MCTSET
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787 Trouble in the Future?

Sun Aug 18, 2019 11:15 pm

Reading the overview of this leeham article I realised that despite the huge 787 pick up in recent years and deliveries really gaining traction they only have a full book until 2021, that has surprised me.

Do you think Boeing has increased the 787 rate too much in order the bring unit costs down but in they may actually outpaced the market and got themselves in a slight problem.

https://leehamnews.com/2019/07/29/boein ... hallenges/

I can tell this thread will cause trouble so everyone take it easy it’s not a battle to the death to defend your favourite manufacturer.
Last edited by SQ22 on Fri Sep 13, 2019 4:54 pm, edited 1 time in total.
Reason: Title updated
 
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Jouhou
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Re: 787 trouble in the future

Mon Aug 19, 2019 12:41 am

MCTSET wrote:
Reading the overview of this leeham article I realised that despite the huge 787 pick up in recent years and deliveries really gaining traction they only have a full book until 2021, that has surprised me.

Do you think Boeing has increased the 787 rate too much in order the bring unit costs down but in they may actually outpaced the market and got themselves in a slight problem.

https://leehamnews.com/2019/07/29/boein ... hallenges/

I can tell this thread will cause trouble so everyone take it easy it’s not a battle to the death to defend your favourite manufacturer.


The global economy seems to be in a downturn, I think the airlines are trying the sit and wait approach as much as possible when it comes to fleet planning (In the case of narrowbodies this isn't as possible due to giant backlogs).
 
phxa340
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Re: 787 trouble in the future

Mon Aug 19, 2019 12:45 am

MCTSET wrote:
Reading the overview of this leeham article I realised that despite the huge 787 pick up in recent years and deliveries really gaining traction they only have a full book until 2021, that has surprised me.

Do you think Boeing has increased the 787 rate too much in order the bring unit costs down but in they may actually outpaced the market and got themselves in a slight problem.

https://leehamnews.com/2019/07/29/boein ... hallenges/

I can tell this thread will cause trouble so everyone take it easy it’s not a battle to the death to defend your favourite manufacturer.


Leeham also consistently has an anti-Boeing tilt to it. While that doesn’t invalidate the article, I definitely think it’s not all doom and gloom for the 787.
 
MIflyer12
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Re: 787 trouble in the future

Mon Aug 19, 2019 1:00 am

Do you think telling a carrier 'You need to wait four years for our first delivery slots,' is really a good selling proposition? What's the 'right' level of backlog, and why is that uniquely the answer?
 
LDRA
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Re: 787 trouble in the future

Mon Aug 19, 2019 1:15 am

Given that narrow body productions all have huge backlog, in case of global travel slow down, can Boeing entice customers to order 787 to use on short/long haul routes that are typically flown by narrow bodies? 787 has the fatigue life to do it, maybe just need a dedicated low MTOW variant with some structural lighten applied?
 
Exeiowa
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Re: 787 trouble in the future

Mon Aug 19, 2019 1:39 am

Wow thats a really interesting idea to explore! So economy of scale helps bring unit costs down, but can only be sustainable with sufficient ongoing demand. And predictions on the future make this an interesting case. If future orders slow (such as a global economic conditions changing) do we end up with choices being made on how to meet this change, by eirher slowing production or running fast and hoping. If we slow then the cost reduction might be reduced from the planned, which effects the ability to be as profitable predicated on the high output when the orders were placed, or you run hoping to get through without effect, then being forced to dramatically slow. With airlines noticing a shorter wait time there is less urgency to order, making the planning even trickier. This could end up being fascinating watching how they figure squaring all the competing circles.
 
trex8
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Re: 787 trouble in the future

Mon Aug 19, 2019 1:39 am

LDRA wrote:
Given that narrow body productions all have huge backlog, in case of global travel slow down, can Boeing entice customers to order 787 to use on short/long haul routes that are typically flown by narrow bodies? 787 has the fatigue life to do it, maybe just need a dedicated low MTOW variant with some structural lighten applied?

Like the 787-3 for Japanese carriers which got dropped??
 
RickNRoll
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Re: 787 trouble in the future

Mon Aug 19, 2019 1:56 am

phxa340 wrote:
MCTSET wrote:
Reading the overview of this leeham article I realised that despite the huge 787 pick up in recent years and deliveries really gaining traction they only have a full book until 2021, that has surprised me.

Do you think Boeing has increased the 787 rate too much in order the bring unit costs down but in they may actually outpaced the market and got themselves in a slight problem.

https://leehamnews.com/2019/07/29/boein ... hallenges/

I can tell this thread will cause trouble so everyone take it easy it’s not a battle to the death to defend your favourite manufacturer.


Leeham also consistently has an anti-Boeing tilt to it. While that doesn’t invalidate the article, I definitely think it’s not all doom and gloom for the 787.


They have the figures all there. It does look bad in the sense that Boeing can't keep up the production rate indefinitely. That isn't a problem if they just cut back the rate. The issue though is that they may have done with the 787 what they have done with the 737, gone all in on the short term without consideration for the long term. That is, are there financial issues that are going to come up because of a drop in the cash income from the 787 program?
 
strfyr51
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:04 am

Boeing has seen enough Production cycles to know what's going on. and they've seen quite a few economy cycles s well. I lived through 2 myself the las one ending in 1983, 1984 till Now has been a pretty good cycle but? as it is with everything, This too shall Pass...
 
