User avatar
scbriml
Topic Author
Posts: 13246
Joined: Wed Jul 02, 2003 10:37 pm

787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 11:33 am

Boeing will announce their 3rd Quarter results tomorrow (Wednesday 26th October). At the same time, they are expected to give guidance on some burning 787 questions:

How many will be delivered this year?
How many will be delivered next year?
How quickly will production ramp-up be achieved?
Over how many frames will the program's accounting block be allocated?

Analysts (yes, them again) are predicting that Boeing will only deliver six 787s this year and 51 in 2012. Additionally, that Boeing will not acheive its desired 10 per month production rate until 2015.

Boeing is still facing significant challenges in finishing 787s after they're built. Earlier this month UA's first -8 rolled out of the factory. This was the 45th plane off the production line, but it will still take another 8 months until it's ready for delivery.

Some analysts are predicting that Boeing will need to spread the cost of development of the 787 over as many as 1,000 frames instead of a more typical 400. Some even doubt the program will be profitable over that many frames. Estimates based on Boeing's SEC filings suggest that the 787 has so far cost Boeing $32 billion ($16 billion in production costs, $15 billion development costs and $1 billion to buy out struggling partners). That gives a production cost of about $400 million for each of the first 40 787s off the line!

Sources:
http://atwonline.com/airline-finance...edicts-more-787-delays-boeing-1024
http://seattletimes.nwsource.com/htm...echnology/2016600067_boeing25.html
Time flies like an arrow. Fruit flies like a banana!
 
AA737-823
Posts: 4888
Joined: Wed Mar 01, 2000 11:10 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 11:41 am

I think it can't be pretty... I came to that conclusion after United's hoo-rah announcement a couple weeks ago. When the aircraft was supposed to inaugurate IAH-AKL next month, yet won't be delivered until "second quarter" (yet another three-month Boeing window) of next year, it doesn't bode well for the program.

I think it's probably a spectacular plane, more ambitious than the A350. Yet simultaneously, this bird may eventually put Boeing under, especially if they're unable to get the production sped up to their crack-headed original advertised 10 per month very soon.

Who cares how fast you can snap together a 787, if the bird then has to wait half a year to have the "finishing touches" put on? Building 100 airplanes per month, just so they can take up space at every airport in Washington state, is senseless.
 
User avatar
Stitch
Posts: 22948
Joined: Wed Jul 06, 2005 4:26 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 12:06 pm

When Boeing cocked-up the 737NG's production in 1997, they had to double the accounting block from 400 to 800 frames, so 1000 frames for the 787 is not as unprecedented as it sounds at first look. And with the current order book, 1000 frames should be guaranteed unless Armageddon happens in the next 20 years. So either way, there are no worries about "break even".  

I don't believe the analysts have stated just how many frames the USD 16 billion in inventory account for, but I expect it is more than 40 frames. One analyst has stated some of the earliest deliveries had production costs near USD 400 million, so that would make the costs for later frames less.



Quoting AA737-823 (Reply 1):
Yet simultaneously, this bird may eventually put Boeing under, especially if they're unable to get the production sped up to their crack-headed original advertised 10 per month very soon.

Boeing has already covered just about every dollar spent, so the 787 cannot kill the company even if they shuttered it tomorrow and bought back both deliveries to NH.
 
captainmeeerkat
Posts: 348
Joined: Sun Aug 15, 2010 7:13 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 12:12 pm

Quoting Stitch (Reply 2):
And with the current order book, 1000 frames should be guaranteed unless Armageddon happens in the next 20 years. So either way, there are no worries about "break even"

Yet, all this excess expense must put their capital expenditure in serious trouble for the next few years? If it takes more than twice as many frames to break-even, they have less to spend in that extra 500-600 frame time-span on R & D, technological improvements etc etc.

At a time when many feel that Boeing should try become innovative once again, perhaps they only have the resources to be reactive for the forseeable future?

Edit: wrong figures

[Edited 2011-10-25 05:16:31]

[Edited 2011-10-25 05:17:00]
my luggage is better travelled than me!
 
