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Revelation
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Tue Feb 02, 2021 5:08 pm

UA748i wrote:
This really hurts me to say, but unfortunately, there is an increasing likelihood we may not even see the 777-8.

Boeing seemed to be a few years too late on the 777X, just like they were too late the 747-8i.

With the advent of NEOs and now the A220, the MAX is losing ground. 747 production is wrapping up, 767 orders wont last forever, 777 pretty much done, the 787 still isn't cash positive, and now this, with the 777X, their new flagship product that hasnt even entered service.

Boeing Defense is in the same realm. Sure, they just launched the F-15EX and F/A-18E/F Block III, Defiant progress is going well, and even are fiddling with a Gen-6 fighter, but 40+ year old fighters and aircraft that will not win their respective competitions is not a recipe for long term success.

The next decade will be a very unexciting period for Boeing, particularly for BCA. An uncompetitive lineup (save the 787) and too broke to launch anything new.

Just my 2c.

787 has been cash positive at least pre-covid. As we just saw with 777X, the deferred production costs can disappear if/when circumstances dictate and the impact is on equity, not cash. The low production rate post-covid means there is not a lot of cash, but the CFO said it is still cash positive and there is no need for a write down at this moment in time, although it could happen soon.
 
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Stitch
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Tue Feb 02, 2021 5:18 pm

UA748i wrote:
This really hurts me to say, but unfortunately, there is an increasing likelihood we may not even see the 777-8.


I think we'll see it, but only as a freighter.


UA748i wrote:
Boeing seemed to be a few years too late on the 777X, just like they were too late the 747-8i.


I don't think they were late - the 777-300ER was still selling decent and there were so many low-cycle 777-300ERs in service still paying off their leasing / purchase contracts that airlines were not in the mood for a wholesale replacement even if that frame had demonstrably better operating economics (i.e. - the slow early sales of the A350-1000).

COVID has forced countries to close their borders so even if people wanted to fly internationally, they can't. So airlines can't operate their existing widebodies and therefore can't afford to keep them, much less take on new ones.
 
Opus99
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Tue Feb 02, 2021 5:43 pm

UA748i wrote:
This really hurts me to say, but unfortunately, there is an increasing likelihood we may not even see the 777-8.

Boeing seemed to be a few years too late on the 777X, just like they were too late the 747-8i.

With the advent of NEOs and now the A220, the MAX is losing ground. 747 production is wrapping up, 767 orders wont last forever, 777 pretty much done, the 787 still isn't cash positive, and now this, with the 777X, their new flagship product that hasnt even entered service.

Boeing Defense is in the same realm. Sure, they just launched the F-15EX and F/A-18E/F Block III, Defiant progress is going well, and even are fiddling with a Gen-6 fighter, but 40+ year old fighters and aircraft that will not win their respective competitions is not a recipe for long term success.

The next decade will be a very unexciting period for Boeing, particularly for BCA. An uncompetitive lineup (save the 787) and too broke to launch anything new.

Just my 2c.

Their line up is fine. Between the Max and 787.

The 787 has 3 variants that are quite versatile. The MAX will sell well enough for what If has been though.

I’m looking at the -10 closely.

Cargo belongs at the moment to them at that’s just that.

The 787 will continue to outsell the 350 IMO. the last four years of orders have shown that.

The 787 is fantastic because it’s one program that is taking on two head on (330neo and 350)

The 32x series will continue to outsell the max.

Boeing will be fine. Even in the HIEGHT of the pandemic and their issues. They still out delivered and outsold Airbus on widebodies.

Now the problem Is. Wide body market is soft as hell. So these next few years are going to be ROUGH. They’ll have to depend on the max as much as they can. They will be very aggressive on their pricing of the jet.

They’ll get back the backlog they lost. Or at least most of it. We can ALC already saying they’re looking at that.
 
iamlucky13
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Tue Feb 02, 2021 9:25 pm

enzo011 wrote:
Stitch wrote:
MrHMSH wrote:
It will still be a long time before it's back to 2019 levels, and airlines will be hit hard, even those that survive. Will enough airlines be able to afford a large aircraft? And will this all happen before the 777X goes too far into the red? The longer it goes on, the worse it gets.


Boeing will just have to play the long game like they did when demand for the 747 and 767 collapsed. They can do ultra-low-rate production for a few years, pushing out one frame every couple of months. They can also prioritize the 777X freighter development and put it into production if cargo demand recovers strongly first.

Yeah, they'll lose money on the program for a time, but they can write off the entire deferred production cost in the interim (as they eventually did with the 747-8 program) to "clear the deck" and this will allow them to book stronger profits when demand does recover as the frames won't be saddled with retiring any accrued debt beyond their direct production cost.


Yeah, but can they afford to lose money on the 777X when they are looking to write off profits off the 787 due to the lower production rate and still catching up with the 737MAX?


A write off of past 787 expenses that may not be recovered by future profits is a separate matter from whether they can afford the future cash flows of the 777X program. That they are choosing to continue the program indicates they believe that at least from the current juncture that has excluded the recently-written off expenses, the program will be net positive.

In the meantime, the company cash flow rate is terrible, but improving. The improvement should accelerate once the 737 is generating regular payments again. They noted during the 4q earnings call that 737 cash flow won't normalize right away due to flexibility they are giving airlines in their payment schedules. That they are able to grant that flexibility is a good sign. The cash flow has also been hurt by the hold-up on 787 deliveries, so there is another major pending improvement.

Revelation wrote:
The customers can now cancel due to Boeing's tardiness, but we have not heard what their plans are. I think it's realistic that some of these at-risk orders are deferred rather than canceled.


I'm doubtful the airlines currently are in a position they have a right to cancel. Under a normal certification timeline, the 777X would be well over half done with flight testing at this point. Either there is a major undisclosed issue that has been discovered, the FAA has mandated a major undisclosed change in order to certify the 777X, or the 2023 date is driven by the airlines.

Their disclosure of the new delivery date target is best described as a smoke screen: "Here are several factors that affect delivery dates. We're not giving you any further clues."

Regardless of how significant each factor is, we do know the airlines don't want deliveries right now. I would wager late 2023 was negotiated with the customers as a contract update, and that there is limited recourse to cancel without penalties.
 
vfw614
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Tue Feb 02, 2021 9:30 pm

Opus99 wrote:
The 787 will continue to outsell the 350 IMO. the last four years of orders have shown that.

The 787 is fantastic because it’s one program that is taking on two head on (330neo and 350)



I think both are pretty equal if you consider the fact that Airbus is approx. three years behind with its programme. Looking at just a random number of years is tricky as over a shorter period orders can be heavily influenced by aspects such as availability of delivery slots or order conversions from VLA to A35K/787-10s which are not really the result of a competitive aircraft procurement. .

If, as you do (and I think is correct), take in the A330neo, overall figures are 1.505 vs. 1.214 and before Airbus launched its product, Boeing had sold more than 300 Boeing 787s, IIRC.

If you look just at the A350, I don't think it is helpful to compare orders by including the 787-8 as it is a much smaller aircraft than the A350-900 (even if you do include it, it has not sold more than a handful for a couple of years now, if I am not mistaken, so it is pretty much a dead man walking). Here the figures are 1.083 vs. 915, again with a head start for Boeing.

