Sokes
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 4:09 am

As this thread is about A350 cost reduction, I shall keep quiet from now. Thanks for bearing with me.
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par13del
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 4:39 am

bob75013 wrote:
How many times do people need to be tolda that deferred production costs are money that Boeing loaned itself in the form of cash. Repayment of deferred production involves Boeing paying Boeing back. It is absolutely meaningless from a financial standpoint. Boeing Paying Boeing bill is a very different animal than Boeing paying a real creditor.

What matters is the market value of Boeing: $209 BILLION as of EOD yesterday,and is sitting on almost $7 BILLION in cash,

Maybe people have a problem with the share buybacks, using the deferred production cost is a red herring?
Just a thought.
 
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ElroyJetson
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 4:48 am

So to summarize......

According to Leeham a 789 costs Boeing roughly $90 million to build. An A359 costs Airbus roughly $110 million to build.

Okay people, mystery solved. The reason A359 new orders have dried up is that one of its chief competing aircraft costs $20 million less at the start. Obviously an enormous advantage for Boeing.

So if the formula for evaluating competing frames is fixed costs, variable costs, and potential revenue per frame Boeing should be killing the A359 on fixed costs. Variable costs i do not know, but I would assume a modest Boeing advantage. The final variable revenue potential, should go to the A359 as it can carry more pax and cargo. However, is the increased revenue potential enough to overcome a potential $20 million capex hit to buy an A359, in addition to the higher landing fees and slightly higher fuel burn vs the 789?


Based on order history over the last 2-3 years since Boeing has so aggressively brought down 787 program production costs, I would say the 787 is overwhelmingly winning the battle.

Imho the article the OP posted that started this thread is absolutely correct. Airbus will need to immediately and drastically bring down production costs on the A350 program or future orders could be tough to come by.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 5:59 am

If we are comparing production cost of A359 with 787 family, shouldn't 787-10 be more direct competitor in terms of size and capacity ? 787-10 list price is 20m higher than A359, and it is also larger than 789 with higher thrust engines. I'd assume the production cost to be more in line with A359 than 789. I do agree that Airbus should take a hard look at their production line and improve efficiency, speed to compete better by earlier slots and lower price.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 8:51 am

9Patch wrote:
VV wrote:
I guess it is normal to try reducing your production cost, whatever the aircraft is.

Now, if Airbus says they need to do it for the A350 it may mean that they consider the production cost of the A350 is too high, whereas A330neo production cost is already low. It is proven by the recent A330neo orders announced at Paris airshow.

Whether it has anything to do with any "price war" is irrelevant.

So every time Airbus sells an A330 it proves the production cost is low?
It may be lower than the A350, but the cost of producing a 787 is what's relevant.


Ha! That's exactly the point.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 10:29 am

sabby wrote:
If we are comparing production cost of A359 with 787 family, shouldn't 787-10 be more direct competitor in terms of size and capacity ? 787-10 list price is 20m higher than A359, and it is also larger than 789 with higher thrust engines. I'd assume the production cost to be more in line with A359 than 789. I do agree that Airbus should take a hard look at their production line and improve efficiency, speed to compete better by earlier slots and lower price.

Production costs between the 789 and 787-10 are probably pretty close to each other, especially as Boeing starts pumping the latter out with more regularity. The 787-10 is mostly a simple stretch of the 789. Yes the list price is higher, but nobody pays list and it means the 787-10 has a higher profit margin to work with than the 789 (this is true of most stretches).
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 11:11 am

ElroyJetson wrote:
So to summarize......

According to Leeham a 789 costs Boeing roughly $90 million to build. An A359 costs Airbus roughly $110 million to build.

Okay people, mystery solved. The reason A359 new orders have dried up is that one of its chief competing aircraft costs $20 million less at the start. Obviously an enormous advantage for Boeing.

So if the formula for evaluating competing frames is fixed costs, variable costs, and potential revenue per frame Boeing should be killing the A359 on fixed costs. Variable costs i do not know, but I would assume a modest Boeing advantage. The final variable revenue potential, should go to the A359 as it can carry more pax and cargo. However, is the increased revenue potential enough to overcome a potential $20 million capex hit to buy an A359, in addition to the higher landing fees and slightly higher fuel burn vs the 789?


Based on order history over the last 2-3 years since Boeing has so aggressively brought down 787 program production costs, I would say the 787 is overwhelmingly winning the battle.

Imho the article the OP posted that started this thread is absolutely correct. Airbus will need to immediately and drastically bring down production costs on the A350 program or future orders could be tough to come by.


Why are you comparing the smaller B789 with the A359? I'm not arguing the numbers you are mentioning, but for a fair comparison you should take the numbers of the B787-10 and the A359 (and correct them for the A359 is just a bit more capable rangewise than the 787-10). And no, I'm not an A or B fanboi, but I do like a non-biased discussion with facts.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 11:33 am

marcelh wrote:
Why are you comparing the smaller B789 with the A359? I'm not arguing the numbers you are mentioning, but for a fair comparison you should take the numbers of the B787-10 and the A359 (and correct them for the A359 is just a bit more capable rangewise than the 787-10). And no, I'm not an A or B fanboi, but I do like a non-biased discussion with facts.

Unfortunately, the 787-10 is new and over the last couple years when the A350 has been touted as more efficient and capable it was to the 787-8 /9, they really did not care which model.
No idea how that get's resolved, guess it just fans using numbers to make their case. We had that before, recall the A340 / A330 debates, 4 engines versus 2 engines but counted as one family. It is what it is...just enjoy the convo...
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 12:07 pm

Sokes wrote:
bob75013 wrote:
How many times do people need to be tolda that deferred production costs are money that Boeing loaned itself in the form of cash. Repayment of deferred production involves Boeing paying Boeing back. It is absolutely meaningless from a financial standpoint. Boeing Paying Boeing bill is a very different animal than Boeing paying a real creditor.

What matters is the market value of Boeing: $209 BILLION as of EOD yesterday,and is sitting on almost $7 BILLION in cash,


I believe until "liability and equity" consists of no more liabilities (=equity only).
I correct myself:
As before I find 339 million $ equity totally inacceptable for a company which is a) the size of Boeing, b) operates in a cyclical business and c) operates in a high risk business.
With high risk business I mostly mean early engine troubles for B747, Lockheed Tristar or, worst, A340. Supplier problems can also be there. Or trouble like the MAX.
Therefore an airline manufacturer needs to have equity which allows for a few quarters of losses. There is a reason that Warren Buffet isn't interested in the business. I think it's inherent in the business, even though we had many years a seller market.
I believe this even if Boeing's debt is, I admit, low.
On the other side: Boeing is too big to fail, so I might be wrong.


Industrial companies go bankrupt because of inadequate liquidity, NOT because they have zero net worth. But that's for another thread.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 1:24 pm

All the talk of different sizes are a red herring, because production costs don't vary much by size within the family.

