FluidFlow
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 1:11 pm

Total cost for the grounding of the grounding seems to be between 10B$-20B$. With expecting the aircraft back in service early Q4 it will be closer to the lower estimation.

Credit Suisse
Numbers appear more favorable than expected: We believe these cost figures are below Street expectations, as we think buyside consensus for BA’s impact from Max is between $10B and $20B, including all incurred and future costs for re-engineering and production enhancements, absorption impact from the delay itself, and for compensation to the various parties involved, from accident victims to the customers affected by the delays.


https://leehamnews.com/2019/07/19/analysts-react-to-boeings-2q-charge-cost-and-rts-announcement/
 
planecane
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 1:21 pm

flyingphil wrote:
capshandler wrote:
If I were Boeing I’d ask Airbus to jump in and help solve the problem. The’ve got experience with FBW and software based flying models. And If I were Airbus I’d jump in immediately. It’s in interest of both for so many reasons. They should work closely and secretly and make the 737Max fly again asap.


Boeing has lots of experience of FBW on its other planes.. but stuck with the old cables and pulleys for the 737MAX.
Maybe Embraer could pitch in, but there is not much you can do with such an old design.

I hope someone at Boeing is looking at doomsday scenarios .. and ‘what if’s’
What if the FAA want a new trim wheel that does not require a bodybuilder to operate it
What if they want a third AoA vane
What if they want aerodynamic changes, vortex generators, etc, etc
Changes that will cost more than the value of the frames..

How far away are Boeing from a 737 replacement?
Here is an idea.. Boeing does a lot of business with China, the Comac C919 is already flying, it has western engines and avionics... why not partner up with them?

Anyway .. will get back in my box now :)


Do you really think the FAA or other regulators aren't talking to Boeing regularly and expressing exactly what needs to be done? Do you think they are waiting to spring some surprise requirements as soon as the software is officially submitted.

If they weren't going to accept a two sensor solution they would have told Boeing by now. The manual trim wheel issue will be addressed with documentation and training for load alleviation under extreme conditions. The trim wheel hasn't caused a problem yet on the NG. With MCAS 2.0 it will not get that far out if trim if there is a failure of both sensors reading high within 5° of each other.
 
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SomebodyInTLS
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 1:22 pm

capshandler wrote:
If I were Boeing I’d ask Airbus to jump in and help solve the problem. The’ve got experience with FBW and software based flying models. And If I were Airbus I’d jump in immediately. It’s in interest of both for so many reasons. They should work closely and secretly and make the 737Max fly again asap.


Taking your premise at face value, I'm sure Airbus people could act in an advisory capacity - but their ability to actually "help" in the sense of involvement in the design/execution of a fix would be limited as they don't have the details. On the other hand, the act of having to document and explain all the existing systems and required changes could help Boeing guys flush out further gremlins and give them a better overview for potential solutions.
Last edited by SomebodyInTLS on Fri Jul 19, 2019 1:27 pm, edited 1 time in total.
"As with most things related to aircraft design, it's all about the trade-offs and much more nuanced than A.net likes to make out."
 
Elementalism
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 1:23 pm

capshandler wrote:
If I were Boeing I’d ask Airbus to jump in and help solve the problem. The’ve got experience with FBW and software based flying models. And If I were Airbus I’d jump in immediately. It’s in interest of both for so many reasons. They should work closely and secretly and make the 737Max fly again asap.



So does Boeing. The 777 and 787 are FBW. The issue, 737 is not FBW. And it wont be retrofitted neither.
 
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par13del
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 1:50 pm

capshandler wrote:
par13del wrote:
capshandler wrote:
If I were Boeing I’d ask Airbus to jump in and help solve the problem. The’ve got experience with FBW and software based flying models. And If I were Airbus I’d jump in immediately. It’s in interest of both for so many reasons. They should work closely and secretly and make the 737Max fly again asap.

You do know that Boeing makes aircraft other than the 737 that do have FBW, right?


I do, but don't seem to work don't you think?

Well there are a few hundred 787's flying around with no problem, a couple thousand 777's all variants, as far as we can see, all Boeing a/c with FBW are functioning normally.
The 737 is not FBW, if Boeing wants to make it FBW it will not be a 737 but a new clean sheet design, they have done FBW for the spoilers I believe, so far no indication that was the cause of the MCAS issues. I stand to be corrected on the item they made FBW on the MAX.
 
