Lumberton
Topic Author
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Boeing Close To Breakeven On 787

Sun May 21, 2006 8:29 pm

Not much to this article other than the comment by a Boeing official that they are close to breaking even on the 787 program--well before first flight!
http://www.bernama.com/bernama/v3/news_lite.php?id=198770

Quote:
Boeing's 787 Dreamliner has won nearly 400 orders from airlines before its planned entry into service in 2008, he said during his presentation at the convention.
"And we are now almost at break even," said Walters.
"When all is said and done, more will be said than done".
 
art
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 8:48 pm

Well done Boeing! Sounds like they will make an average ca $25 million per frame on the the first 400. That margin can only go up, surely... assuming no severe composite nasties come to light in the next few years.
 
scouseflyer
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 8:53 pm

Well actually they'll break-even if all of those orders are delivered and the bills paid - they've not got back the cash they invested yet!

It's very unlikely to go wrong but I bet that Concorde was almost in the same place - didn't it have over 100 orders before everyone started to cancel.......
 
art
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 8:57 pm

Quoting Scouseflyer (Reply 2):
It's very unlikely to go wrong but I bet that Concorde was almost in the same place - didn't it have over 100 orders before everyone started to cancel.......

IIRC correctly, it reached 72 or 74 and most were not firm orders.

Edit: Or even if they were firm orders, the deposits given were very small and the cost of cancellation was therefore negligible.

[Edited 2006-05-21 14:29:40]
 
pavlin
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 9:22 pm

They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.
 
scouseflyer
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 9:23 pm

Quoting Art (Reply 3):
Quoting Scouseflyer (Reply 2):
It's very unlikely to go wrong but I bet that Concorde was almost in the same place - didn't it have over 100 orders before everyone started to cancel.......

IIRC correctly, it reached 72 or 74 and most were not firm orders.

No problem, I knew it was quite a few.
 
Lumberton
Topic Author
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 9:29 pm

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?

Plus another 40 or so firm orders that need to be signed, plus a slew of options and committments. See the Wikipedia entry under 787 for a good breakdown. In my view, to be close to BEP and not having flown the aircraft is a stupendous achievement. No doubt this project will be firmly ensconsed "in the black" by the time it takes to the air. How many other commercial aircraft could make the same boast?

Quoting Art (Reply 1):
Well done Boeing!

Well done, indeed!  thumbsup 
"When all is said and done, more will be said than done".
 
atmx2000
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 9:40 pm

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.

The pricing model for the 787 would take into account competition, market size, and launch discounts. Because of the first item, break even would be higher, but because of the 2nd item, Boeing can afford to set pricing so that the break even would be higher.

But I think a more important question is how long does it take to break even. Given the expected delivery rates, Boeing should break even in around 5 years after 787 EIS, while the A380 break even will take 6 to 7 years after EIS. Boeing could break even on the 787 before Airbus does on the A380.
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
NAV20
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 9:53 pm

From Boeing's viewpoint, the best aspect of it is that, now that the A350 is on hold, they know there'll be no competition for five or six years. It's not often that a manufacturer in any field achieves a market ascendancy like that.

Apart from anything else, that makes a second 787 line a virtual certainty.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
leelaw
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 10:10 pm

Quoting NAV20 (Reply 8):
apart from anything else, that makes a second 787 line a virtual certainty.

I wouldn't bet the farm on that just yet, I've heard rumors recently that a couple of the risk sharing partners are getting antsy about the financial commitments necessary for such a ramp-up.
Lex Ancilla Justitiae
 
art
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 10:23 pm

Quoting Leelaw (Reply 9):
Quoting NAV20 (Reply 8):
apart from anything else, that makes a second 787 line a virtual certainty.

I wouldn't bet the farm on that just yet, I've heard rumors recently that a couple of the risk sharing partners are getting antsy about the financial commitments necessary for such a ramp-up.

While I appreciate that risk sharing partners may be uneasy about extending themselves further financially, I would have thought that an important factor in making a decision on a second line would be knowing the nature of any 787 competitors. Airbus say they will emerge from their analysis paralysis within 2 months and release details of the "definitive" 787 competitor.
 
scouseflyer
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 10:37 pm

Quoting Art (Reply 10):
While I appreciate that risk sharing partners may be uneasy about extending themselves further financially, I would have thought that an important factor in making a decision on a second line would be knowing the nature of any 787 competitors. Airbus say they will emerge from their analysis paralysis within 2 months and release details of the "definitive" 787 competitor.