The big picture view shows the 787 is produced at 50% greater rate which does lower production cost significantly.

Whatever Boeing is doing to 'protect' 77x doesn't seem to matter since customers are buying 787-10 in healthy amounts.

KE just included 787-10 in its order at PAS, and the KE order was the only wide body order of significance at PAS.

EK just ordered large numbers of A330neo and A350 but is STILL saying they are looking in to ordering 787-10.

Note most of the 787-10 customers are also current or likely 77x customers too.

Not sure why this thread has so much Boeing content, though.

The thread started because Airbus's COO is making public statements that their costs are too high and their production techniques are too complex and that adaptations need to be made in order to compete with Boeing on price.

You would think Team A would embrace this and say these kinds of improvements are what are needed for a better future, but instead we lots of denial and lots of complaining about differing accounting practices.

Yet that's not what Airbus's COO is addressing, he is saying it IS about excess complexity in their production facilities and changes need to be made.

It should be interesting to see what these changes are and if Airbus will just start silently rolling them out or if it will be announced with a lot of fanfare such as Power8 was ( ref: https://en.wikipedia.org/wiki/History_o ... Airbus_SAS ).
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 1:55 pm

R and D are sunk costs. Airbus or Boeing find the fortunes of one particular model rising or sinking but other models are doing the opposite. If another model is earning enough profits it can without effort offset the lesser profits of another model. What they do not want is for a particular family of planes to be losing money and taking too much effort on the part of headquarters. Hence the 380 and passenger 767 models.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 1:59 pm

Revelation wrote:
KE just included 787-10 in its order at PAS, and the KE order was the only wide body order of significance at PAS.

EK just ordered large numbers of A330neo and A350 but is STILL saying they are looking in to ordering 787-10.

Note most of the 787-10 customers are also current or likely 77x customers too.

Not sure why this thread has so much Boeing content, though.

The thread started because Airbus's COO is making public statements that their costs are too high and their production techniques are too complex and that adaptations need to be made in order to compete with Boeing on price.

You would think Team A would embrace this and say these kinds of improvements are what are needed for a better future, but instead we lots of denial and lots of talk of how it's all due to tricky book keeping.

Nope, that's not what Airbus's COO is saying, he's saying it IS about excess complexity in their production facilities and changes need to be made..


In the context of this thread, the comment about KE's 787-10 order being the only widebody order of note is far from correct in my opinion.
My recollection suggests that Airbus managed to sell 16 x A330NEO to Cebu, and 8 x A330NEO to VA (which is a 787 operator).
So things aren't quite as "black-and-white" as some people o the thread want to suggest.

I certainly agree with your sentiment about "Team A embracing the comments". This is not bad news. It is a necessary review given the intense focus Boeing have displayed in the last few years.

I think the thing that "Team A" guys could get a bit agitated about on this thread is the underlying "doom-and-gloom" atmosphere that can be sensed.
For context, Airbus commercial made E4.8Bn last year on E48Bn revenue i.e. 10% margin. (c. $5.5Bn from $55Bn at 2018 exchange rates.
Not Boeing levels (Boeing commercial recorded $7.9Bn from $60.7Bn, or 13% margin)
So equally not "dire straits".

The picture at the strategic level is a lot more complex than quite a lot of posters are making out.
Even our knowledgeable posters are having a tendency to focus on their area of knowledge and extrapolate the whole picture from it.
Something I see every day at work.

Nobody can (should?) deny the comments from Airbus CEO/COO though. But neither should they read into them that, whilst Boeing have been sharpening the knives, Airbus have been sat back being fat, dumb and happy. It's just not the case.
We already know that Airbus are working very hard on the A32X production system - my view is that that is driven primarily by clearing output bottlenecks to achieve significant ramp ups, but you can't separate production bottlenecks from production cost.
Once they rationalise the A320 series production process, not only will a greater number of profitable frames come out, but they will each be more profitable.

It seems pretty clear to me that despite the current production set-up, the A320 series is strongly profitable for Airbus, particularly given the strength they display at the higher value end of that segment (and the XLR will only emphasise). That gives them a very strong base to manipulate sales from, and, whilst they work on widebody costs, to "bundle" sales, as they may well have done for Cebu Pacific.

I will be interested to see how things unfold.

Rgds
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 2:25 pm

Revelation wrote:
All the talk of different sizes are a red herring, because production costs don't vary much by size within the family.

IMO, it’s just too easy to compare the B789 versus the A359 and ignore the differences. Calling it a red herring, state an opinion as a fact and don’t come with the numbers don’t change that. You can do better.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 2:26 pm

The A350 production has been ramped up over the past years and a lot of efforts has been spent on Airbus to make supply chain and assembly line stable. Now as production has reached 10 per month, Airbus can focus more on productivity improvements which will reduce cost per unit. Expect the economies of scale to kick in as well and production cost per unit to go down.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 2:45 pm

BREECH wrote:
lightsaber wrote:
BREECH wrote:
60 tons difference in MTOW, 10 tons difference in payload... that's 20% in my book. Oh, and a foot of fuselage width.

Now estimate the revenue benefit and variable cost difference. Discuss the business case.

For DL TPAC, I see your point. But UA flies 787s to North China as that is the best solution.

If bigger is better, compare to the 779, very optimized for payload at range. Wider too.

The example is taxis. My father always wants the cheapest Uber or taxi and complains if the car is too small. I go cheap most days, but if I want big, I have a limo service. What are customers willing to pay for? The answer is airline and even route specific.

Lightsaber

You forgot where you started. You said A350 is more expensive. I merely reminded you that it's a larger plane hence the higher price. If you compare 787 to A320, the latter would be much cheaper and much better suited for the missions it flies.


thing is even if you compare the 787 to the a330neo, all evidence is that boeing has brought down costs dramatically, to the point where it's cheaper to buy a 787 than an a330neo. and that's not even considering the fact 787 production is increasing to rate 14, while 330neo is being dropped to rate 3.5. all that adds up, and points to the 787 being nearly unbeatable on costs.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 2:45 pm

astuteman wrote:
It seems pretty clear to me that despite the current production set-up, the A320 series is strongly profitable for Airbus, particularly given the strength they display at the higher value end of that segment (and the XLR will only emphasise). That gives them a very strong base to manipulate sales from, and, whilst they work on widebody costs, to "bundle" sales, as they may well have done for Cebu Pacific.

The article is ostensibly about wide-bodies but does touch on narrow-bodies too. While I agree that the A320 series is strongly profitable despite the current set up, they could do even better:
There need to be “adaptations” at some plants, Schöllhorn said. The chief concern, he added, is to keep up with the demands of ramping up single-aisle plane output with a production system that was designed decades ago to build 700 planes in total but is now churning out that number every year.