StTim
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 1:50 pm

Revelation wrote:
ArgentoSystems wrote:
StTim wrote:
You are partially correct.

BUT you are absolutely wrong to say this is part of the money that Boeing have just set aside.

I never said that. I only showed that 5.6B figure can't possibly be the final bill.

Perhaps not the final bill, but the market is treating it as a clear signal from Boeing that it thinks the worst is over.

Leeham quotes Cowan Research:

Key takeaway from yesterday’s Q2 preannounce was that BA assumes “return to service early in Q4in line with our estimates and plans to reach 57/month in 2020 vs. our assumption of a 52/month peak. While timing of return to service obviously is in the hands of the regulators, we assume that BA’s timing comments are based on its extensive interactions with regulators. Furthermore, its willingness to publicly target reaching 57/month next year presumably reflects discussions with customers indicating sufficient demand to warrant taking the rate up to that level.

Lots of similar analysis at https://leehamnews.com/2019/07/19/analy ... ouncement/


But Boeing does not own the timeline and has been spectacularly wrong with previous estimates - as I suspect they will be this time. My best guess is that the grounding will be a year give or take a month or two.
 
ArgentoSystems
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 2:24 pm

10 is closer to reality. I'm shocked how eagerly markets eats whatever bs Boeing feeds them.
 
JibberJim
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 2:49 pm

ArgentoSystems wrote:
2.They did not fire anybody, so no saving on labor either.


There could be some savings in labour costs now, much less overtime when the plant isn't running at full capacity.

However, it's almost certainly going to cost an awful lot of overtime when the plane can fly again as they have to deliver all the stored planes, so certainly no overall saving.
 
majano
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 3:07 pm

ArgentoSystems wrote:
10 is closer to reality. I'm shocked how eagerly markets eats whatever bs Boeing feeds them.

The cost up to so far is USD8.3bn as per Flightglobal. https://www.flightglobal.com/news/artic ... un-459769/
 
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par13del
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 3:40 pm

ArgentoSystems wrote:
10 is closer to reality. I'm shocked how eagerly markets eats whatever bs Boeing feeds them.

You saying the markets are made up of easily influenced investors?
Hmmm....why exactly would folks make such markets so influential in the world and go there for financing if the principals are so easily fooled?

Any chance that Boeing is a publicly traded company and the investors actually have access to and know how to read the various Boeing, SEC and other financial regulator reports?
 
snowkarl
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 4:17 pm

Revelation wrote:
ArgentoSystems wrote:
StTim wrote:
You are partially correct.

BUT you are absolutely wrong to say this is part of the money that Boeing have just set aside.

I never said that. I only showed that 5.6B figure can't possibly be the final bill.

Perhaps not the final bill, but the market is treating it as a clear signal from Boeing that it thinks the worst is over.

Leeham quotes Cowan Research:

Key takeaway from yesterday’s Q2 preannounce was that BA assumes “return to service early in Q4in line with our estimates and plans to reach 57/month in 2020 vs. our assumption of a 52/month peak. While timing of return to service obviously is in the hands of the regulators, we assume that BA’s timing comments are based on its extensive interactions with regulators. Furthermore, its willingness to publicly target reaching 57/month next year presumably reflects discussions with customers indicating sufficient demand to warrant taking the rate up to that level.

Lots of similar analysis at https://leehamnews.com/2019/07/19/analy ... ouncement/


I do not believe a single person with any insight would ever believe Boeing's 5 billion figure.

It's pure PR. They're spinning the figure of 5 billion which is only punitive damages, costs for reimbursing airlines and victims and nothing else, as if it was the whole cost.

Also; back in the air by October 1st? Hilarious.
 
lhrnue
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 4:56 pm

How long can an aircraft be parked before it need maintenance when going back into service?
 
Absynth
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 5:37 pm

ArgentoSystems wrote:
PW100 wrote:
Production is lower. But cost will also be lower'they don't have to buy engines, avionics, wings, bolts, nuts etc. for planes not being produced. Chances are that their labor force will also be somewhat lower. I guess what I'm trying to say is that lost production income does not equal losses. Costs are also going down. Not to the same extent of course.


Wrong.
1.They continue to pay for 52 of everything per month - engines, nuts, bolts., hulls
2.They did not fire anybody, so no saving on labor either.
3. I gave estimate of their loss of revenues. Costs has nothing at all to do with that.

