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scbriml
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 7:12 am

MIflyer12 wrote:
Stitch wrote:
Boeing is not going to publicly confirm it until they are ready / required because it is a statement that will have a material effect on their market performance and the SEC has rules around the reporting of such items.


It will have no material effect on revenues: it's half a plane a month. There can't be much left to depreciate to precipitate a big write-down.


Closing down an aircraft production line is certainly not a "no cost" action. I expect Boeing will take a fairly significant charge.
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UA444
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 7:14 am

Basically, nothing we didn’t know before and Boeing responded with the same thing they did when this thread was made.
 
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metalinyoni
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 8:15 am

I know no one outside Boeing knows for sure, but what would be a profitable production rate for the 747?
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 8:37 am

We know about the industrial backgrounds with manufacturing and that closed fuselage supplier. But could a new 747-8 freighter still be ordered today? Would Boeing let you order or move you over to the 777 sales team?
 
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Phosphorus
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 11:29 am

metalinyoni wrote:
I know no one outside Boeing knows for sure, but what would be a profitable production rate for the 747?

(Disclaimers everywhere -- this WAS the reality, before
a) production rate was cut
b) suppliers were hanged out to dry
c) some suppliers moved to get out of 747)

It appears, at launch of 747-8, the program was expected to make money at 2 frames a month, with a possibility to somewhat increase, if demand warrants.
Then, if memory serves, the program incurred a cost overrun in the beginning, and thus profitability was a bit more tricky to reach. Then, some of these overruns were written off.
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 11:50 am

USTraveler wrote:
Why would Boeing announce, in a time like this, that they are closing down a production line? Especially for the 747?
Just let it take its course. Media manipulation (social engineering)
The fake news is all over this, further reducing Boeing's stocks.


They will not announce it, until it's time. Maybe, as the entire thread posits, there is an influential faction within Boeing, believing that the fat lady has not sung yet. Quietly searching for orders and business case to continue.

Or maybe it's really over, and then there is incentive for the management to keep it for the "D-Day", when a slew of announcements is due:
"Company planning for a fresh start, with new direction, and laser-focus on core products, innovation and shareholder value... bla-bla", with some "Project Above and Beyond" announced, together with "cutting of deadwood", etc.
Now is too early for anything like this, as MAX is not out of the woods yet.

On the other hand, if they announce killing 747-8 now, it will be a sign of weakness -- "Boeing has lost another jet in its product lineup", etc.
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 12:16 pm

What with the extreme difficulty that the entire aviation industry is likely to face in the next few years it makes little sense for Boeing to devote any resources at all to preserving production capability for a model for which there is no guarantee that there ever will be enough demand for production to be profitable again. I say this as one who loves the 747 and deeply wishes it would continue to be produced and flown for a long time to come, but one who also recognizes economic realities. The 747 has had a fabulous run, but it is sadly coming to a close. Had the COVID-19 crisis not hit it would have made sense to keep options open for as long as possible, but the picture is now completely altered.
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ltbewr
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 1:22 pm

The 747 line has been kept alive in part to keep on the good side of the US Government for military contracts. The last 747's will be the VC-25's for Presidential use that mandate a 4 engine aircraft. I am quite sure the 747 line, something I saw in 2004 and very slow then, only freighters for non-US airlines, could be put to more productive use for 787's, 777's and military 767's once the VC-25's are done.
 
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Phosphorus
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 1:27 pm

ltbewr wrote:
The 747 line has been kept alive in part to keep on the good side of the US Government for military contracts. The last 747's will be the VC-25's for Presidential use that mandate a 4 engine aircraft. I am quite sure the 747 line, something I saw in 2004 and very slow then, only freighters for non-US airlines, could be put to more productive use for 787's, 777's and military 767's once the VC-25's are done.

Frames of two future VC-25B's are the property of USAF for some time now (both Transaero's NTUs).
E-4B replacement is being discussed upon, but that's a separate story, and it's speculation only, at this point.
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ltbewr
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 1:45 pm

Phosphorus wrote:
ltbewr wrote:
The 747 line has been kept alive in part to keep on the good side of the US Government for military contracts. The last 747's will be the VC-25's for Presidential use that mandate a 4 engine aircraft. I am quite sure the 747 line, something I saw in 2004 and very slow then, only freighters for non-US airlines, could be put to more productive use for 787's, 777's and military 767's once the VC-25's are done.

Frames of two future VC-25B's are the property of USAF for some time now (both Transaero's NTUs).
E-4B replacement is being discussed upon, but that's a separate story, and it's speculation only, at this point.