User avatar
InsideMan
Posts: 229
Joined: Thu Aug 04, 2011 9:49 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 12:19 pm

Quoting Stitch (Reply 2):
Boeing has already covered just about every dollar spent, so the 787 cannot kill the company even if they shuttered it tomorrow and bought back both deliveries to NH.

I wouldn't be so sure. If Boeing cancelled the whole programme today, they would still have to compensate all their customers. I don't think that this is in any way covered....
 
User avatar
Stitch
Posts: 22948
Joined: Wed Jul 06, 2005 4:26 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 12:20 pm

Quoting captainMeeerkat (Reply 3):
Yet, all this excess expense must put their capital expenditure in serious trouble for the next few years? If it takes more than twice as many frames to break-even, they have less to spend in that extra 500-600 frame time-span on R & D, technological improvements etc etc.

It should not be. Let us not forget that Boeing has increased delivery rates for the 737 and 777 and that means significant revenue increases that will bolster Boeing's cash flow and provide new cash to fund R&D. Let us also not forget that Boeing's credit rating remains strong and they recently secured a USD 2.4 billion revolving line of credit they can draw from.


Quoting InsideMan (Reply 4):
I wouldn't be so sure. If Boeing cancelled the whole programme today, they would still have to compensate all their customers. I don't think that this is in any way covered....

Boeing has eleven figures worth of cash and cash equivalents on hand. It is unlikely 787 customer deposits and progress payments to date are that high.

[Edited 2011-10-25 05:23:50]
 
captainmeeerkat
Posts: 348
Joined: Sun Aug 15, 2010 7:13 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 12:23 pm

Quoting Stitch (Reply 5):
It should not be. Let us not forget that Boeing has increased delivery rates for the 737 and 777

Good point! In all the 787 fanfare, I had forgotten that they produce other types as well 

Many thanks for your answer, I hope you are right.
my luggage is better travelled than me!
 
User avatar
InsideMan
Posts: 229
Joined: Thu Aug 04, 2011 9:49 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 12:39 pm

Quoting Stitch (Reply 5):
Boeing has eleven figures worth of cash and cash equivalents on hand. It is unlikely 787 customer deposits and progress payments to date are that high.

I was refering to liquidated damages on top of any deposits. None the less I don't think it will ruin the company. Neither do I believe they will cancel the 787... Just something that people keep forgetting when discussing the financials of the programme.
 
User avatar
Stitch
Posts: 22948
Joined: Wed Jul 06, 2005 4:26 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 12:47 pm

Quoting InsideMan (Reply 7):
I was refering to liquidated damages on top of any deposits.

That seems to be around 0.5% of the contract price based on what AI and QF have received.

Quoting InsideMan (Reply 7):
None the less I don't think it will ruin the company. Neither do I believe they will cancel the 787...

Agreed on both counts.   






It just seems to me that there is this somewhat common misconception that these eleven-figure costs for programs like the 787 and A380 are pure debt and a financial hole that must be filled lest it bankrupt the company, when in fact they have been mostly, if not completely, paid in full through the operating cash flow of other programs.

The A380 and 787 need to break even to justify the decisions to launch them.

They do not need to break even to keep Airbus and Boeing fiscally solvent.
 
474218
Posts: 4510
Joined: Mon Oct 10, 2005 12:27 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 1:00 pm

Quoting Stitch (Reply 2):
Boeing has already covered just about every dollar spent, so the 787 cannot kill the company even if they shuttered it tomorrow and bought back both deliveries to NH.
Quoting Stitch (Reply 8):
It just seems to me that there is this somewhat common misconception that these eleven-figure costs for programs like the 787 and A380 are pure debt and a financial hole that must be filled lest it bankrupt the company, when in fact they have been mostly, if not completely, paid in full through the operating cash flow of other programs

Boeing has managed to acquire 12.6B dollars in short and long term debt (at the end of 2010) so not everything has been paid for?
 
User avatar
scbriml
Topic Author
Posts: 13246
Joined: Wed Jul 02, 2003 10:37 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 1:35 pm

Quoting Stitch (Reply 2):
they had to double the accounting block from 400 to 800 frames

But that's for a plane that has sales figures an order of magnitude higher than the 787.

