Just January ? It is very optimistic...

qf789 wrote:

Due to the size of previous threads

When the page takes 20 minutes to load, we know it's an effing disaster...

I wish Boeing a happier new year.

qf789 wrote:

Olddog wrote:

Just January ? It is very optimistic...

Due to the size of previous threads it has been decided that monthly threads will be more appropriate, has nothing to do when return to service will be, that's something no one knows at this stage

Good decision. I'm guessing that the MAX grounding threads is the longest series of threads in a.net history to date?

flyingturtle wrote:

I wish Boeing a happier new year.

zkojq wrote:

Good decision. I'm guessing that the MAX grounding threads is the longest series of threads in a.net history to date?

We are getting off topic, but to answer your question, no, look for example at B787 or A350 development/production threads.

For Turkish Airlines: 12 in service and another 63 out of 75 to be delivered. This will get you 225million. That not too much I guess. I wonder how much it will cost Boeing if the grounding will last another 6 months. And then there are probably the necessary hardware changes.

It may be sensible to pin the reference thread.

I honestly wish Boeing a happy new year and fortune to get things going again.

Here's hoping for a 2020 that Boeing will do better and learn from mistakes made. I think 2019 has proven a very costly lesson that you cannot put profits before safety.

Hi,

somehow the post on todays article of Reuters on Turkish Airlines compensation was deleted.

- Turkey's Hurriyet newspaper reported that it was worth $225 million including $150 million in compensation and $75 million covering things such as spare parts and training.
- Turkish Airlines had taken delivery of 12 737 MAX planes before the grounding out of 75 it has ordered. It was supposed to have received 12 more since.

Best regards
Lenny

Accountability?

Any real world estimates of what the grounding of the MAX has cost Boeing in the duration of 2019?

As a guide RR has stated the Trent 1000 issues will cost 2.4 billion, with circa 40 planes AOG.

I suggest it’s going to cost them north of 240 billion.

Hi,

if you assume TK's compensation for the current fleet and aircraft on order the total compensation is between 16bn and 99bn USD depending on the amount of planes are being accounted for in the negotiation.

Below the rough calculation.

Turkish Airlines Compensation mUSD Spares mUSD Total mUSD
Fleet #
Current per plane 12,00 12,50 6,25 18,75
Total fleet and on order per plane 75,00 2,00 1,00 3,00
Total compensation agreed 150,00 75,00 225,00

737 Max Compensation in mUSD
Fleet # min max
existing 387 1.161,00 7.256,25
on order 4912 14.736,00 92.100,00
Total Compensations 5299 15.897,00 99.356,25

lowbank wrote:

As a guide RR has stated the Trent 1000 issues will cost 2.4 billion, with circa 40 planes AOG.

I suggest it’s going to cost them north of 240 billion.

How do you get to $240 Billion?

They would shut the program down long before it gets to $50 Billion. $60 -100 Billion is probably the lifetime profit of the Program (Assuming about 10-15% Margin on 6,000 frames plus spare parts, etc..)

A better way to look at Airline's losses is the cost to lease in extra Capacity less the difference in Fuel Expense.

According to this great post by Lightsaber viewtopic.php?t=1424243

737-800 lease costs are about $250,000 per month - call it $3,000,000 per year. MAX's burn about 15% less than 737-800's.

737-800 fuel flows are about 800 Gallons per hour at say an average $2 per gallon worldwide fuel cost.

That's $240 in Fuel savings per hour. Assume 16 hours per day utilization that's $3,840 per day or $1.4 Million per year.

Call it $5 Million per frame x 1000 grounded/built/should have been built so far. That's $5 Billion.

Plus some for generally pissing off your customers and compensation to the victims - that's still under $10 Billion. With the longer grounding it may get to $15-20Billion but that should be about it.

They won't have to compensate customers for frames that aren't due to be delivered for a few years yet.

They can ramp to 57 or more per month and get back onto schedule in 24-30 months or so if the line starts again within 6 months.

That is all offset by the fact that a lot of Airlines have cut capacity somewhat and are enjoying record profits due to higher yields.