Think about it this way: Company shuts down for a week long mandatory unpaid vacation. Nothing to buy, no workers to pay. By your logic, company does not lose anything since there are no out of pocket payments.


No you are wrong. These parts will end up in planes, they aren't going to the bin. It just means when production ramps up, suppliers will ramp up later. And labor will be moved around, you can be sure nobody is fiddling their thumbs on the production line. There might be some lost productivity but I'm sure there's a big pile of work spilled over they can focus their energy on, retraining etc. These people will be put to use, no worries.

Losses from lost productivity equals production rate cute x profit per plane. If they'd make a loss per sold plane their figures would go up.

So the losses from productivity would be about 3 months x 10 planes x ~5?million ppp + 6months x15 planes x~5?million if the grounding is lifted worldwide by jan 1st 2020.

Or about 600million in lost profits from the production rate cut.
Last edited by Absynth on Fri Jul 19, 2019 5:50 pm, edited 1 time in total.
 
ArgentoSystems
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 5:48 pm

Absynth wrote:
No you are wrong.


I'm afraid you did not understand my message.
 
Absynth
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 5:52 pm

ArgentoSystems wrote:
Absynth wrote:
No you are wrong.


I'm afraid you did not understand my message.



Yes I did and like many others I'm trying to explain to you you cannot equal lost revenue from the production rate cut to lost profits that add to the figure Boeing mentioned and we discuss.

I also explained why your refute was false. If you don't get it yet I cannot help you further.
 
Absynth
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 5:59 pm

Personally, I think the biggest future loss outside penalty payments to operators and victims, and lost profits from lower sales will be structurally lower ASP for the plane. Those orders that haven't been finalised will probably be renegotiated so I can see ASP going down by a million per plane at the very least.
 
ArgentoSystems
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 7:56 pm

Why do you assume confusion between profits and revenues, when I never mentioned profits and was only talking about revenues?

So the losses from productivity would be about 3 months x 10 planes x ~5?million ppp + 6months x15 planes x~5?million if the grounding is lifted worldwide by jan 1st 2020.

Ok, even if you are talking about profits, or revenues minus expenses, the number will still be higher than your calculations. All of your fixed expenses, such of labor, including office folks, utilities, amortization of factories, are, by definition, fixed. You have to pay them regardless of the number of planes you make. If you don't make 10 plane to provide revenues to pay for fixed costs, the fixed costs will have to be covered by remaining 42 planes.
 
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flyingphil
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 9:52 pm

https://www.forbes.com/sites/jeremyboga ... ion-again/

Hmm.. all speculation about a further cut in production.
Also says they are still producing some NG’s. Thought that had finished.
 
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NeBaNi
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Fri Jul 19, 2019 10:42 pm

majano wrote:
ArgentoSystems wrote:
10 is closer to reality. I'm shocked how eagerly markets eats whatever bs Boeing feeds them.

The cost up to so far is USD8.3bn as per Flightglobal. https://www.flightglobal.com/news/artic ... un-459769/

Going off of this article, I'm going to attempt to calculate what numbers go into (or IMO, should go into) the cost so far for Boeing:
:arrow: $1.7 Billion (Billion shortened to B after this) added in Q2 2019 + $1B in April, to account for the production rate going from 52/month to 42/month
:arrow: $5.6B, the hit on Boeing's 2Q pretax earnings and revenue.

Let's try to break down the $5.6B amount:
:arrow: $100 million ($0.1B) for the fund for the MAX victims and families, from The Seattle Times

:arrow: From April to June, building the MAX at 42/month costs Boeing roughly $5.3B.
What follows is a pretty crude method used to calculate the production costs above. Current 737-MAX8 list price is ~$120Million. Assuming a 50% discount to sell it, say Boeing gets $60M per plane at delivery. Say Boeing gets about 70% of that, after factoring in revenue to CFM, APU manufacturers, interior manufacturers, and so on. So $42M. For a 3-month production at 42/month, that works out to $42M x (42x3) = $5292M, so about $5.3B. I would welcome any refinements or any links to how much it actually costs Boeing to build a 737 MAX. This also assumes all models produced are MAX 8's, which of course isn't true. So more cost for Boeing to produce the longer MAX 9's and less costs to produce the shorter 7's. But since more 9's are being produced than 7's, I'd expect this to be a conservative estimate, with the figure likely being higher.