For an E-4B replacement, perhaps convert one of the VC-25's when they end service upon delivery of the new ones or find a recent build 747-8 some airline cancelled delivery on or has discontinued from their fleet. It won't be cheap but it might be the best alternative.
 
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Stitch
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 2:08 pm

Ishrion wrote:
Kinda confused on the current orders for the 747-8F - what's left exactly? 12 for UPS and 3 for Volga? Or were the 3 for Volga completely removed?


The current Official Backlog is 12 frames, all for UPS. Boeing also supposedly has parts on hand / on order to produce another four frames and speculation is UPS will eventually take those via a top-up order.
Last edited by Stitch on Fri Jul 03, 2020 2:18 pm, edited 1 time in total.
 
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Stitch
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 2:15 pm

Noshow wrote:
We know about the industrial backgrounds with manufacturing and that closed fuselage supplier. But could a new 747-8 freighter still be ordered today? Would Boeing let you order or move you over to the 777 sales team?


I do not believe Boeing is accepting new orders for a 747-8 airframe and I believe they have not done so since the end of 2018.

It has been reported that Boeing placed a final order for 20 sets of parts in 2018 with suppliers: 14 for UPS, 4 for Volga-Dnepr and 2 "spares" which I think might have been intended for the VC-25B program. Yes, I know the previous year the USAF and Boeing agreed to use the two Transaero NTUs, but Boeing might have already committed to suppliers on the assumption the planes would be new-builds.

It has also been reported by multiple sources that Boeing stopped all marketing efforts for the 747-8 program by the end of 2018 and declined any RFPs regarding the 747-8. Instead, Boeing has been offering the 777 Freighter to customers with a near-term need for lift and discussing a possible 777X Freighter for those more interested in something towards the end of the decade.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 3:02 pm

744SPX wrote:
This lack of confirmation could be a form of "last call" to cargo airlines. If there is no significant response within the next few months then maybe they will make it a solid confirmation.

It's hard to picture them accepting any orders now, except perhaps for the four "spares" that can be made from the last batch of Triumph parts. They are losing $40M per frame already. Why would they want to prolong that loss in the current climate? Earlier in this thread we had suggestions that it would take orders of 30 frames or so to make it feasible to replace the Triumph facilities. I'm not seeing where such orders could come from, do you? Remember, the whole point of the exercise is to make money. As above, you'd probably need an order big enough to lift the production rate to 2/month and to pay for the reboot of the Triumph lines AND make some profit. Doesn't it make more sense to push customers towards the 777F products? Heck, even China is willing to order those these days. It'd be best to help 777 get critical mass, IMO.
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PepeTheFrog
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 4:13 pm

wjcandee wrote:
It's not over yet. But it's not looking good.


Not over yet? Triumph Group is not making the fuselage panels anymore, so the writing is on the wall. Once Boeing worked through the spares, the assembly line will be depleted.
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 4:19 pm

PepeTheFrog wrote:
wjcandee wrote:
It's not over yet. But it's not looking good.


Not over yet? Triumph Group is not making the fuselage panels anymore, so the writing is on the wall. Once Boeing worked through the spares, the assembly line will be depleted.


This thread is going around in circles, circles, circles, circles.

Respectfully, Pepe, I did know that tidbit.

I don't, however, agree with your conclusion. If someone was willing to order 50 (and nobody will be), whether "Triumph Group" shredded every bit of machinery, tools, business papers and computer info it had, the planes would be sold and built. We're talking about things around the margin, and, as I say, it's not over yet.
 
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Stitch
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 4:43 pm

It "won't be over yet" for some people even when the last 747-8 is retired from service and turned into beer cans, much less the last frame is delivered to UPS and Boeing re-purposes Building 40-21 and 40-22.
 
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FrenchPotatoEye
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 4:46 pm

747 having the good run.

Now, future freighta will be 77XF. Boeing may push this for sales in futures.
 
FGITD
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 5:18 pm

Stitch wrote:
It "won't be over yet" for some people even when the last 747-8 is retired from service and turned into beer cans, much less the last frame is delivered to UPS and Boeing re-purposes Building 40-21 and 40-22.


Look at where we are with the 757...

The scenarios put forth border on the ridiculous. If someone was going to order 50+ -8s, they'd have done it by now. And eventually even if you order them, Boeing won't make them.
 
wjcandee
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 6:33 pm

You people have no nuance. I said as an obvious example that if someone ordered 50, they would make them. I also said that such an order wouldn't happen. The question is what number of additional orders would be necessary to make more -- and what is the likelihood that number would be reached? I don't know the answer to either. It's easy for you to sit there and say, "It's over. Get over it. People who think it isn't over are losers and stupid."

