bringiton
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Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:26 am

What do you guys think should be a reasonable break even no. for the 787 ( just out of the 3 models we know off so far ) given that unofficial sources give the cost of the development in the 8-10 billion US $ bracket ( boeing doesnt officially release developmental costs ) .
 
Lemurs
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:32 am

Seems like you could do the math pretty easily...assuming $50M in real money per airframe sold (probably a little low) and $10B in development costs (possibly high, who knows though) they'd break even at 200 airframes. That doesn't factor maintnance contracts they'll get for those sales either. Kind of looks like the 787 might already be at 100+% ROI, assuming no cancelations, cost overruns, or a billion other things that could go wrong.
There are 10 kinds of people in the world; those who understand binary, and those that don't.
 
DAYflyer
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:46 am

A far cry from the breakeven point of the A-380, which now must be at 400+ frames.
One Nation Under God
 
ebbuk
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:47 am

I heard it was 3000 frames. Is that right?
 
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clickhappy
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:50 am

3000 frames

LMFAO.

If your build cost is (lets say) 50 million each, 3000 copies would equal a break even cost of $150,000,000,000

I dont think the development cost of the 787 program is $150 Billion
 
DAL767400ER
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:53 am

Quoting Clickhappy (Reply 4):
I dont think the development cost of the 787 program is $150 Billion

In EbbUK's Airbus-centered world it is  Wink . Of course, whatever the actual number is, I would bet that the total number of orders has already surpassed the break-even number.
 
osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:56 am

Quoting EbbUK (Reply 3):
I heard it was 3000 frames. Is that right?

I think you meant 300 didn't you?

My number is between 300 and 400.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
Lemurs
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:57 am

Oops...I entirely left the build cost out of my disturbingly basic equation. Let's assume $20m on that. It would up the number to 330 frames or so. That still puts them into profit, but only just the begining...still, for an airplane that's not been assembled yet...

Of course, the build and sales numbers are entirely whipped out of thin (non-existant) air.
There are 10 kinds of people in the world; those who understand binary, and those that don't.
 
swissy
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 5:58 am

Quoting DAL767400ER (Reply 5):
would bet that the total number of orders has already surpassed the break-even number.

It is a little early to make statements like that..... IF everything is going the way it should I agree  Wink but lets wait and see.........

Cheers,
 
bringiton
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:04 am

Whats the profit margin like with jets like 787 and 350 in general terms not generous terms Smile obviously someone will get a fantastic deal but on an average how much profit can one expect in terms of dollars and percentage ??
 
osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:08 am

Quoting Bringiton (Reply 9):
Whats the profit margin like with jets like 787 and 350 in general terms not generous terms obviously someone will get a fantastic deal but on an average how much profit can one expect in terms of dollars and percentage ??

With or without dev costs? Without development, production is likely $20M (ish) for a 787. How much development you attribute to the cost depends on how many you sell (the more you sell the better the margin on each one). Assume they sell for $80M to the first customers.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
bringiton
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:09 am

OSIRIS thx man!! I was refering to only recurring cost ( dev. cost being non-recurent for fixed varients) !!
 
ikramerica
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:11 am

The title reads funny.

Reminds me of a Simpsons episode:

Lionel Hutz's yellowpages ad read: "Work on contingency. No money down."

He explained it was a misprint. It should have read: "Work on contingency? NO! Money down!"

That's how the thread reads: "Boeing 787 Dreamliner. Break Even? NO!"

Quoting EbbUK (Reply 3):
I heard it was 3000 frames. Is that right?

Sounds low...  Wink

Nobody can take a joke these days, can they?
Of all the things to worry about... the Wookie has no pants.
 
lehpron
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:12 am

Quoting Osiris30 (Reply 6):
Quoting EbbUK (Reply 3):
I heard it was 3000 frames. Is that right?

I think you meant 300 didn't you?

I think he mistook what Boeing expects to sell over the course of the life of the model.