Overall, I don't think the widebody offering gives Boeing an advantage that is near as big as the advantage Airbus has with its narrowbody offering over Boeing.. And realistically, Airbus has much smaller millstone around its neck with the A380 debacle compared to Boeing's resulting from the Boeing 737MAX, Boeing 787 and Boeing 777X drama.
 
Opus99
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Tue Feb 02, 2021 9:34 pm

vfw614 wrote:
Opus99 wrote:
The 787 will continue to outsell the 350 IMO. the last four years of orders have shown that.

The 787 is fantastic because it’s one program that is taking on two head on (330neo and 350)



I think both are pretty equal if you consider the fact that Airbus is approx. three years behind with its programme. Looking at just a random number of years is tricky as over a shorter period orders can be heavily influenced by aspects such as availability of delivery slots or order conversions from VLA to A35K/787-10s which are not really the result of a competitive aircraft procurement. .

If, as you do (and I think is correct), take in the A330neo, overall figures are 1.505 vs. 1.214 and before Airbus launched its product, Boeing had sold more than 300 Boeing 787s, IIRC.

If you look just at the A350, I don't think it is helpful to compare orders by including the 787-8 as it is a much smaller aircraft than the A350-900 (even if you do include it, it has not sold more than a handful for a couple of years now, if I am not mistaken, so it is pretty much a dead man walking). Here the figures are 1.083 vs. 915, again with a head start for Boeing.

Overall, I don't think the widebody offering gives Boeing an advantage that is near as big as the advantage Airbus has with its narrowbody offering over Boeing..


It certainly doesn't of course, but i'm just trying to point out some of the few things Boeing has going for it.

Another big thing you should add there is price. I used recent orders to try and see if that can counter the gap in EIS. the 787 sold over 364 since 2016 and i think the A350 close to 200 or so. I have to check again. But again, there a lot of factors there. Airbus' cost position also does not help
 
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Revelation
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 12:04 am

iamlucky13 wrote:
Revelation wrote:
The customers can now cancel due to Boeing's tardiness, but we have not heard what their plans are. I think it's realistic that some of these at-risk orders are deferred rather than canceled.


I'm doubtful the airlines currently are in a position they have a right to cancel. Under a normal certification timeline, the 777X would be well over half done with flight testing at this point. Either there is a major undisclosed issue that has been discovered, the FAA has mandated a major undisclosed change in order to certify the 777X, or the 2023 date is driven by the airlines.

Their disclosure of the new delivery date target is best described as a smoke screen: "Here are several factors that affect delivery dates. We're not giving you any further clues."

Regardless of how significant each factor is, we do know the airlines don't want deliveries right now. I would wager late 2023 was negotiated with the customers as a contract update, and that there is limited recourse to cancel without penalties.

Current rights aren't what matters, what matters according to what I've quoted earlier is whether or not Boeing expects the current orders to be filled and the answer was no for about a third of them. I presume this means Boeing now knows they can't deliver by the agreed upon delivery dates and has asked the customers what their plans would be if this should happen and were told that the orders would be canceled. Maybe the customers no longer want them, maybe the customer thinks they can get a better deal via a new contract in the future, maybe the customer just wants their deposit money back, who knows?

I think the combination of this news and the MAX10 news means FAA really is holding Boeing's feet to the fire and is finding "issues" that need to be resolved. Also the FG piece on EASA's statements regarding MAX10 indicates they have found deficiencies in Boeing's design processes (ref: 737 news thread). Given Boeing's less that full transparency in recent times, I'm more inclined to believe the more pessimistic takes on things.
 
iamlucky13
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 1:01 am

Revelation wrote:
iamlucky13 wrote:
Revelation wrote:
The customers can now cancel due to Boeing's tardiness, but we have not heard what their plans are. I think it's realistic that some of these at-risk orders are deferred rather than canceled.


I'm doubtful the airlines currently are in a position they have a right to cancel. Under a normal certification timeline, the 777X would be well over half done with flight testing at this point. Either there is a major undisclosed issue that has been discovered, the FAA has mandated a major undisclosed change in order to certify the 777X, or the 2023 date is driven by the airlines.

Their disclosure of the new delivery date target is best described as a smoke screen: "Here are several factors that affect delivery dates. We're not giving you any further clues."

Regardless of how significant each factor is, we do know the airlines don't want deliveries right now. I would wager late 2023 was negotiated with the customers as a contract update, and that there is limited recourse to cancel without penalties.

Current rights aren't what matters, what matters according to what I've quoted earlier is whether or not Boeing expects the current orders to be filled and the answer was no for about a third of them. I presume this means Boeing now knows they can't deliver by the agreed upon delivery dates and has asked the customers what their plans would be if this should happen and were told that the orders would be canceled. Maybe the customers no longer want them, maybe the customer thinks they can get a better deal via a new contract in the future, maybe the customer just wants their deposit money back, who knows?

I think the combination of this news and the MAX10 news means FAA really is holding Boeing's feet to the fire and is finding "issues" that need to be resolved. Also the FG piece on EASA's statements regarding MAX10 indicates they have found deficiencies in Boeing's design processes (ref: 737 news thread). Given Boeing's less that full transparency in recent times, I'm more inclined to believe the more pessimistic takes on things.


Thank you for the clarification of what your thinking is. I have to point out that presuming that Boeing is driving the change of delivery dates remains unconfirmed. I still default to starting from a position of what we know and what we don't know. We do know that Boeing's customers are in a extremely difficult financial position right now. Even as their situations improve, VLA's will be the last aircraft they need more of. They have clear incentive to delay delivery.

Any significant flight test issues are speculative. It does not appear anyone is proposing this as likely, so I will let this one rest for now.

The scope of new FAA requirements for the 777X is also speculative. It is a safe assumption some level of change is needed, and this was all but admitted in the quarterly earnings call, but they were not very specific. Considering the roughly 3-year time frame (assuming the FAA's thoughts were known by late 2020, and EIS is now late 2023), I take it as implied as part of this theory that 777X has more challenging deficiencies to address than the 737 MAX. I'm fine with your reasoning for being pessimistic, but presuming an improved successor to an aircraft with an excellent safety record is less readily certifiable than an aircraft that had accidents due to a latent critical issue is more pessimism than I can muster right now.

I will add one more consideration to build on my airline financial position comment, although this one is somewhat speculative - aircraft purchase agreements commonly allow for penalty-free cancellation and refund of predelivery payments in case of bankruptcy. Given the state of the industry, I could see that being a valid reason to call into doubt a significant percentage of pending orders. There may also be some customers not anticipating bankruptcy, but either considering accepting a penalty for cancellation or change of delivery dates as a less worse option than long-haul over-capacity. Furthermore, since Boeing was late on the original 2020 target, some of them may have leverage to negotiate a mutually beneficial change to the penalty terms.
 
Jetport
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 2:48 am

Lots of evidence free speculation and Boeing bashing on here today. Now back in the real world, Boeing was able to sell $9.825 billion in bonds today at 175 basis points above US Treasuries. Lots of bond buyers willing to buy Boeing debt for pretty modest returns.

https://finance.yahoo.com/news/boeing-k ... 06995.html
 
oldJoe
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 4:10 am

Jetport wrote:
Lots of evidence free speculation and Boeing bashing on here today. Now back in the real world, Boeing was able to sell $9.825 billion in bonds today at 175 basis points above US Treasuries. Lots of bond buyers willing to buy Boeing debt for pretty modest returns.

https://finance.yahoo.com/news/boeing-k ... 06995.html


Boeing bashing ? Selling bonds of $9.825 billion to repay a portion of $13.8 billion loan ?
Thanks to your link which provides "its debt balance up to $63.6 billion by year end."
 