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lightsaber
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:15 am

MIflyer12 wrote:
Do you think telling a carrier 'You need to wait four years for our first delivery slots,' is really a good selling proposition? What's the 'right' level of backlog, and why is that uniquely the answer?

Exactly. This has enabled Boeing to gain orders:
Orders by year: 2013 2014 2015 2016 2017 2018 2019
787 182 41 72 58 94 109 59
a350 232 -32 -3 41 36 40 19

Now Airbus and Boeing did very well in 2013.

Since then Boeing has done well selling 787s. I hypothesize due to near term slots availability. But now in a downturn, Boeing intentionally keeping open slots has risk. We'll find out soon enough.

Either more orders, like ANZ (not finalized) roll in, or we have an issue. Not until 2022, but vendors do not like book to bill ratios below one when the backlog is approaching the current industry standard (three and a half years).

787: 591 firm and decent letters of intent to finalize or 3.51 year backlog
A350: 618, plus sales campaigns in work, about 5.7 year backlog

With 787 approaching minimum backlog for vendor contracts to provide minimum cost, no crisis in 2019. There is enough backlog for full scale production. But this time next year, either Boeing sells 168+ by September 2020 (end September) or a line slowing.

With the PiPs we hear about and debate about their validity, we should.

Interesting times,
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:28 am

Leave it to Leeham to find some sort of negative about the massive backlog/production rate
 
RickNRoll
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:43 am

ikolkyo wrote:
Leave it to Leeham to find some sort of negative about the massive backlog/production rate


At the current rate there is not a massive backlog. Which is perfectly OK if that is what Boeing has planned for.
 
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:50 am

Cyclical economic downturns, like the one we are probably about to witness, are always tougher on widebody sales.
This will affect both Airbus and Boeing, although I am not sure which is better positioned to weather the storm.

From an uneducated standpoint, one would say that Boeing's MAX-related financial hit will likely not help in the medium term. Production rate cuts on the 787 are not hard to envision either, and they wouldn't help, although Airbus will likely be in an equivalent pickle, especially with the A330.

With any luck, the 78J will prove popular in Asia as the true A330-300 replacement and will sustain the orderbook.

Another article on the topic:

https://dsm.forecastinternational.com/w ... stainable/
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musman9853
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:56 am

It's inevitable that the 787 line will drop from rate 14. The only question is when. I would wager that it would be later next decade at the earliest, and maybe even later depending on pips/neo that will come online
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Re: 787 trouble in the future

Mon Aug 19, 2019 3:01 am

To expand on my prior post, Boeing must sell. The 787-10 will sell more. Possible sales:
QF (decision 2020)
EK
SpiceJet

Plus top off orders.

I agree it is if, not when production decreases. I think Boeing can pull off a few more years. As noted, the 787-10 is a natural A333 replacement.

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astuteman
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Re: 787 trouble in the future

Mon Aug 19, 2019 5:51 am

MIflyer12 wrote:
Do you think telling a carrier 'You need to wait four years for our first delivery slots,' is really a good selling proposition? What's the 'right' level of backlog, and why is that uniquely the answer?


Typically a manufacturer would want a backlog equivalent to about 4-5 years of production, with the next 2 years slots filled.
This brings security and stability to the whole supply and manufacturing process, and prevents catastrophic downswings which kill productivity.

That is pretty much where the 787 is now.
However, the overall backlog is now at 3.5 years of production and sinking, which is what is being flagged up.
Can the type sustain 168 orders per year in the long run?

lightsaber wrote:
Exactly. This has enabled Boeing to gain orders:
Orders by year: 2013 2014 2015 2016 2017 2018 2019
787 182 41 72 58 94 109 59
a350 232 -32 -3 41 36 40 19.


The issue shown in these numbers is that orders "only" average 72 per year for the last 6 years against a production rate of 168

We can see that orders have increased as the backlog comes down, which is what we would expect for a popular aircraft, but only to c. 100 per year.

Whilst the A350 numbers are lower, they illustrate the issue of having too long a backlog, rather than a shrinking one - still at nearly 6 years of production.
It is relevant to the 787 because as A350 backlog drops, and production rates/efficiency climb, it will become increasingly available, cheaper, and more attractive

lightsaber wrote:
With 787 approaching minimum backlog for vendor contracts to provide minimum cost, no crisis in 2019. There is enough backlog for full scale production. But this time next year, either Boeing sells 168+ by September 2020 (end September) or a line slowing.


Agree. Vendors will be starting to get nervous about the rate over the next 12 months if there is no major change

ikolkyo wrote:
Leave it to Leeham to find some sort of negative about the massive backlog/production rate


It is entirely appropriate to point out that your greatest asset (a high rate that reduces cost and increases availability) becomes one of your greatest risks once the backlogs get too short.

Boeing have clearly gone "all-out" on the 787 and will have gained massive cost reductions both from the supply chain and in its own production processes.
Once it starts to reduce the production rate by any significant amount, those benefits will progressively erode.