The focus is on Airbus’s core locations in France, Germany, Spain and the U.K., but the company needs to take into account its plants in the U.S. and China, Schöllhorn said. In the case of China considerations are complicated by offset obligations and questions surrounding how much production should be based there beyond the current final assembly lines and delivery center.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 2:50 pm

Asiaflyer wrote:
The A350 production has been ramped up over the past years and a lot of efforts has been spent on Airbus to make supply chain and assembly line stable. Now as production has reached 10 per month, Airbus can focus more on productivity improvements which will reduce cost per unit. Expect the economies of scale to kick in as well and production cost per unit to go down.

You make a good point in that just ramping production helps. But let us not talk per month as per year drives economy of scale. So the A350 is at 110 per year versus 168 for the 787. This is at the level that the 777 was approximately at before blanking slots.

So yes, Airbus is finally ready for productivity improvements. I've seen parts to remove cost and 500 kg from the A350 by large scale 3D printing. Time to make it happen.

They will also need to squeeze vendors as well as look internally for major efficiency drives. The 777 is on at least the 3rd factory layout to improve assembly.

Spirit is going big on robots for Boeing. Is the A350 at that level? If not why?

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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 2:54 pm

Im Already Slash787, now its time to SlashA350 :duck:
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 2:57 pm

astuteman wrote:

Nobody can (should?) deny the comments from Airbus CEO/COO though. But neither should they read into them that, whilst Boeing have been sharpening the knives, Airbus have been sat back being fat, dumb and happy. It's just not the case.
We already know that Airbus are working very hard on the A32X production system - my view is that that is driven primarily by clearing output bottlenecks to achieve significant ramp ups, but you can't separate production bottlenecks from production cost.
Once they rationalise the A320 series production process, not only will a greater number of profitable frames come out, but they will each be more profitable.

It seems pretty clear to me that despite the current production set-up, the A320 series is strongly profitable for Airbus, particularly given the strength they display at the higher value end of that segment (and the XLR will only emphasise). That gives them a very strong base to manipulate sales from, and, whilst they work on widebody costs, to "bundle" sales, as they may well have done for Cebu Pacific.

Good point on the A330neo sales, I should have noted them. I was a bit distracted by the whole 777x vs 787 tangent. Like KE, though, I wasn't very surprised by either order, despite VS being a 787 customer too. VS is a happy A330ceo customer, its TATL routes are ideal for A330neo, and the move brings it in alignment with its stakeholder DL. The Cebu order also was in line with expectations. It seemed to me that the KE announcement got more media attention than either a330 announcement and the unexpected (shocking?) IAG 737 order then seemed to dominate all coverage later in the show.

I also think Airbus is doing anything but sitting on their hands. The strides they've made since introduction of A330 and A321 in terms of capacity whilst retaining commonality and safety are remarkable. I think the opportunities being pointed out for future strides are well known in house. I expect the A320 production optimizations to add lots of profit and lots of competitive opportunities, and said so at the time they were announced, despite lots of push back from those who wanted other things. I think all of this is provides the pressure that makes Boeing realize that NMA has to be all about reducing cost and improving design and production efficiency, and why they feel they need a whole new approach in place before they attempt a NSA.

Yet we're left with the Airbus COO saying things are too complex with regard to widebody production and the CEO saying they are behind on cost. The remarks also show an awareness that changes in the industrial footprint would be difficult to accomplish. We know a380 will be phased out in the next two years yet some adjustments for this and the reduced a400m production rate have already been announced. We know a330 is being produced at a lower rate than its high point. We have the Leeham estimate suggesting the cost to produce A350 is noticeably higher than 787. What can be done to reduce A330 and A350 cost of production? As you note it's not an issue of Airbus having the money to effect change. It's really about what they want to do and what they feel they can get away with without upsetting their various commitments to their various stakeholders. Also, the A380 write off and newly signed A400M agreement should also give them more financial freedom to do what they feel they need to do.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 3:17 pm

marcelh wrote:
Revelation wrote:
All the talk of different sizes are a red herring, because production costs don't vary much by size within the family.

IMO, it’s just too easy to compare the B789 versus the A359 and ignore the differences. Calling it a red herring, state an opinion as a fact and don’t come with the numbers don’t change that. You can do better.

Now we have to put the toys back into the tram, even though there's plenty of numbers in this thread.

50% more production per year and ~$20M cheaper per plane should tell you all you need to know.

And, again, it is Airbus's CEO and CCO who are saying there is a problem needing to be addressed!

Narrowing this down to one model vs another model is missing the forest for the trees, IMO.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 3:59 pm

Revelation wrote:
marcelh wrote:
Revelation wrote:
All the talk of different sizes are a red herring, because production costs don't vary much by size within the family.

IMO, it’s just too easy to compare the B789 versus the A359 and ignore the differences. Calling it a red herring, state an opinion as a fact and don’t come with the numbers don’t change that. You can do better.

Now we have to put the toys back into the pram, even though there's plenty of numbers in this thread.

50% more production per year and ~$20M cheaper per plane should tell you all you need to know.

And, again, it is Airbus's CEO and CCO who are saying there is a problem needing to be addressed!

Narrowing this down to one model vs another model is missing the forest for the trees, IMO.

FTFY but it's almost as irrelevant as all the distractions from the other bolded portion.

As I said in a now-deleted posted, AIRBUS is saying this, not a.net Boeing fanboys.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 4:39 pm

Bricktop wrote:
As I said in a now-deleted posted, AIRBUS is saying this, not a.net Boeing fanboys.

True, and while giddy about the A321XLR orders and conversions, I think the main concern in the Airbus C-Suite must be that while they are moving A330neo they are not moving A35x that well, the only new order this year is 5 to StarLux in March and none at their traditional showcase, the Paris Air Show.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 4:59 pm

marcelh wrote:
ElroyJetson wrote:
So to summarize......

According to Leeham a 789 costs Boeing roughly $90 million to build. An A359 costs Airbus roughly $110 million to build.

Okay people, mystery solved. The reason A359 new orders have dried up is that one of its chief competing aircraft costs $20 million less at the start. Obviously an enormous advantage for Boeing.

So if the formula for evaluating competing frames is fixed costs, variable costs, and potential revenue per frame Boeing should be killing the A359 on fixed costs. Variable costs i do not know, but I would assume a modest Boeing advantage. The final variable revenue potential, should go to the A359 as it can carry more pax and cargo. However, is the increased revenue potential enough to overcome a potential $20 million capex hit to buy an A359, in addition to the higher landing fees and slightly higher fuel burn vs the 789?


Based on order history over the last 2-3 years since Boeing has so aggressively brought down 787 program production costs, I would say the 787 is overwhelmingly winning the battle.

Imho the article the OP posted that started this thread is absolutely correct. Airbus will need to immediately and drastically bring down production costs on the A350 program or future orders could be tough to come by.


Why are you comparing the smaller B789 with the A359? I'm not arguing the numbers you are mentioning, but for a fair comparison you should take the numbers of the B787-10 and the A359 (and correct them for the A359 is just a bit more capable rangewise than the 787-10). And no, I'm not an A or B fanboi, but I do like a non-biased discussion with facts.