If they leased in 10 frames to replace 20 - it's kind of hard for them to make the argument that they would have had the same earnings on 10 extra frames as that would have reduced yields.

It's complicated calculus, and no situation will likely be the same.

Given that the industry seems to be surviving with not all of the 800 frames replaced by something else, tells me there is overcapacity right now.

qf789 wrote:

Olddog wrote:

Just January ? It is very optimistic...

Due to the size of previous threads it has been decided that monthly threads will be more appropriate, has nothing to do when return to service will be, that's something no one knows at this stage

Good call.

If I would have to give an estimated RTS I would say june-july. But some major decisions would have to made asap.

morrisond wrote:

They would shut the program down long before it gets to $50 Billion.

And this is how the Max may never end up returning to service...

lowbank wrote:

As a guide RR has stated the Trent 1000 issues will cost 2.4 billion, with circa 40 planes AOG.

I suggest it’s going to cost them north of 240 billion.

You know what? I would love it to cost Boeing so much that it puts the future of the company in jeopardy. Why? Boeing might then return to being an exquisite airplane producer, an object of admiration for its products rather than a vehicle for producing management bonuses and stock dividends.

Did anyone read the Bloomberg Business week article on the Max this week?

Long story short, the article claims Boeing self-made this disaster in the pursuit of Greed.

Union busting, relocation, outsourcing, lack of communication between development groups... the article has it all

People within knew about the MCAS problems, it was just never effectively communicated.

For those of you wishing Boeing well...I wish the 300 plus families that lost a loved one well.

Boeing created their own mess here

This mess goes back much further than 2011. The 737 should have been replaced with a new model after the first A320-200 came out.

The 737 nose and fuselage is basically 707/727 vintage from another era. Would it still be acceptable to be building the 707 or 727 in 2020. It would not.

Why is it any different for the 737?

jfklganyc wrote:

Did anyone read the Bloomberg Business week article on the Max this week?

Long story short, the article claims Boeing self-made this disaster in the pursuit of Greed.

Union busting, relocation, outsourcing, lack of communication between development groups... the article has it all

People within knew about the MCAS problems, it was just never effectively communicated.

For those of you wishing Boeing well...I wish the 300 plus families that lost a loved one well.

Boeing created their own mess here

So, in other words...the same thing that's been discussed in countless other articles over and over again during the past year or so.

uta999 wrote:

This mess goes back much further than 2011. The 737 should have been replaced with a new model after the first A320-200 came out.

The 737 nose and fuselage is basically 707/727 vintage from another era. Would it still be acceptable to be building the 707 or 727 in 2020. It would not.

Why is it any different for the 737?

There are almost zero parts on the MAX that are the same from the 707 or 727 era other than the general exterior shape.

Much like as others have posted the A320NEO has only about 25% parts commonality with the original 320.

It's kind of equivalent to the Super Hornet vs Original F18 Hornet - they kind of look the same but almost nothing is interchangeable.

morrisond wrote:

A better way to look at Airline's losses is the cost to lease in extra Capacity less the difference in Fuel Expense.

According to this great post by Lightsaber viewtopic.php?t=1424243

737-800 lease costs are about $250,000 per month - call it $3,000,000 per year. MAX's burn about 15% less than 737-800's.

737-800 fuel flows are about 800 Gallons per hour at say an average $2 per gallon worldwide fuel cost.

That's $240 in Fuel savings per hour. Assume 16 hours per day utilization that's $3,840 per day or $1.4 Million per year.

Call it $5 Million per frame x 1000 grounded/built/should have been built so far. That's $5 Billion.

Plus some for generally pissing off your customers and compensation to the victims - that's still under $10 Billion. With the longer grounding it may get to $15-20Billion but that should be about it.

They won't have to compensate customers for frames that aren't due to be delivered for a few years yet.

They can ramp to 57 or more per month and get back onto schedule in 24-30 months or so if the line starts again within 6 months.

That is all offset by the fact that a lot of Airlines have cut capacity somewhat and are enjoying record profits due to higher yields.

If they leased in 10 frames to replace 20 - it's kind of hard for them to make the argument that they would have had the same earnings on 10 extra frames as that would have reduced yields.