Quoting Stitch (Reply 2):
I don't believe the analysts have stated just how many frames the USD 16 billion in inventory account for, but I expect it is more than 40 frames.

From one of my quoted sources, the $16 billion figure was what Boeing last filed as the cost to produce the 787s. I would imagine at that time, they'd built or were in the process of building the 40th 787? That would give you the $400 million per plane figure. Obviously, as they pump out more, that figure will come down significantly and start being offset by revenue from deliveries.

Quoting Stitch (Reply 8):
The A380 and 787 need to break even to justify the decisions to launch them.

They do not need to break even to keep Airbus and Boeing fiscally solvent.

Of course, but there seem to be as many obsessed about 787 break-even as there are about A380 break-even. From my perspective, the news of the accounting block will give a clear indication of when Boeing expects the 787 to be making a positive contribution to profits, but they need to get the production rate up in good time. It could be a very interesting announcement.
Time flies like an arrow. Fruit flies like a banana!
 
ebbuk
Posts: 844
Joined: Thu May 11, 2006 6:47 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 1:48 pm

Dear dear me. Surely Boeing would have had more success with the Sonic Cruiser than this plane? What a shambles. I expect more vacuous "future forecasting" speak from Boeing tomorrow, promising much and delivering little. It has no credibility, in my view, when announcing anything to do with civil aircraft. I'll believe it when BA gets its 787s.

With all the struggles with composite planes, I wish, oh how I wish Airbus never listened to Udvar-Hazy and built the 350MK1. If ever there was a case for not listening to the customer that shouts loudest, this was it. Sure there were others voicing concern but he had the biggest balls at the time. I expect BIG troubles the XWB.
 
col
Posts: 1692
Joined: Thu Nov 27, 2003 2:11 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 1:53 pm

There are two issues. 1) Is financial. 2) Is when are the airlines going to get the frame they need and have budgeted/programmed for. The fiasco just never ends!!
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 2:11 pm

Quoting scbriml (Thread starter):
Analysts (yes, them again) are predicting that Boeing will only deliver six 787s this year and 51 in 2012. Additionally, that Boeing will not acheive its desired 10 per month production rate until 2015.

Boeing is still facing significant challenges in finishing 787s after they're built. Earlier this month UA's first -8 rolled out of the factory. This was the 45th plane off the production line, but it will still take another 8 months until it's ready for delivery.

if Boeing could start building them in SouthCarolina then they could easily achieve any production rate target they desire, but thanks to the agenda of a selfish few, Boeing might fail to generate sufficient cash flow to sustain the company and end up in Chp 11.

instead of delivering jobs to South Carolina, the NLRB will probably deliver them to Europe, Canada, Brazil, and even China.
 
SonomaFlyer
Posts: 1865
Joined: Tue Apr 20, 2010 2:47 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 2:34 pm

I don't see Boeing going bankrupt. The technology/processes in developing the 787 can be used in virtually all future aircraft lines should they wish. They are taking short term losses for what should be long term gains in production efficiency and fuel efficiency/passenger comfort.

No doubt the lessons they've learned (supply chain management, fastenerGATE etc) were painful but not fatal.
 
User avatar
Polot
Posts: 4598
Joined: Thu Jul 28, 2011 3:01 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 2:41 pm

Quoting SonomaFlyer (Reply 14):
I don't see Boeing going bankrupt. The technology/processes in developing the 787 can be used in virtually all future aircraft lines should they wish. They are taking short term losses for what should be long term gains in production efficiency and fuel efficiency/passenger comfort.

No doubt the lessons they've learned (supply chain management, fastenerGATE etc) were painful but not fatal.

And lets not lose perspective, there is far more to Boeing than just their commercial division.
 
mham001
Posts: 4187
Joined: Thu Feb 03, 2005 4:52 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 3:08 pm

Interesting how an announcement of a quarterly earnings call has people randomly predicting bankruptcy. Dream on.
 
GBan
Posts: 488
Joined: Thu Jun 16, 2005 5:10 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 3:47 pm

Quoting mham001 (Reply 16):
Interesting how an announcement of a quarterly earnings call has people randomly predicting bankruptcy. Dream on.