Which means that they're likely to come out with something that will match the 87 and the suppliers don't want to build a new factory and then have to shut it down again after 2 or 3 years.

It's always better to under produce the market than over produce it (as then you can get top price for your goods) - look at what the games console manufacturs do!
 
NAV20
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 10:44 pm

See your point, Art, but as I see it, Boeing will soon have a pretty good idea of what the competition will be like; depending on which way the Airbus cat jumps over the next month or two. There are really two alternative scenarios:-

Either 1. Airbus announces a 'new' model in June or July. There won't have been time to produce even a preliminary design for a fully-competitive counter to the 787 (i.e. fully-composite construction, new engines etc.), so Boeing can be pretty sure that the counter will be the 'A350 Mark Five' - another relatively heavy, relatively thirsty half-measure.

Or 2. Airbus says that it is going to develop a completely-new, all-composite design. That will not carry conviction in the market until design development of both airframe and engines has been carried to quite a detailed level, which will take at least a year, probably two. So Boeing will know that Airbus won't even be able to sign up firm orders on a settled and proven design until about 2008. On their recent record, no-one is going to order an Airbus design 'off the back of an envelope', they'll have to prove out the claimed performance figures and put them beyond doubt.

So either Boeing won't have any competition worth worrying about - or they'll have 5-6 years clear to 'make hay while the sun shines'.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
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Stitch
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 11:03 pm

Assuming the A350 program is "stalled" until the mid-2010s (2013-2017), that might take some of the pressure off Boeing to build a second line, since they can force customers to wait (by still being able to deliver product before the A350MkV enters service) or it may allow Boeing to command enough of a premium to help shoulder the burden of their suppliers ramping up production to support a second line.

So Boeing can tell SQ and EK they can get the 787-8 for a discount and wait till 2012, or they can pay full list and get it in 2010. It would then depend on how fast and how badly they want the plane.
 
NAV20
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RE: Boeing Close To Breakeven On 787

Sun May 21, 2006 11:15 pm

I think that's dead right, Stitch. The late-ordering airlines will either have to wait, or pay Boeing (and its suppliers) top dollar to compensate for the extra risk.

One of Boeing's problems may simply be that they can't believe their luck - that they've been handed a virtual monopoly on a plate. Airbus' challenge in the midsize longhaul sector has crumbled so quickly that it has taken everyone by surprise.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
Halibut
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 12:19 am

Quoting NAV20 (Reply 12):

So either Boeing won't have any competition worth worrying about - or they'll have 5-6 years clear to 'make hay while the sun shines'.


NAV20,
Excellent discription of the " Pickle " !

No matter what Airbus does , Boeing will still be raking in the dough ! Airbus ...? Most likely not !

Hmmm

  

http://www.bizjournals.com/seattle/stories/2006/05/08/daily34.html

Quoting Puget Sound Business Journal]

Boeing raises prices 4 percent
Puget Sound Business Journal (Seattle) - May 12, 2006

The 787-9 plane, for example, Boeing's longer-range version of its Dreamliner airplane, has a list price of $178.5 million to $188 million.
[/quote]

Quoting Manni (Reply 15):
Quoting Lumberton (Reply 6):
Plus another 40 or so firm orders that need to be signed,

Firm orders that need to be signed? In other words... commitments. Of which most likely some never will be signed (Primaris ).

Manni
I thought you count both commitments & firm orders ? Oh , you have a different system of counting orders/commitments for Airbus & Boeing !  

  

Quoting Manni (Reply 10):

Aeroflot Has Chosen The A350 Over The 787? (by FCKC May 6 2006 in Civil Aviation)

[quote=Manni-:
Quoting Manni (Reply 10):

If you'd like to count firm orders only, that's up to you. Meanwhile, I count both firm and commitments, announced by Airbus. Which at this stage excludes the Air Madrid order and those of Aeroflot.

Halibut

[Edited 2006-05-21 17:30:44]
6 million Jews were slaughtered-Do you see Jews flying planes into buildings in Germany to kill 1000s of innocent, NO !
 