There's no question that Boeing did the right thing hiking the supply rate to "make hay while the sun shines"
Now we get to the phase where we will begin to see what the long-term viable rate is for the 787.

To be fair, a rate cut to say 10 per month is no great disaster.
And who knows? We might yet see 168 orders in the next year :)
Leeham are rightly pointing out that we are approaching the decision point. And rightly so

Rgds
 
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Re: 787 trouble in the future

Mon Aug 19, 2019 6:04 am

With 857 units already delivered and 591 in the backlog, it is not a bad situation.

Let's take a very conservative approach and say that a 787 delivery brings 100 million dollars (an extremely conservative average) then the total sales has been 85,700,000,000 dollars.

Whichever way you doin it, you know that the deferred production cost is only an accounting technique and is not something "to pay back" as opposed to the cash in flow generated by deliveries that is real (real cash transaction).

Obviously there will be more cash to generate with future deliveries.

And finally, there are very likely new orders coming in especially for 787-10.

It is interesting to see how people are worried by the future of the 787. That's very nice of them to think about it.
 
WIederling
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Re: 787 trouble in the future

Mon Aug 19, 2019 6:54 am

phxa340 wrote:
Leeham also consistently has an anti-Boeing tilt to it. While that doesn’t invalidate the article, I definitely think it’s not all doom and gloom for the 787.

Realism and not going with the cheering fans is not really "anti"-anything.

The Leeham article noted that at current (mismatched) production and order rates the orderbook will run significantly dryer in a couple of years.
Just not enough new orders coming up and remaining orders are often spaced out further into the future.

Which is information accessible to everyone. you only have to turn your eyes away from the more flashy newbytes.

Actually rather similar to the classic 777 production ( rates ).
Only there is currently no successor model coming up after the 787 Mk1/2
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astuteman
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Re: 787 trouble in the future

Mon Aug 19, 2019 7:09 am

astuteman wrote:
To be fair, a rate cut to say 10 per month is no great disaster.


For context, no other widebody in history has achieved the 120 per year delivery rate that 10 per month implies

The A330 hit
101 in 2012
108 in 2013
108 in 2014
103 in 2015

The 777 hit
98 in 2013
99 in 2014
98 in 2015
99 in 2016

That's the context for the 787 rates

A bit more context..

Total medium/large twin-aisle deliveries (A330/A350 and 777/787) were at:-

below 100 until 2006
below 200 until 2012
below 300 until 2014
have been at 350 per year ever since

how sustainable is a delivery rate of 350 per year for big widebody twins?

Rgds
 
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Re: 787 trouble in the future

Mon Aug 19, 2019 7:24 am

Boeing may be ramping up production as a way to deal with the MAX crisis. That way they maintain cash flow while the income from the 737 is nearly completely cut off, and if necessary cut back later after the MAX is flying again. I also suspect that cost savings achieved when ramping production up to 14 per month do not all go away when production is later cut back to, say, 10 a month. And having a shorter backlog is certainly a selling point.
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WIederling
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Re: 787 trouble in the future

Mon Aug 19, 2019 7:24 am

astuteman wrote:
astuteman wrote:
To be fair, a rate cut to say 10 per month is no great disaster.


For context, no other widebody in history has achieved the 120 per year delivery rate that 10 per month implies
.....

how sustainable is a delivery rate of 350 per year for big widebody twins?


Slightly OT:
Question to Radio Yerevan:
is it true that in America every one has an automobile?

Answer from Radio Yerevan:
In principle: yes. But we have the parking space.

i.e. that depends on the imbeciles kicking off another major global crisis or not.
signs are not good.
This could work for Boeing like the GFC.
Murphy is an optimist
 
JayinKitsap
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Re: 787 trouble in the future

Mon Aug 19, 2019 7:34 am

The answer is probably in the options, AA has 28 from their recent order alone. If 50 options are taken a year, over 4 years that is 200 planes by itself. I would suspect that Boeing has a decent feel as to how many options are being taken in the near term.
 
astuteman
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Re: 787 trouble in the future

Mon Aug 19, 2019 7:50 am

SEPilot wrote:
Boeing may be ramping up production as a way to deal with the MAX crisis. That way they maintain cash flow while the income from the 737 is nearly completely cut off, and if necessary cut back later after the MAX is flying again. I also suspect that cost savings achieved when ramping production up to 14 per month do not all go away when production is later cut back to, say, 10 a month. And having a shorter backlog is certainly a selling point.


Boeing planned to go to rate 14 on the 787 long before the MAX crisis.

Your point about cost savings is valid, though IMO, and why I felt it worth adding the context that 120 per year is still an unprecedented delivery rate.
But some of the current advantage will get eroded as the rate drops.

160 x 787 vs 80 x A350
is not the same advantage as
130 x 787 vs 110 x A350
(for example).

Of course we don't know yet that the orders won't come.
But we are entering the phase where we start to find out what the long term sustainable rate for the 787 is.