It's complicated calculus, and no situation will likely be the same.

Given that the industry seems to be surviving with not all of the 800 frames replaced by something else, tells me there is overcapacity right now.

Cost of Inventory, Boeing will be paying borrowing costs for all the Frames it’s made.
Supplier claims, the cheaper of paying for all components within the LTA lead time or the suppliers compensation claim within lead time. Plus equipment investment claims.
The costs of whatever redesign is required.
Costs of retrofitting each aircraft, being as they haven’t got a fix yet this is going to be unknown.
Loss of production revenue and profits.

Plus more that won’t come to mind today!

jfklganyc wrote:

Union busting, relocation, outsourcing,

Are these three things highly valued by just about all of corporate America?

morrisond wrote:

A better way to look at Airline's losses is the cost to lease in extra Capacity less the difference in Fuel Expense.

According to this great post by Lightsaber viewtopic.php?t=1424243

737-800 lease costs are about $250,000 per month - call it $3,000,000 per year. MAX's burn about 15% less than 737-800's.

737-800 fuel flows are about 800 Gallons per hour at say an average $2 per gallon worldwide fuel cost.

That's $240 in Fuel savings per hour. Assume 16 hours per day utilization that's $3,840 per day or $1.4 Million per year.

Call it $5 Million per frame x 1000 grounded/built/should have been built so far. That's $5 Billion.

Plus some for generally pissing off your customers and compensation to the victims - that's still under $10 Billion. With the longer grounding it may get to $15-20Billion but that should be about it.

They won't have to compensate customers for frames that aren't due to be delivered for a few years yet.

They can ramp to 57 or more per month and get back onto schedule in 24-30 months or so if the line starts again within 6 months.

That is all offset by the fact that a lot of Airlines have cut capacity somewhat and are enjoying record profits due to higher yields.

If they leased in 10 frames to replace 20 - it's kind of hard for them to make the argument that they would have had the same earnings on 10 extra frames as that would have reduced yields.

It's complicated calculus, and no situation will likely be the same.

Given that the industry seems to be surviving with not all of the 800 frames replaced by something else, tells me there is overcapacity right now.

Thats not how it will be calculated for the airlines. As this is a negotiation the airlines will go in with the premise of not having the aircraft that was promised and call for the full costs of not having an aircraft. Boeing on the other side will argue that the airline could lease one and reduce said costs so they will meet im the middle (if Boeing stays hard). This might piss off some customers. Do it will tend towards what the airlines want.

Do not forget the moment cancelling the order becomes more economic for Boeing than paying the compensation costs the real deal starts. The airlines know this too. I guess that is why the line is shut down now. We might see airlines starting to demand so much compensation that Boeing is cancelling their orders for free and they can walk off the deal. If they already took 4-6 year leases they do not need the MAX but still have the right for compensation if they are delivered late and or are grounded. This will probably come with NDAs because if it will result in a mass exodus Boeing also has a problem.
Boeing will try to keep cancellations for some and compensations for others to bring the short term demand down to a level sustainable with reduced (halted) production rate for up to 48 months (that is when the rate is probably up to 57. This is up to 1000 delayed deliveries (450 stored, the rest not build due to rate cut and line halted).

This is a big deal for Boeing to deal with. So pay high compensation for big customers (legacy carriers, big lccs) way above lease expenses etc., while also cancelling orders to have no liability down the line.

On the bright side, at least CFM is now not under too much pressure to hit delivery goals.

art wrote:

You know what? I would love it to cost Boeing so much that it puts the future of the company in jeopardy. Why? Boeing might then return to being an exquisite airplane producer, an object of admiration for its products rather than a vehicle for producing management bonuses and stock dividends.

Far more likely they "pull a Lockheed" and exit Commercial Aviation and focus just on defense-related aerospace.

jfklganyc wrote:

hOMSaR wrote:

jfklganyc wrote:

Did anyone read the Bloomberg Business week article on the Max this week?

Long story short, the article claims Boeing self-made this disaster in the pursuit of Greed.

Union busting, relocation, outsourcing, lack of communication between development groups... the article has it all

People within knew about the MCAS problems, it was just never effectively communicated.