Thorny
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 12:23 am

Quoting Scouseflyer (Reply 11):

Which means that they're likely to come out with something that will match the 87 and the suppliers don't want to build a new factory and then have to shut it down again after 2 or 3 years.

2-3 years later would be right about the time Boeing's 737RS enters service. Boeing could very easily sweeten the deal by adding a contract clause that said suppliers would get first dibs on 737RS work. That would be very enticing, and a win/win for Boeing.
 
11Bravo
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 12:31 am

Quoting Manni (Reply 15):
Firm orders that need to be signed? In other words... commitments.

Exactly. I've said it about Airbus orders and I'll say it about Boeing orders; playing games with terms like "firm commitments", or in this case "Firm orders that need to be signed?" is pure spin and means nothing.

The signing of an order is the act that makes it firm. There is no such thing as a "Firm order that needs to be signed". It's a contradiction in terms. It's like saying "The dead dog needs to be killed".

The orders are either firm or they're not. The B787 has 350 firm orders.
WhaleJets Rule!
 
EMBQA
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 12:39 am

Quoting Pavlin (Reply 4):
A 8 billion euro A380 has a breakeven of 250-300 planes.

Where did you get the A380 break even figure from...?? Airbus has never released it and the industrey guess is close to the same as the B787....400
"It's not the size of the dog in the fight, but the size of the fight in the dog"
 
art
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 12:41 am

Quoting Manni (Reply 15):
Quoting Lumberton (Reply 6):
Plus another 40 or so firm orders that need to be signed,

Firm orders that need to be signed? In other words... commitments. Of which most likely some never will be signed (Primaris ).

Manni, you make it sound as if the 787 is in a precarious position, order-wise. Would it matter if none of the 40 frames mentioned ever turned into firm orders? I don't think so.

Just to recap on the 787's position:

- market for mid-sized long range wide bodies estimated at 3000+ up to 2025

- 787 has secured 350+ orders/commitments in about 2 years

Boeing's problem is not getting orders. I would venture that their concern is how to exploit the runaway success of the 787 in the market to give themselves the biggest return possible from that success (IMO for which they have to thank Airbus, to some extent, given their reluctance to respond in timely fashion with a viable alternative).

I think Nav20 puts the position succinctly in his reply number 12.
 
SWALoveField
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 12:56 am

Could all of this 787 success financially equal some big time cash for the 737 replacement?

Robb
Dallas, TX
 
Halibut
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 1:08 am

Quoting SWALoveField (Reply 20):
Could all of this 787 success financially equal some big time cash for the 737 replacement?

And then some !
In my oppinion , 2010 thur 2014 is Boeing's sweet spot !

Quoting NAV20 (Reply 12):
So either Boeing won't have any competition worth worrying about - or they'll have 5-6 years clear to 'make hay while the sun shines'.

Quote of the Year !

 praise  NAV20

Halibut
6 million Jews were slaughtered-Do you see Jews flying planes into buildings in Germany to kill 1000s of innocent, NO !
 
siromega
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 1:35 am

How does -10 development factor in on this? I expect a lot of orders to show up when the -10 is annouced. I assume it'll add some extra development cost to the project, but it wouldn't surprise me if those costs are immediately offset (either entirely or mostly) by the number of -10 purchases.
 
BoomBoom
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 1:46 am

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.

Smaller plane=smaller proft, even though the development cost is nearly as large as a big plane. It's the same situation with autos.

Nobody knoes what the breakeven number is for the A380. Airbus put out a bunch of contradictory information, then went mum.

Quoting Art (Reply 19):
Manni, you make it sound as if the 787 is in a precarious position, order-wise.

You would think the whole 787 program depends on the Primairs order. NOT!
Our eyes are open, our eyes are open--wide, wide, wide...
 
ShowerOfSparks
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 2:06 am

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.

Yes, but can you actually believe those numbers for the A380, I think not.
 
astuteman
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 2:20 am

Quoting BoomBoom (Reply 23):
Smaller plane=smaller proft, even though the development cost is nearly as large as a big plane. It's the same situation with autos.

Nobody knoes what the breakeven number is for the A380. Airbus put out a bunch of contradictory information, then went mum.