Jetport
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 5:08 am

oldJoe wrote:
Jetport wrote:
Lots of evidence free speculation and Boeing bashing on here today. Now back in the real world, Boeing was able to sell $9.825 billion in bonds today at 175 basis points above US Treasuries. Lots of bond buyers willing to buy Boeing debt for pretty modest returns.

https://finance.yahoo.com/news/boeing-k ... 06995.html


Boeing bashing ? Selling bonds of $9.825 billion to repay a portion of $13.8 billion loan ?
Thanks to your link which provides "its debt balance up to $63.6 billion by year end."


It is called selling lower interest debt to pay off higher interest debt, thus saving lots of money on interest. I was pointing out that the market is willing to lend Boeing money at surprisingly low interest rates. Apprently the market isn't too worried about getting paid back by Boeing.
 
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enzo011
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 6:53 am

Jetport wrote:
oldJoe wrote:
Jetport wrote:
Lots of evidence free speculation and Boeing bashing on here today. Now back in the real world, Boeing was able to sell $9.825 billion in bonds today at 175 basis points above US Treasuries. Lots of bond buyers willing to buy Boeing debt for pretty modest returns.

https://finance.yahoo.com/news/boeing-k ... 06995.html


Boeing bashing ? Selling bonds of $9.825 billion to repay a portion of $13.8 billion loan ?
Thanks to your link which provides "its debt balance up to $63.6 billion by year end."


It is called selling lower interest debt to pay off higher interest debt, thus saving lots of money on interest. I was pointing out that the market is willing to lend Boeing money at surprisingly low interest rates. Apprently the market isn't too worried about getting paid back by Boeing.



Could be because the market knows a important defense contractor will not be allowed to fail by the US Government, so they are happy to make easy money off the company and if need be the US Taxpayer if it comes to that. I would be concerned what mindset that will entrench into the management when they can oversee, let's be honest here, a disaster even before the pandemic and there is very little consequence for the company. There is no risk for them to consider when they make decisions as the stock price remains high and they are able to get easy money from bonds and the markets. Then again the previous chairman of the board now in charge may change his ways and the way the company is run, right?
 
Danny
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 12:45 pm

enzo011 wrote:
Jetport wrote:
oldJoe wrote:

Boeing bashing ? Selling bonds of $9.825 billion to repay a portion of $13.8 billion loan ?
Thanks to your link which provides "its debt balance up to $63.6 billion by year end."


It is called selling lower interest debt to pay off higher interest debt, thus saving lots of money on interest. I was pointing out that the market is willing to lend Boeing money at surprisingly low interest rates. Apprently the market isn't too worried about getting paid back by Boeing.



Could be because the market knows a important defense contractor will not be allowed to fail by the US Government, so they are happy to make easy money off the company and if need be the US Taxpayer if it comes to that.


Exactly that. Without taxpayer support Boeing is bankrupt.
 
morrisond
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 1:40 pm

Danny wrote:
enzo011 wrote:
Jetport wrote:

It is called selling lower interest debt to pay off higher interest debt, thus saving lots of money on interest. I was pointing out that the market is willing to lend Boeing money at surprisingly low interest rates. Apprently the market isn't too worried about getting paid back by Boeing.



Could be because the market knows a important defense contractor will not be allowed to fail by the US Government, so they are happy to make easy money off the company and if need be the US Taxpayer if it comes to that.


Exactly that. Without taxpayer support Boeing is bankrupt.


No - Boeing has not taken any COVID bailout money. The rates they are paying are so low that carrying even $63B on the balance sheet is affordable at less than $650 million per quarter.

The stock price is still at about $200 per share with a market cap of about $117B - there has also been speculation that they will do a large equity issue to fix the balance sheet. They may be waiting in hopes the share price goes higher but even at current prices the dilution is not that bad.

They also still have $25B of Cash on the balance sheet. While they would never do this - there was speculation that the equity raise would be about $30B - that plus the cash on hand could almost totally wipe out there debt - which they would be crazy to do so given the low rates they are paying.

We also must remember that Boeing has radically reduced it's overhead in Commercial Airplanes (unfortunately at a very high human cost) so that when 737 MAX and 787 Deliveries get up to speed again even at 5 per month on the 787 and the MAX gets past the ones that are being delivered on future credits/deposits - Commercial Aircraft should be cash flow positive again.
 
 
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par13del
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 3:00 pm

Danny wrote:
enzo011 wrote:
Jetport wrote:

It is called selling lower interest debt to pay off higher interest debt, thus saving lots of money on interest. I was pointing out that the market is willing to lend Boeing money at surprisingly low interest rates. Apprently the market isn't too worried about getting paid back by Boeing.



Could be because the market knows a important defense contractor will not be allowed to fail by the US Government, so they are happy to make easy money off the company and if need be the US Taxpayer if it comes to that.


Exactly that. Without taxpayer support Boeing is bankrupt.

So the tax payers just give Boeing funds without them having to deliver a product, I thought in the military field the missiles, helicopters and other items still had to be built and delivered.
 
Exeiowa
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 3:09 pm

There is a category called "research" that seems to be the vehicle by which money can be allocated without providing a physical good in return.
 
astuteman
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 3:27 pm

morrisond wrote:
Danny wrote:
enzo011 wrote:


Could be because the market knows a important defense contractor will not be allowed to fail by the US Government, so they are happy to make easy money off the company and if need be the US Taxpayer if it comes to that.


Exactly that. Without taxpayer support Boeing is bankrupt.


No - Boeing has not taken any COVID bailout money. The rates they are paying are so low that carrying even $63B on the balance sheet is affordable at less than $650 million per quarter.

The stock price is still at about $200 per share with a market cap of about $117B - there has also been speculation that they will do a large equity issue to fix the balance sheet. They may be waiting in hopes the share price goes higher but even at current prices the dilution is not that bad.

They also still have $25B of Cash on the balance sheet. While they would never do this - there was speculation that the equity raise would be about $30B - that plus the cash on hand could almost totally wipe out there debt - which they would be crazy to do so given the low rates they are paying.

We also must remember that Boeing has radically reduced it's overhead in Commercial Airplanes (unfortunately at a very high human cost) so that when 737 MAX and 787 Deliveries get up to speed again even at 5 per month on the 787 and the MAX gets past the ones that are being delivered on future credits/deposits - Commercial Aircraft should be cash flow positive again.


$2.6Bn interest payments PA is a pretty significant drag on finances I'd suggest.

I'd also ask you for some data to back up "Boeing has radically reduced its overhead in Commercial Airplanes"...
I'm sure they'd love to have.
There are certainly actions that can be pointed to about what they're going to do (as opposed to have already done)

And whilst delivery rates remain a fraction of their peak, overheads on a per unit basis are going to continue to be a massive challenge (same for Airbus).
I've been there ....