I have been in business far, far too long to think that unlikely things don't happen and that the world doesn't change in an instant. Business then responds to the change. Yes, the direction things are going is that the 747 line will likely close, and that article from a while back was likely a form of more-public "last call" from Boeing. But a lot can happen in a year, so, we'll see. There are few things in life that are black and white, most things are shades of grey. And the big problem with the childish posts on a.net is the lack of appreciation for grey.
 
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Stitch
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 7:17 pm

wjcandee wrote:
You people have no nuance.


Maybe not, but we do have common sense.


wjcandee wrote:
The question is what number of additional orders would be necessary to make more -- and what is the likelihood that number would be reached?


Boeing has supposedly lost $40 million per frame since 2016. They've delivered 36 frames since then, so that would be just under $1.5 billion USD they would need to recover, in addition to the $40 million extra it costs per frame with the current production schedule, so at least another half billion, which brings us to an even $2 billion Boeing will need to recover through these additional sales via a mark-up on top of their average sales price per frame.

Boeing projected sufficient demand to support Rate 2 (24 per year) so that is likely what they need to be profitable on a production basis. Suppliers will want years worth of orders at that rate, so let's just make it an even 100 frames - four years of production at Rate 2 plus some slack as they build up from the current Rate 0.5 to Rate 2 using the remaining UPS and NTU frames.

Current MSRP for a 747-8F is $420 million and Boeing's share is maybe half that, the remainder being engines and Customer Furnished Equipment. Of course, nobody pays MSRP. Nobody pays probably half of MSRP. But Boeing will still need to price all 100 frames at a profit plus at least another $20 million on top of that profit to recover the $2 billion they will have lost getting up to speed to deliver those 100 frames. If those customers are not willing to pay a $20 million per frame premium, then Boeing will need to sell more than 100 frames.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 7:24 pm

wjcandee wrote:
You people have no nuance. I said as an obvious example that if someone ordered 50, they would make them. I also said that such an order wouldn't happen. The question is what number of additional orders would be necessary to make more -- and what is the likelihood that number would be reached? I don't know the answer to either. It's easy for you to sit there and say, "It's over. Get over it. People who think it isn't over are losers and stupid."

I have been in business far, far too long to think that unlikely things don't happen and that the world doesn't change in an instant. Business then responds to the change. Yes, the direction things are going is that the 747 line will likely close, and that article from a while back was likely a form of more-public "last call" from Boeing. But a lot can happen in a year, so, we'll see. There are few things in life that are black and white, most things are shades of grey. And the big problem with the childish posts on a.net is the lack of appreciation for grey.

Ok, then the 757 is also in the gray zone since there is some number of orders that could entice Boeing to start making them again. It may be 500 or 1000 or 2000 but sooner or later if someone orders enough it can be made at a profit so Boeing would start making them. Same goes with Ford and Model T.
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smartplane
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 7:42 pm

Stitch wrote:
wjcandee wrote:
You people have no nuance.


Maybe not, but we do have common sense.

Boeing has supposedly lost $40 million per frame since 2016. They've delivered 36 frames since then, so that would be just under $1.5 billion USD they would need to recover, in addition to the $40 million extra it costs per frame with the current production schedule, so at least another half billion, which brings us to an even $2 billion Boeing will need to recover through these additional sales via a mark-up on top of their average sales price per frame.

Plus what sub-contractors have lost. Every contractor making 748-specific parts with contract flexibility has exited, or is making as bespoke on overrun pricing contracts.

If you follow the management charts, 748 and 777 are now in one group. Plus 787 and MAX. The only internal tussle in Boeing is WB v WB. Three model families. The question isn't whether there should be two, but should there be one? And more importantly, the impact on the bottom line.

The X team is being incredibly 'gentle' to customers approaching and passing milestones, and in particular milestone payments, to avoid triggering defaults, and in turn, customer covenant breaches leading to deferrals and cancellations. That's as much to protect the X from the 'wolves' within, as for good external PR.

Fortunately most of the Board who approved the 748 and X, rather than giving the 787 team free reign, are still there, so want the X to continue post-COVID, even if the financials are now firmly negative, instead of marginal when approved.
 
MIflyer12
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 7:46 pm

Stitch wrote:

Boeing has supposedly lost $40 million per frame since 2016. They've delivered 36 frames since then, so that would be just under $1.5 billion USD they would need to recover, in addition to the $40 million extra it costs per frame with the current production schedule, so at least another half billion, which brings us to an even $2 billion Boeing will need to recover through these additional sales via a mark-up on top of their average sales price per frame.


