Therefore it still makes sense to do NMA in a tight light 7W and then resuse that Fuselage/nose for NSA once you have figured out how to build it cheaper than A320. Highly automated production that radically reduces the amount of labour.
Do it first on NMA which can be priced at a premium due to it's capabilities to offset low initial production volumes but amortize the development of the production system and barrel/nose/system design over both NMA/NSA so development cost per frame is quite low using program cost accounting. Assume say 10,000 frames total over 20 years between the two programs at $40 Billion total and that is only $4 million per frame. However it shouldn't be that expensive to do both - maybe $25-30B stretched over 10 years.
Boeing totally has the cashflow for that.
I do not think Boeing can afford a dual-development (or only in the best case). Over the next years multiple risks are emerging and taking them into account will lead to lower risk options (767 re-engined, 737-9ER, etc.) to overcome the recent troubles:
possible global economical slowdown reduces investment from airlines --> slim chances to sell new aircraft (especially at premiums to get a return of investment), airlines would prefer established "cheap" models (737, 787, A320)
possible global economical slowdown reduces investment from airlines --> less orders of 787/777 push up the price of a single aircraft due to reduction of production and also pressure on accounting with the deferred production costs
years of liability's from the MAX grounding --> $8-9B costs already confirmed by Boeing (this number gets higher every month of the ongoing grounding)
years of liability's from the MAX grounding --> up to another $10B+ costs from court cases, settlements etc possbile
years of liability's from the MAX grounding --> compensations for airlines reduce profitability of the 737Max line (and other lines if compensations are shifted towards them)
changes in certification due to FAA/Boeing scandal regarding the 737Max certification --> possible delay of the 777X certification
changes in certification due to FAA/Boeing scandal regarding the 737Max certification --> increased certification times and efforts needed for any new aircraft (higher costs)
introducing new type (no commonality) --> increased costs for airlines pushes them to buy established models already in the fleet
lessons learned from the 787 development ($30B R&D costs for the aircraft and production system development) --> developments do not get cheaper due to additional complexity of modern frames
lessons learned from the 787 development ($30B R&D costs for the aircraft and production system development) --> a dual development would cost even more (probably $40B+)
There are a more risks but this are just the most obvious ones. Taking them into account to calculate possible returns, vs the expected return while doing nothing for the next 4-8 years, will give the board an indication how much the return per share would/could be hit and how likely this is. In my eyes any big investment/announcement will be pushed beyond 2020 into 2021 or further, to minimize the risks posed by the global economy.
By all reports NMA/NSA won't be incorporating much new tech - they will be based on 787/777x - it will just be the production system which is new - and those are probably just further refinements (albeit major) of 787/777x.
That might be fine enough for a NMA for 2025 but in my opinion that launch window is gone and it will be up to 2027 until it would be out (probably change in certification, possible engine delays see 777X). For an NSA that would not be sufficient enough to produce an aircraft to compete, because if that is enough Boeing would have launched the NSA instead of the MAX with the possibility for a simple re-engine in 2030, but they did not so a new NSA has to be way more than a bit of new tech.
A lot of the 787 development cost (deferred production cost was $30 B - I'm not sure development cost was $30B) was that new tech.
Until 2011 Boeing invested $32B into development and production (that was before the first 787 was delivered): https://www.seattletimes.com/business/boeing-celebrates-787-delivery-as-programs-costs-top-32-billion/
Also building the first 500 787 accumulated another $30B of losses: https://www.fool.com/investing/2018/01/21/boeing-cos-dreamliner-profitability-is-set-to-soar.aspx
As it is also stated the development of the aircraft alone was $15B, it can be assumed that overall costs till 2014 was $15B for the aircraft, $15B for the production and $15B for selling the aircraft under production costs.
So even if we assume that the 797 will be so expensive to avoid deferred production costs we can still assume it will cost around $30B, that is around $4B per year till 2027.
NMA Wood most likely be the new fuselage/nose plus a shrink of the 777x wing.
Shrinking the wing is not a good option, better develop a new one matching the new aircraft as it will anyway has to be fully certified as a new aircraft. You cannot simply shrink stuff in engineering.
It won't be that expensive - $40 billion for both is totally reasonable at least for NMA small and Large and NSA small and Large - maybe if they do NSA XL sometime 15 years from now that may take it over that number.
This is a really low estimate but if it does not include much new tech it is definitely possible but could be easily our surpassed by other manufacturers spending more on new tech an bring it to market a few years later.
Just based on backlogs Boeing probably has a good $100B to spend. Unless the Max is permanently grounded total cost for the fiasco probably never goes past $15b which is just two years of share buybacks.
Boeing sais its Backlog is worth $490B ($412B in commercial sector). If we assume that is taking full order books from Q1 2018 till Q4 2025, so 7 years, (a bit less with the 787 and a bit more with the 737) and a profit margin of 10% we have a profit of $49B or 6.12B per year. https://www.aviationtoday.com/2019/01/30/boeing-brings-in-100-billion-in-2018-revenue/
. Additional revenue brought the result up to $10B a year (2018). https://www.aviationtoday.com/2019/01/30/boeing-brings-in-100-billion-in-2018-revenue/
So until Q4 2026 (first delivery of possible NMA) Boeing has about $70B to spend. This does not include costs from MAX crisis and compensations and possible cost overruns from the 777X. It also does not include the possibility of cut backs in 787 orders or heavy discounts to keep the line open.
They can afford it.
Taking into account above numbers: 70B to spend, 30B development costs, 15B Max related costs, 5B other R&D costs (737-9ER, 764 re-engine for fright purposes, 777X compensations and delays, NSA project launch in 2025) Boeing would still make $20B profit from Q12020-Q42026. Sounds good but that is a lousy $2.85B per year. This would push the share price down by a huge amount. On top of that, this estimate includes a healthy order book for the 787 also from 2022 onwards.
So yes Boeing can afford it but do they really want to? It is a risky investment and in the current economy might not be the best idea. Business risk analysts will also take into account a slowdown of the economy, weak orders and cost overruns. That could then quickly turn into heavy losses.
764 re-engine for the freighter market (I highly doubt it will be for the passenger market - if people don't think MOM is good enough the economics on 764 will never work) and 739ER are minor derivative programs - maybe a billion or so for both.
They will tie up minimal resources.
That is exactly why they are launched. No risk and still great return for the company. Thats the option I guess Boeing will go for the next 3-4 years. Slow investment and market observation to launch a great NAaircraft with EIS in 2030.
By many reports NMA was ready to be launched this year - they are just waiting for MAX to fly again before announcing - it will make no sense to announce NSA anytime time soon.
A lot of stuff in a lot of industries is ready to be launched, that does not mean it will be launched. If it has a big risk of not bringing money the thing will just gather dust in some execs drawer.