Actually not a single one in this thread is predicting bankruptcy! Or did I miss a post?
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 4:06 pm

Quoting Stitch (Reply 8):
The A380 and 787 need to break even to justify the decisions to launch them.

They do not need to break even to keep Airbus and Boeing fiscally solvent.

  

Quoting mogandoCI (Reply 13):
if Boeing could start building them in SouthCarolina then they could easily achieve any production rate target they desire

Really. 1) I understand they have started building them there. 2) Why are they not constrained by the suppliers earlier in the supply chain?

Quoting mogandoCI (Reply 13):
but thanks to the agenda of a selfish few

You mean the selfish few who failed to understand the rules they have to follow. And then putting the company in trouble because they had to brag about it.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
astuteman
Posts: 6340
Joined: Mon Jan 24, 2005 7:50 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 4:07 pm

Quoting mogandoCI (Reply 13):
Boeing might fail to generate sufficient cash flow to sustain the company and end up in Chp 11.

???

As Stitch says, most of the $32Bn quoted as spent to date is exactly that - spent.

I don't see a huge overhang of costs coming in that the underlying $3Bn - $4Bn operating profit PER YEAR that Boeing make can't swallow.

Quoting GBan (Reply 17):
Actually not a single one in this thread is predicting bankruptcy! Or did I miss a post?

See reply #13 as I've quoted above.

Quoting Stitch (Reply 8):
The A380 and 787 need to break even to justify the decisions to launch them.

They do not need to break even to keep Airbus and Boeing fiscally solvent.

Correct on both counts.

I think the only thing I would be uncomfortable with are the comments in the Seattle Times article that a "1000 frame" accounting block could still be based on "best case" scenarios....

Quote:
To avoid an overall loss based on a more realistic assumption — that it can reduce its manufacturing costs at the same rate as it did on the 777 in the mid-1990s — Strauss projected Boeing would need to spread the Dreamliner costs over approximately 3,000 airplanes.

But an accounting block that large couldn't be justified by the sales to date.

Strauss' analysis assuming a 777 pace of cost reduction shows Boeing breaking even on manufacturing costs only in 2038.

Just for the record, I don't think either Boeing with the 787 or Airbus with the A380 will ultimately regret launching these programmes, even if either (or both) of them, struggle to make an NPV of the kind that the "accountants" amongst us seem to demand.

Rgds
 
User avatar
scbriml
Topic Author
Posts: 13246
Joined: Wed Jul 02, 2003 10:37 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 4:25 pm

Some further information in this article, although much of it is just a rehash of existing news:
http://www.bloomberg.com/news/2011-1...ility-to-output-of-1-100-jets.html

However, there is a bit more information about the use of accounting blocks.
Time flies like an arrow. Fruit flies like a banana!
 
Kaiarahi
Posts: 1807
Joined: Tue Jul 07, 2009 6:55 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 4:38 pm

Quoting ebbUK (Reply 11):
I expect more vacuous "future forecasting" speak from Boeing tomorrow, promising much and delivering little.

I doubt it, unless they want to run afoul of the SEC.
Empty vessels make the most noise.
 
mark2fly1034
Posts: 245
Joined: Mon Oct 24, 2011 11:38 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 5:00 pm

I was at the Boeing plant in July and I remember seeing 20 or so 787s sitting all over the place and another 20 747-800 sitting around. Hope they can get it moving soon.
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 5:11 pm

Quoting cmf (Reply 18):
You mean the selfish few who failed to understand the rules they have to follow. And then putting the company in trouble because they had to brag about it.

when did "a non-government enterprise must not host manufacturing capacity in a right-to-work state" become a rule ?

the NLRB is neither constitution nor law.

look at how many companies unions have bankrupted in history and you'll see the dangerous thin ice Boeing is skidding upon
 
User avatar
Stitch
Posts: 22948
Joined: Wed Jul 06, 2005 4:26 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 6:27 pm

Quoting 474218 (Reply 9):
Boeing has managed to acquire 12.6B dollars in short and long term debt (at the end of 2010) so not everything has been paid for?