Noooo.... The money they've lost isn't relevant to future production pricing. They would need to price it above variable production cost (and so make a contribution to fixed overhead and any still-unamortized engineering/tooling charges) plus the opportunity cost for alternate use(s) of the plant.

What Boeing has lost has served its purpose - a foot on the neck of the A380 leading to the 380's demise. 748, 77W, and 77X for the win.

Set your reminders to 12/31/2030 and Aboulafia's prediction: “I'd be shocked if there's still an A380 in service in 2030.”
 
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Stitch
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 8:17 pm

MIflyer12 wrote:
Noooo.... The money they've lost isn't relevant to future production pricing. They would need to price it above variable production cost (and so make a contribution to fixed overhead and any still-unamortized engineering/tooling charges) plus the opportunity cost for alternate use(s) of the plant.


Well they're still going to need at least another 100 orders at a positive rate and frankly, if you have enough demand for 100 new orders (and everyone, even the dreamers, agree there is not anywhere near that), why not pack on a premium? Call it "Market Adjusted Value" like on popular car models - or more, properly, "(Stock) Market Adjusted Value" since it would be about wiping out some of the almost $6 billion the 747-8 program has flushed down the toilet since entering production. :rotfl: :dollarsign:
 
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 8:58 pm

There have been 106 freighter orders since 2005 (15 years) so an average of only 7 per year. UPS is the biggest of those with 28. Only Cathay and Cargolux have ordered more than 10. It seems beyond reality that any customer could order 20, much less the 50 that probably needs to occur to 'restart' the line. Probably less than 1% chance of any further orders beyond the 4 that V-D did not take up, as Stitch noted are probably UPS's if the parts were actually ordered for these 4, as well as unassigned spares.

Boeing probably has a date on the calendar that they need to get by to close off any returns to mfg, as LH did with 6 of the A380's to Airbus. The same customer bought 747-8i so likely a similar contract term exists. Deliveries to LH were from 2012 to 2015, this current schedule stretches to 2023 at an unprofitable rate, there are only 2 reasons for that - the hopes of gaining some large orders and to get past a milestone that avoids large costs.

Boeing did with the 767 a several year coast until the KC-46 was awarded, it is possible but very unlikely a big savior order will come for the 747.
 
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Stitch
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Re: ​Internal tussle as Boeing weighs future of 747

Fri Jul 03, 2020 10:29 pm

Boeing announced in January 2016 that they would reduce from Rate 1 to Rate 0.5 by September and they took a nearly $600 million charge against their Q4 2015 results to account for that reduction. They expected to return to Rate 1 by 2019, but in July 2016 they cancelled those plans and took another $800 million charge because of it (to cover the remaining frames they had on order). They also said that if they did not secure a large order soon "it is reasonably possible that we could decide to end production of the 747".

Bloomberg says Boeing has lost $40 million per frame since it went to Rate 0.5 in 2016 and during that time recorded $1.4 billion in write-offs related to that rate reduction. Divide $1.4 billion by 36 (the number of 747s delivered between January 2016 and last month) and you get $38.9 million per frame. So that is probably where they are calculating the $40 million.

Now hopefully Boeing priced UPS and Volga-Dnepr's frames with the knowledge of the higher production costs a Rate 0.5 would incur compared to the earlier sales that were all priced based on Rate 2 costs. And since Boeing has not announced any subsequent 747-8 program write-downs based on production costs, that implies they did so.

However, it is clear major suppliers cannot support producing parts at the current rate under their current contracts, which is why they informed Boeing that they would stop making parts unless Boeing paid them more to cover their own higher costs. Evidently Boeing said "no" since those suppliers have subsequently stopped production (or are in the process of doing so) and Boeing has made no suggestion they would take over production as they considered in 2015 (and I believe the Georgia plant they wanted to use is now sold off and the employees re-assigned or terminated).

So in order to continue production, Boeing has to pay their suppliers more, which means they have to raise the price of the 747-8F. And those suppliers probably want longer-term guarantees otherwise they are probably better off re-purposing or closing those facilities. So Boeing would need more frames to support that extended production period. So Boeing needs to find a customer, or a collection of customers, who not only want years more production (even at 6 per year) and are willing to pay more than they did for their current planes.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Sat Jul 04, 2020 12:00 am

Stitch wrote:
Boeing announced in January 2016 that they would reduce from Rate 1 to Rate 0.5 by September and they took a nearly $600 million charge against their Q4 2015 results to account for that reduction. They expected to return to Rate 1 by 2019, but in July 2016 they cancelled those plans and took another $800 million charge because of it (to cover the remaining frames they had on order). They also said that if they did not secure a large order soon "it is reasonably possible that we could decide to end production of the 747".