For those of you wishing Boeing well...I wish the 300 plus families that lost a loved one well.

Boeing created their own mess here

So, in other words...the same thing that's been discussed in countless other articles over and over again during the past year or so.

Just dont be stupid enough to post how you feel bad for Boeing or wish them a better year

They produced a faulty product that killed hundreds of people.

Send warm wishes to the family of the dead. Not a greed-driven corporation, especially when that greed had a direct hand in this situation

I fully agree! The industry needs Boeing and competition is what drives innovation, keeps costs down and keeps manufacturers in-check, but this does need to be a massive lesson for Boeing moving forward and they need a complete, top-to-bottom re-think of their procedures and ethics. They have indeed killed hundreds with the shotty path that lead to the MAX certification, who knows how many more may have died if authorities hadn't acted when they did and who knows how many more may die if Boeing doesn't get this right. I too wish Boeing a path forward but only after intense soul-searching and perhaps an entire re-invention.

FluidFlow wrote:

morrisond wrote:

A better way to look at Airline's losses is the cost to lease in extra Capacity less the difference in Fuel Expense.

According to this great post by Lightsaber viewtopic.php?t=1424243

737-800 lease costs are about $250,000 per month - call it $3,000,000 per year. MAX's burn about 15% less than 737-800's.

737-800 fuel flows are about 800 Gallons per hour at say an average $2 per gallon worldwide fuel cost.

That's $240 in Fuel savings per hour. Assume 16 hours per day utilization that's $3,840 per day or $1.4 Million per year.

Call it $5 Million per frame x 1000 grounded/built/should have been built so far. That's $5 Billion.

Plus some for generally pissing off your customers and compensation to the victims - that's still under $10 Billion. With the longer grounding it may get to $15-20Billion but that should be about it.

They won't have to compensate customers for frames that aren't due to be delivered for a few years yet.

They can ramp to 57 or more per month and get back onto schedule in 24-30 months or so if the line starts again within 6 months.

That is all offset by the fact that a lot of Airlines have cut capacity somewhat and are enjoying record profits due to higher yields.

If they leased in 10 frames to replace 20 - it's kind of hard for them to make the argument that they would have had the same earnings on 10 extra frames as that would have reduced yields.

It's complicated calculus, and no situation will likely be the same.

Given that the industry seems to be surviving with not all of the 800 frames replaced by something else, tells me there is overcapacity right now.

Thats not how it will be calculated for the airlines. As this is a negotiation the airlines will go in with the premise of not having the aircraft that was promised and call for the full costs of not having an aircraft. Boeing on the other side will argue that the airline could lease one and reduce said costs so they will meet im the middle (if Boeing stays hard). This might piss off some customers. Do it will tend towards what the airlines want.

Do not forget the moment cancelling the order becomes more economic for Boeing than paying the compensation costs the real deal starts. The airlines know this too. I guess that is why the line is shut down now. We might see airlines starting to demand so much compensation that Boeing is cancelling their orders for free and they can walk off the deal. If they already took 4-6 year leases they do not need the MAX but still have the right for compensation if they are delivered late and or are grounded. This will probably come with NDAs because if it will result in a mass exodus Boeing also has a problem.
Boeing will try to keep cancellations for some and compensations for others to bring the short term demand down to a level sustainable with reduced (halted) production rate for up to 48 months (that is when the rate is probably up to 57. This is up to 1000 delayed deliveries (450 stored, the rest not build due to rate cut and line halted).

This is a big deal for Boeing to deal with. So pay high compensation for big customers (legacy carriers, big lccs) way above lease expenses etc., while also cancelling orders to have no liability down the line.

Somewhere in the middle probably.

Remember, no customer contract has ever envisaged this situation.

The majority of Boeing aircraft are sold using a Boeing new aircraft sale / purchase agreement, much of which uses industry standard / IATA clauses. Major customers like the US3, EU3, ME3 (perhaps ME2 now) and China (with Ministry) use their own bespoke agreements.

Contracts evolve. A380 delays were a catalyst for major customers to review bespoke contracts, which until that time predominantly just included specific customer preferences and foibles. The next review was due to the 787 grounding, and undoubtedly the MAX will trigger a range of new penalties and definitions.