That's pretty much it, BoomBoom.

IIRC analysts have said Boeing will need to sell c. 500 frames to break even, which to me sounds pretty reasonable for a mid-sized high volume airframe.

Airbus said "around 250" for Break-even on the A380 but we all know the development cost escalated 20% since then, giving a break-even of "around 300" frames. Even then, Airbus did admit that the 250 frame break-even was purely in "accounting terms" , which means purely numbers (i.e no interest/discounted cash-flow/ROI type considerations).
On a typical 10% PA discounted cash-flow basis, I would estimate break-even to be in the region of 450 - 500 frames for the A380

Regards
 
leelaw
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 2:35 am

Quoting Astuteman (Reply 25):
Airbus said "around 250" for Break-even on the A380 but we all know the development cost escalated 20% since then, giving a break-even of "around 300" frames. Even then, Airbus did admit that the 250 frame break-even was purely in "accounting terms" , which means purely numbers (i.e no interest/discounted cash-flow/ROI type considerations).
On a typical 10% PA discounted cash-flow basis, I would estimate break-even to be in the region of 450 - 500 frames for the A380

IIRC, Mr. Champion of Airbus, in his recent "Hard Talk" interview with Sarah Montague on the BBC, either said directly or confirmed Ms. Montague's figure of 250-300 units for A380 breakeven.
Lex Ancilla Justitiae
 
irishpower
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 2:36 am

Quoting Astuteman (Reply 25):

Well done Astuteman. I like your financial breakdown.
Realistically speaking though discounted cash flows at 10% for a project as large as the A380 is probably a little low. I would assume it is more on the order of 12-15% which would add more to the bottom line. Remember the 8 billion dollar deveoplment cost is in todays dollars. In order to get a real picture of cost we need to know what that 8 billion will be worth when amoritized out over the life of the project.
 
YULWinterSkies
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 2:38 am

Quoting Astuteman (Reply 25):
IIRC analysts have said Boeing will need to sell c. 500 frames to break even, which to me sounds pretty reasonable for a mid-sized high volume airframe.

Then with 350 orders, they are still quite far from breakeven, so this is nothing else that propaganda from Boeing. But why should we bother about that, that's the way economy works, this is it.
When I doubt... go running!
 
leelaw
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 3:15 am

Breakeven Point (Cost-Volume-Profit Analysis) is really an "infantile" method of evaluating the financial success of a long-term project, because it doesn't take into account the time value of money. It's really most useful as a tool for setting prices. The OEM's like to quote it because it's easy for the masses to understand. IIRC, it's more significant for Airbus because some of the benchmarks for the repayment of 'lauch-aid' are tied to "breakeven."
Lex Ancilla Justitiae
 
astuteman
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 3:19 am

Quoting Irishpower (Reply 27):
Realistically speaking though discounted cash flows at 10% for a project as large as the A380 is probably a little low

It's the standard "cost-of-capital" model used by both Boeing and Airbus (+ or - a 1/4%) in order to determine DCF or NPV values  Smile.

Quoting Leelaw (Reply 26):
IIRC, Mr. Champion of Airbus, in his recent "Hard Talk" interview with Sarah Montague on the BBC, either said directly or confirmed Ms. Montague's figure of 250-300 units for A380 breakeven.

I could probably live with a figure of 300 to make the "raw numbers" equalise (250 + 20%), but Airbus themselves have admitted that their break-even numbers make no allowance for NPV or DCF calculations. I guess it depends on one's definition  Smile

Quoting YULWinterSkies (Reply 28):
Then with 350 orders, they are still quite far from breakeven, so this is nothing else that propaganda from Boeing

I was only quoting from memory what I recall being said YULWinterSkies. There's always the question of whether that number is on a Discounted cash-flow (DCF) basis or just "raw numbers).
To be honest, if I'd got 350 orders and 50 or so commitments 2 years before EIS and my break-even was 500, I'd say I was "pretty near" too.

If its propaganda, I'd say they've earned it  checkmark  (and don't forget I'm an Airbus fan at heart  Smile).

Regards
 
deltaguy767
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 3:24 am

Kudos for Boeing for getting close to Break Even this early in the program. Also once the US carriers get their acts together then we will see large orders from AA and DL mot to mention other carriers still on the fence. I hope that Boeing will be able to have continued success with their airliners including the mysterious 747-ADV program.