Bloomberg says Boeing has lost $40 million per frame since it went to Rate 0.5 in 2016 and during that time recorded $1.4 billion in write-offs related to that rate reduction. Divide $1.4 billion by 36 (the number of 747s delivered between January 2016 and last month) and you get $38.9 million per frame. So that is probably where they are calculating the $40 million.

Now hopefully Boeing priced UPS and Volga-Dnepr's frames with the knowledge of the higher production costs a Rate 0.5 would incur compared to the earlier sales that were all priced based on Rate 2 costs. And since Boeing has not announced any subsequent 747-8 program write-downs based on production costs, that implies they did so.

However, it is clear major suppliers cannot support producing parts at the current rate under their current contracts, which is why they informed Boeing that they would stop making parts unless Boeing paid them more to cover their own higher costs. Evidently Boeing said "no" since those suppliers have subsequently stopped production (or are in the process of doing so) and Boeing has made no suggestion they would take over production as they considered in 2015 (and I believe the Georgia plant they wanted to use is now sold off and the employees re-assigned or terminated).

So in order to continue production, Boeing has to pay their suppliers more, which means they have to raise the price of the 747-8F. And those suppliers probably want longer-term guarantees otherwise they are probably better off re-purposing or closing those facilities. So Boeing would need more frames to support that extended production period. So Boeing needs to find a customer, or a collection of customers, who not only want years more production (even at 6 per year) and are willing to pay more than they did for their current planes.

Something I saw in a recent Reuters post ( https://www.reuters.com/article/us-boei ... SKBN2442O8 ) which supports your points on this thread:

One supplier source said he was not sure when Boeing made a formal decision to end the program but said the final number of ship sets - as complete sets of parts are known - was agreed to with the supply base at least a year ago.

I wish the report was more specific, but it isn't, so all we have is our faith (or lack of faith) in Reuters's editorial standards to go with, but it is consistent with the evidence we have.
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Stitch
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Re: ​Internal tussle as Boeing weighs future of 747

Sat Jul 04, 2020 1:05 am

Revelation wrote:
Something I saw in a recent Reuters post ( https://www.reuters.com/article/us-boei ... SKBN2442O8 ) which supports your points on this thread:

One supplier source said he was not sure when Boeing made a formal decision to end the program but said the final number of ship sets - as complete sets of parts are known - was agreed to with the supply base at least a year ago.

I wish the report was more specific, but it isn't, so all we have is our faith (or lack of faith) in Reuters's editorial standards to go with, but it is consistent with the evidence we have.


That tracks with the 2019 Paris Air Show source whom stated that Boeing had ordered a total of 20 ship sets for the 747-8F. At the time, they had 14 new UPS orders and 4 new Volga-Dnepr orders, for a total of 18 frames. That would have left two "spares", however 20 might have been the minimum amount the suppliers were willing to produce and therefore Boeing agreed with the expectation (hope) they could sell two more frames to use them.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Mon Jul 06, 2020 6:13 pm

Okay I'll take the final one. Can I still get my freighter with cabin windows please or is it too late now?
 
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Re: ​Internal tussle as Boeing weighs future of 747

Mon Jul 06, 2020 8:35 pm

I think the restarting 747 vs restarting 757 comparison has some validity, if as above we presume neither is at all likely to happen.

Restarting 747 has advantages that the FAL is still up and running, but has disadvantages that the whatever supply chain tooling that hasn't already been scrapped or sold is in storage, and there really aren't many customers interested in buying more frames.

Restarting 757 is tougher. I think it's a given that you need a new engine to get orders. I know it's debatable but I'll presume the tooling still exists. Why? Someone I trust told me he's seen it. So, it needs a FAL, a supply chain and a new engine. Yet it's about as likely because it can get orders. My guesstimate is that for every one 748F order you could get, you could get ten 757 orders, and that's about what it would take.

Keep in mind, as above, neither is at all likely to happen.
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Re: ​Internal tussle as Boeing weighs future of 747

Mon Jul 06, 2020 8:45 pm

 
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 1:28 am

Canuck600 wrote:

TFA says:

...industry sources told Reuters on Friday.

Unfortunately it's a rehash of the Reuters piece we had three days ago ( ref: viewtopic.php?f=3&t=1446803&start=300#p22305937 ).
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 7:28 am

Stitch wrote:
Now hopefully Boeing priced UPS and Volga-Dnepr's frames with the knowledge of the higher production costs a Rate 0.5 would incur compared to the earlier sales that were all priced based on Rate 2 costs. And since Boeing has not announced any subsequent 747-8 program write-downs based on production costs, that implies they did so.