:arrow: Cost of parking grounded aircraft, this Bloomberg link has an industry veteran estimate the parking cost of one aircraft at $2000/month. For the 126 built since the grounding plus the 387 already delivered (total 513) for a period of 3 months, this is $1 026 000, or ~$1M or $0.001B. Miniscule in the grand scheme of things. This estimate is also for parking the aircraft at the Mojave desert, which of course is only true for the 34 WN maxes. I'd call this a conservative estimate, since parking it at other airports (LAX, HOU, IAH, MFM, Europe, etc.) for the other operators is likely more expensive.

:arrow: Compensation to airlines for canceled flights and lost operating profit: the Bloomberg link above estimates this to be about $1.4B through September, say half of that for Q2, so about $0.7B.

Added up, these already add up to more than $5.6B. Even if my aircraft production cost is a wild overestimate, there's still other factors to be accounted for, which I cannot put a dollar amount to, including but not limited to:
  • Compensation to airlines for leasing or financing costs for the already-delivered MAXes. I assume financiers will continue seeking payment from airlines despite the grounding for frames already delivered. On the other hand, I assume it saves would-be operators of the currently undelivered but produced airframes some money to not have to pay Boeing for progress payments and delivery.
  • MAX redesign/software update, rollout of redesign/update into already produced airframes, and recertification costs. Note that here, I don't assume the MAX will need a new type certificate, I just mean the costs to carry out additional testing and certification steps.
  • Potential compensation to WN if pilot sim training is needed.

What else am I missing? After doing this analysis, it seems like $5.6B is too low of a charge for this whole debaucle....
 
RickNRoll
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 12:11 am

par13del wrote:
ArgentoSystems wrote:
10 is closer to reality. I'm shocked how eagerly markets eats whatever bs Boeing feeds them.

You saying the markets are made up of easily influenced investors?
Hmmm....why exactly would folks make such markets so influential in the world and go there for financing if the principals are so easily fooled?

2008 proved that to be true. Everyone has been trying to forget 2008 ever happened.
 
FLALEFTY
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2018 Annual Report We’re Boeing. The future is built here. THE BOEING COMRe: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 12:40 am

klkla wrote:
FLALEFTY wrote:
scbriml wrote:

I don't see how it matters, it's all one company with a single stock market entity. It's not like Boeing Defence and Boeing Commercial are separate companies. That money will come out of Boeing's profits, it doesn't matter in the slightest which division caused it.


One of Boeing's favorite weapons to use against Airbus is to pull out the issue of government subsidies. Therefore, I could see Airbus going to the WTO wailing against Boeing taking corporate profit writeoffs to "rescue" a troubled commercial program such as the 737MAX. This would be especially true if given evidence that Boeing's defense operations were providing most of the corporate operating profits. Being a public company, where Boeing's profits come from at the division level are all laid bare in their 10K filings.


They wouldn't have to "move" money. That's not how corporate accounting works.

The profits of both the military and civilian divisions are combined into the earnings of the corporation as a whole. They are free to use the proceeds how they see fit.


I will leave Boeing's 2018 annual report for your & others' information. (Yes, they do report revenues & earnings by business sector)

https://s2.q4cdn.com/661678649/files/do ... -Final.pdf
 
klkla
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Re: 2018 Annual Report We’re Boeing. The future is built here. THE BOEING COMRe: Boeing 737MAX Grounded Worldwide Q3 2

Sat Jul 20, 2019 3:12 am

FLALEFTY wrote:
klkla wrote:
FLALEFTY wrote:

One of Boeing's favorite weapons to use against Airbus is to pull out the issue of government subsidies. Therefore, I could see Airbus going to the WTO wailing against Boeing taking corporate profit writeoffs to "rescue" a troubled commercial program such as the 737MAX. This would be especially true if given evidence that Boeing's defense operations were providing most of the corporate operating profits. Being a public company, where Boeing's profits come from at the division level are all laid bare in their 10K filings.


They wouldn't have to "move" money. That's not how corporate accounting works.

The profits of both the military and civilian divisions are combined into the earnings of the corporation as a whole. They are free to use the proceeds how they see fit.


I will leave Boeing's 2018 annual report for your & others' information. (Yes, they do report revenues & earnings by business sector)

https://s2.q4cdn.com/661678649/files/do ... -Final.pdf


Of course they do. But that's not what I was responding to. You left out part of your original quote.

FLALEFTY wrote:
Someone asked in another post if Boeing could simply "move" money from the defense/space division to the commercial division to cover the writeoff. The answer would likely be "No". Furthermore, Boeing is still writing off cost overruns caused by the troubled, KC-46 tanker program.