Agreements include arbitration clauses, which will be how compensation is handled if Boeing are not proactive, which they will be, hopefully having learned from Airbus, RR and PW (they seem to be using the confidentiality model developed by RR).

As with other aviation industry compensation settlements, it will be tiered, with the highest value if taken in new aircraft and parts, and the lowest value if taken in cash, with a range of options between.

Boeing will be keen to clean the slate, otherwise future deliveries / sales will have to be re-priced to compensate for higher insurance and financing costs reflecting risk.

For example, the most financially nimble airlines receive 'real-time' insurance premium discounts for aircraft not flying in a 24 hour period. A smaller number are penalised for outstanding, unactioned AD's, but then rewarded when the AD is completed. When combined with real-time cover, this creates a dual fleet of higher use, 'very safe' aircraft, and a pool of low use, safe aircraft for peaks and spares. This insurance innovation is moving into finance, with margins and fees tweaked to reflect models and even specific aircraft.

If the MAX is permitted to fly subject to an immediate modification, plus issued with multiple AD's to be completed within say 2 years, customers will likely be financially penalised until actioned by their insurer, and possibly by there financiers. Boeing will have to compensate.

Morrisson will be pleased, but unions not, that the data (and pricing) is cascading down beyond an aircraft to the micro level. GE and RR are already there.

hivue wrote:

Stitch wrote:

art wrote:

You know what? I would love it to cost Boeing so much that it puts the future of the company in jeopardy. Why? Boeing might then return to being an exquisite airplane producer, an object of admiration for its products rather than a vehicle for producing management bonuses and stock dividends.

Far more likely they "pull a Lockheed" and exit Commercial Aviation and focus just on defense-related aerospace.

No. The defense business would be spun off to go its highly profitable way on its own. The commercial business would get a government bailout. People praying for Boeing to get their just dues by being forced into a catastrophic financial situation should be careful what they wish for.

No-one in the commercial aviation industry is 'praying for Boeing to get their just dues'. No-one wants an Airbus monopoly, even Airbus, just like Microsoft didn't want Apple to fail.

Perhaps not quite so generous when it comes to saving professional managers in Boeing with no aviation and / or engineering backgrounds, and those who should have known better but went over to the dark side.

We do want and expect EVERY new model to be as at least as safe as the model it replaces.

hivue wrote:

Stitch wrote:

art wrote:

You know what? I would love it to cost Boeing so much that it puts the future of the company in jeopardy. Why? Boeing might then return to being an exquisite airplane producer, an object of admiration for its products rather than a vehicle for producing management bonuses and stock dividends.

Far more likely they "pull a Lockheed" and exit Commercial Aviation and focus just on defense-related aerospace.

No. The defense business would be spun off to go its highly profitable way on its own. The commercial business would get a government bailout. People praying for Boeing to get their just dues by being forced into a catastrophic financial situation should be careful what they wish for.

I would call one group Boeing Company and the other one McDonnell Douglas.

Just a quick look and approx airframe cost is $100,000,000.
With 400 frames on the ground that’s 40 billion dollars of inventory , that’s borrowed money, interest having to be paid.

lowbank wrote:

Just a quick look and approx airframe cost is $100,000,000.
With 400 frames on the ground that’s 40 billion dollars of inventory , that’s borrowed money, interest having to be paid.

I seriously doubt it would cost Boeing $100M to build a 737. So the amount needed to build this inventory is way lower.

WildcatYXU wrote:

lowbank wrote:

Just a quick look and approx airframe cost is $100,000,000.
With 400 frames on the ground that’s 40 billion dollars of inventory , that’s borrowed money, interest having to be paid.

I seriously doubt it would cost Boeing $100M to build a 737. So the amount needed to build this inventory is way lower.

Couple of engines gunna cost ya around 30 million.

How much do you think it’s going to cost to build an aircraft.