This is an unending circle, isn't it? The frame isn't selling because it is not attractive enough and to offset the financial cost Boeing has to price it higher, which makes it less attractive, which means Boeing has to ask for a higher price to offset the higher cost, which makes it less attractive for buyers.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 3:05 pm

enzo011 wrote:
This is an unending circle, isn't it? The frame isn't selling because it is not attractive enough and to offset the financial cost Boeing has to price it higher, which makes it less attractive, which means Boeing has to ask for a higher price to offset the higher cost, which makes it less attractive for buyers.


Yes. Which is why "logic suggests" (with apologies to Captain Spock) that Boeing internally cancelled this program years ago and just have not yet felt it necessary to let the general public - or more accurately, the investing public - know that until they are ready to (and by "ready to" I mean "required to" by financial reporting laws).

I mean even the people who are adamant that this program is "not dead yet" admit that there is no chance there is any way it can be saved so I don't know why there is still debate about it.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 3:11 pm

enzo011 wrote:
Stitch wrote:
Now hopefully Boeing priced UPS and Volga-Dnepr's frames with the knowledge of the higher production costs a Rate 0.5 would incur compared to the earlier sales that were all priced based on Rate 2 costs. And since Boeing has not announced any subsequent 747-8 program write-downs based on production costs, that implies they did so.

This is an unending circle, isn't it? The frame isn't selling because it is not attractive enough and to offset the financial cost Boeing has to price it higher, which makes it less attractive, which means Boeing has to ask for a higher price to offset the higher cost, which makes it less attractive for buyers.

Personally I think it's more likely it was the opposite.

From what I read Boeing's goal was to keep the product alive as long as possible hoping as 744s retired off and as e-commerce grew the market would grow for the product. UPS had already ordered 748 in the past so it knew the Rate 2 pricing. It would seem UPS was in a good negotiating position.

The counter point could be Boeing saying to UPS that this was the last chance to order 748 so you better order all you think you need and by the way the price is going up. Personally I doubt that's how it went down, but I can't be sure one way or the other.
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 3:38 pm

Bottom line, until the Board officially cancels the Queen, its all academic. Personally, I tend to think there's still a chance if enough orders can be had by hook ro by crook, including:
- cargo operators.
- E-4B replacement.
- possible Air Force transport order to supplement the C-117 and C-5.

Do I think this will happen? Sadly, no. It is a beautiful dream, though, isn't it?
 
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 3:52 pm

wjcandee wrote:
PepeTheFrog wrote:
wjcandee wrote:
It's not over yet. But it's not looking good.


Not over yet? Triumph Group is not making the fuselage panels anymore, so the writing is on the wall. Once Boeing worked through the spares, the assembly line will be depleted.


This thread is going around in circles, circles, circles, circles.

Respectfully, Pepe, I did know that tidbit.

I don't, however, agree with your conclusion. If someone was willing to order 50 (and nobody will be), whether "Triumph Group" shredded every bit of machinery, tools, business papers and computer info it had, the planes would be sold and built. We're talking about things around the margin, and, as I say, it's not over yet.

In what plausible economic scenario would anyone order 50 examples?

1. In this thread we have links on how cargo demand is down, but supply is down further. viewtopic.php?f=3&t=1448653
2. 777-300ERSF conversion starting. In this thread we are discussing cargo conversions (mostly full conversions, but also temporarily fir Covid19): viewtopic.php?f=3&t=1448687 The price of used 777-300ERs has dropped so much, it makes new build freighters a tough sell.
3. Boeing seems to be accelerating the 777x freighter offer.
4. Boeing must cut costs. The 748 line is an obvious target.
5. Post Covid19, the recession will cause a drop in air freight demand.

The cost of restarting production is higher than continuing production. If there are indeed parts for 4 more, those might be built. But any additional additional production hope died with Covid19.

At thus juncture, Boeing must invest in keeping the 777 line on life support, 767 tanker fixes, and MAX reintroduction.

There is no plausible large order which would distract Boeing.

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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 5:13 pm

Is there any way to hold the 747 line for some years? Like being able to build 50 or 100 in some years time? It's seems to only be a matter of time until big numbers of new 747 will be needed. Amazon hasn't even started to order them.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 5:29 pm

The 747 spot in the aviation market is dwindling, once it was the only choice, now the twins are taking most of its former thunder.

There are 106 748F's flying and a lot of 744F's, all with nose doors. Cargo that needs the nose door has plenty of choices, in 20 years the availability of nose doors will be more limited, but still massive compared to the number of AN's flying. So the advantage of the nose door has little impact on what freighter to buy today.