Rgds
 
sagechan
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Re: 787 trouble in the future

Mon Aug 19, 2019 1:35 pm

It's an interesting and valid disclaimer to make. However, excluding a situation where Boeing received massive cancellations of closer in orders, it's not a difficult to manage problem. Rates can be cute by several frames per month and maintain positive margins on production. There would be some margin reduction due to cost increases. Since the deferred program accounting costs are sunk, they are irrelevant to maintaining production margins. So barring something crazy Boeing is really only at risk for a modest margin hit.
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Elementalism
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:17 pm

What I find interesting. With this strategy of high delivery rates short time frame. Boeing can really hammer on the A330 with the 787. The most compelling argument for the A330 NEO has been production slots. With under 2 years worth of slot left. That isnt even a selling point for Airbus anymore.

The risk as others have pointed out. If the orders dont materialize. That is an expensive production line sitting idle.
 
CHRISBA35X
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:29 pm

No I don't see any threat to the 787 here.

You'll have the 787-9 continue to be ordered in huge numbers and the 787-10 start to really gain traction with the range bumps it has apparently been given.

I think they'll end up lightening the 787-8 too.

Thing to remember is many 772/A333s are not quite at the end of their replacement cycle yet and when they do the 789/J combo will gobble up 70% of the market. In five years there will be a monster backlog of 789s I'm very certain. I like the A339 but I think it is too close to the A359 and needed to be a lighter, less capable and more short-haul optimised bird.
 
TObound
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:50 pm

MIflyer12 wrote:
Do you think telling a carrier 'You need to wait four years for our first delivery slots,' is really a good selling proposition? What's the 'right' level of backlog, and why is that uniquely the answer?


Yep. That a 2+ year backlog is seen as a potential warning sign is nuts.

I'd argue that 2-3 years is about right for the backlog. Covers the long lead time, which means ordering airlines pay immediately and procurement for their frames start immediately. But it's not so much of a concern that they are paying now and looking at deliveries half a decade away, which is also an option when the backlog is only 2-3 years.
 
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Re: 787 trouble in the future

Mon Aug 19, 2019 2:54 pm

RickNRoll wrote:
The issue though is that they may have done with the 787 what they have done with the 737, gone all in on the short term without consideration for the long term. That is, are there financial issues that are going to come up because of a drop in the cash income from the 787 program?

As above, maybe they are doing their long range planning quite well, and their long term plan says to make as many as they can at 14/month to get the backlog down, and then move remaining production to CHS to take advantage of lower labor and better logistics since CHS also sources major fuselage parts, and make room at PAE for NMA and NSA right next to the wing plant.

Looking at things from an unconventional angle, another GFC like dip would make it pretty easy for them to write off that much discussed deferred production cut with one swipe of the pen, bury it amongst other bad news, and emerge ready to fight another day.

Not that anyone hopes for another GFC or a reduced backlog, but one does have to make hay while the sun shines, and eventually winter does come.
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Re: 787 trouble in the future

Mon Aug 19, 2019 3:29 pm

astuteman wrote:
MIflyer12 wrote:
Do you think telling a carrier 'You need to wait four years for our first delivery slots,' is really a good selling proposition? What's the 'right' level of backlog, and why is that uniquely the answer?


Typically a manufacturer would want a backlog equivalent to about 4-5 years of production, with the next 2 years slots filled.
This brings security and stability to the whole supply and manufacturing process, and prevents catastrophic downswings which kill productivity.

That is pretty much where the 787 is now.
However, the overall backlog is now at 3.5 years of production and sinking, which is what is being flagged up.
Can the type sustain 168 orders per year in the long run?

lightsaber wrote:
Exactly. This has enabled Boeing to gain orders:
Orders by year: 2013 2014 2015 2016 2017 2018 2019
787 182 41 72 58 94 109 59
a350 232 -32 -3 41 36 40 19.


The issue shown in these numbers is that orders "only" average 72 per year for the last 6 years against a production rate of 168

We can see that orders have increased as the backlog comes down, which is what we would expect for a popular aircraft, but only to c. 100 per year.

Whilst the A350 numbers are lower, they illustrate the issue of having too long a backlog, rather than a shrinking one - still at nearly 6 years of production.
It is relevant to the 787 because as A350 backlog drops, and production rates/efficiency climb, it will become increasingly available, cheaper, and more attractive

lightsaber wrote:
With 787 approaching minimum backlog for vendor contracts to provide minimum cost, no crisis in 2019. There is enough backlog for full scale production. But this time next year, either Boeing sells 168+ by September 2020 (end September) or a line slowing.


Agree. Vendors will be starting to get nervous about the rate over the next 12 months if there is no major change

ikolkyo wrote:
Leave it to Leeham to find some sort of negative about the massive backlog/production rate


It is entirely appropriate to point out that your greatest asset (a high rate that reduces cost and increases availability) becomes one of your greatest risks once the backlogs get too short.

Boeing have clearly gone "all-out" on the 787 and will have gained massive cost reductions both from the supply chain and in its own production processes.
Once it starts to reduce the production rate by any significant amount, those benefits will progressively erode.

There's no question that Boeing did the right thing hiking the supply rate to "make hay while the sun shines"
Now we get to the phase where we will begin to see what the long-term viable rate is for the 787.

To be fair, a rate cut to say 10 per month is no great disaster.
And who knows? We might yet see 168 orders in the next year :)
Leeham are rightly pointing out that we are approaching the decision point. And rightly so

Rgds

You make good points.

The next two years are filled. Vendors will work full speed 2020 and 2021.