From BDL and BAF,  wave 
DeltaGuy767
A Good Landing is one you walk away from!
 
jacobin777
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 3:32 am

Quoting Leelaw (Reply 26):
IIRC, Mr. Champion of Airbus, in his recent "Hard Talk" interview with Sarah Montague on the BBC, either said directly or confirmed Ms. Montague's figure of 250-300 units for A380 breakeven.

i still think he's touting the mpany rubbish.......300-350 (possibly 375-400) are the numbers.

and how can the price be 200-300 since 2001-2002, before the 6 month delay, as well as the couple of billions of $$ in delay......???
"Up the Irons!"
 
patches
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 3:59 am

maybe this question has been asked. When will we see a real 787? instead of a fake drawing or a computer generated picture. I MEAN THATS ALL WE HAVE SEEN. it would be nice to finally see the real deal.
 
brendows
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 4:12 am

Quoting Patches (Reply 33):
When will we see a real 787? instead of a fake drawing or a computer generated picture. I MEAN THATS ALL WE HAVE SEEN. it would be nice to finally see the real deal.

You can see what the 787 will be like here:
Technical drawings of the 787
Take a look on boeing.com, they posted images of the firm design last fall  Smile
If you're talking about the first prototype, assembly will begin in the second half this year, and roll-out and first flight is in the first half next year.
 
PlaneHunter
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 4:23 am

Quoting NAV20 (Reply 8):
From Boeing's viewpoint, the best aspect of it is that, now that the A350 is on hold, they know there'll be no competition for five or six years.

If Airbus presents a competitive updated A350, they are certainly able to offer it earlier than 2012. Not every customer out there needs the aircraft within the next six years.

Quoting NAV20 (Reply 14):
One of Boeing's problems may simply be that they can't believe their luck - that they've been handed a virtual monopoly on a plate.

Though the B787 has been selling extremely well, Boeing hasn't achieved a "virtual monopoly". What numbers are you talking about?

Quoting Halibut (Reply 15):
No matter what Airbus does , Boeing will still be raking in the dough ! Airbus ...? Most likely not !

It's interesting that people tend to forget the recent past very quickly. Only some years ago, certain people predicted the end of Boeing, claiming that Airbus would be untouchable for a long time to come...We know what happened. In mid-2006, people do exactly the same, just the other way round...  scratchchin 


PH
Nothing's worse than flying the same reg twice!
 
AirRyan
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:03 am

Maybe Boeing will consider the 787 for the USAF KC tanker, than? IMO, the first builder to offer either the A350 or the 787 will get the bid. The USAF using the 767 to buy tankers for the next 40+ years instead of the modern 787 would be like soldiering on with the KB-29's instead of the modern 707's available.
 
flydreamliner
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:10 am

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.

I'd heard more recently, I believe here on A.net that projected break even was supposed to be somewhere shy of 400 units on A380 - due to projected discounting or something or other. Either way, the A380 is more than twice the price of 787, fair to assume that the markup is higher, and thus fewer units would have to be sold to cover development. Moreover, 787 is priced extremely aggressively, it is fact slightly less expensive than 767 and noticably less expensive than A330. Also, development costs on 787 were 7 billion USD (and you can argue that the Euro is valued higher than the dollar, but for at least a part of the 787 development, that wasn't true) so development costs on A380 and 787 are fairly similar in cost.
"Let the world change you, and you can change the world"
 
hb88
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:24 am

Quoting AirRyan (Reply 36):
Maybe Boeing will consider the 787 for the USAF KC tanker, than?

I'm not sure. According to the media and Boeing, it's proving extremely difficult for Boeing to implement and certify effective EME protection for lightning strike in the 787 right now, let alone a tanker version which would (presumably) carry fuel in the fuselage as well.

One of the downsides of plastic planes I guess.
 
jacobin777
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:26 am

Quoting PlaneHunter (Reply 35):
If Airbus presents a competitive updated A350, they are certainly able to offer it earlier than 2012. Not every customer out there needs the aircraft within the next six years.

actually not, according to flightinternational.com

" Under the revised schedule, first delivery is expected to be no earlier than 2012."

by the time all is said and done, I would say 2012-2014.......
"Up the Irons!"
 