Boeing is more than just the 787, so a good part of that debt is likely for other programs.



Quoting scbriml (Reply 10):
But that's for a plane that has sales figures an order of magnitude higher than the 787.

At the time they set the accounting block to 800 units, the 737NG had just over 723 orders.



Quoting scbriml (Reply 10):
From one of my quoted sources, the $16 billion figure was what Boeing last filed as the cost to produce the 787s. I would imagine at that time, they'd built or were in the process of building the 40th 787? That would give you the $400 million per plane figure. Obviously, as they pump out more, that figure will come down significantly and start being offset by revenue from deliveries.

But was all that inventory just for 40 frames? What about long-lead items for later frames? Spirit alone had over 50 Section 41s completed.



Quoting scbriml (Reply 10):
Of course, but there seem to be as many obsessed about 787 break-even as there are about A380 break-even.

Indeed, unfortunately.  
 
mham001
Posts: 4187
Joined: Thu Feb 03, 2005 4:52 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 6:40 pm

Quoting GBan (Reply 17):
Actually not a single one in this thread is predicting bankruptcy! Or did I miss a post?

You must have missed a post, or two.

Quoting AA737-823 (Reply 1):
this bird may eventually put Boeing under,
Quoting mogandoCI (Reply 13):
Boeing might fail to generate sufficient cash flow to sustain the company and end up in Chp 11.
 
User avatar
scbriml
Topic Author
Posts: 13246
Joined: Wed Jul 02, 2003 10:37 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:09 pm

Quoting Stitch (Reply 24):
But was all that inventory just for 40 frames?

I really don't know when Boeing made the filing the analysts are making their calculations against. If it was 3 months ago when Boeing announced their 2nd quarter results, 40 frames would have been a reasonable number, I think? Of course, 40 frames for $16 billion also keeps the maths very simple! 
Time flies like an arrow. Fruit flies like a banana!
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:15 pm

Quoting mogandoCI (Reply 23):
when did "a non-government enterprise must not host manufacturing capacity in a right-to-work state" become a rule

It is rather ignorant suggesting that is the problem.

Quoting mogandoCI (Reply 23):
look at how many companies unions have bankrupted in history and you'll see the dangerous thin ice Boeing is skidding upon

Far less than bad management.....

Boeing is on thin ice with unions because they have decided to be confrontational instead of smart. Pretty much the same thing as QF.

In the NLRB case Boeing was too stupid to keep their mouths shut.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
aerodog
Posts: 109
Joined: Tue Jun 13, 2006 10:48 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:20 pm

The Bloomberg article noted one of the key financial problems:

"Boeing will need to reduce the 787’s manufacturing costs 50 percent to 60 percent faster than on the 777, “despite having less control of production,” Strauss wrote."

Boeing has sub-contracted out most of the airplane...how in hell can they cut costs? Lean on suppliers to reduce costs when they have already taken a bath on a program that is 3 years late and they sure won't be cutting costs on high ticket items like engines and avionics.

Early on, Boeing claimed the use of composites was not so much for weight savings but rather the speed in which they could assemble the airframes. At some point reality set in and they figured out they would need another facility to achieve the projected production rates. Even though the new facility is non-union, I personally don't believe adding a second facility will have any significant monetary savings.

Like our politicians down in Washington dealing with our country's problems, Boeing management is kicking the can down the road meanwhile, every week they are collecting a fat paycheck and every year adding to their fat retirements. Pity the poor bastards that will follow and have to clean up this mess.
 
bennett123
Posts: 7426
Joined: Sun Aug 15, 2004 12:49 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:33 pm

Mark2fly1034

Do you mean 20 B737-800 or B747-8?.
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:37 pm

Quoting aerodog (Reply 28):
Boeing has sub-contracted out most of the airplane...how in hell can they cut costs?

Doubt the contracts are cost plus.

Quoting aerodog (Reply 28):
I personally don't believe adding a second facility will have any significant monetary savings.