The backlog is low. 3.5 years is the minimum at contract signing for the next two years or vendors push back.

Airlines do not like buying out past 4 years and if they need aircraft, they need them now. Some of that is met by Leasing companies buying on speculation.

There will be new orders. But as I noted before, without 168 in the next year, Boeing will have to slow the in 2022.

As noted, cutting rate to 120/year is no disaster. Because the 168 will be maintained for 3 years+, enough equivalent will be paid down it will work. That is 8 quarters*$1.3 billion per quarter of differed costs bought down. Or a little over $10 billion. I'll let other threads discuss that in detail.

Boeing must sell. Let us see how they do

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kanban
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Re: 787 trouble in the future

Mon Aug 19, 2019 5:51 pm

What I find funny about the whole thread is you need buyers in order to sell aircraft, and currently the airlines are not buying 'just in case' planes. selling aircraft for millions of dollars is not a sellers market. the industry is cyclic an new model comes out and here is a surge of buying, then things quiet down. If either OEM came up with a 40% operational cost reduction, you'd see a surge.. but that's not going to happen. neither OEM will throw money at even slight improvements until the airlines indicate a willingness to buy which right now they are not doing. additionally aircraft are starting to have longer service lives, so automatic 10 year replacements may become a thing of the past.
 
mjoelnir
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787 production, does Boeing has to slow down?

Fri Sep 13, 2019 11:38 am

Boeing Warns U.S.-China Spat Raises New Risk for 787 Dreamliner

https://www.bloomberg.com/news/articles ... dreamliner

It seems that if Boeing does not get many new orders for the 787 production has to slow from 14 frames a month.
In 2022 are 93 slots unfilled, increasing to 136 and 154 in 2023 and 2024.

Boeing did expect orders from China, but they do not materialize because of the ongoing trade war.
 
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par13del
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 11:46 am

...or, they can continue to produce the 14 frames a month until the orders are filled, clear the accounting block then dedicate more resources to the NMA and NSA.
Maybe they should wait to see if Trump get's re-elected, if he does, them filling all orders sooner rather than later allowing new technology may be a good idea as the trade wars will continue, you don't really think that either China or Trump will fold?
 
mjoelnir
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 12:06 pm

par13del wrote:
...or, they can continue to produce the 14 frames a month until the orders are filled, clear the accounting block then dedicate more resources to the NMA and NSA.
Maybe they should wait to see if Trump get's re-elected, if he does, them filling all orders sooner rather than later allowing new technology may be a good idea as the trade wars will continue, you don't really think that either China or Trump will fold?


I assume that Boeing wants to produce the 787 the next 30 years.

even a 100 frame order from China would only push the empty slots a year down the road. IMO 14 frames a month is not sustainable.
I could imagine that Boeing getting near to 2022, could close down the FAL in Everett and let the FAL in Charleston be enough.
 
Weatherwatcher1
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 12:43 pm

The 787 earned about 100 orders in Both 2018 and 2017. The trade war may be the difference between 10 a month and 14 a month rates.

For the last few years, the A330CEOs being built almost all went to China. Without more A330s on order, that demand for new airplanes has to go somewhere.
Last edited by Weatherwatcher1 on Fri Sep 13, 2019 12:57 pm, edited 1 time in total.
 
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 1:44 pm

par13del wrote:
...or, they can continue to produce the 14 frames a month until the orders are filled, clear the accounting block then dedicate more resources to the NMA and NSA.


The accounting block is strictly an accounting issue as deferred engineering expense. It has nothing to do with resources available to NMA or NSA. It just gets set up for more profits now vs. more profits later.

Didn't this forum just have a discussion on depletion of the 787 backlog? Was that initiated by the Bloomberg author doing 'research?'
 
Sooner787
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 2:08 pm

Wonder what the monthly production rate would have to drop to
before Boeing decided to consolidate 787 production in CHS?

Of course , if that happened, it would open up space in Everett
for a 797 line.
 
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scbriml
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 2:19 pm

par13del wrote:
...or, they can continue to produce the 14 frames a month until the orders are filled, clear the accounting block then dedicate more resources to the NMA and NSA.
Maybe they should wait to see if Trump get's re-elected, if he does, them filling all orders sooner rather than later allowing new technology may be a good idea as the trade wars will continue, you don't really think that either China or Trump will fold?


You're missing the point. The backlog is not the issue, but empty production slots where airlines don't want a plane delivered is a big potential problem. Currently there are, according to Reuters, 190 unallocated production slots in 2023/24. That's just short of eight per month unallocated from the 14 available slots. That would be too many for there to not be a significant drop in production rate.

Even if Boeing books 100 787 orders per year, that would only support a long-term production rate of eight per month.
Time flies like an arrow. Fruit flies like a banana!
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whywhyzee
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 3:21 pm

From the airline's perspective, if they know the slots will be available, why order far in advance if they don't have to. It is in their best interest to wait and make the decision with as much information as possible. From Boeing's perspective, being able to offer say 18 month lead times consistently is a huge selling feature in itself.

I don't think this will end up being an issue at all, even without China. There are still a lot of A330s and 777s pending replacement orders that the 787 will be a very strong contender for.
 
inkjet7
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Re: 787 Trouble in the Future?