To 'move money' insinuates you are referring to cash. If you are talking about accounting charges that's a different story. They can use their money for whatever purpose they desire.
 
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par13del
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 3:54 am

RickNRoll wrote:
par13del wrote:
ArgentoSystems wrote:
10 is closer to reality. I'm shocked how eagerly markets eats whatever bs Boeing feeds them.

You saying the markets are made up of easily influenced investors?
Hmmm....why exactly would folks make such markets so influential in the world and go there for financing if the principals are so easily fooled?

2008 proved that to be true. Everyone has been trying to forget 2008 ever happened.

Not trying hard enough since they have been put back on their elevated pedestal, guess the more things change....or fool me once, shame on you, fool me twice.........
 
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scbriml
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Re: 2018 Annual Report We’re Boeing. The future is built here. THE BOEING COMRe: Boeing 737MAX Grounded Worldwide Q3 2

Sat Jul 20, 2019 6:23 am

FLALEFTY wrote:
I will leave Boeing's 2018 annual report for your & others' information. (Yes, they do report revenues & earnings by business sector)

https://s2.q4cdn.com/661678649/files/do ... -Final.pdf


Yes, that doesn’t change anything I, and others, said. It’s all Boeing’s ‘money’.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
art
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 6:26 am

As I understand things the ground clearance required to mount LEAP engines in the same underwing position as CFM56 engines on the NG would have required redesign of the wingbox. I guess Boeing management opted not to do so because of (a) extra development time required (b) extra cost. I think Boeing will rue the day they rejected that option for a long. long time.

When I think about it, Boeing must have been aware of high by-pass engines coming when they started designing the original 737 so why did they not design it with increased ground clearance to take account of coming engine developments?
 
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seahawk
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 7:02 am

In the 1960ies the industry was quite a bit away from high bypass fans for short haul applications. (and even for long haul)
 
Andy33
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 7:23 am

flyingphil wrote:
https://www.forbes.com/sites/jeremybogaisky/2019/07/19/boeing-may-have-to-cut-737-max-production-again/

Hmm.. all speculation about a further cut in production.
Also says they are still producing some NG’s. Thought that had finished.

Technically they are still producing NGs (and we have a separate thread on the topic) because the military P8 is a derivative of the NG, has an order backlog and is still available to order.
In addition there are 8 738s that are built but not yet delivered to airlines, plus one 738 for KLM where something went badly wrong in assembly and a new fuselage is awaited so it can be completed, and a literal handful of BBJ versions of the -700 and -800 that are yet to be built. All the outstanding -900 orders have now been built and delivered, the last one to Delta.
 
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flyingphil
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 8:03 am

art wrote:

When I think about it, Boeing must have been aware of high by-pass engines coming when they started designing the original 737 so why did they not design it with increased ground clearance to take account of coming engine developments?


The original 737-100 was deliberately designed with low ground clearance for fast turnarounds with no ground equipment.. it had airstairs and luggage could've loaded easily.

The 737 was basically a cut down version of the 727 which in turn was a cut down version of the 707.

A new wingbox would then need a new wing.. so you may as well start from scratch.
 
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SheikhDjibouti
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 5:44 pm

art wrote:
When I think about it, Boeing must have been aware of high by-pass engines coming when they started designing the original 737 so why did they not design it with increased ground clearance to take account of coming engine developments?

Unfortunately, they didn't have a fairy godmother who gave them a crystal ball with the number 22 embedded in it.

The 737 was originally envisioned in 1964.
It was originally developed as a shorter, lower-cost twin-engine airliner derived from the 707 and 727.

Production of the 707 ended after 22 years in 1979 according to Wikipedia, although I would argue it's days were already over a decade earlier in 1969 (¹)
Thus it never got around to being fitted with high-bypass engines.

Production of the 727 also ended after 22 years, in 1984
Hence it also never got around to being fitted with high-bypass engines.

Without a crystal ball, how the hell would Boeing guess that the third member of this group (the 737) would continue in production for 53 years and counting?
It was after nearly 22 years in production that the prototype 737 with CFM-56 engines first flew. (Ok, so it was 18 years if you're being pedantic)

In a parallel universe, after 22 years the 737 would also have been terminated, and these new high bypass engines would have been fitted to a clean sheet design
Hence I can see exactly why Boeing did not anticipate the need for increased ground clearance.