While, IMO, assuming that because 787 is smaller than A380 then it should sell less to break even is dangerous. Scaling the costs of development to the estimated costs of each unit with the percentage of profit aimed at both, it is concievable that both aircraft may need to reach the same number to break even. People think/believe/know that 787 may reach its mark quicker. It may already have, I don't keep up with that stuff. To me the selling of an airplane is not a race.
The meaning of life is curiosity; we were put on this planet to explore opportunities.
 
osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:16 am

Quoting Lehpron (Reply 13):
While, IMO, assuming that because 787 is smaller than A380 then it should sell less to break even is dangerous. Scaling the costs of development to the estimated costs of each unit with the percentage of profit aimed at both, it is concievable that both aircraft may need to reach the same number to break even. People think/believe/know that 787 may reach its mark quicker. It may already have, I don't keep up with that stuff. To me the selling of an airplane is not a race.

Well to Airbus and Boeing the race of selling is all that counts  Wink As for the 787 I expect it's break even to be compared in terms of frames to the INITIAL 380 projections. My number is roughly between 300 and 400. Without having the financials anything more precise than that is a WAG.

Having said that, I think Boeing is at or just past break even on the 787, and feel confident that by year end they are > breakeven.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
Pope
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:18 am

The above calculations assume that the technology developed in the 787 has no value in any other project. Furthermore, you forget that R&D costs generate tax deductions which offset other taxable income and depending on the specific expense may qualify for an R&D tax credit.
Hypocrisy. It's the new black for liberals.
 
texfly101
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:20 am

Quoting Bringiton (Reply 9):
Whats the profit margin like with jets like 787 and 350 in general terms not generous terms Smile obviously someone will get a fantastic deal but on an average how much profit can one expect in terms of dollars and percentage ??

Check the annual report, its available online, and you'll see the reported margin for either company. Its believable and will give a good estimate of the profits for the business units. Just remember that some models are sold at discounts and that others have to make up for their lack of profit. Make your assumptions, factor in numbers of airframes and profits, and you probably won't be too far off. A basic economics text will help with the NPV, FV and AC equations.
 
osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:21 am

Quoting Pope (Reply 15):
The above calculations assume that the technology developed in the 787 has no value in any other project. Furthermore, you forget that R&D costs generate tax deductions which offset other taxable income and depending on the specific expense may qualify for an R&D tax credit.

I'm purposely ignoring those on both fronts, as the impact is much too hard to determine, especially across country lines. I'm intentionally "keeping it simple stupid" so as to provide a reasonable baseline by which all project might be compared, not just the 787.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
bringiton
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:24 am

Quoting Lehpron (Reply 13):
While, IMO, assuming that because 787 is smaller than A380 then it should sell less to break even is dangerous. Scaling the costs of development to the estimated costs of each unit with the percentage of profit aimed at both, it is concievable that both aircraft may need to reach the same number to break even. People think/believe/know that 787 may reach its mark quicker. It may already have, I don't keep up with that stuff. To me the selling of an airplane is not a race.

That was something i believed aswell . If you look at the dev. cost of the A380 ( let me take the original 12 billion dollars ) and then take at the estimated dev. cost of the 787 ( 8-10 billion , lets assume 9 ) and assume that the profit margin ( profit % of the total cost (recurring ) of production) is the same for both aircraft then the dreamliner would have needed about 25% less no. of orders to break even . Even if we assume that the % of profit derived from one single 787 sale is 2/3 that derived from one A380 sale ( dont VLA's sell at a higher % profit ? ) and take the break even no. of 380 to be around 300 then the break even no. is rougly around 300-325 for the 787 .
 
jacobin777
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:27 am

Quoting Bringiton (Thread starter):
What do you guys think should be a reasonable break even no. for the 787 ( just out of the 3 models we know off so far ) given that unofficial sources give the cost of the development in the 8-10 billion US $ bracket ( boeing doesnt officially release developmental costs ) .

The total program costs in 2003-2004 were about $9-$10 billion of which Boeing's expense was about $6 billion according to credible sources...which sounds just abuot right...
"Up the Irons!"
 
DfwRevolution
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:28 am

Quoting Bringiton (Thread starter):
What do you guys think should be a reasonable break even no. for the 787 ( just out of the 3 models we know off so far ) given that unofficial sources give the cost of the development in the 8-10 billion US $ bracket (

Most estimates place full amortization of program costs at 500-600 units.

Boeing is around 400 firm orders at the moment.

Quoting EbbUK (Reply 3):
I heard it was 3000 frames. Is that right?

For break-even, no that's well beyond reason

The total market size for the 787 and A350 over their product life is estimated at around 3,000 frames
 
Ken777
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:29 am

I think it may be different for Boeing and all of the risk taking suppliers. Each of the suppliers will have their own target break even point (unless they get cost overruns) and there may be a fairly wide range (like 300 - 400) depending on the supplier.