Fri Sep 13, 2019 5:50 pm

... Not mentioning all the options airlines have. The slots might fill up rapidly if they get close to their expiry dates..
 
ewt340
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Re: 787 trouble in the future

Fri Sep 13, 2019 5:59 pm

phxa340 wrote:
MCTSET wrote:
Reading the overview of this leeham article I realised that despite the huge 787 pick up in recent years and deliveries really gaining traction they only have a full book until 2021, that has surprised me.

Do you think Boeing has increased the 787 rate too much in order the bring unit costs down but in they may actually outpaced the market and got themselves in a slight problem.

https://leehamnews.com/2019/07/29/boein ... hallenges/

I can tell this thread will cause trouble so everyone take it easy it’s not a battle to the death to defend your favourite manufacturer.


Leeham also consistently has an anti-Boeing tilt to it. While that doesn’t invalidate the article, I definitely think it’s not all doom and gloom for the 787.


With due respect. I don't think Leeham have an anti-Boeing bias.

If we are looking at the fact. All Boeing's latest projects has been engulfed in serious problems. Starting with B787 and the battery that got it grounded worldwide for 4 months. The MAX disaster and groundings. And now B777X, while it's not serious yet, it might comes up in the future if we look at the pattern that happens in the last decade for Boeing.

Their analysis would naturally became "anti-Boeing". But it's only true because all the problems that surfaced by all Boeing recent products.

While airbus also encounter many problems on A350, A330neo and A320neo family. It never really created as much problems as Boeing's newer products. Their biggest problems comes from the lack of order for A380 which resulted in financial losses for the company.
 
ewt340
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Re: 787 Trouble in the Future?

Fri Sep 13, 2019 6:13 pm

I mean they could update B787 with neo engines in around 2025+ and try to revive those for couple more years. But for the production gap around 2022-2023, it would be easily get filled in upcoming years for new expected orders from airlines around the world at next air shows.

As for 2024-2025. Not sure about this timeframe. Presumably they would have to cut off production rates soon if they didn't sell enough and moved their resources to NMA or NSA like many has suggested in previous comments.
 
h1fl1er
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Re: 787 trouble in the future

Fri Sep 13, 2019 6:17 pm

ewt340 wrote:
If we are looking at the fact. All Boeing's latest projects has been engulfed in serious problems. Starting with B787 and the battery that got it grounded worldwide for 4 months. The MAX disaster and groundings. And now B777X, while it's not serious yet, it might comes up in the future if we look at the pattern that happens in the last decade for Boeing.

Their analysis would naturally became "anti-Boeing". But it's only true because all the problems that surfaced by all Boeing recent products.

While airbus also encounter many problems on A350, A330neo and A320neo family. It never really created as much problems as Boeing's newer products. Their biggest problems comes from the lack of order for A380 which resulted in financial losses for the company.


Given the order book and sales landslide for the 787, I'm sure their competitors would love to have such a problem.

On the OP, the replacement cycle for larger airframes will occur at some point and Boeing is positioning themselves to capitalize. If the orders don't materialize, everyone is in trouble at that point. But there are a couple thousand 777s out there which will eventually go to scrap and Boeing is betting their house they will capture the lion's share of these especially with the 78x. Between 777s and 330s, it's a lot of planes. Some will get moved to 321XLRs, I'm convinced. But all those 767s, 330s, 777s - right now the battle is in that market space.

Looking long-term, their issue is not a noncompetitive product, but an overcapacity in production. Over in Toulose, they're facing the opposite problem. If orders for 787s dry up, what's going to supplant them? Until Airbus can cut 350 production costs a lot, it won't be that frame. The 330N is a stopgap, but stopgap to what?
 
ewt340
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Re: 787 trouble in the future

Fri Sep 13, 2019 6:27 pm

h1fl1er wrote:
ewt340 wrote:
If we are looking at the fact. All Boeing's latest projects has been engulfed in serious problems. Starting with B787 and the battery that got it grounded worldwide for 4 months. The MAX disaster and groundings. And now B777X, while it's not serious yet, it might comes up in the future if we look at the pattern that happens in the last decade for Boeing.

Their analysis would naturally became "anti-Boeing". But it's only true because all the problems that surfaced by all Boeing recent products.

While airbus also encounter many problems on A350, A330neo and A320neo family. It never really created as much problems as Boeing's newer products. Their biggest problems comes from the lack of order for A380 which resulted in financial losses for the company.


Given the order book and sales landslide for the 787, I'm sure their competitors would love to have such a problem.

On the OP, the replacement cycle for larger airframes will occur at some point and Boeing is positioning themselves to capitalize. If the orders don't materialize, everyone is in trouble at that point. But there are a couple thousand 777s out there which will eventually go to scrap and Boeing is betting their house they will capture the lion's share of these especially with the 78x. Between 777s and 330s, it's a lot of planes. Some will get moved to 321XLRs, I'm convinced. But all those 767s, 330s, 777s - right now the battle is in that market space.

Looking long-term, their issue is not a noncompetitive product, but an overcapacity in production. Over in Toulose, they're facing the opposite problem. If orders for 787s dry up, what's going to supplant them? Until Airbus can cut 350 production costs a lot, it won't be that frame. The 330N is a stopgap, but stopgap to what?