I'm pretty sure the assertion that Boeing can manage without bailout is legitimate - their scale is just huge.
But on the flipside, it feels a bit wishful to try and brush the financial issues under the carpet...
Just my view

Rgds
 
tomcat
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 3:30 pm

chiad wrote:


And Max7 deliveries to start this year. Several A.net members have been wondering what its status was so now we know.
 
frmrCapCadet
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 4:05 pm

Next month Boeing is moving all 787 production to Charleston, where IIRC, they still cannot produce planes. Does anyone have information on that major glitch of joining fuselage sections, perhaps they have solved the problem?
 
PlaneInsanity
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 4:23 pm

How can a company such Boeing, survive such massive and ongoing losses of this scale? I wonder. I do confess not knowing much on the financial side of things in the Aerospace Industry, be gentle. ;-)
 
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Stitch
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 4:53 pm

PlaneInsanity wrote:
How can a company such Boeing, survive such massive and ongoing losses of this scale?


Mainly because a significant portion of these losses are being reported all at one time now due to Program Accounting rules even though they actually occurred over a much longer period of time (many years).

So Boeing didn't actually empty 8 billion out of their checking account last quarter to cover them all in one lump payment, but instead have been withdrawing it in much smaller amounts over those past years as the individual bills came due.

So the actual direct financial impact has been spread out in a way that Boeing is able to absorb.
 
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Revelation
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 5:20 pm

enzo011 wrote:
Jetport wrote:
oldJoe wrote:
Boeing bashing ? Selling bonds of $9.825 billion to repay a portion of $13.8 billion loan ?
Thanks to your link which provides "its debt balance up to $63.6 billion by year end."

It is called selling lower interest debt to pay off higher interest debt, thus saving lots of money on interest. I was pointing out that the market is willing to lend Boeing money at surprisingly low interest rates. Apprently the market isn't too worried about getting paid back by Boeing.

Could be because the market knows a important defense contractor will not be allowed to fail by the US Government, so they are happy to make easy money off the company and if need be the US Taxpayer if it comes to that. I would be concerned what mindset that will entrench into the management when they can oversee, let's be honest here, a disaster even before the pandemic and there is very little consequence for the company. There is no risk for them to consider when they make decisions as the stock price remains high and they are able to get easy money from bonds and the markets. Then again the previous chairman of the board now in charge may change his ways and the way the company is run, right?

I'm not sure why this perspective is being taken. Boeing has taken no COVID relief funds from the US government to 'deliver nothing', Airbus has, yet they are not getting roasted here. Boeing has lots of government contracts and is 'too big to fail' but so are many other large corporations both inside and outside the USA.

par13del wrote:
Danny wrote:
enzo011 wrote:
Could be because the market knows a important defense contractor will not be allowed to fail by the US Government, so they are happy to make easy money off the company and if need be the US Taxpayer if it comes to that.

Exactly that. Without taxpayer support Boeing is bankrupt.

So the tax payers just give Boeing funds without them having to deliver a product, I thought in the military field the missiles, helicopters and other items still had to be built and delivered.

Let's see, just as USAF complains about various faults in the KC-46, we see that DoD just put 15 more under contract, Japan has increased its order from 2 to 4, etc. Something is being delivered. Same will be true of the other programs.

PlaneInsanity wrote:
How can a company such Boeing, survive such massive and ongoing losses of this scale? I wonder. I do confess not knowing much on the financial side of things in the Aerospace Industry, be gentle. ;-)

As above, it's because investors are willing to loan them money at low interest because they expect they will be repaid.
 
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Revelation
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 6:00 pm

Since this seems to be the place we're discussing the impact of Boeing's decision to delay 777X till 2023 and the recent order backlog reduction, Bloomberg reports EK is considering swapping up to 40 77X orders to 787:

Boeing Co.’s biggest 777X customer is weighing whether to swap as many as a third of its orders for the smaller 787 Dreamliner, said a person familiar with the matter, adding to the uncertainty swirling around the behemoth jet’s future.

Gulf carrier Emirates is seeking to switch between 30 and 40 of its 115 commitments for the 777X to the Dreamliner as it calibrates fleet plans, said the person, who asked not to be identified discussing private considerations. The moves could further squeeze the profits of Boeing’s newest jet, which faces a lengthy regulatory review and design changes.

Ref: https://www.bloomberg.com/news/articles ... ers-to-787

Presuming these orders aren't already in the recent backlog reduction, the backlog could be down from 191 to 151, but I'm not sure we can make that presumption.

It's definitely unwelcome news for the program, but it seems unlikely to drive Boeing to not continue with the program, and presuming it is still around if/when wide body travel recovers it still has a chance to eventually thrive, IMO.
 
morrisond
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 6:49 pm

astuteman wrote:
morrisond wrote:
Danny wrote:

Exactly that. Without taxpayer support Boeing is bankrupt.


No - Boeing has not taken any COVID bailout money. The rates they are paying are so low that carrying even $63B on the balance sheet is affordable at less than $650 million per quarter.

The stock price is still at about $200 per share with a market cap of about $117B - there has also been speculation that they will do a large equity issue to fix the balance sheet. They may be waiting in hopes the share price goes higher but even at current prices the dilution is not that bad.

They also still have $25B of Cash on the balance sheet. While they would never do this - there was speculation that the equity raise would be about $30B - that plus the cash on hand could almost totally wipe out there debt - which they would be crazy to do so given the low rates they are paying.

We also must remember that Boeing has radically reduced it's overhead in Commercial Airplanes (unfortunately at a very high human cost) so that when 737 MAX and 787 Deliveries get up to speed again even at 5 per month on the 787 and the MAX gets past the ones that are being delivered on future credits/deposits - Commercial Aircraft should be cash flow positive again.


$2.6Bn interest payments PA is a pretty significant drag on finances I'd suggest.

I'd also ask you for some data to back up "Boeing has radically reduced its overhead in Commercial Airplanes"...
I'm sure they'd love to have.
There are certainly actions that can be pointed to about what they're going to do (as opposed to have already done)

And whilst delivery rates remain a fraction of their peak, overheads on a per unit basis are going to continue to be a massive challenge (same for Airbus).
I've been there ....

I'm pretty sure the assertion that Boeing can manage without bailout is legitimate - their scale is just huge.
But on the flipside, it feels a bit wishful to try and brush the financial issues under the carpet...
Just my view

Rgds


Here is the overhead reduction - 19% of payroll https://www.seattletimes.com/business/b ... ses-mount/

They will be down to 131,000 or thereabouts - they have not been that low in the last 20 years. From what we have heard it was just not production line workers - but unfortunately a lot of high paying middle management positions.

https://www.statista.com/statistics/268 ... om-boeing/
Last edited by morrisond on Wed Feb 03, 2021 6:53 pm, edited 1 time in total.
 
morrisond
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 6:52 pm

Revelation wrote:
Since this seems to be the place we're discussing the impact of Boeing's decision to delay 777X till 2023 and the recent order backlog reduction, Bloomberg reports EK is considering swapping up to 40 77X orders to 787:

Boeing Co.’s biggest 777X customer is weighing whether to swap as many as a third of its orders for the smaller 787 Dreamliner, said a person familiar with the matter, adding to the uncertainty swirling around the behemoth jet’s future.