The market is turning to 767's new and conversions, 777's new and conversions, and hopefully A330 conversions.
 
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 7:16 pm

Noshow wrote:
Is there any way to hold the 747 line for some years? Like being able to build 50 or 100 in some years time? It's seems to only be a matter of time until big numbers of new 747 will be needed. Amazon hasn't even started to order them.


Basically, no.

First, once the line shuts down, the expertise starts to go away pretty quickly. The staff who were trained on how to work that specific assembly line will either go on to other jobs or retire.

Second, it's costly (either real or opportunity costs) to keep an assembly line when you would have the ability to either sell off the line and its components and tools, or repurpose it to some other (more profitable/productive) use. Once repurposed to something different (i.e. a more profitable/productive use), then it would take a major change of economics (and, perhaps, even physics, which is very unlikely) to make that more productive use suddenly less productive, and make the 747 suddenly the best use of that space once again.

Third, with every year that goes by, the 747 becomes that much less competitive against the entirety of the rest of the options on the market. A few years from now, you'll have 77W converted freighters, probably followed by a 778F (and maybe, if they can pull it off, a 779F?). The market for which the 747 is the best choice gets smaller every day. If you can't sell 50 of them now, you certainly won't be able to sell 50 of them several years into the future. Combine that with the high costs (as indicated earlier in the thread) of restarting production, meaning that the sales price would have to be high to recover the costs of a restart, which then makes the plane less competitive on a purchase basis, and it's easy to see why 747 quite simply has no future.
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 7:30 pm

Noshow wrote:
Amazon hasn't even started to order them.


What scenarios would Amazon need to order them? Surely the long term goal for amazon is less flying, you get enough warehousing close enough to everyone such that you meet the demand without flying stuff between? Obviously the US is a physically larger country and does a bit more volume in the US, but the UK and Germany are large markets and amazon doesn't fly much if anything around - and both countries manage same or next day delivery everywhere in them. Once a market is large enough for more volume, you get a warehouse nearer you don't you - not more flights from a warehouse further away?
 
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 10:10 pm

Cargo Facts ( https://cargofacts.com/allposts/equipme ... ts-learns/ ) teases us with:

In shuttering 747 program, Boeing shuns consortium’s proposal, Cargo Facts learns

Not only is Boeing abandoning the 747 platform, continuing its trend in recent years of turning away customers seeking to purchase the iconic widebody, the aerospace giant has also declined an offer to acquire the program, Cargo Facts has learned. Efforts to save the 747-8 have failed, requiring the air cargo industry to face the […]

... and the rest is revealed to those with login credentials.

Anyone care to guess what "consortium" proposed buying the 748 program from Boeing?
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 10:28 pm

Revelation wrote:
Cargo Facts ( https://cargofacts.com/allposts/equipme ... ts-learns/ ) teases us with:

In shuttering 747 program, Boeing shuns consortium’s proposal, Cargo Facts learns

Not only is Boeing abandoning the 747 platform, continuing its trend in recent years of turning away customers seeking to purchase the iconic widebody, the aerospace giant has also declined an offer to acquire the program, Cargo Facts has learned. Efforts to save the 747-8 have failed, requiring the air cargo industry to face the […]

... and the rest is revealed to those with login credentials.

Anyone care to guess what "consortium" proposed buying the 748 program from Boeing?


It wasn't Airbus, for sure. I have no idea why they would want it but even if they did I bet they wouldn't even bother asking Boeing about it. No way in hell that would happen. Though, it is kind of fun to think about the absolute sh*t-storm that would be an A.Net thread on that topic...

In all seriousness, I suspect that someone like the Chinese could have made an offer. Sure, it is an old A/C but still far more advanced than anything they've ever produced. I think, though, that even if Boeing wanted to do that the government wouldn't be too keen on it. That said, more likely, imo, the bid may have come from aerospace companies that don't currently produce any actual aircraft but are maybe interested in getting into the game somehow. It could be some of the suppliers for the 748 itself trying to save the program to keep work flowing.
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Re: ​Internal tussle as Boeing weighs future of 747

Tue Jul 07, 2020 11:50 pm

Do you think Boeing will store the production presses/jigs? There has to be some old warehouse in the SEA/TAC area that could be used for long term storage. If not stored then destroyed. I would hate to see them shipped off to China like we have done with a lot of industrial equipment. The Chinese buy plants lock, stock and barrel and reassemble them to compete with the world (even ones that you would have thought were obsolete).
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    Re: ​Internal tussle as Boeing weighs future of 747

    Tue Jul 07, 2020 11:55 pm

    MohawkWeekend wrote:
    Do you think Boeing will store the production presses/jigs? There has to be some old warehouse in the SEA/TAC area that could be used for long term storage. If not stored then destroyed. I would hate to see them shipped off to China like we have done with a lot of industrial equipment. The Chinese buy plants lock, stock and barrel and reassemble them to compete with the world (even ones that you would have thought were obsolete).