It's a stopgap for many market that required cheap transitions to a more modern replacements for their B767 and A330.

Albeit it's not the perfect solutions. It's the only one that make sense for Airbus. I think they did suspect that A330neo would lose in the battle against B787 from the get go, Hence why they developed A350 in the first place.

But one of B787 downfall would be the fact that B787-10 wouldn't be able to offer 1-1 replacement for B777-200ER or B777-300ER. That's when A350 steps in, and Airbus realized it would be redundant to created direct competitions for B787 cause it's gonna ended up in bloodbath that nobody wins while Boeing still dominates the B777-300ER's 350 seat market.

Again, we could ask the same thing with B777X. It's a stopgap but stopgap to what? Boeing know their re-engine B777-300ER wouldn't be as efficient as A350-1000. Hence why they stretched it to make it more efficient. Both A330neo and B777X are created as stopgap, stopgap that they have to creat to make sure their competitions doesn't get to consumed 100% of the market they used to cover. It's redundant, but cheap enough to justify to make a tiny bit of profits at the end of the decade.

B787 future would be fine, they are successful, but it doesn't mean the market not gonna dry up in the future.
 
h1fl1er
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Re: 787 trouble in the future

Fri Sep 13, 2019 6:50 pm

ewt340 wrote:
h1fl1er wrote:
ewt340 wrote:
If we are looking at the fact. All Boeing's latest projects has been engulfed in serious problems. Starting with B787 and the battery that got it grounded worldwide for 4 months. The MAX disaster and groundings. And now B777X, while it's not serious yet, it might comes up in the future if we look at the pattern that happens in the last decade for Boeing.

Their analysis would naturally became "anti-Boeing". But it's only true because all the problems that surfaced by all Boeing recent products.

While airbus also encounter many problems on A350, A330neo and A320neo family. It never really created as much problems as Boeing's newer products. Their biggest problems comes from the lack of order for A380 which resulted in financial losses for the company.


Given the order book and sales landslide for the 787, I'm sure their competitors would love to have such a problem.

On the OP, the replacement cycle for larger airframes will occur at some point and Boeing is positioning themselves to capitalize. If the orders don't materialize, everyone is in trouble at that point. But there are a couple thousand 777s out there which will eventually go to scrap and Boeing is betting their house they will capture the lion's share of these especially with the 78x. Between 777s and 330s, it's a lot of planes. Some will get moved to 321XLRs, I'm convinced. But all those 767s, 330s, 777s - right now the battle is in that market space.

Looking long-term, their issue is not a noncompetitive product, but an overcapacity in production. Over in Toulose, they're facing the opposite problem. If orders for 787s dry up, what's going to supplant them? Until Airbus can cut 350 production costs a lot, it won't be that frame. The 330N is a stopgap, but stopgap to what?


It's a stopgap for many market that required cheap transitions to a more modern replacements for their B767 and A330.

Albeit it's not the perfect solutions. It's the only one that make sense for Airbus. I think they did suspect that A330neo would lose in the battle against B787 from the get go, Hence why they developed A350 in the first place.

But one of B787 downfall would be the fact that B787-10 wouldn't be able to offer 1-1 replacement for B777-200ER or B777-300ER. That's when A350 steps in, and Airbus realized it would be redundant to created direct competitions for B787 cause it's gonna ended up in bloodbath that nobody wins while Boeing still dominates the B777-300ER's 350 seat market.

Again, we could ask the same thing with B777X. It's a stopgap but stopgap to what? Boeing know their re-engine B777-300ER wouldn't be as efficient as A350-1000. Hence why they stretched it to make it more efficient. Both A330neo and B777X are created as stopgap, stopgap that they have to creat to make sure their competitions doesn't get to consumed 100% of the market they used to cover. It's redundant, but cheap enough to justify to make a tiny bit of profits at the end of the decade.

B787 future would be fine, they are successful, but it doesn't mean the market not gonna dry up in the future.


777X is imo a stopgap to nowhere. I don't see a future for planes that large. It only makes sense for the big cargo haulers.

Economically, it gets dominated by the smaller jets. The flaw is thinking that we need 1-1 replacements. That didn't happen with 747 and it isn't going to happen with 777. Nor 767 nor 330. The latter two are small enough that more comparable replacements will be sold, but the biggest jets are dinosaurs. Once the 767/330 sized jets had the range of the bigger ones, they are doing the replacing. The 777 showed us this 20+ years ago. Economics of operation are more important than size. Airlines are tending to pick the smallest jet that can do a route. If it's DL, yeah lol they want to haul 26t cargo TPAC, they're gonna be an outlier.

The real issue I see coming up is how do these side cargo business fliers like the US3 and EK coexist with airlines that are lopsidedly choosing smaller frames? The US3 are so stingy with big frame orders that you cannot keep a model alive just for them regardless of their desires. Does the cargo business go away? The cargo business in the first place was a way to maximize payload range economics of frames which were in a sense too large for the passenger routes. So they filled the excess with freight. Swap in a 78X and you don't that slack anymore so what next?
 
bbowma77
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Re: 787 Trouble in the Future?