Gulf carrier Emirates is seeking to switch between 30 and 40 of its 115 commitments for the 777X to the Dreamliner as it calibrates fleet plans, said the person, who asked not to be identified discussing private considerations. The moves could further squeeze the profits of Boeing’s newest jet, which faces a lengthy regulatory review and design changes.

Ref: https://www.bloomberg.com/news/articles ... ers-to-787

Presuming these orders aren't already in the recent backlog reduction, the backlog could be down from 191 to 151, but I'm not sure we can make that presumption.

It's definitely unwelcome news for the program, but it seems unlikely to drive Boeing to not continue with the program, and presuming it is still around if/when wide body travel recovers it still has a chance to eventually thrive, IMO.


The money is sunk - cancelling the program now does not really do much for them. As long as the cash cost for assembling is lower than the sales price it will add to the bottom line as are all the development essentially written off?

It could be EK wanting new planes sooner as well. Boeing can easily pump out more 787's in the short run to lower EK's operating costs and accommodate lower traffic levels.
 
astuteman
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 7:17 pm

morrisond wrote:
astuteman wrote:
morrisond wrote:

No - Boeing has not taken any COVID bailout money. The rates they are paying are so low that carrying even $63B on the balance sheet is affordable at less than $650 million per quarter.

The stock price is still at about $200 per share with a market cap of about $117B - there has also been speculation that they will do a large equity issue to fix the balance sheet. They may be waiting in hopes the share price goes higher but even at current prices the dilution is not that bad.

They also still have $25B of Cash on the balance sheet. While they would never do this - there was speculation that the equity raise would be about $30B - that plus the cash on hand could almost totally wipe out there debt - which they would be crazy to do so given the low rates they are paying.

We also must remember that Boeing has radically reduced it's overhead in Commercial Airplanes (unfortunately at a very high human cost) so that when 737 MAX and 787 Deliveries get up to speed again even at 5 per month on the 787 and the MAX gets past the ones that are being delivered on future credits/deposits - Commercial Aircraft should be cash flow positive again.


$2.6Bn interest payments PA is a pretty significant drag on finances I'd suggest.

I'd also ask you for some data to back up "Boeing has radically reduced its overhead in Commercial Airplanes"...
I'm sure they'd love to have.
There are certainly actions that can be pointed to about what they're going to do (as opposed to have already done)

And whilst delivery rates remain a fraction of their peak, overheads on a per unit basis are going to continue to be a massive challenge (same for Airbus).
I've been there ....

I'm pretty sure the assertion that Boeing can manage without bailout is legitimate - their scale is just huge.
But on the flipside, it feels a bit wishful to try and brush the financial issues under the carpet...
Just my view

Rgds


Here is the overhead reduction - 19% of payroll https://www.seattletimes.com/business/b ... ses-mount/

They will be down to 131,000 or thereabouts - they have not been that low in the last 20 years. From what we have heard it was just not production line workers - but unfortunately a lot of high paying middle management positions.

https://www.statista.com/statistics/268 ... om-boeing/


Firstly let me say that I support your view that Boeing is NOT a financial basket case in need of like support.

BUT ....

As a point of order, Production workers are NOT overhead.
Their numbers and cost are directly connected to the volume of output.
Those reductions are necessary to even have a hope of avoiding unit cost increases.

But the challenge really lies in those non-production related costs - the cost of running the business.
Many of these are fixed, so if output halves, their impact on unit cost doubles.

The reason I mentioned things that Boeing are going to do, is because the planned rationalisation of production locations (like 787 in CHS) is directly aimed at this cost component.
Even then, halving the facility space whilst halving output, still won't really move the unit cost needle.

I don't share your optimism that Boeing are slashing unit costs.
I suspect reality is the opposite at this moment in time.

Saving grace - Airbus have the same problems of protecting unit cost whilst volume reduces.
In the 2020 Q3 results they claimed to be in the process of delivering the savings commensurate with the volume reduction.

https://www.airbus.com/newsroom/press-r ... sults.html

Airbus’ EBIT Adjusted of € -641 million (9m 2019: € 3,593 million(1)) mainly reflected the reduced commercial aircraft deliveries and lower cost efficiency. It also included € -1.0 billion of COVID-19 related charges. The necessary steps have been taken to adapt the cost structure to the new levels of production and the benefits are materialising as the plan is executed


Of course Airbus have not experienced the output reductions that Boeing have...

I feel that the journey for Boeing to becoming awash with cash with killer unit costs is a lot longer than you are predicting...
They will get there eventually, I'm sure :)

Rgds
 
morrisond
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 7:51 pm

astuteman wrote:
morrisond wrote:
astuteman wrote:

$2.6Bn interest payments PA is a pretty significant drag on finances I'd suggest.

I'd also ask you for some data to back up "Boeing has radically reduced its overhead in Commercial Airplanes"...
I'm sure they'd love to have.
There are certainly actions that can be pointed to about what they're going to do (as opposed to have already done)

And whilst delivery rates remain a fraction of their peak, overheads on a per unit basis are going to continue to be a massive challenge (same for Airbus).
I've been there ....

I'm pretty sure the assertion that Boeing can manage without bailout is legitimate - their scale is just huge.
But on the flipside, it feels a bit wishful to try and brush the financial issues under the carpet...
Just my view

Rgds


Here is the overhead reduction - 19% of payroll https://www.seattletimes.com/business/b ... ses-mount/

They will be down to 131,000 or thereabouts - they have not been that low in the last 20 years. From what we have heard it was just not production line workers - but unfortunately a lot of high paying middle management positions.

https://www.statista.com/statistics/268 ... om-boeing/


Firstly let me say that I support your view that Boeing is NOT a financial basket case in need of like support.

BUT ....

As a point of order, Production workers are NOT overhead.
Their numbers and cost are directly connected to the volume of output.
Those reductions are necessary to even have a hope of avoiding unit cost increases.

But the challenge really lies in those non-production related costs - the cost of running the business.
Many of these are fixed, so if output halves, their impact on unit cost doubles.

The reason I mentioned things that Boeing are going to do, is because the planned rationalisation of production locations (like 787 in CHS) is directly aimed at this cost component.
Even then, halving the facility space whilst halving output, still won't really move the unit cost needle.

I don't share your optimism that Boeing are slashing unit costs.
I suspect reality is the opposite at this moment in time.

Saving grace - Airbus have the same problems of protecting unit cost whilst volume reduces.
In the 2020 Q3 results they claimed to be in the process of delivering the savings commensurate with the volume reduction.

https://www.airbus.com/newsroom/press-r ... sults.html

Airbus’ EBIT Adjusted of € -641 million (9m 2019: € 3,593 million(1)) mainly reflected the reduced commercial aircraft deliveries and lower cost efficiency. It also included € -1.0 billion of COVID-19 related charges. The necessary steps have been taken to adapt the cost structure to the new levels of production and the benefits are materialising as the plan is executed


Of course Airbus have not experienced the output reductions that Boeing have...

I feel that the journey for Boeing to becoming awash with cash with killer unit costs is a lot longer than you are predicting...
They will get there eventually, I'm sure :)

Rgds


I agree with you on unit costs - this will not be enough. I cannot remember where I saw it but apparently a lot of the overhead reduction was in expensive middle management ranks. You still need X number of workers to build X planes.