Boeing stated units produced in SC cost more to produce.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
ikramerica
Posts: 13730
Joined: Mon May 23, 2005 9:33 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:37 pm

Quoting Stitch (Reply 5):
It should not be. Let us not forget that Boeing has increased delivery rates for the 737 and 777 and that means significant revenue increases that will bolster Boeing's cash flow and provide new cash to fund R&D. Let us also not forget that Boeing's credit rating remains strong and they recently secured a USD 2.4 billion revolving line of credit they can draw from.

And currently they are building inventory without deliveries. Within 1 year, they should be depleting inventory which will help cash flow even if each delivered frame was a book loss. Same for the 748. This is similar to what the A380 went through with all the changes and reworking.

Quoting Stitch (Reply 8):
The A380 and 787 need to break even to justify the decisions to launch them.

They do not need to break even to keep Airbus and Boeing fiscally solvent.

I don't agree. Launching the 787 was a no brainer. Sub-contracting it out the way they did was the big question, and eventually breaking even won't justify that decision. That decision, and all the problems that went with it, is now a proven mistake. Breaking even and turning an eventual profit will simply show how good a decision the 787 was anyway.

The A380 still hasn't sold enough frames to recover from the original break even, and is not close to the ROI that was originally needed. It seems as if more investment will be needed to even reach those original projections (launch of A389, A388R). The delays and cost overruns from the mistakes are problems similar to Boeing's and is an indictment of the politicization of production in the EU and splitting things up in a way that didn't really make practical sense from a production standpoint.

The 787 order book has already reached the original projected break even point (500-800 frames, ROI promises uknown?), the A380 hasn't (300+ for BE, over 500 for promised ROI), and the A380 has been in service for years now. The current breakeven numbers (1000-1500 vs. 450-550) aren't reflective on the launch decision, but on the execution, and both paint the respective companies in a poor light.
Of all the things to worry about... the Wookie has no pants.
 
aerodog
Posts: 109
Joined: Tue Jun 13, 2006 10:48 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:44 pm

Quoting cmf (Reply 30):
Quoting aerodog (Reply 28):
Boeing has sub-contracted out most of the airplane...how in hell can they cut costs?

Doubt the contracts are cost plus.

My guess is they are fixed with an escalator for material and labor costs thru the end of the decade.
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 7:55 pm

Quoting aerodog (Reply 32):
My guess is they are fixed with an escalator for material and labor costs thru the end of the decade.

Agree. And negotiated discounts for higher production rates. But I have only been involved with contracts in other industries.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
zkeoj
Posts: 968
Joined: Sun Feb 27, 2005 3:00 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:01 pm

Quoting scbriml (Thread starter):
This was the 45th plane off the production line

That's a lot of aircraft. Dumb question (but serious): Where are they all parked? At BFI? I wouldn't think they have the space for so many frames on the aprons there?

Also, if an B787 operator is code sharing, do we now say "they are sending their own plastic?" instead of "metal"?  

Can't wait to be on this beauty in a bit more than 2 weeks - YAHOO!

Cheers
micha
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:11 pm

Quoting cmf (Reply 27):
Boeing is on thin ice with unions because they have decided to be confrontational instead of smart. Pretty much the same thing as QF.

unions, by design, are confrontational. there's nothing smart when you have to deal with a bunch of people who views all management as "bad" and "evil" and that their interests are opposite that of the company (long term survival and profitability), customers (good products at low prices), or shareholders (obtaining value out of their investments). not to mention every extra penny that the union negotiates for you goes straight back to the union itself via dues.

instead of being to hire the best, fire the worst, and react to fast changing economic times (both boom and bust), unions ensure that the corporation is forced to give out paychecks to mediocrity.
 
User avatar
par13del
Posts: 6664
Joined: Sun Dec 18, 2005 9:14 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:14 pm

Quoting captainMeeerkat (Reply 3):
At a time when many feel that Boeing should try become innovative once again,

So are you saying that the 787 was not innovative and their last such project was the 777?
Boeing attempted to apply some lessons learned from the 777 program, a number folks believe the 787 was innovative and if they are correct, Boeing needs some time to port the knowledge to other programs before they attempt to innovate again.
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:19 pm

Quoting mogandoCI (Reply 35):
unions, by design, are confrontational. there's nothing smart when you have to deal with a bunch of people who views all management as "bad" and "evil"

With that position I understand you're having problems dealing with unions. And if they think management is bad and evil then it probably is because management is behaving bad and evil.