Fri Sep 13, 2019 6:54 pm

Leeham posted an analysis a few years back that predicted Airbus would surpass Boeing in widebody's deliverys by 2019 or something like that, and there was also endless articles about how the bottom had dropped out on 777 retail values and that Boeing wouldn't be able to sell enough 777-300er to bridge the production gap. Boeing may have to reduce 787 production at some point, but they will still sell shedloads of them. The light backlog of 787's is really more of a problem for Airbus more than it is for Boeing. If you can get a 787 for around the same price as an A330NEO or 20% less than an A350 in the same timeframe or less, what would you do.
 
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Faro
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Re: 787 trouble in the future

Fri Sep 13, 2019 7:31 pm

lightsaber wrote:
To expand on my prior post, Boeing must sell. The 787-10 will sell more.



And then there’s the 787-10ER...if (when?) launched within 3-5 years that will sell boatloads of planes...besides killing off the 778X...and putting a serious dent in un-PiPed A350 sales...

I wonder whether GE can develop a smaller-diameter fan for a GE9X-lite at a reasonable cost...

Faro
The chalice not my son
 
jbs2886
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Re: 787 trouble in the future

Fri Sep 13, 2019 8:12 pm

Faro wrote:
lightsaber wrote:
To expand on my prior post, Boeing must sell. The 787-10 will sell more.



And then there’s the 787-10ER...if (when?) launched within 3-5 years that will sell boatloads of planes...besides killing off the 778X...and putting a serious dent in un-PiPed A350 sales...

I wonder whether GE can develop a smaller-diameter fan for a GE9X-lite at a reasonable cost...

Faro


I agree, the 787-10ER is the future of the 787 line and, IMO, will be very successful.

I’d add the 787 depends in part on the NMA. If that doesn’t go ahead, l would expect a reworked 787-8.
 
WayexTDI
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Re: 787 trouble in the future

Fri Sep 13, 2019 8:38 pm

Faro wrote:
lightsaber wrote:
To expand on my prior post, Boeing must sell. The 787-10 will sell more.



And then there’s the 787-10ER...if (when?) launched within 3-5 years that will sell boatloads of planes...besides killing off the 778X...and putting a serious dent in un-PiPed A350 sales...

I wonder whether GE can develop a smaller-diameter fan for a GE9X-lite at a reasonable cost...

Faro

What makes you believe Airbus will sit on their hands and do nothing if Boeing improves their 787?
 
travelhound
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Re: 787 production, does Boeing has to slow down?

Fri Sep 13, 2019 9:14 pm

mjoelnir wrote:
Boeing Warns U.S.-China Spat Raises New Risk for 787 Dreamliner

https://www.bloomberg.com/news/articles ... dreamliner

It seems that if Boeing does not get many new orders for the 787 production has to slow from 14 frames a month.
In 2022 are 93 slots unfilled, increasing to 136 and 154 in 2023 and 2024.

Boeing did expect orders from China, but they do not materialize because of the ongoing trade war.


Looking at my wide body orders, production and delivery spreadsheet, the major Chinese carriers have 184 A330 aircraft that will go into a replacement cycle starting 2022. There are minimal 787 orders to cover these retiring aircraft.

On the flip side out of the 1469 A330's delivered, 1218 are less than twenty years old. The replacement cycle for this aircraft (20-year economic life) will be around 30-45 aircraft per year starting 2023 or as high as 60-70 aircraft per year if we assume some of the major airlines will be using a 12 year replacement cycle.

If we look at current buying trends, with the exception of some of the large major airlines the 787 orders "stage" has been largely set, Ultimately, the success of the 14 units/month production rate will be based upon the success of sales campaigns with Turkish Airlines, Thai Airways, Saudi Arabian Airlines, Philippine Airlines, Malaysia Airlines, China Eastern, China Southern, Air China and to a lesser extent Air France/KLM.

Are there some head winds? Yes...........but if we consider the market is approximately two times larger than at the time the 787 was announced and Airbus has sold nearly 1500 aircraft since that time the 787 should flourish. Can it sustain production of fourteen units per month? Ultimately, that will probably be determined by world affairs and not the 787 itself.
 
h1fl1er
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Re: 787 trouble in the future

Sat Sep 14, 2019 12:38 am

WayexTDI wrote:
What makes you believe Airbus will sit on their hands and do nothing if Boeing improves their 787?


what can they do? In the Bloomberg article on production cost and market share they effectively threw in the towel in this product segment.

Improving their model means dropping production costs significantly or else it will get even less competitive.

If the 78x eventually turns out to be the W of the 787 line, look out. Everyone around here is dim on it because it didn't have mid 7000nm range with a full pax load like the W but how many routes are there at that distance? 20? It seems to honest to goodness be capable of mid 6000s with 330 pax at a fuel burn rate that can't be matched by the competition.

It's also not a giant cargo hauler but most airlines don't seem to miss that. They haven't been stampeding to buy bigger jets for more than half a decade now. Those who need that capability will trickle in a sale here, a sale there for a 359 or 779, probably not for many 35K or 778s, tho. the 35K will do crazy lift over crazy distance, yeah not as crazy as the 77L, but nobody's in any hurry to buy either of 'em. The 778 even more so and it has less than half the sales of the K.

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