Unit costs will be a problem for some time - however in general Boeing has historically enjoyed a higher Margin on Commercial aircraft so they may have more room to move in terms of pricing to still be cash flow positive. Of course the MAX is such a basket case who knows when that will be cash flow positive on new builds.

Personally I believe - although the human cost is a price one should never have to pay - more cuts may be needed. However remember that is Boeing total employment including defence which seems to be about 1/3 of the work force. It could be a lot more than 19% on the commercial side.

No Airbus has not had the output reductions Boeing has had on the SA side - but how many are being paid for in full or not using things like retrospective credits?
 
vfw614
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 9:12 pm

Revelation wrote:

Boeing Co.’s biggest 777X customer is weighing whether to swap as many as a third of its orders for the smaller 787 Dreamliner, said a person familiar with the matter, adding to the uncertainty swirling around the behemoth jet’s future.

Gulf carrier Emirates is seeking to switch between 30 and 40 of its 115 commitments for the 777X to the Dreamliner as it calibrates fleet plans, said the person, who asked not to be identified discussing private considerations. The moves could further squeeze the profits of Boeing’s newest jet, which faces a lengthy regulatory review and design changes.

Ref: https://www.bloomberg.com/news/articles ... ers-to-787

Presuming these orders aren't already in the recent backlog reduction, the backlog could be down from 191 to 151, but I'm not sure we can make that presumption.


I don't think so.- the order breakdown of 309 before / 191 orders after the adjustment was apparently based on

Qatar originally 60 -> still 60
Lufthansa originally 20 -> still 20
All Nippon originally 20 -> still 20
Singapore originally 20 -> still 20
British Airways originally 18 -> still 18
Etihad originally 25 -> now 0
Cathay Pacific originally 21 -> now 0
Unknown originally 10 -> now 0

That leaves Emirates with originally 115 -> now 53 - which would suggest also that it would not be a 1 for 1 order conversion, but an overall reduction..
 
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Revelation
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 9:24 pm

morrisond wrote:
ASC 606 adjustments - which Airbus does not do

I have noted mentally that while Airbus customers don't have the MAX "get out of jail free" card they still have their own financial problems that could/should show up as adjustments to the Airbus backlog, yet we haven't seen too much of this. On the other hand, there is something called 'IFRS 15' that an old a.net thread says is similar to 'ASC 606' and Airbus complies with that.

vfw614 wrote:
I don't think so.- the order breakdown of 309 before / 191 orders after the adjustment was apparently based on

Qatar originally 60 -> still 60
Lufthansa originally 20 -> still 20
All Nippon originally 20 -> still 20
Singapore originally 20 -> still 20
British Airways originally 18 -> still 18
Etihad originally 25 -> now 0
Cathay Pacific originally 21 -> now 0
Unknown originally 10 -> now 0

That leaves Emirates with originally 115 -> now 53 - which would suggest also that it would not be a 1 for 1 order conversion, but an overall reduction..

That jives with the Leeham reporting:

One scenario would involve Emirates entirely walking away from all or part of its 115-strong 777X order. Tim Clark, the president of Emirates, publicly complained about the engines and the delays. He is known to want to swap between 50-70 orders for more 787s. The delays incurred so far probably trigger the option to cancel orders without penalty. Cancellation is believed to be based on a plane-by-plane basis after a 12 month delay, not the entire order in a block.

Ref: https://leehamnews.com/2021/02/01/exclu ... rs-remain/
 
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scbriml
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 10:57 pm

Revelation wrote:
I have noted mentally that while Airbus customers don't have the MAX "get out of jail free" card they still have their own financial problems that could/should show up as adjustments to the Airbus backlog, yet we haven't seen too much of this. On the other hand, there is something called 'IFRS 15' that an old a.net thread says is similar to 'ASC 606' and Airbus complies with that.


I’m not 100% sure on this, but I believe IFRS 15 requires Airbus to more accurately value its order book when it reports its backlog, so it’s less transparent than Boeing’s reporting of ASC 606 reductions by model. Airbus has to remove the value of “iffy orders” when it reports, but doesn’t seem to have to identify the models or number of frames involved.
 
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par13del
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 11:38 pm

If EK converts777X orders to 787, will they start taking them before 2023?
 
Opus99
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Wed Feb 03, 2021 11:58 pm

par13del wrote:
If EK converts777X orders to 787, will they start taking them before 2023?

Remember in the summer they wanted to switch 777x delivery with 787 when 777x EIS was 2022. So I think so
 
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par13del
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 3:01 am

Opus99 wrote:
par13del wrote:
If EK converts777X orders to 787, will they start taking them before 2023?

Remember in the summer they wanted to switch 777x delivery with 787 when 777x EIS was 2022. So I think so

So bad for the 777X but good for Boeing cash flow going up one year earlier, yes the delay will see discounts but the 777X was / is more expensive than a 787 so...win some loose some.
 
Scotron12
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 4:37 am

Opus99 wrote:
par13del wrote:
If EK converts777X orders to 787, will they start taking them before 2023?

Remember in the summer they wanted to switch 777x delivery with 787 when 777x EIS was 2022. So I think so


There has not been any confirmation on how many 787s EK will take. I would assume they will all be 787-9s. Could also take some A350-1000s as well?
 
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Stitch
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 4:41 am

I expect EK would be looking at a mix of 787-9 and 787-10 frames.

As for the A350-1000, probably depends on how their long-haul traffic patterns evolve. If they fully recover (even if only on certain routes), the 777-9 would likely remain the preferred choice as originally planned. If that recovery is weaker than before, but still strong, then the A350-1000 might come into play.
 
DUSZRH
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 1:09 pm

Revelation wrote:

vfw614 wrote:
I don't think so.- the order breakdown of 309 before / 191 orders after the adjustment was apparently based on

Qatar originally 60 -> still 60
Lufthansa originally 20 -> still 20
All Nippon originally 20 -> still 20
Singapore originally 20 -> still 20
British Airways originally 18 -> still 18
Etihad originally 25 -> now 0
Cathay Pacific originally 21 -> now 0
Unknown originally 10 -> now 0

That leaves Emirates with originally 115 -> now 53 - which would suggest also that it would not be a 1 for 1 order conversion, but an overall reduction..

That jives with the Leeham reporting:

One scenario would involve Emirates entirely walking away from all or part of its 115-strong 777X order. Tim Clark, the president of Emirates, publicly complained about the engines and the delays. He is known to want to swap between 50-70 orders for more 787s. The delays incurred so far probably trigger the option to cancel orders without penalty. Cancellation is believed to be based on a plane-by-plane basis after a 12 month delay, not the entire order in a block.

Ref: https://leehamnews.com/2021/02/01/exclu ... rs-remain/


As it basically affects all aircraft which were supposed to be delivered until 2023. It should be all of the early customers affected. Meaning some still on the hook (EY, CX), while others LH, QR not obliged to take all their order.

Now what will happen? The airlines, which over ordered (EY, CX, EK) will likely cancel those frames.

I agree that CX and EY want to cancel it all together, but that’s not yet the case.

With EK I expect them to try to convert some more to 787s. ( Boeing might be inclined to swap some later 77X orders to earlier 787s)

With the others, I expect them to take a wait and see role. As it’s the last of the order that could go on for some time. Depending on the airline and the market, either taking them (after renegotiation) or not.