I wouldn't be surprised, however, if Boeing has the lowest break even point of them all.  Smile
 
airfrnt
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:32 am

Quoting Bringiton (Thread starter):
What do you guys think should be a reasonable break even no. for the 787 ( just out of the 3 models we know off so far ) given that unofficial sources give the cost of the development in the 8-10 billion US $ bracket ( boeing doesnt officially release developmental costs ) .

The number is somewhere between 300-450. Typically planes with a higher break even number have not done as well. The 747 was very expensive when introduced because Boeing was not planning on selling a lot, and probably broke even around 200 frames.

Also, please bear in mind that Boeing isn't paying nearly the whole development cost for the 787. There is a much higher risk sharing percentage in the 787 then in the A380. Their number is probably around 5 billion budgeted, and will probably end around 8 billion. It ends up coming out in the wash however for break even because risk sharing partners get more of the profit.
 
bringiton
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:36 am

DFWrev. the only way the breakeven no . would be 400-500 is if the % of profit as compared to the overall cost of production ( only recurring of the shelf or as we in defence call it FLY away ) is considerably less then that of the A380 as if 6-7 billion is to be take as BOEING's cost of development then their cost is roughly half so they should only need 150 odd to break even therefore 500 orders would suggest that the % of profit out of one 787 is 75% less then that out of one A380 sold in the market .
 
Jet-lagged
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 7:57 am

Breakeven, or makes a reasonable return on investment factoring in time value of money?

Most number for programs batted around seem to be in the 400 to 500 range, from what I see.

Interestingly, lets say it is 500 for a good ROI. Since Boeing has ~440 orders now, I think it is safe to assume they will generate at least 25% more, when existing options are exercised.

So, unless they muck it up, they have a shareholder-value creating program on their hands.

And, I think many models sell 2 times, or more, they number of frames compared to orders before EIS. So, Boeing should have a real cash cow.
 
bringiton
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:12 am

Lets see how the 787 pans out in the next critical 12-24 months or so , I guess it would be fair to say that as of now boeing has far more riding on the 787 then airbus on the A380 ( atleast they have the A350 to fall back on) , not only interms of this but boeing's future y1 and y3 all depend on the success of y2 and the technologies it is able to bring into the market!!
 
osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:18 am

Quoting Bringiton (Reply 25):
Lets see how the 787 pans out in the next critical 12-24 months or so , I guess it would be fair to say that as of now boeing has far more riding on the 787 then airbus on the A380 ( atleast they have the A350 to fall back on) , not only interms of this but boeing's future y1 and y3 all depend on the success of y2 and the technologies it is able to bring into the market!!

Well that's a relative now isn't it LOL.. To hear Airbus talk everything rides on the 380.. to the point of neglect for the 400M and 350.

Knowing what Boeing learned from their earlier troubles I will expect 787 EIS to happen relatively smoothly. So far the majority of the project has been on schedule and been surprisingly smooth.. and sales keep pouring in. (which is unusal this close to EIS, especially with order slots in 2012/2013 now)
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flydreamliner
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:23 am

As boeing looks to end the year with about 500 787 orders, it's safe to say the aircraft will be profitable before it ever takes to the skies, something I don't believe has ever happened before.
"Let the world change you, and you can change the world"
 
osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:30 am

Quoting FlyDreamliner (Reply 27):
As boeing looks to end the year with about 500 787 orders, it's safe to say the aircraft will be profitable before it ever takes to the skies, something I don't believe has ever happened before.

 checkmark  Definitely a modern era first for a non-variant model.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
787engineer
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:43 am

Quoting Bringiton (Thread starter):
What do you guys think should be a reasonable break even no. for the 787

A and B make less of a profit on smaller aircraft. I think the break even point for the 787 will be 350-450 frames (barring any delays, etc). Just my  twocents 
 
kaitak744
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 9:23 am

Also, keep in mind that some launch airlines, ANA for example, got their 787s at some pretty large discounts. So, they don't make the same amount of money they do on every plane. I would think the break-even would be about 400 frames. A number which I think they can reach by this year's end. Also, if they give a go ahead to the 787-10, the break-even would be about 450-500 frames. Further, if they decide to ramp up production and build a new line at Everett, they would make the break-even 600-650ish.
 
bringiton
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 9:29 am

Quoting Kaitak744 (Reply 30):
would think the break-even would be about 400 frames. A number which I think they can reach by this year's end.

they are allready over that if you count the 20 Singapore orders and the UFO's , coupled with the aeroflot ( is it included in the UFO ?) they should be pushing towards 430+ now IIRC.
 
kalakaua
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 9:32 am

Quoting Ikramerica (Reply 12):
The title reads funny.