PlaneHunter
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:39 am

Quoting Jacobin777 (Reply 39):
actually not, according to flightinternational.com

" Under the revised schedule, first delivery is expected to be no earlier than 2012."

I didn't talk about deliveries, but their ability to actively offer the model years before EIS. Airbus would not be locked out of tenders in the next few years, as some users seem to suggest.


PH
Nothing's worse than flying the same reg twice!
 
474218
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:44 am

Boeing is a long way from BREAK EVEN on the 787. When an customer signs a firm contract for an new aircraft they pay a small payment (1 to 5 percent of sales price). When the aircraft is in the production cycle and certain milestones are met additional payments (5 to 10 percent) are made. When the aircraft is delivered the balance (50 to 75 percent) is paid. So while Boeing may have orders enough orders to cover their original investment, it will be years before the money starts rolling in. Until then the Boeing and its suppliers are deeply in debt (lots going out, very little coming in) on the 787 program.
 
Lokey123
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:48 am

Quoting 474218 (Reply 41):
Boeing is a long way from BREAK EVEN on the 787. When an customer signs a firm contract for an new aircraft they pay a small payment (1 to 5 percent of sales price). When the aircraft is in the production cycle and certain milestones are met additional payments (5 to 10 percent) are made. When the aircraft is delivered the balance (50 to 75 percent) is paid.

I don't think that your math quite adds up. As far as I know when a firm contract is signed the deposit is something like 30 percent of the purchase price, I am sure that someone else can confirm.
 
jacobin777
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 5:53 am

Quoting PlaneHunter (Reply 40):
I didn't talk about deliveries, but their ability to actively offer the model years before EIS. Airbus would not be locked out of tenders in the next few years, as some users seem to suggest.

got ya.. checkmark 
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lredlefsen
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 6:16 am

Quoting Lumberton (Thread starter):
... Boeing official that they are close to breaking even on the 787 program

I wonder if that includes all the $$$ they spent on the Sonic Cruiser?
 
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Stitch
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 6:29 am

Quoting Lokey123 (Reply 42):
I don't think that your math quite adds up. As far as I know when a firm contract is signed the deposit is something like 30 percent of the purchase price, I am sure that someone else can confirm.

I've been told by Boeing Sales folks who I used to shoot the breeze with up at Paine that it's usually one-third down on order, one-third down once the plane starts assembly, and one-third down on delivery.

That being said, it is likely Boeing and the airlines come to custom-tailored agreements on each order, but I would be very surprised if they or Airbus started construction on a frame without a very significant amount of cash (at or beyond 50% of the agreed-upon purchase price) already deposited, since the exposure otherwise would be far too great.
 
474218
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 6:30 am

Quoting Lokey123 (Reply 42):
I don't think that your math quite adds up. As far as I know when a firm contract is signed the deposit is something like 30 percent of the purchase price, I am sure that someone else can confirm.

Doesn't add up 5% down, 4 milestone payments at 10% each = 45% + 55% at delivery? Adds up to 100%. Unless thing have really changed in the last thirty years since I was involved with a production program that is basicly the way it worked.
 
scouseflyer
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 6:40 am

Quoting HB88 (Reply 38):
Quoting AirRyan (Reply 36):
Maybe Boeing will consider the 787 for the USAF KC tanker, than?

I'm not sure. According to the media and Boeing, it's proving extremely difficult for Boeing to implement and certify effective EME protection for lightning strike in the 787 right now, let alone a tanker version which would (presumably) carry fuel in the fuselage as well.

One of the downsides of plastic planes I guess

I think that Boeing said that a 787 tanker was not possible at it would require a bigger hole in the fuselage than was possible with a Cardon construction?
 
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glideslope
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 6:47 am

Quoting Scouseflyer (Reply 2):
It's very unlikely to go wrong but I bet that Concorde was almost in the same place - didn't it have over 100 orders before everyone started to cancel.......

Good point. At least with the A380 operators are not ordering in the first place.
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keesje
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RE: Boeing Close To Breakeven On 787

Mon May 22, 2006 6:53 am

Very good! So break-even in 5 or 6 years if everything goes well!
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