N.B.: LH also said last summer it was in negotiations to swap early Xs to (5 if I remember correctly) 77Fs. However I believe it was more a CAPEX thing, to have expensive hardware just sitting on the tarmac. As I stated above, I expect a wait and see approach.
 
Scotron12
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 1:22 pm

DUSZRH wrote:
Revelation wrote:

vfw614 wrote:
I don't think so.- the order breakdown of 309 before / 191 orders after the adjustment was apparently based on

Qatar originally 60 -> still 60
Lufthansa originally 20 -> still 20
All Nippon originally 20 -> still 20
Singapore originally 20 -> still 20
British Airways originally 18 -> still 18
Etihad originally 25 -> now 0
Cathay Pacific originally 21 -> now 0
Unknown originally 10 -> now 0

That leaves Emirates with originally 115 -> now 53 - which would suggest also that it would not be a 1 for 1 order conversion, but an overall reduction..

That jives with the Leeham reporting:

One scenario would involve Emirates entirely walking away from all or part of its 115-strong 777X order. Tim Clark, the president of Emirates, publicly complained about the engines and the delays. He is known to want to swap between 50-70 orders for more 787s. The delays incurred so far probably trigger the option to cancel orders without penalty. Cancellation is believed to be based on a plane-by-plane basis after a 12 month delay, not the entire order in a block.

Ref: https://leehamnews.com/2021/02/01/exclu ... rs-remain/


As it basically affects all aircraft which were supposed to be delivered until 2023. It should be all of the early customers affected. Meaning some still on the hook (EY, CX), while others LH, QR not obliged to take all their order.

Now what will happen? The airlines, which over ordered (EY, CX, EK) will likely cancel those frames.

I agree that CX and EY want to cancel it all together, but that’s not yet the case.

With EK I expect them to try to convert some more to 787s. ( Boeing might be inclined to swap some later 77X orders to earlier 787s)

With the others, I expect them to take a wait and see role. As it’s the last of the order that could go on for some time. Depending on the airline and the market, either taking them (after renegotiation) or not.

N.B.: LH also said last summer it was in negotiations to swap early Xs to (5 if I remember correctly) 77Fs. However I believe it was more a CAPEX thing, to have expensive hardware just sitting on the tarmac. As I stated above, I expect a wait and see approach.


There were so many rumors about EY. Some mentioned they didn't or wouldn't take all the 787s they ordered, nevermind the 777X. Let's not forget, they have 5 x 35Ks sitting in France , what I wonder will happen with them
 
airbazar
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 1:25 pm

par13del wrote:
So the tax payers just give Boeing funds without them having to deliver a product, I thought in the military field the missiles, helicopters and other items still had to be built and delivered.

Come on really? The DoD contracts have been bank rolling Boeing's finances for years if not decades, especially so if you include R&D for military programs that later gets rolled out to commercial aircraft.
https://www.flightglobal.com/defence/bo ... 97.article
Without the funding from the U.S. government, Boeing would be a very different company. Why do you think Airbus has decided to get in on the military business too?
 
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Revelation
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 1:51 pm

airbazar wrote:
par13del wrote:
So the tax payers just give Boeing funds without them having to deliver a product, I thought in the military field the missiles, helicopters and other items still had to be built and delivered.

Come on really? The DoD contracts have been bank rolling Boeing's finances for years if not decades, especially so if you include R&D for military programs that later gets rolled out to commercial aircraft.
https://www.flightglobal.com/defence/bo ... 97.article
Without the funding from the U.S. government, Boeing would be a very different company. Why do you think Airbus has decided to get in on the military business too?

Your article says:

Boeing Defense, Space & Security third-quarter revenue increased 1.5% to $7 billion over the same period in 2018. That was primarily due to selling more satellites, weapons and the T-7A Red Hawk, the US Air Force aircraft formerly known as the T-X trainer, the firm says.

Earnings from operations for the defence division were $755 million for the third quarter. That’s compared to a $247 million loss in the third quarter of 2018. Losses last year were caused by development costs for the T-7A trainer and US Navy MQ-25 unmanned inflight aerial refueling tanker, as well as additional certification, design changes and flight test expenses on the KC-46A Pegasus in-flight aerial refueling tanker, the firm says.

The suggestion "the tax payers just give Boeing funds without them having to deliver a product" is a myth. The tax payers are getting satellites, weapons, tankers and trainers.
 
astuteman
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Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 2:13 pm

Revelation wrote:
airbazar wrote:
par13del wrote:
So the tax payers just give Boeing funds without them having to deliver a product, I thought in the military field the missiles, helicopters and other items still had to be built and delivered.

Come on really? The DoD contracts have been bank rolling Boeing's finances for years if not decades, especially so if you include R&D for military programs that later gets rolled out to commercial aircraft.
https://www.flightglobal.com/defence/bo ... 97.article
Without the funding from the U.S. government, Boeing would be a very different company. Why do you think Airbus has decided to get in on the military business too?

Your article says:

Boeing Defense, Space & Security third-quarter revenue increased 1.5% to $7 billion over the same period in 2018. That was primarily due to selling more satellites, weapons and the T-7A Red Hawk, the US Air Force aircraft formerly known as the T-X trainer, the firm says.

Earnings from operations for the defence division were $755 million for the third quarter. That’s compared to a $247 million loss in the third quarter of 2018. Losses last year were caused by development costs for the T-7A trainer and US Navy MQ-25 unmanned inflight aerial refueling tanker, as well as additional certification, design changes and flight test expenses on the KC-46A Pegasus in-flight aerial refueling tanker, the firm says.

The suggestion "the tax payers just give Boeing funds without them having to deliver a product" is a myth. The tax payers are getting satellites, weapons, tankers and trainers.


Agreed.
Interesting to note that the declared earnings pretty much match the calculated debt interest discussed earlier.
I also note the "classic" 10% margin on defense business that has been an enduring aspect of US defense industrial strategy for decades (KC46 perhaps the glaring exception)
Doesn't hurt in the current climate..

Rgds
 
morrisond
Posts: 3497
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 2:17 pm

scbriml wrote:
Revelation wrote:
I have noted mentally that while Airbus customers don't have the MAX "get out of jail free" card they still have their own financial problems that could/should show up as adjustments to the Airbus backlog, yet we haven't seen too much of this. On the other hand, there is something called 'IFRS 15' that an old a.net thread says is similar to 'ASC 606' and Airbus complies with that.


I’m not 100% sure on this, but I believe IFRS 15 requires Airbus to more accurately value its order book when it reports its backlog, so it’s less transparent than Boeing’s reporting of ASC 606 reductions by model. Airbus has to remove the value of “iffy orders” when it reports, but doesn’t seem to have to identify the models or number of frames involved.