Reminds me of a Simpsons episode:

I was thinking the same!
Gravity explains the motions of the planets, but it cannot explain who set the planets in motion.
 
WingedMigrator
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 3:31 pm

Quoting Osiris30 (Reply 10):
Without development, production is likely $20M (ish) for a 787.

I have trouble believing that figure... that's without engines, right? Engines would add quite a bit to that total. I could believe $45-50M per frame.

Quoting Osiris30 (Reply 14):
Having said that, I think Boeing is at or just past break even on the 787, and feel confident that by year end they are breakeven.

They will be at breakeven not when they have booked that many firm orders, but instead when they have delivered that many frames. That's the difference between Monopoly money and real money, and I think it matters, don't you?  Smile
 
zvezda
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 4:28 pm

My estimates are now 350-400 for B787, 40-50 for the B747-8, and 800-1000 for the WhaleJet.
 
legoguy
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 6:19 pm

Quoting Zvezda (Reply 34):
800-1000 for the WhaleJet.

Wow! Out of interest, how many orders does the a380 have?
Can you say 'Beer Can' without sounding like a Jamaican saying 'Bacon'?
 
manni
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 7:05 pm

Legoguy,

The A380 has 159 firm orders and 9 commiments, there's also about 60 options.
Altough people like to speculate, often greatly exaggerated, about the number of orders for A380s needed to break even, the truth is none of us know the exact number. So let's speculate...

The production cost of an A380 is believed to be about 40% of the listprice. Aircraft are sold on average with a discount of 30%. However this might not be the case with the A380 as all of the orders have been placed before Boeing came out with an aircraft that has the remote possibility to compete with the A380s prime advantages, adding capacity at slot restricted airports and raising the standard in inflight ammenities. There are offcourse the launch discounts (as with every other program) and the compensations for delays (rumoured to be capped) that need consideration. Let us exceed the average discount with a good margin and raise it to 40 a 45% discount on each and every A380 sold.

A margin of 15 to 20% sounds plausible IMO. That would bring the number to break even at 250 to 333 aircraft on a total development cost of US$15 billion, before the recently announced delay.

Perhaps I'm off by a wide margin, even as much as 50%, that would bring the numbers to 375 to 499 aircraft. FWIW, if I was of by 300% the numbers would be 750 to 1000 aircraft.

My speculation might not show what the break even number WILL be, but it certainly shows what the break even number WILL NOT be.

As far as the 787 is concerned, that's anyones guess. I dont recall any speculation in the press or information provided by Boeing about a break even number. About 400 to 500 sounds plausible IMO, provided everything goes as planned.
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legoguy
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 7:27 pm

Quoting Manni (Reply 36):

Thanks for the info!

Quoting Manni (Reply 36):
250 to 333 aircraft

That sounds do-able if the a380 performs well when enters service.

Quoting Manni (Reply 36):
As far as the 787 is concerned,

The 787 is a great aircraft which will with out a doubt break even and provide the company with a great profit. Hopefully the a380 will do the same.

Quoting Manni (Reply 36):
The production cost of an A380 is believed to be about 40% of the listprice.

So the cost of the materials and components to make an aircraft is only 40% of the final cost of the finished aircaft!?!?! So 60% of the final price of the aircraft is just pure profit? (give or take afew percent to cover discounts and labour work etc etc)
Can you say 'Beer Can' without sounding like a Jamaican saying 'Bacon'?
 
osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 7:32 pm

Quoting WingedMigrator (Reply 33):
I have trouble believing that figure... that's without engines, right? Engines would add quite a bit to that total. I could believe $45-50M per frame.

Yes. Without engines. Those are contracted separately from the main body (sometimes in the same agreement, but broken out separately)

Quoting WingedMigrator (Reply 33):
They will be at breakeven not when they have booked that many firm orders, but instead when they have delivered that many frames. That's the difference between Monopoly money and real money, and I think it matters, don't you?