I do not assume you are a fanboy and I think you raise an excellent point when stating the 787-10 is from a size perspective a more direct competitor to the A359.

The primary reason I chose the 789 is there is documentation from Leeham regarding Boeing's production cost for the 789. I have not seen information on the 787-10 production costs. I agree with Revelation that the costs should be similar as the 787-10 is a simple stretch, but I do not know for certain. I was attempting to be as factual as possible.

Regardless, I think we should take Airbus at their word. Production costs on the A350 program must come down. I give credit to Lightsaber who has been saying for over a year how aggressively Boeing has been bringing down costs on the 787 program and the risk they took in increasing production to 14 frames per month. It looks like the changes Boeing has made have paid off.

Now the ball is with Airbus. I have no doubt they will respond aggressively.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 5:05 pm

Let us see it from another perspective. It has also been discussed in a blog entry.

The reality is that the 787 has already achieved 840 deliveries as of end of May 2019 and A350 program hit the 280th delivery this month.

Obviously it looks like 787 production system already reached maturity, whereas A350's is yet to be mature. Boeing already did the effort to improve 787's productivity.
It is normal Airbus wishes to improve A350 program's productivity too.

It is business as usual.

Case closed.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 5:32 pm

VV wrote:
Let us see it from another perspective. It has also been discussed in a blog entry.

The reality is that the 787 has already achieved 840 deliveries as of end of May 2019 and A350 program hit the 280th delivery this month.

Obviously it looks like 787 production system already reached maturity, whereas A350's is yet to be mature. Boeing already did the effort to improve 787's productivity.
It is normal Airbus wishes to improve A350 program's productivity too.

It is business as usual.

Case closed.

Yes, but there is that inconvenient truth that Airbus's COO is pointing out that changes need to be made, and that Airbus had to hire an outsider to lead the charge.

Another observation I make is that Boeing is getting the kind of volume out of one production methodology / supply chain (granted, with two FALs) that Airbus is getting out of two different FALs with two different production methodologies and two different supply chains.

I remember back in the A330neo days being glad that they went forward since it offered such a great value proposition, but it seemed to me to be making a statement that A350s were expensive to produce and production cost would not be coming down quickly, whereas we knew from the 787 hype that a main goal was to drive down production cost.

There was a lot of outrage here about Boeing squeezing suppliers, but it seems there was method to the madness.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 5:38 pm

Revelation wrote:
marcelh wrote:
Revelation wrote:
All the talk of different sizes are a red herring, because production costs don't vary much by size within the family.

IMO, it’s just too easy to compare the B789 versus the A359 and ignore the differences. Calling it a red herring, state an opinion as a fact and don’t come with the numbers don’t change that. You can do better.

Now we have to put the toys back into the tram, even though there's plenty of numbers in this thread.

50% more production per year and ~$20M cheaper per plane should tell you all you need to know.

And, again, it is Airbus's CEO and CCO who are saying there is a problem needing to be addressed!

Narrowing this down to one model vs another model is missing the forest for the trees, IMO.


At the start of the A350 program I had some serious discussions with "Ferbe" remember him???? there were lots of pictures and flow diagrams.. The problems were obvious.. the FAL was slotted into an empty building here then to a shared building and then another building over there, parts were not designed for manufacture and required "fit and fair" on assembly (something Henry Ford resolved with the Model T) . There was no plan to install system components before fuselage completion other than landing gear. Some buildings were too low for normal FAL installations like fin and rudder, others had limited or no crane service so pieces were towed into position..

Back then I predicted the manufacturing/assembly morass would be the Achilles heel of this program...

Look at the site and track the process from building to building.. each move requires 6-12 people per airplane because you have to start at the final position and move it while another team is moving the next one up etc. etc.. in addition, you have the regularly scheduled crews clearing the paths of tooling and workstations, then relocating them.. since they don't move from one building to the next, there is a lot of idle time. Question, how many total man-hours are on the clock during a line move shift.. and what is the company wrap rate (I left the w off in a previous post)?. On the 737 line (3 at the time at a 40 per month rate) it was discovered that the line move amounted to the equivalent of 2-3 times a 737 sales price per year.

that was money down the drain. The Airbus CEO and CCO are obviously coming to the same conclusion.

found this video of their idealized new facility https://www.youtube.com/watch?v=W0jlu0ghNIg it shows in that facility they have corrected some issues.. however because it's a PR piece there are many things missing.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 6:12 pm

VV wrote:
The reality is that the 787 has already achieved 840 deliveries as of end of May 2019 and A350 program hit the 280th delivery this month.

MAYBE the reason for fewer deliveries is that Airbus started production of A350 in 2015 while Boeing delivered 787 since 2011?
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 6:19 pm

Revelation wrote:
Now we have to put the toys back into the tram, even though there's plenty of numbers in this thread.

50% more production per year and ~$20M cheaper per plane should tell you all you need to know.

And, again, it is Airbus's CEO and CCO who are saying there is a problem needing to be addressed!

Narrowing this down to one model vs another model is missing the forest for the trees, IMO.



It is put your toys back in the pram, why would you have toys in a tram? You are very correct that Airbus has identified they have to reduce production costs. I think posters are trying to somehow ram the point home that the A350 is losing out to the 787 when compared to production costs and that this is somehow something us fanboys have to wear around our necks. I have to wonder why there is a need for you to get others to post that things are almost exactly where Boeing was in their production run is somehow a negative. I will go first if that is what you want.

Airbus needs to cut production costs. Airbus needs to ensure the frame is cash positive in 2019 to earn more profits for the company. Airbus also needs to increase the production rates to free up delivery slots which will help with sales.

Boeing projects break-even on 787 manufacturing in 10 years

Over the next 10 years, Boeing said Wednesday, it will deliver 1,100 Dreamliners and at least break even on the cost of building them.

The projection doesn’t imply that the troubled jet program, plagued by earlier disastrous setbacks, will recover heavy upfront development costs and make money overall. Some analysts believe that may never happen.

...

Bell projected that the cost to build each Dreamliner will drop below the price paid by the buyer around 2015, providing positive cash flow for the first time.


Airbus keeps outlook as Q1 core earnings rise

Higher deliveries of A320neo jets, which sell at a premium to earlier models, and progress in reducing costs on the larger A350 contributed to the sharp rise in profits.

...

It reaffirmed 2019 targets including positive free cashflow of €4 billion and a 15% rise in operating profit.

Last week, Airbus' rival Boeing abandoned its 2019 financial outlook, halted share buybacks and said that lowered production due to the grounding of its 737 MAX jet after two crashes had cost it at least $1 billion so far.


So I wonder whether people here think Airbus cannot obtain the same production cost savings that Boeing was able to do and also that when we compare the 787 with the A350, why do people keep trying to compare programs that are at different stages of development. Airbus is now where Boeing was in 2015, trying to get the airframe in a cash positive position. If in 4 years time Airbus has not substantially reduced the cost on the A350 then heads needs to roll, and posters here will need to bow to Boeing's superiority, but why stress about this now when there is still a long way to go in the program?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 6:23 pm

BREECH wrote:
VV wrote:
The reality is that the 787 has already achieved 840 deliveries as of end of May 2019 and A350 program hit the 280th delivery this month.