    After the last 757 rolled off the line, Boeing destroyed all the tooling for the 757 program.

    That will probably be your answer.
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    Re: ​Internal tussle as Boeing weighs future of 747

    Wed Jul 08, 2020 3:31 am

    hOMSaR wrote:
    Noshow wrote:
    Is there any way to hold the 747 line for some years? Like being able to build 50 or 100 in some years time? It's seems to only be a matter of time until big numbers of new 747 will be needed. Amazon hasn't even started to order them.


    Basically, no.

    First, once the line shuts down, the expertise starts to go away pretty quickly. The staff who were trained on how to work that specific assembly line will either go on to other jobs or retire.

    Second, it's costly (either real or opportunity costs) to keep an assembly line when you would have the ability to either sell off the line and its components and tools, or repurpose it to some other (more profitable/productive) use. Once repurposed to something different (i.e. a more profitable/productive use), then it would take a major change of economics (and, perhaps, even physics, which is very unlikely) to make that more productive use suddenly less productive, and make the 747 suddenly the best use of that space once again.


    I recall DOD received pricing from Boeing to mothball the C-17 line (about 2008) for several years, it was cheaper to just order the extra planes. In 2009 Boeing was awarded an order for 17 extra, I believe that this order covered the cost to reduce the rate from 16 to 10 per year. DOD did not pony up the cash to store the jigs and tooling for the C-17, my guess is the cost to disassemble for reuse (verses scrapping) would have been $10M or more and several million a year to store. Somewhere around 5 years in storage it is cheaper to start again. Besides, its a real cats breakfast trying to put back together a relocated line, I've worked on installing a relocated rolling mill, it was not fun. Reminds me of this song

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    Re: ​Internal tussle as Boeing weighs future of 747

    Wed Jul 08, 2020 7:32 am

    FWAERJ wrote:
    After the last 757 rolled off the line, Boeing destroyed all the tooling for the 757 program.

    That will probably be your answer.


    For every person that claims the 757 tooling was destroyed, another claims it hasn't been. To the best of my recollection, neither side of the argument has ever offered any supporting evidence, all we have is hearsay (though to some it's heresy!).
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    Re: ​Internal tussle as Boeing weighs future of 747

    Wed Jul 08, 2020 8:37 am

    scbriml wrote:
    FWAERJ wrote:
    After the last 757 rolled off the line, Boeing destroyed all the tooling for the 757 program.

    That will probably be your answer.


    For every person that claims the 757 tooling was destroyed, another claims it hasn't been. To the best of my recollection, neither side of the argument has ever offered any supporting evidence, all we have is hearsay (though to some it's heresy!).

    One thing we know though is the former plant for 757 is being used to produce 737 these days - if the tools are not easily relocatable they might as well have been destroyed

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    Re: ​Internal tussle as Boeing weighs future of 747

    Wed Jul 08, 2020 1:09 pm

    I think it is safe to say whenever the final assembly line ends, a type is gone mostly forever. Even when you keep the tools, you need the supply chain, the people, the certificates. Except for maybe selected military programs they never seem to come back. And if they do only after major investments. Look how difficult it is to restart some An-124 production? Or how difficult it was to restart the IL-76-line.

    So the 747 line would need to be mothballed to keep it available. As the supply chain dwindles even this might not help anymore.
     
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    Re: ​Internal tussle as Boeing weighs future of 747

    Wed Jul 08, 2020 1:31 pm

    scbriml wrote:
    FWAERJ wrote:
    After the last 757 rolled off the line, Boeing destroyed all the tooling for the 757 program.

    That will probably be your answer.


    For every person that claims the 757 tooling was destroyed, another claims it hasn't been. To the best of my recollection, neither side of the argument has ever offered any supporting evidence, all we have is hearsay (though to some it's heresy!).

    Due to the history, nostalgia, and love for the queen of the skies, the debates on the 747 production restart will be louder. With continued rumors coming in, it seems the 747 is done.

    The 779 is a perfect one for one 747 replacement. So there is no need in passenger duty. For freight, until decades from now, there isn't enough bif a premium for nose loaded freight.

    The 737 and 777 have received PiPs neither the 747 nor 757 had the volume/time to pay for. At this point, a new design is cheaper, in my opinion.

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