Ofcourse. This is all hypothetical assuming no cancelations or delays. However I would rather have an order book that on delivery is break-even (or better) than not, wouldn't you?
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
aerosol
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 7:45 pm

The development costs are only one part of the cost block. For the break even you have to factor in the other fix costs and variable costs (for example: raw materials per unit).
 
manni
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 7:57 pm

Quoting Legoguy (Reply 37):
So 60% of the final price of the aircraft is just pure profit?

No, that wouldn't be correct. There are the development costs, overhead costs and discounts that need to be taken into consideration aswell. Except the odd private jet most discounts are certainly more than a few %. The 40% appeared in a report a few weeks ago, IIRC published by Leeham, it did not give a clue wether the engines are included or not.

To have an idea about the cost of the engines, take a look at KE's purchase.

http://www.asiatraveltips.com/news05/156-KoreanAir.shtml

23 engines valued at US$300 million. Keep in mind that these are listprices and engine manufacturers also compete for contracts.

Quoting WingedMigrator (Reply 33):
Engines would add quite a bit to that total. I could believe $45-50M per frame.

Korean Air ordered 22 engines valued at US$240 million at listprice.
That would be about US$22 million per frame at listprice.

http://www.geae.com/aboutgeae/presscenter/genx/genx_20051214.html
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osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:06 pm

Quoting Manni (Reply 40):
No, that wouldn't be correct. There are the development costs, overhead costs and discounts that need to be taken into consideration aswell. Except the odd private jet most discounts are certainly more than a few %. The 40% appeared in a report a few weeks ago, IIRC published by Leeham, it did not give a clue wether the engines are included or not.

I doubt it did. Engines are relatively immaterial for a plane maker in terms of $. (Outside of issues and delays that can impact overall sales)
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
manni
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:32 pm

Quoting Osiris30 (Reply 41):
I doubt it did.

I think it did. 40% + the cost of 4 engines seems a bit to much to start from, to make a profit. If it did not include the engines, the airframe + engines would be worth 56% of the listprice. Add your average 30% discount and you'd have 14% left to pay for development costs and to make a profit on the airframe, and that doesn't even include overhead costs.
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osiris30
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:40 pm

Quoting Manni (Reply 42):
I think it did. 40% + the cost of 4 engines seems a bit to much to start from, to make a profit. If it did not include the engines, the airframe + engines would be worth 56% of the listprice. Add your average 30% discount and you'd have 14% left to pay for development costs and to make a profit on the airframe, and that doesn't even include overhead costs.

Sorry misunderstood what the 40% was referring to. I thought you were referring to 40% of the sale price of an airplane being the cost excluding all the sunk costs (dev, interest, production facilities, etc.)

Engine cost is not included in the sale price. (at least not the one you see listed on Boeing or Airbus's site that is then discounted). Boeing and Airbus just work as a passthrough on Engine contract usually. The don't buy from RR/GE/PW and sell to the end user.

Admittedly it's a little odd, but hey..
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
Jet-lagged
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RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 8:48 pm

Quoting Manni (Reply 36):
A margin of 15 to 20% sounds plausible IMO. That would bring the number to break even at 250 to 333 aircraft on a total development cost of US$15 billion, before the recently announced delay.

Have you included time value of money?

If not, I think you should plan on a hurdle rate of around 8% (sounds too low to me, but let's be gentle). In that case, after six years, money received is worth about 61% of money in the hand now. (Over eight years, it is 51%. Over 10 years, 43%). Since Airbus gets most of their money back on delivery, this needs to be factored in.

How long will it have taken from start of significant investments, until they get most of their cash back? 8 years? 10 years? Let's stick with 6 to 8.

I would suggest to divide your numbers by 50% or 60%, to produce a number based on ROI . . . that creates a range of 417 to 666 units.

A more rigorous analysis could give us a better output.
 
PolymerPlane
Posts: 832
Joined: Thu May 11, 2006 1:12 am

RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 9:36 pm

Quoting Manni (Reply 40):
Korean Air ordered 22 engines valued at US$240 million at listprice.
That would be about US$22 million per frame at listprice.