MAYBE the reason for fewer deliveries is that Airbus started production of A350 in 2015 while Boeing delivered 787 since 2011?

Yes, we know. From another thread
https://www.airliners.net/forum/viewtopic.php?f=3&t=1424777

Revelation wrote:
New article from FG at https://www.flightglobal.com/news/artic ... ar-458314/ compares A350 vs 787.

It seems a bit reluctant to reach any conclusions, but it does provide some interesting graphs normalized by first year of delivery/orderability.

First, deliveries:

Image

Second: orders:

Image

I also am reluctant to draw any conclusions, but I think I see a pattern.

The article goes on to compare how the two products are doing based on geographical region.

All in all, a very informative article.


Of course, this again drags us away from the subject at hand. What is causing such discomfort about discussing this topic amongs certain posters?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 6:28 pm

kanban wrote:
At the start of the A350 program I had some serious discussions with "Ferbe" remember him???? there were lots of pictures and flow diagrams.. The problems were obvious.. the FAL was slotted into an empty building here then to a shared building and then another building over there, parts were not designed for manufacture and required "fit and fair" on assembly (something Henry Ford resolved with the Model T) . There was no plan to install system components before fuselage completion other than landing gear. Some buildings were too low for normal FAL installations like fin and rudder, others had limited or no crane service so pieces were towed into position..

Back then I predicted the manufacturing/assembly morass would be the Achilles heel of this program...

Look at the site and track the process from building to building.. each move requires 6-12 people per airplane because you have to start at the final position and move it while another team is moving the next one up etc. etc.. in addition, you have the regularly scheduled crews clearing the paths of tooling and workstations, then relocating them.. since they don't move from one building to the next, there is a lot of idle time. Question, how many total man-hours are on the clock during a line move shift.. and what is the company wrap rate (I left the w off in a previous post)?. On the 737 line (3 at the time at a 40 per month rate) it was discovered that the line move amounted to the equivalent of 2-3 times a 737 sales price per year.

that was money down the drain. The Airbus CEO and CCO are obviously coming to the same conclusion.

found this video of their idealized new facility https://www.youtube.com/watch?v=W0jlu0ghNIg it shows in that facility they have corrected some issues.. however because it's a PR piece there are many things missing.

Excellent and informative (to me) post. Thanks for this.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 6:38 pm

enzo011 wrote:
So I wonder whether people here think Airbus cannot obtain the same production cost savings that Boeing was able to do and also that when we compare the 787 with the A350, why do people keep trying to compare programs that are at different stages of development. Airbus is now where Boeing was in 2015, trying to get the airframe in a cash positive position. If in 4 years time Airbus has not substantially reduced the cost on the A350 then heads needs to roll, and posters here will need to bow to Boeing's superiority, but why stress about this now when there is still a long way to go in the program?

I don't think there are many people saying Airbus will fail at doing it. Kanban's post certainly means they have a lot of wood to chop though, and Airbus faces certain externalities that Boeing hasn't.

Not to you Enzo, but I would have thought Airbus partisans would actually rejoice at this news. It's like when a team gets a new manager. They usually don't get one because the previous guy did a bang up job: It's because changes need to be made. They recognize that they are stuck with the players they have on the field right now, and they have to get rid of the ones who aren't performing and bring in some new players and new thinking. Hopefully without too much interference from "ownership" ie Germany and French govts. We'll see.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 8:38 pm

smartplane wrote:
The 777X, A330NEO and A350 are all facing stiff pricing competition from the 787 family, and increasingly capability.

Either Boeing continues to stunt 787 performance and pricing at the top end, to protect the 777X niche, or shift the 777X game plan by increasing it's size, or it's cancelled. Just like Airbus are stunting A330NEO performance and pricing at the top end to protect the A350.

Who will blink first?

The 777x is also going to cut costs. It just lacks 787 economy of scale.

The 787 paid profit plus $26.1 million in differed costs. That should improve next year by $2 million per aircraft (or as profit).
https://leehamnews.com/2019/04/24/initi ... -earnings/

Boeing is selling 777x, so there looks to be a business case. The challenge is the US3.

The two aircraft have their own targets. If that means fewer 777x are sold, so what? The 777x is to blunk A35K sales and keep the top of the market. We will know more at the Dubai airshow.

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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 8:50 pm

IMHO it's silly to put all the blame on the price and ignore the fact that the competing airplane
is extremely efficient and reliable and proven a game changer , which is not common with cheaper product .

The 787 family covers a large segment of missions which adds another advantage ,
the 350 in the other hand provides an overperformance which isn't needed in the most of missions (exclut some very few ULR one),
how many flight take off of MOTW ?

Airlines lean toward the lighter and more flexible airframe, even though the gap isn't that big
but adding the purchase cost in the mix ,makes the 787 more appealing

Further PIPs gonna give the 789 more range and will turn it to a true ULH aircraft while still being lightweight ,
and the 78J will be more capable
the 350 already has longer legs ,an extra range won't be useful
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 9:05 pm

Boeing dropped the cost on B787?
Repeating alternative facts without data seems to be the common strategy of some mega posters on anet.
Lightsaber and Revelation check the flat deffered cost drop per frame per quarter as it shown to you several times. The production cost per frame stay equal since quarters (otherwise the drop should increase), so you can repeat yourself every week, but it is boring to correct you every time with same fact.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 10:04 pm

I think that the A350XWB FAL video is a good starting point for this discussion. It shows:
- Where sub-assemblies are manufactured.
- What route the sub-assemblies travel before entering the FAL.
- The FAL assembly steps followed to make an A350 from the sub-assemblies.
I agree there many movement steps in the FAL proces. A flowline would require much less movements. But the benefit of the station FAL proces is that a misproduced plane doesn't block the whole line. AFAIK it's exact this, lower rate production on a flow line, that caused the deferred production cost of the Boeing 787.
It's a fact that the FAL proces and production accounting are very different if you compare the A350 with the 787. Personally I think the A350 FAL proces is a good improvement of the A330/A340 proces. When rate 10 is achieved on the A350 both the A330 and A350 FALs have operated at rate 10. But I wonder if the A350FAL can sustain a higher rate than 10.
Boeing build two 787 FAL flowlines with a max production rate of 7 (correct?). So when they reach rate 14 they've reached max designed FAL capacity.

I disagree with the notion of a direct linear relation between production rate and cost.
Rate can be improved by expanding production facilities or shortening the production proces steps. Let's assume Airbus sees long-term demand for higher A350 production, so they want to increase the production rate. If they can shorten the duration of the steps, fixed production cost per frame drop. But when additional facilities are required, this isn't always the case. Because the increased production rate could be insufficient to offset the increase in total fixed production cost, leading to higher per frame fixed cost.