In my experience most unions, and employees, are very reasonable if you lay out the problem instead of telling them "this is what we've decided". It is all about good management.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
ghifty
Posts: 885
Joined: Sun Jul 25, 2010 9:12 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:28 pm

Quoting mogandoCI (Reply 13):
if Boeing could start building them in SouthCarolina then they could easily achieve any production rate target they desire, but thanks to the agenda of a selfish few, Boeing might fail to generate sufficient cash flow to sustain the company and end up in Chp 11.

instead of delivering jobs to South Carolina, the NLRB will probably deliver them to Europe, Canada, Brazil, and even China.

I wrote a response to the silly NLRB actions for my college english course...

I still don't see how they have jurisdiction to interfere with BA's decisions. After all, neither WA nor South Carolina are "right-to-work" states.

Quoting scbriml (Thread starter):
instead of a more typical 400

Where does that figure come from?

[Edited 2011-10-25 13:29:00]
Fly Delta Jets
 
User avatar
PW100
Posts: 2725
Joined: Mon Jan 28, 2002 9:17 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:32 pm

Quoting ikramerica (Reply 31):
The A380 still hasn't sold enough frames to recover from the original break even, and is not close to the ROI that was originally needed. It seems as if more investment will be needed to even reach those original projections (launch of A389, A388R).

Please correct me if I´m wrong, but my fading memory seems to recall that the original A380 business plan was supposed to have break even at around 250 frames. According to wiki, current firm orders stand at 236. UPS and Fedex cancelled 20 frames because of the production FUBAR and extensive delays [even longer than the 787  ].

My conclusion is that despite all the delays, despite the fact that ordering an A380 today, you will not see delivery in significant numbers before 2015/201, despite the tanking economy [actually ever since first A380 delivery], Airbus still managed to sell to the original break even point. So I'm not sure why all this unfounded negativity . . . .

Rgds,
PW100
Immigration officer: "What's the purpose of your visit to the USA?" Spotter: "Shooting airliners with my Canon!"
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:39 pm

Quoting PW100 (Reply 39):
UPS and Fedex cancelled 20 frames

Add 10 for ILFC.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
User avatar
scbriml
Topic Author
Posts: 13246
Joined: Wed Jul 02, 2003 10:37 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:40 pm

Quoting ghifty (Reply 38):
Where does that figure come from?

From the Seattle Times article I linked to, which now seems to have been edited, but still includes this:

Quote:
On previous programs, Boeing has spread its production costs over an initial block of 400 jets.
Time flies like an arrow. Fruit flies like a banana!
 
babybus
Posts: 2379
Joined: Sun Dec 28, 2003 5:07 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:52 pm

I like the way this has been turned around into an Airbus thread  

Why did Boeing do it? Why did it allow that project to get so out of hand? It is unlikely that Boeing will make a profit out of this aircraft for the foreseeable future. Too much compensation to pay out and orders being cancelled, all this on top of the 748 problems. Not a great place to be in a severe global economic stagnation.

Boeing will never be allowed to go bust, at least while it produces military hardware of any sort.
and with that..cabin crew, seats for landing please.
 
UALWN
Posts: 2171
Joined: Mon Jun 01, 2009 3:27 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:57 pm

Quoting ikramerica (Reply 31):
The delays and cost overruns from the mistakes are problems similar to Boeing's and is an indictment of the politicization of production in the EU and splitting things up in a way that didn't really make practical sense from a production standpoint.

The splitting of the production, or "politization" as you call it, has worked very well for the 330/340 and 32X programs. So the reason for the cock-up of the 380 production must lie elsewhere.
AT7/111/146/Avro/CRJ/CR9/EMB/ERJ/E75/F50/100/L15/DC9/D10/M8X/717/727/737/747/757/767/777/787/AB6/310/32X/330/340/380
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 8:58 pm

Quoting Babybus (Reply 42):
It is unlikely that Boeing will make a profit out of this aircraft for the foreseeable future.

