Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR
Olddog wrote:Just January ? It is very optimistic...
qf789 wrote:Due to the size of previous threads
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
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?
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.
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
morrisond wrote:They would shut the program down long before it gets to $50 Billion.
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.
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
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?
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.
jfklganyc wrote:Are these three things highly valued by just about all of corporate America?Union busting, relocation, outsourcing,
hOMSaR wrote: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.
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.
LennyM8472 wrote: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
qf789 wrote:if you are quoting from news sources to add links and your own comments
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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
889091 wrote:Is Boeing self-insuring the stored frames or are they paying to have them insured (against hail damage, for example)?
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.
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.
morrisond wrote:They won't have to compensate customers for frames that aren't due to be delivered for a few years yet.
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.