(¹) Boeing 707 deliveries peaked at 118 in 1967, and 111 the following year, but in 1969 it dropped to 59 and by 1972 it was just 4 frames. The 707 production line continued at a slow trickle for another two decades, but it was mostly one-offs or military derivatives. Hence my argument that 22 years isn't entirely accurate for the 707. Ditto the 727. And the 757. And probably the 767 too, once you have discounted the freighter and KC-46 variants. Meh....
Nothing to see here; move along please.
 
smartplane
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sat Jul 20, 2019 11:50 pm

SheikhDjibouti wrote:
Production of the 707 ended after 22 years in 1979 according to Wikipedia, although I would argue it's days were already over a decade earlier in 1969 (¹)
Thus it never got around to being fitted with high-bypass engines.

Decades ago, seem to recall working on an engine funding proposal for GE/Safran to fit CFM56 engines on 707 derivatives which went ahead.
 
oschkosch
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 7:26 am

CNBC is not so optimistic:
https://www.cnbc.com/2019/07/20/boeing- ... -jets.html


https://www.bloomberg.com/news/articles ... crash-czar

And Bloomberg says:

The crashes of two Boeing Co. 737 Max jetliners have put the aerospace giant on a perilous course through multiple U.S. investigations. But as it faces off against the government, Boeing will be dealing with a lot of familiar faces. The myriad personal connections between the U.S. plane-maker and top officials were hinted at when Attorney General William Barr bowed out of a criminal investigation of the plane’s design and certification. Barr cited his past affiliation with Kirkland & Ellis LLP, a longtime legal adviser to Boeing that’s now helping with its defense in the matter.


“Boeing has wired politics to an extent that allows them a considerable margin for error,” said Jeff Hauser, executive director of the Revolving Door Project at the Center for Economic and Policy Research in Washington.
 
art
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 8:02 am

“Boeing has wired politics to an extent that allows them a considerable margin for error,”

Ouch! Not exactly conducive to guaranteeing safety, is it? Thinking of the Boeing/FAA relationship where certifying the NG and MAX were concerned. A strong incentive for EASA to review and scrutinise the FAA certification of the MAX in great detail.
 
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par13del
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 11:50 am

So let's speculate on the next item that could potentially cause problems if the a/c is cleared with a software fix.
Over 400 or more ( those already delivered and continued production ) a/c will need to have the software uploaded and if required / demanded, proving test flights. If Boeing has to do all of that by itself, it will take a lot of time, only so many bodies available.
How much can certified mechanics / engineers at the various airlines, MRO shops etc. do to speed up the pace, will the regulators demand Boeing only as a condition for liability as this is not a normal situation meaning the world wide grounding?
 
uta999
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 11:51 am

It may turn out to be quicker to re-certify the MAX completely, and as a new model. It’s not as if there is a shortage of planes, pilots and resources. It could even be done in Europe to prove its full independence.

The problem now is they are trying to justify its NG breeding, which is proving impossible.
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seahawk
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 12:47 pm

Easy there. There is no need for a new certification and getting a common type rating with the NGs should be no problem either. On the administrative front this is no biggie, on the technology side it should be no biggie either, it might be a huge problem on the commercial front if you have given guarantees on the scope of training requirements for switching a pilot from the NG to the Max.
 
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par13del
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 1:21 pm

Regardless, if a software update is approved, it still has to be loaded before the a/c can go back into commercial service.
Since we have no new updates on where they are, just thought it would be interesting to speculate on how the ungrounding would work from a logistics point of view, will the regulators allow Boeing to use other resources already certified on the 737 / MAX.
Even if the a/c is approved by Oct-2019, how long as an example would it take WN to get 30+ a/c returned to their operational fleet, 2020?
If test flights are required, would the regulators allow WN pilots to perform or only Boeing?
 
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seahawk
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 1:54 pm

If it only a software fix and nothing else (no crew training, no hardware changes), there is no need for a testflight, So a few days would probably enough, as you can start making the planes ready some time before the FAA is expected to pass the fix. Then it is just up-dating the software.
 