What kind of profit are you thinking about? Because many costs have already been expensed or written off and production costs are spread over a significant but, based on orders and expectations, realistic number I'm convinced Boeing will show profit on deliveries soon.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 9:01 pm

Quoting cmf (Reply 37):
In my experience most unions, and employees, are very reasonable if you lay out the problem instead of telling them "this is what we've decided". It is all about good management.

are you or were you involved in a union? if so, this discussion is already moot because you have a pre-disposed viewpoint.

i've been never involved in either an union or management so i'm speaking as a consumer who's always on the receiving end of the whole "not my job i don't care go ask someone else" and "bad attitude is perfectly okay as long as it's legal" response I get from union members
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 9:12 pm

Quoting ghifty (Reply 38):

I wrote a response to the silly NLRB actions for my college english course...

I still don't see how they have jurisdiction to interfere with BA's decisions. After all, neither WA nor South Carolina are "right-to-work" states.


Then you should know it is about retaliatory actions for striking and nothing about right to work that is the issue in question. And that falls under NLRB.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 9:16 pm

Quoting mogandoCI (Reply 45):
are you or were you involved in a union? if so, this discussion is already moot because you have a pre-disposed viewpoint.

I have on multiple occasions negotiated with unions about reducing number of employees after we have bought companies. I have never been a member of a union. In my first job I was one of only four in a company with 300 employees who was not.

If I have a pre-disposed view then it isn't from the point you're alleging.
Don’t repeat earlier generations mistakes. Learn history for a better future.
 
blueflyer
Posts: 3625
Joined: Tue Jan 31, 2006 4:17 am

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 9:40 pm

Quoting scbriml (Thread starter):
This was the 45th plane off the production line, but it will still take another 8 months until it's ready for delivery.

It is my understanding that most customers have already received the maximum amount of compensation for delay they're contractually entitled to, and Airbus doesn't have planes ready to sell off the shelf (shocker).

With that in mind, why doesn't Boeing cut down on the resources assigned to the backlog of planes awaiting piecemeal resources and redirect some to planes coming off the production line now so that they have a more-or-less normal delivery schedule? Customers with planes in the backlog will have to wait even longer for their aircraft, but others will get theirs more or less on time (according to whichever iteration of the new schedule we're on), and Boeing should be able to start ramping up production sooner, rather than have to wait until the existing backlog has been processed if every plane is added to the back of the line.

Quoting mogandoCI (Reply 23):
when did "a non-government enterprise must not host manufacturing capacity in a right-to-work state" become a rule ?

When the "non-government enterprise" was so stupid it practically begged, on its knees, in tears, for a lawsuit.

Boeing pretty much bragged that their new plant's sole purpose is to avoid their union and its past strikes. Even the greenest lawyer can make a case of retaliation against union activity out of this (which is illegal), and that is exactly what happened. Had Boeing kept their mouth shut (or used pretty much any other reason), the union would not have had a case, but by all means, let's blame the union and the NLRB rather than the stellar, flawless Boeing management.
Recep Tayyip Erdoğan has no clothes.
 
cmf
Posts: 3120
Joined: Sun Jun 12, 2011 11:22 pm

RE: 787 - Boeing Still Facing Big Challenges?

Tue Oct 25, 2011 9:43 pm

Quoting blueflyer (Reply 48):
Customers with planes in the backlog will have to wait even longer for their aircraft, but others will get theirs more or less on time


You mean doing what airlines do to us if a flight is delayed/cancelled

Quoting blueflyer (Reply 48):
Boeing pretty much bragged that their new plant's sole purpose is to avoid their union and its past strikes. Even the greenest lawyer can make a case of retaliation against union activity out of this (which is illegal), and that is exactly what happened. Had Boeing kept their mouth shut (or used pretty much any other reason), the union would not have had a case, but by all means, let's blame the union and the NLRB rather than the stellar, flawless Boeing management.


 checkmark 

[Edited 2011-10-25 14:45:55]
Don’t repeat earlier generations mistakes. Learn history for a better future.