I've now only written about the FAL proces. But I expect more cost reductions can be found with transport and production of the sub-assemblies. This is very complicated matter, where I've totally insufficient details to formulate improvements.
One step that might be improved is the A350 Wing production flow. The A350FAL proces video show that wings are moved between the UK and Germany before going to the FAL in Toulouse
France. AFAIK it's availability of Beluga flight hours that currently caps Airbus widebody (A330 & A350) production rate. The A350 requires lot more Beluga flights than the A330. The BelugaXL will already reduce the required flights because they can take a wing-set instead of one wing. But AFAIK for the A330 the wings or large components aren't transported between different production sites. And why air transport via Beluga(XL) instead of sea/road transport?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 10:07 pm

Revelation wrote:
All the talk of different sizes are a red herring, because production costs don't vary much by size within the family.

The big picture view shows the 787 is produced at 50% greater rate which does lower production cost significantly.


Production cost may not vary very much with size, selling costs OTOH do vary much more significantly with size (and scope). So it is by no means irrelevant.

The 50% greater production rate is very important indeed, though somewhat reduced by the double FAL.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 10:23 pm

kanban wrote:
At the start of the A350 program I had some serious discussions with "Ferbe" remember him???? there were lots of pictures and flow diagrams.. The problems were obvious.. the FAL was slotted into an empty building here then to a shared building and then another building over there, parts were not designed for manufacture and required "fit and fair" on assembly (something Henry Ford resolved with the Model T) . There was no plan to install system components before fuselage completion other than landing gear. Some buildings were too low for normal FAL installations like fin and rudder, others had limited or no crane service so pieces were towed into position..

Back then I predicted the manufacturing/assembly morass would be the Achilles heel of this program...

Look at the site and track the process from building to building.. each move requires 6-12 people per airplane because you have to start at the final position and move it while another team is moving the next one up etc. etc.. in addition, you have the regularly scheduled crews clearing the paths of tooling and workstations, then relocating them.. since they don't move from one building to the next, there is a lot of idle time. Question, how many total man-hours are on the clock during a line move shift.. and what is the company wrap rate (I left the w off in a previous post)?. On the 737 line (3 at the time at a 40 per month rate) it was discovered that the line move amounted to the equivalent of 2-3 times a 737 sales price per year.

that was money down the drain. The Airbus CEO and CCO are obviously coming to the same conclusion.

found this video of their idealized new facility https://www.youtube.com/watch?v=W0jlu0ghNIg it shows in that facility they have corrected some issues.. however because it's a PR piece there are many things missing.


Yes, remember those discussions. Great times at this site.
I believe on the the things discussed was that the A350 FAL set-up was pretty fine for low volume (say 2 - 4 frames per month), but would become rather inefficient above rate 5 (let alone 10 per month). Schlepping large widebodies from bay to bay, hanger to hanger, with associated sequential moves of small and large tools, doesn't seem very efficient at rate 10.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 10:26 pm

sciing wrote:
Boeing dropped the cost on B787?
Repeating alternative facts without data seems to be the common strategy of some mega posters on anet.
Lightsaber and Revelation check the flat deffered cost drop per frame per quarter as it shown to you several times. The production cost per frame stay equal since quarters (otherwise the drop should increase), so you can repeat yourself every week, but it is boring to correct you every time with same fact.

I just posted the deffered costs per frame are being paid off fast, how is that possible without a cost cut?

It certainly is far from flat. If you noticed, it was over $1 billion paid off in one quarter despite machine tools purchasing.

We also know from the AA order, Boeing is being agresive. We also see the cash from the 787 program growing. So information presented is the opposite of what you just quoted and online with posts.

Lightsaber

Late edit:

Repost if link to accelerating payoff of deferred costs:
https://leehamnews.com/2019/04/24/initi ... -earnings/

787 amortization of deferred production costs and tooling improved to $1.04B, up from Q4’s $753MM and Q3’s $782MM. Core unit deferred production increased to a very impressive $30.7MM/unit vs. $19.3MM in Q4.

$19.3 million per aircraft to $30.7 is not flat.
That is an improvement in line with the cost drops described.
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 10:46 pm

[quote=Revelation] Another observation I make is that Boeing is getting the kind of volume out of one production methodology / supply chain (granted, with two FALs) that Airbus is getting out of two different FALs with two different production methodologies and two different supply chains.[/quote]

This is only true if you look at production rate. But you neglect that the A330NEO and A350XWB cover the market where Boeing offers the 777 and 787.
The A350 has nearly reached rate 10 for now the maximum production goal. The A330(NEO) is in a low production state because of low A330 demand and the CEO to NEO transition phase. The RR Trent1000 problems and relation of Trent7000 to Trent1000TEN were not helping for A330NEO demand and possibly also A350 demand.
AFAIK max achieved production rates /goals are:
A350 10 . A330 10 => A widebody 13 / 20
787 14 . 777 8,25 => B widebodies 22,25.

There is a huge culture difference between Airbus and Boeing in how they deal with production goals. AFAIK Boeing is much shorter term and acceoting more fllluctuation between years than Airbus. On the A320 Airbus hasn't had to reduce production rate. The A330 now is in low rate. But the combined widebody output is record high.

I remember an article where Airbus was studying A320 rate 100 and A350 rate 20. I think narrow A220&A320) rate 100, wide rate 20 is a beter discription of the production goal for Airbus.
I wonder what Airbus is planning for repurposing of the A380 production facilities. Could this also be part of the effort to reduce A350 production cost?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 10:53 pm

kanban wrote:
Revelation wrote:
marcelh wrote:
IMO, it’s just too easy to compare the B789 versus the A359 and ignore the differences. Calling it a red herring, state an opinion as a fact and don’t come with the numbers don’t change that. You can do better.

Now we have to put the toys back into the tram, even though there's plenty of numbers in this thread.

50% more production per year and ~$20M cheaper per plane should tell you all you need to know.

And, again, it is Airbus's CEO and CCO who are saying there is a problem needing to be addressed!

Narrowing this down to one model vs another model is missing the forest for the trees, IMO.


At the start of the A350 program I had some serious discussions with "Ferbe" remember him???? there were lots of pictures and flow diagrams.. The problems were obvious.. the FAL was slotted into an empty building here then to a shared building and then another building over there, parts were not designed for manufacture and required "fit and fair" on assembly (something Henry Ford resolved with the Model T) . There was no plan to install system components before fuselage completion other than landing gear. Some buildings were too low for normal FAL installations like fin and rudder, others had limited or no crane service so pieces were towed into position..

Back then I predicted the manufacturing/assembly morass would be the Achilles heel of this program...