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par13del
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 1:57 pm

So Boeing has the staff to travel to all the sites of the grounded a/c to upload the software in a "reasonable" period of time?
On the test flight, is it something that the regulators would require, this grounding is somewhat unique in recent times when most countries now have their own regulatory staff to some degree?
 
f1restate
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 3:23 pm

par13del wrote:
So Boeing has the staff to travel to all the sites of the grounded a/c to upload the software in a "reasonable" period of time?
On the test flight, is it something that the regulators would require, this grounding is somewhat unique in recent times when most countries now have their own regulatory staff to some degree?
Why does Boeing staff need to go on-site to perform the firmware upgrade ? This should be a routine procedure that can be done by the qualified engineers employed by each one of the airlines involved. Unless, the module in question is not designed to be upgraded by service personnel and requires specific tools to do so. Which would be unlikely (however, I must say, not entirely out of the question).

In the considerably less sophisticated automotive industry, module firmware upgrades performed during service have been a thing for decades now

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PW100
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 4:17 pm

ArgentoSystems wrote:
PW100 wrote:
Production is lower. But cost will also be lower'they don't have to buy engines, avionics, wings, bolts, nuts etc. for planes not being produced. Chances are that their labor force will also be somewhat lower. I guess what I'm trying to say is that lost production income does not equal losses. Costs are also going down. Not to the same extent of course.


Wrong.
1.They continue to pay for 52 of everything per month - engines, nuts, bolts., hulls
2.They did not fire anybody, so no saving on labor either.
3. I gave estimate of their loss of revenues. Costs has nothing at all to do with that.

Think about it this way: Company shuts down for a week long mandatory unpaid vacation. Nothing to buy, no workers to pay. By your logic, company does not lose anything since there are no out of pocket payments.


Wrong.
1) They did not continue to pay for 52 of everything per month. By their own admission, they indicated that (one of the) reason(s) for lowering monthly rate is to allow CFM to catch up on their delays. While I don't have insight into their monthly bills, it would not bode well for Boeing purchasing department if they would continue to pay for 52 monthly sets of engines. I have no doubt that in other area's they will be paying for rate 42 to many of their suppliers. Yes. they have a deal with Spirit, continuing production and payment of fuselage sections at rate 52, but that appears to be an anomaly, not the standard.

2) I would not be surprised if there were layoffs. In any case, a company the size of 737 production will Always have a level of fluidity in their employment around a core of trained staff. I have no doubt that once the rate is raised back to 52, some additional staff will be hired.

3) You wrote:
5.6B can't possibly include losses for Q3 and Q4. They lose 500M per month (in revenues) just from the lost productivity. They . . . . As you can see, these losses alone for Q2 Q3 Q4 will exceed 5.6B figure.

I did not imply that 5.6B covers ONLY the Q2. It probably somewhat covers Q3 and Q4, just not entirely.


Maybe I read that wrong, or you were meaning something different and that we were on different pages.

And for the record, you claimed that "by my logic, company does not lose anything since there are no out of pocket payments" is incorrect, as I also wrote:
"Costs are also going down. Not to the same extent of course."
I don't see what is not clear and how this led you to arrive at your false conclusion.



To go back to whether the 5.6B covers only Q2. It is my understanding that the 5.6B covers all future potential losses (in terms of airline compensation for late deliveries, grounded planes etc), as foreseen as reasonably foreseen at this point in time. So that would include also Q3 and Q4, and also 2020. However if the grounding takes longer than foreseen (at this point in time), that that number will be revised.
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seahawk
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 4:30 pm

par13del wrote:
So Boeing has the staff to travel to all the sites of the grounded a/c to upload the software in a "reasonable" period of time?
On the test flight, is it something that the regulators would require, this grounding is somewhat unique in recent times when most countries now have their own regulatory staff to some degree?


There is a big difference between those frames that have been in service already and those that are waiting for delivery. For the ones that were in service the MRO service of the operator should be able to update the software and make the planes ready again.
For the ones not delivered, Boeing needs to do this and probably a lot of pre-delivery inspections and so on. Those will take time.
 
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par13del
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 5:32 pm

So as this is a unique situation, if resolved by a software update the regulators would revert to the procedures for normal software update?
I only asked in case we think this grounding is unique.
 
StTim
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 6:11 pm

Each frame is going to need a return to service plan. It isn't just upload the new software, fill her up and off you go. These planes have been sat idle for months.
 
2175301
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 6:33 pm

StTim wrote:
Each frame is going to need a return to service plan. It isn't just upload the new software, fill her up and off you go. These planes have been sat idle for months.