I also thing that cost to built is much lower, somewhere betwen 25-35 mil, but its still a lot of money. Also those A/C were built with money from prepayment from airlines received before March. One reasons why Boeing stopped production now that the airlines do not want to make prepayments anymore.

lowbank wrote:

WildcatYXU wrote:

lowbank wrote:

Just a quick look and approx airframe cost is $100,000,000.
With 400 frames on the ground that’s 40 billion dollars of inventory , that’s borrowed money, interest having to be paid.

I seriously doubt it would cost Boeing $100M to build a 737. So the amount needed to build this inventory is way lower.

Couple of engines gunna cost ya around 30 million.

How much do you think it’s going to cost to build an aircraft.

The question is if the engines are purchased by Boeing and resold, or if the engines are purchased by the airline separately. This press release is suggesting that the latter is true: https://www.safran-group.com/media/2014 ... gine-order
At least in case of Air Canada.
I have no idea how much is the marginal cost of building a 737. Lightsaber estimated the cost of building a 787-9 at $90M some time ago.

Something I found interesting while watching Juan Brown on the Blancoliro channel on YouTube. The Pilatas PC12 that crashed November 30, 2019 on take off from Chamberlain, South Dakota, had a very similar system to MCAS. The difference between the Pilatus version vs MCAS at Boeing, Pilatus uses it to get the aircraft out of a stall situation and Boeing's MCAS is to make it feel like an NG. It is my understanding, it is very much like MCAS in its function but for two very different reasons. I firmly believe the 737 MAX will return to the skies. How quickly, well that is the 200 million Dollar question. For the sake of Boeing and all of the customers, I hope its soon. Here is a link to Juan's video on this. https://www.youtube.com/watch?v=8S8E4wFSmN0

WildcatYXU wrote:

lowbank wrote:

WildcatYXU wrote:

I seriously doubt it would cost Boeing $100M to build a 737. So the amount needed to build this inventory is way lower.

Couple of engines gunna cost ya around 30 million.

How much do you think it’s going to cost to build an aircraft.

The question is if the engines are purchased by Boeing and resold, or if the engines are purchased by the airline separately. This press release is suggesting that the latter is true: https://www.safran-group.com/media/2014 ... gine-order
At least in case of Air Canada.
I have no idea how much is the marginal cost of building a 737. Lightsaber estimated the cost of building a 787-9 at $90M some time ago.

Engine purchase by the customer is more common:
With WB versus NB.
Amongst larger customers than small.
Where there is a choice of engine supplier.
With RR versus GE customers (GE has been consistently more resistant, partly influenced by Boeing's preference).

There has been a reversal in direct engine purchase with the 737, and especially the A320, since PW and Leap issues, more than offset by the increase of PBTH ownership and / or maintenance contracts.

In respect to turnkey orders (engines ordered from Boeing), it's unknown whether Boeing has been making milestone payments for engines fitted on stored aircraft. Milestone payments from customers have ceased, even where held in trust.

Where engines have been purchased direct (ie not from Boeing), milestone payments pretty much ceased with the global grounding, whether pre-shipment finance was being funded by the customer or financier.

So not one answer. Some engines will be part paid, with the last 2 payments not received - customer acceptance and warranty withheld (about 50% of the purchase price). These will be the aircraft earliest off the production line after grounding. As the grounding continued, a smaller percentage of the engine purchase price has been paid.

It was Boeing and GE that decided to keep delivering engines, so they could fly aircraft to storage, allowing production to continue.

There is now a mega hole in Boeing and GE cash flows, in turn cascading down to suppliers and sub-contractors.

When Boeing decided to park frames in the carpark I suppose they didn't expect the grounding to last this long. Long term aircraft storage is normally done at places like Victorville where the air is dry. We've seen what effects the weather has on aircraft storage - TG's A340 at DMK. Will mildew (for those frames stored at Paine Field) pose a problem when the RTS is announced?

Is Boeing self-insuring the stored frames or are they paying to have them insured (against hail damage, for example)?

jfklganyc wrote:

Just dont be stupid enough to post how you feel bad for Boeing or wish them a better year

They produced a faulty product that killed hundreds of people.