Look at the site and track the process from building to building.. each move requires 6-12 people per airplane because you have to start at the final position and move it while another team is moving the next one up etc. etc.. in addition, you have the regularly scheduled crews clearing the paths of tooling and workstations, then relocating them.. since they don't move from one building to the next, there is a lot of idle time. Question, how many total man-hours are on the clock during a line move shift.. and what is the company wrap rate (I left the w off in a previous post)?. On the 737 line (3 at the time at a 40 per month rate) it was discovered that the line move amounted to the equivalent of 2-3 times a 737 sales price per year.

that was money down the drain. The Airbus CEO and CCO are obviously coming to the same conclusion.

found this video of their idealized new facility https://www.youtube.com/watch?v=W0jlu0ghNIg it shows in that facility they have corrected some issues.. however because it's a PR piece there are many things missing.


Kanban has been involved with the 737 production for a long time, his posts reflect where the people on the factory floor constantly bring up possible improvements, with a good portion being done. One recent one he noted was the new 737 wing auto riveting setup. He does know production.

There are many approaches to both structures and final assembly: having specific assembly bays, a staged line where the plane is stepped forward after work is complete at a station, stepped lines where the plane is advanced at intervals on a continuous line, and the constantly moving line. I believe Boeing is using all of these concepts - interesting is what works for one model is not the best for another. For example the 787 is using a stepped line but the 767, 737, and 777 use the continuous lines.

Staged and to a lesser extent stepped lines have the issue that every station has the same allotted time, but some stations have only 1.5 shifts of work while others have 2 shifts of work. So the excess needs a 2nd task to fill a 1/2 shift, etc. The interval and continuous line allow for varying length of tasks able to be performed. With the plane moving, the jigs, platforms, and tools are mobile, saving time to reposition, etc. There is no one right answer, but for each assembly line there are methods that approach optimum and all the methods may occur in one assembly line. For example Painting requires its own station in its own building as there is prep, a closed space during painting with specialized downflow ventilation to avoid paint overspray to land back on the plane. Then there needs to be a baking period where the entire hanger is a big bake oven.

A side story, at Boeing Field the old paint hanger was uninsulated and used massive heaters to bake the plane overnight. Well the heaters when a plane was getting painted malfunctioned and the hanger went up to 30 degrees above normal (I recall 160F), sufficient to warp the interior panels. The replacement hanger I was involved with the new ceiling structure on had a much better system and was well insulated. Still an incredible heating system, it would raise the hanger from ambient to 130F in about 90 minutes.

The big point is reduction in costs allows lower sales prices, leading to more orders won. Prior to 2006 the order rate was in near parity, then the 787 jumped ahead, by 2008 the A350 had regained parity but since 2011 have been climbing faster for the 787. Right now the 787 orders are running at 60% of the total 787 & 350 segment. However, the A330 and B777 do affect the total market.
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 11:17 pm

Wish the Airbus experts would post the details of their production like this so we can do more informed speculation on how the Airbus execs intend to reduce production cost. While informative - I do save post for future reading - this is about Airbus production methods, is it just a culture thing or confidentiality clauses?
 
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Sun Jun 23, 2019 11:23 pm

What is the A350 production cost? I have seen estimates, but not as detailed on the 787.

This thread has a link on differed production cost buydown, see post #101
viewtopic.php?f=3&t=1407193&start=100

Accounting block at 1400 units:
https://seekingalpha.com/article/411729 ... omplicated

Boeing claims program is now profitable:
https://leehamnews.com/2013/10/23/boein ... ve-update/

And the program is profitable, so it follows that the accounting quantity can’t be ‘the breakeven number’ .

Now let us look into details:
https://nyc787.blogspot.com/2019/04/boe ... erred.html

$22,029 million usd owed for block of 1400. 818 were delivered by all things 787 at the end of that quarter:
https://nyc787.blogspot.com/search?upda ... 8:00-04:00

So by the current accounting standard, anything below $37.85 million per airframe means costs must be cut further for the 787. However, as there are now over 1,400 sales, it would be possible to extend the block (again). Or... Sell more high end airframes (Rumors are 787-10 sell for more, but I expect to cost more to produce).

My post #208 above notes the current paydown (Just over $30 million per 787 airframe). JayinKitsap notes that the 787 is running at about 60% of orders (plus A330 and 777x).

The A350 is a good plane. It simply needs to reduce fixed costs for the revenue capability. It still sells. It will continue to sell no matter how much we debate. What matters is there is evidence Boeing has entered a price war and done so on the back of reduced manufacturing costs: HA, AA, NZ, and is apparently in a sales campaign with EK to save that 787-10 order:

If Airbus could cut the price of an A359 by say $5 million, I do not think EK would talk to Boeing about 787s anymore. Just my opinion.

Aircraft sales are a long term death march. Look how long it took the 787 to drive down A330 sales. It isn't like anything dramatic will happen this year or next year.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
JayinKitsap
Posts: 1400
Joined: Sat Nov 26, 2005 9:55 am

Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 5:53 am

One thing I am watching the NMA for is to see which new systems on the 787 and 777x follow on, will it have:
1. Bleedless engines / electric architecture as the 787 does, or revert to a full bleed air system.
2. Have CFRP barrels been a good choice or is sections better. For a number of engineering reasons barrels is the way to go.
3. Will the wing be the continuation of the learning in the 787 and 77X, possibly built at the 777x wing plant initially.
4. Will it have folding wing tips? They may need to be longer past the hinge for it to fit in C gates, a huge advantage.
 
astuteman
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 6:25 am

lightsaber wrote:
The A350 is a good plane. It simply needs to reduce fixed costs for the revenue capability. It still sells. It will continue to sell no matter how much we debate. What matters is there is evidence Boeing has entered a price war and done so on the back of reduced manufacturing costs: HA, AA, NZ, and is apparently in a sales campaign with EK to save that 787-10 order:

If Airbus could cut the price of an A359 by say $5 million, I do not think EK would talk to Boeing about 787s anymore. Just my opinion.

Lightsaber


I think this is a good shout.

A lot has been made of the $90m to $110m production cost gap between the 787-9 and A350-900.

I believe about 10% is purely down to the product scale - the A350-900 is about 10% more aeroplane than the 787-9.
Boeing being able to build a 787-9 for $90m does not mean they could build an A350-900 sized plane for $90m

Secondly, as you have pointed out, the 50% production scale advantage gives the 787 at least a 5% cost benefit compared to the A350.
The residual delta based on production method alone is therefore around the $5m you describe.
So I can buy into that.

For what its worth I don't think the 787 will, or can, sustain 168-170 frames per year ad-infinitum, so I think the production rates will equalise a bit.
I'd expect the 787 to retain a modest margin purely by dint of being the smaller, slightly more flexible frame of the two

The 787 is more mature than the A350, which means the supply chain economies, and implementation of 3D printing are more mature.
But there is nothing on the 787 in terms of those improvements that is not equally available on the A330NEO and A350.
And they WILL come. some of them already are.
Why would anyone think they won't when you consider the title of the thread and the origin of the comments.
It's clear that Airbus have woken up to the mission here.