That was covered long ago: If I recall the previous post the Airlines estimated in the range of 100 to 150 manhours to return to each aircraft to service (including time to upload new software), assuming no other maintenance issues needed to be taken care of. Several people would be working on the aircraft at once and each aircraft would likely take 2-3 days to return to service. The larger airlines figured that they could be returning multiple aircraft to service at a time. Based on what was presented then I expected that the aircraft could all be physically returned to service within 2 weeks of the upgrade being issued.

It may potentially take more time for pilot training than to return the aircraft themselves to service. That will likely be true if new simulator scenarios have to be run.

Have a great day,
 
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seahawk
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 6:53 pm

StTim wrote:
Each frame is going to need a return to service plan. It isn't just upload the new software, fill her up and off you go. These planes have been sat idle for months.


If you have enough faith in Boeing you can do all inspections before the date, the FAA certifies the software update.
 
StTim
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 6:56 pm

2175301 wrote:
StTim wrote:
Each frame is going to need a return to service plan. It isn't just upload the new software, fill her up and off you go. These planes have been sat idle for months.


That was covered long ago: If I recall the previous post the Airlines estimated in the range of 100 to 150 manhours to return to each aircraft to service (including time to upload new software), assuming no other maintenance issues needed to be taken care of. Several people would be working on the aircraft at once and each aircraft would likely take 2-3 days to return to service. The larger airlines figured that they could be returning multiple aircraft to service at a time. Based on what was presented then I expected that the aircraft could all be physically returned to service within 2 weeks of the upgrade being issued.

It may potentially take more time for pilot training than to return the aircraft themselves to service. That will likely be true if new simulator scenarios have to be run.

Have a great day,


I suspect that 150 hours is increasing significantly as the grounding continues.
 
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7BOEING7
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 7:33 pm

Airplanes are not just parked and forgotten about. They were either put in short term storage or long term storage. Each has different requirements for procedures that cover all three phases — going in, during, and coming out. Long term will take a few more manhours to get back to service but I don’t think either one will be a very big deal.
 
smartplane
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 8:19 pm

f1restate wrote:
Why does Boeing staff need to go on-site to perform the firmware upgrade ? This should be a routine procedure that can be done by the qualified engineers employed by each one of the airlines involved.

CAF's and ownership hasn't transferred to customers, so unlikely to permit customer's engineers to have a role. They need to be modified, Boeing test flight, CAF then handover. Maybe this can all be accomplished at storage locations. Or perhaps the mods are performed at the storage locations, then transit to Boeing = test flight, then CAF.

Will WN change their new aircraft acceptance process following increased FAA scrutiny of WN and Boeing?
 
f1restate
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 8:47 pm

smartplane wrote:
f1restate wrote:
Why does Boeing staff need to go on-site to perform the firmware upgrade ? This should be a routine procedure that can be done by the qualified engineers employed by each one of the airlines involved.

CAF's and ownership hasn't transferred to customers, so unlikely to permit customer's engineers to have a role. They need to be modified, Boeing test flight, CAF then handover. Maybe this can all be accomplished at storage locations. Or perhaps the mods are performed at the storage locations, then transit to Boeing = test flight, then CAF.

Will WN change their new aircraft acceptance process following increased FAA scrutiny of WN and Boeing?
That pertains to a ~100 aircraft in BA storage, if I am not mistaken? The other ~400 are already delivered.

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scbriml
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Re: Boeing 737MAX Grounded Worldwide Q3 2019

Sun Jul 21, 2019 9:04 pm

PW100 wrote:
To go back to whether the 5.6B covers only Q2. It is my understanding that the 5.6B covers all future potential losses (in terms of airline compensation for late deliveries, grounded planes etc), as foreseen as reasonably foreseen at this point in time. So that would include also Q3 and Q4, and also 2020. However if the grounding takes longer than foreseen (at this point in time), that that number will be revised.


If one reads the original Leeham article, it seems reasonably clear that the $5.6billion is Boeing's estimate of all the costs you've listed for the duration of the grounding. But, it assumes that MAX returns to service in October and obviously doesn't include any settlements for victims of the two crashes or any possible fines that might arise from government investigations.

https://leehamnews.com/2019/07/18/boein ... rge-in-2q/
For purposes of the second-quarter financial results, the company has assumed that regulatory approval of 737 MAX return to service in the U.S. and other jurisdictions begins early in the fourth quarter 2019. This assumption reflects the company’s best estimate at this time, but actual timing of return to service could differ from this estimate.


Equally obviously, another charge will almost certainly have to be taken if the grounding extends beyond October and into 2020.
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