Send warm wishes to the family of the dead. Not a greed-driven corporation, especially when that greed had a direct hand in this situation

What's wrong with wishing the rank and file Boeing workers a better year? They aren't management, the ones who made the bad decisions that led to this. They are likely suffering emotionally over the knowledge that management misdirection led them to unknowingly build a faulty product that killed a few hundred people. The fallout from this will likely cause many of them to lose their jobs in time. Given that, the stress they must be under coupled with undoubtedly morale on the production line must have left a deep emotional impact on many of them. The families of the dead do indeed deserve our greatest sympathies but let's not condemn everyone at Boeing for this morass. The management, the leadership deserve stern condemnation but don't include the line workers and others that were just doing their jobs as instructed, sir.

889091 wrote:

Is Boeing self-insuring the stored frames or are they paying to have them insured (against hail damage, for example)?

In normal operations, I believe Boeing self-insures up to the delivery, backstopped by excess insurance for exceptional losses (I don't have figures).

I would guess at a very least they reviewed their excess insurance coverage to account for the larger-than-usual number of undelivered aircraft.

Well one thing I know for a fact.
Engines delivered to Airbus are owned by the OEM until delivered the the airline.
Engines delivered to Boeing are owned by Boeing on delivery.

hivue wrote:

Stitch wrote:

art wrote:

You know what? I would love it to cost Boeing so much that it puts the future of the company in jeopardy. Why? Boeing might then return to being an exquisite airplane producer, an object of admiration for its products rather than a vehicle for producing management bonuses and stock dividends.

Far more likely they "pull a Lockheed" and exit Commercial Aviation and focus just on defense-related aerospace.

No. The defense business would be spun off to go its highly profitable way on its own. The commercial business would get a government bailout. People praying for Boeing to get their just dues by being forced into a catastrophic financial situation should be careful what they wish for.

Have a look at the annual reports, 2018 or 2017. The main revenue and profit came from commercial airplanes. The third revenue division are global services, that again depends on commercial airplanes. The profit from commercial airplanes was a multible of the profit from defense.
Detach commercial airplanes and Boeing would ride a rather small horse into the sunshine.

lowbank wrote:

Well one thing I know for a fact.
Engines delivered to Airbus are owned by the OEM until delivered the the airline.
Engines delivered to Boeing are owned by Boeing on delivery.

You are describing the preference of the two air frame OEM's, and for Boeing the way it always was, and how they would still like it to be. No longer black and white, but a hundred shades of grey.

Also owned itself is relative. If using the International Registry, or Retention of Title clauses, if the customer has paid say 40% of the engine invoice cost, they 'own' 40% of the engine by value.

RR was the first to encourage customers to purchase engines direct, something which Boeing was dead against, but supported by Airbus. A point of difference.

European engine OEM's are very proactive with retention of title measures, including fully using Cape Town protections.

Engines supplied on a PBTH ownership basis by the OEM (or subsidiary) are never owned by Boeing. Engines purchased directly by the customer are never owned by the air frame OEM. Ironically, there is a notional purchase and sale by Boeing, designed to protect the engine OEM and customer's financial arrangements.

morrisond wrote:

They won't have to compensate customers for frames that aren't due to be delivered for a few years yet.

Boeing is already 90 frames down on the 52 per month they were running at before the grounding. By the end of March they'll be 260 frames behind schedule. Ramp up back to 52 will take some time and even that doesn't allow for the higher rate they were aiming for in 2020. Unless they go to an even higher rate than they were planning for 2020, they'll never catch up those lost production slots.

lowbank wrote:

Just a quick look and approx airframe cost is $100,000,000.
With 400 frames on the ground that’s 40 billion dollars of inventory , that’s borrowed money, interest having to be paid.

The list price of a 737-8 is $121 million. Airlines typically pay about 50% of list, so the build cost is going to be a lot less than $100 million. I don't think you'd be far wrong if you estimated the value of undelivered MAXes at $60 million each - so of the order of $24 billion. Still a large sum of money, but a long way short of $40 billion.

Firstly, let me wish you all a Happy New Year.

I guess first major news for 2020 is TK getting around 225M$ in compensation for 2019 only. So that figure can easily increase while grounding continues into 2020. And it sets a benchmark for other airlines. With 12 delivered and a further 12 built but not delivered the rough benchmark is 10M$ per plane.

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