A380 uses 4 engines  Smile so it should be around $40 mil per frame
One day there will be 100% polymer plane
 
manni
Posts: 4049
Joined: Thu Nov 08, 2001 1:48 am

RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 9:58 pm

Quoting PolymerPlane (Reply 45):
A380 uses 4 engines Smile so it should be around $40 mil per frame

The 22 engines valued at US$240 million are for the 787s KE ordered. I've also included a link in my post to an article covering the A380 engine purchase.

Quoting Manni (Reply 40):
http://www.asiatraveltips.com/news05/156-KoreanAir.shtml

23 engines valued at US$300 million. Keep in mind that these are listprices and engine manufacturers also compete for contracts.



Quoting Osiris30 (Reply 43):

Engine cost is not included in the sale price.

Are you saying that the listprices for aircraft exclude the engines? I wasn't aware of that, obviously I never purchased an aircraft.

Quoting Jet-lagged (Reply 44):
A more rigorous analysis could give us a better output.

It certainly would, if only someone could provide us with the correct figures. As mentioned before, my very rough estimate shows better how many aircraft are not needed to be sold as compared to how many are needed to be sold in order to break even.

[Edited 2006-10-04 15:00:44]
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Joni
Posts: 2613
Joined: Thu Aug 10, 2000 11:05 pm

RE: Boeing 787 Dreamliner Break Even No!

Wed Oct 04, 2006 10:02 pm

Quoting Bringiton (Reply 9):
Whats the profit margin like with jets like 787 and 350 in general terms not generous terms Smile obviously someone will get a fantastic deal but on an average how much profit can one expect in terms of dollars and percentage ??

We discussed this a while back, and from the annual reports of Airbus and Boeing the profit margins on sold planes are about 5-10% (average over narrow-and widebodies), such that narrowbodies command a lower margin than widebodies and Airbus usually a slightly higher margin on its planes. Since the 787 is a widebody, we can assume 15% since we have no actual information. The list price is around 150MUSD, less discounts of 20% we have 120MUSD/plane, and 15% of that is 18MUSD profit.

You can then divide the development budget + interest by that amount, arrivign somewhere between 400 and 600 units likely. One thing that hasn't been taken into account here is that Boeing has partners here, and they pay for part of the development costs and also receive part of the revenues. We can perhaps assume that the plane will break even around the same time for Boeing and the partners, since that will simplify things. Another thing we haven't taken yet into account is that a good chunk of the partners' development costs are funded by subsidies, which will bring down the breakeven point and (according to EADS) allows Boeing to sell the plane for less money than if the funding was on a private basis. EADS has called the B787 "the most heavily subsidized plane in history".
 
Jet-lagged
Posts: 819
Joined: Mon Mar 04, 2002 11:58 pm

RE: Boeing 787 Dreamliner Break Even No!

Thu Oct 05, 2006 12:03 am

Quoting Manni (Reply 46):
As mentioned before, my very rough estimate shows better how many aircraft are not needed to be sold as compared to how many are needed to be sold in order to break even.

Well, yes, except that 'break even' doesn't really matter. It doesn't mean anything useful. Same applies for 787s. It is academic exercise, about as useful for a company's business as "how many airplanes stacked end to end equal one kilometer". If 'break even' takes too long to achieve, the company would have been much better investing in another program, or will go bust. (But in Airbus's case I think the sugar-daddies will always bail them out.). Time value of money must be factored in, which I've tried to contribute to your figures.

Anyway, kudos to you for laying out some basic figures. At least it is a basis for discussion and comparison based on numbers, and not just emotions!
 
scaledesigns
Posts: 199
Joined: Tue Aug 22, 2006 2:12 am

RE: Boeing 787 Dreamliner Break Even No!

Thu Oct 05, 2006 12:48 am

Boeing has the updated 777 wich they are supposed to be working on now and the all new 737 replacement,so not everything is riding on the 787.
CB is a gamble,but it has been used on large military aircraft,so they
know how it will react to long term cycles.The B2 is been in service for
long enough for problems to crop up and be resolved.
Airbus is riding big on the A380 as it is the flagship.They will have the A350
coming up in 10 years(anything sooner is an Airbus dream with all the problems
they are having with the A380).I figure the 1st A350 delivery will be in 2015.
Im saying that because politics will add 2-3 years to the project,like it or not.
Thats my guess.The Airbus cashcow will be the updated A320 series as usual.If the Germans are smart they will let the French have the wide body
assembly production!!
F1 Tommy

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