Rgds
 
VV
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 6:29 am

BREECH wrote:
VV wrote:
The reality is that the 787 has already achieved 840 deliveries as of end of May 2019 and A350 program hit the 280th delivery this month.

MAYBE the reason for fewer deliveries is that Airbus started production of A350 in 2015 while Boeing delivered 787 since 2011?


Or maybe because the ramp up has been much slower on the A350????

Launch
787 launch: 26 April 2004
http://boeing.mediaroom.com/2004-04-26- ... Dreamliner
A350 launch: 1 December 2006
http://www.airbus.com/presscentre/press ... -go-ahead/

EIS from launch
787 EIS: 26 October 2011 (April 2004 +90.0 months or +7.5 years)
A350 EIS: 15 Jan 2015 (December 2006 +97.5 months or +8.1 years)

Deliveries after 10 years from launch
787 (April 2004 to end of April 2014): 140 deliveries
A350 (December 2006 to end of Dec 2016): 64 deliveries

Deliveries after 2 years from EIS
787 (Oct 2011 to end of Oct 2013): 98 deliveries
A350 (Jan 2015 to end of Jan 2017): 65 deliveries

People only remember 787 had a production trouble in its debut. But when compared with the right numbers the program is doing just fine.

I am wondering which program is actually more expensive than the other.
 
VV
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 6:46 am

The reality is that the 787 has already achieved 840 deliveries as of end of May 2019 and A350 program hit the 280th delivery this month.

It does not matter which one started earlier.
The fact is that one has achieved its "cruise speed" while the other has not completely reached the end of the learning curve.

The issue is that the pricing is for today. In two years perhaps the A350 will reach production system maturity.

The sales campaigns happen today. One can offer an aircraft based on the actual mature production system while the other must speculate on what the production maturity level is in two or three years.

In addition, Boeing already did the effort to reduce its 787 production cost since years and not the other. The comparison happens TODAY, regardless of the beginning of the mass production.

You cannot compare the pricing of an aircraft with mature production system (840 deliveries) against the pricing of a ramping up production system (280 deliveries).

There is no price war. The price is only the manifestation of the maturity of the program.

It is obviously time to reduce A350 production cost.

This story about "price war" is not legitimate. It is just a mean to justify the failure to sell.
 
CFRPwingALbody
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 7:03 am

Airbus is much more conservative in production ramp-up than Boeing. Airbus only increases production rate when it can be sustained by demand for a long time. Boeing does ramp-up production for short periods to scale back production several years later.
I think this has to do with employment layoff regulations.
 
VV
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 7:56 am

CFRPwingALbody wrote:
Airbus is much more conservative in production ramp-up than Boeing. Airbus only increases production rate when it can be sustained by demand for a long time. Boeing does ramp-up production for short periods to scale back production several years later.
I think this has to do with employment layoff regulations.


It doesn't change the fact one already reached 840 deliveries today, so mature production system and the other is at 280, still in the learning curve.

So, this "price war" thing is not fully legitimate.
 
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enzo011
Posts: 1664
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Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 9:29 am

VV wrote:
Or maybe because the ramp up has been much slower on the A350????

Launch
787 launch: 26 April 2004
http://boeing.mediaroom.com/2004-04-26- ... Dreamliner
A350 launch: 1 December 2006
http://www.airbus.com/presscentre/press ... -go-ahead/

EIS from launch
787 EIS: 26 October 2011 (April 2004 +90.0 months or +7.5 years)
A350 EIS: 15 Jan 2015 (December 2006 +97.5 months or +8.1 years)

Deliveries after 10 years from launch
787 (April 2004 to end of April 2014): 140 deliveries
A350 (December 2006 to end of Dec 2016): 64 deliveries

Deliveries after 2 years from EIS
787 (Oct 2011 to end of Oct 2013): 98 deliveries
A350 (Jan 2015 to end of Jan 2017): 65 deliveries

People only remember 787 had a production trouble in its debut. But when compared with the right numbers the program is doing just fine.

I am wondering which program is actually more expensive than the other.



It is hard to try and compare the timelines of the programs as they were launched at such different times for the companies. Boeing was able to jump headfirst into the 787 while Airbus knew they were going to have to take their time on the A350 as they needed to sort out the A380 first. This means that when you look at program launch there is not a lot of difference, and yet the 787 was supposed to EIS in 2008 while the A350 was 4 years later. So a 2 year difference in launch of program but a 4 year difference in EIS.

There is a lot of grey areas when you compare the 2 programs to each other. Like for instance, the 789 reached a profit for each delivery first before the 788, but the 788 was delivered ahead of the 789. So you have a case where you can point to a date where Boeing reached a level where they obtained a profit per delivery, and yet the earlier frame was still losing money on each delivery (AFAIR). So this would make that discussion nuanced as well when you want to compare it to the A350.

So basically, we can play with the dates of when they were launched, EIS, rollout, first test flight etc., and I suspect we can all reach the conclusion we want to reach. As for Airbus, they seem to have been busy about cutting costs on the A350 already and will continue to do so.


Bricktop wrote:
I don't think there are many people saying Airbus will fail at doing it. Kanban's post certainly means they have a lot of wood to chop though, and Airbus faces certain externalities that Boeing hasn't.

Not to you Enzo, but I would have thought Airbus partisans would actually rejoice at this news. It's like when a team gets a new manager. They usually don't get one because the previous guy did a bang up job: It's because changes need to be made. They recognize that they are stuck with the players they have on the field right now, and they have to get rid of the ones who aren't performing and bring in some new players and new thinking. Hopefully without too much interference from "ownership" ie Germany and French govts. We'll see.


Is it really news though? Airbus profits went up due to cost savings on the A350, so the company is working on it. The company coming out to say it doesn't mean it wasn't ever on the cards or in the process of happening. Is it good news? If you are a shareholder of Airbus, yes. If you are a shareholder of a partner that will see squeezed margins, maybe no. As a fanboy? :scratchchin:
 
RandWkop
Posts: 179
Joined: Sat May 05, 2012 10:56 pm

Re: Bloomberg:Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War

Mon Jun 24, 2019 1:39 pm

Rifitto wrote:
IMHO it's silly to put all the blame on the price and ignore the fact that the competing airplane
is extremely efficient and reliable and proven a game changer , which is not common with cheaper product .

The 787 family covers a large segment of missions which adds another advantage ,
the 350 in the other hand provides an overperformance which isn't needed in the most of missions (exclut some very few ULR one),
how many flight take off of MOTW ?

Airlines lean toward the lighter and more flexible airframe, even though the gap isn't that big
but adding the purchase cost in the mix ,makes the 787 more appealing

Further PIPs gonna give the 789 more range and will turn it to a true ULH aircraft while still being lightweight ,
and the 78J will be more capable
the 350 already has longer legs ,an extra range won't be useful


If the 787 can gain extra range without gaining weight or losing efficiency, why can't the A350 gain efficiency and still maintain it's current range and payload capabilities?

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