Here is a Leeham article on ASC 606 adjustments for Boeing and Airbus - however the tables aren't working for me. I remember reading it before and it was somewhere around 500 aircraft that need to come off to compare apples to apples.

https://leehamnews.com/2020/07/27/apply ... rder-book/

When the article came we talked about it in this thread and it was about at 5,700 using ASC 606 six months ago - another 275 - 300'ish 320's were delivered since then less any orders received in that time as well.

viewtopic.php?f=3&t=1448399&p=22354717&hilit=asc+606+airbus#p22354717

So it's probably around 5,400-5,500 for the Airbus A320. Add another 1,000 to the MAX's 3,200 and it's not that big of a difference.
 
astuteman
Posts: 7419
Joined: Mon Jan 24, 2005 7:50 pm

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 3:24 pm

morrisond wrote:
scbriml wrote:
Revelation wrote:
I have noted mentally that while Airbus customers don't have the MAX "get out of jail free" card they still have their own financial problems that could/should show up as adjustments to the Airbus backlog, yet we haven't seen too much of this. On the other hand, there is something called 'IFRS 15' that an old a.net thread says is similar to 'ASC 606' and Airbus complies with that.


I’m not 100% sure on this, but I believe IFRS 15 requires Airbus to more accurately value its order book when it reports its backlog, so it’s less transparent than Boeing’s reporting of ASC 606 reductions by model. Airbus has to remove the value of “iffy orders” when it reports, but doesn’t seem to have to identify the models or number of frames involved.


Here is a Leeham article on ASC 606 adjustments for Boeing and Airbus - however the tables aren't working for me. I remember reading it before and it was somewhere around 500 aircraft that need to come off to compare apples to apples.

https://leehamnews.com/2020/07/27/apply ... rder-book/

When the article came we talked about it in this thread and it was about at 5,700 using ASC 606 six months ago - another 275 - 300'ish 320's were delivered since then less any orders received in that time as well.

viewtopic.php?f=3&t=1448399&p=22354717&hilit=asc+606+airbus#p22354717

So it's probably around 5,400-5,500 for the Airbus A320. Add another 1,000 to the MAX's 3,200 and it's not that big of a difference.


Check for understanding, where did the another 1,000 MAX's come from?

Rgds
 
TeamLH
Posts: 14
Joined: Wed Jan 27, 2021 3:38 pm

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 3:44 pm

morrisond wrote:
scbriml wrote:
Revelation wrote:
I have noted mentally that while Airbus customers don't have the MAX "get out of jail free" card they still have their own financial problems that could/should show up as adjustments to the Airbus backlog, yet we haven't seen too much of this. On the other hand, there is something called 'IFRS 15' that an old a.net thread says is similar to 'ASC 606' and Airbus complies with that.


I’m not 100% sure on this, but I believe IFRS 15 requires Airbus to more accurately value its order book when it reports its backlog, so it’s less transparent than Boeing’s reporting of ASC 606 reductions by model. Airbus has to remove the value of “iffy orders” when it reports, but doesn’t seem to have to identify the models or number of frames involved.


Here is a Leeham article on ASC 606 adjustments for Boeing and Airbus - however the tables aren't working for me. I remember reading it before and it was somewhere around 500 aircraft that need to come off to compare apples to apples.

https://leehamnews.com/2020/07/27/apply ... rder-book/

When the article came we talked about it in this thread and it was about at 5,700 using ASC 606 six months ago - another 275 - 300'ish 320's were delivered since then less any orders received in that time as well.


viewtopic.php?f=3&t=1448399&p=22354717&hilit=asc+606+airbus#p22354717

So it's probably around 5,400-5,500 for the Airbus A320. Add another 1,000 to the MAX's 3,200 and it's not that big of a difference.


63% to 37% post-adjustments vs. 61% to 39% pre adjustments is a noteable difference. And if you had 1,000 to the MAX you should also add 1,000 to the NEO.
 
User avatar
Carlos01
Posts: 186
Joined: Fri Aug 12, 2016 11:52 am

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 5:57 pm

PlaneInsanity wrote:
How can a company such Boeing, survive such massive and ongoing losses of this scale? I wonder. I do confess not knowing much on the financial side of things in the Aerospace Industry, be gentle. ;-)


To be honest, it's very close to the point where it just cannot. There have been so many setbacks or even disasters that it's nearly impossible to even comprehend all of that. The losses are very significant, and the overall financial position of the company is everything but healthy. The roadmap to recovery is full of 'if's and 'but's together with high hopes and unknowns.

The Board of Directors are responsible to the shareholders for delivering maximum value / minimum damage. The company is now at a stage where any further major setback could crack the camel's spine. Can the BoD just sit and wait and hope that nothing bad will happen anymore? I don't know, but if I was in their shoes, I would be in full damage control mode by now.

It could very well be that the company gets split up to various chunks, some of them will continue under Boeing, some maybe under some other new company, some could be sold, some even scrapped. With such actions they could be able to save the hugely valuable parts of the company, and make sure that there will be a future.

Who knows, maybe the Chinese will keep saying "no" to the MAX, until one day they offer to buy the whole MAX-program for 250 Billion USD? With that deal China will become a serious player in the aircraft market, and Boeing will be in a position to fix their health and develop the new killer product (no pun intended) and move on.

Just speculating. Time will tell.
 
Opus99
Posts: 2365
Joined: Thu May 30, 2019 10:51 pm

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 6:05 pm

Carlos01 wrote:
PlaneInsanity wrote:
How can a company such Boeing, survive such massive and ongoing losses of this scale? I wonder. I do confess not knowing much on the financial side of things in the Aerospace Industry, be gentle. ;-)


To be honest, it's very close to the point where it just cannot. There have been so many setbacks or even disasters that it's nearly impossible to even comprehend all of that. The losses are very significant, and the overall financial position of the company is everything but healthy. The roadmap to recovery is full of 'if's and 'but's together with high hopes and unknowns.

The Board of Directors are responsible to the shareholders for delivering maximum value / minimum damage. The company is now at a stage where any further major setback could crack the camel's spine. Can the BoD just sit and wait and hope that nothing bad will happen anymore? I don't know, but if I was in their shoes, I would be in full damage control mode by now.

It could very well be that the company gets split up to various chunks, some of them will continue under Boeing, some maybe under some other new company, some could be sold, some even scrapped. With such actions they could be able to save the hugely valuable parts of the company, and make sure that there will be a future.

Who knows, maybe the Chinese will keep saying "no" to the MAX, until one day they offer to buy the whole MAX-program for 250 Billion USD? With that deal China will become a serious player in the aircraft market, and Boeing will be in a position to fix their health and develop the new killer product (no pun intended) and move on.

Just speculating. Time will tell.

Except the American government is ready to throw anything at Boeing to ensure it survives. Jets are the US’ single largest export. Which is part of the reason the market is prepared to answer its request for capital. Time and again
 
frmrCapCadet
Posts: 4978
Joined: Thu May 29, 2008 8:24 pm

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 6:13 pm

The US government normally comes out ahead when it rescues a company 'too big to fail'. Stockholders wiped out, workers and pensions take a big hit, and the government holds enough stock for a tidy profit.
 
morrisond
Posts: 3497
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 7:39 pm

astuteman wrote:
morrisond wrote:
scbriml wrote:

I’m not 100% sure on this, but I believe IFRS 15 requires Airbus to more accurately value its order book when it reports its backlog, so it’s less transparent than Boeing’s reporting of ASC 606 reductions by model. Airbus has to remove the value of “iffy orders” when it reports, but doesn’t seem to have to identify the models or number of frames involved.


Here is a Leeham article on ASC 606 adjustments for Boeing and Airbus - however the tables aren't working for me. I remember reading it before and it was somewhere around 500 aircraft that need to come off to compare apples to apples.

https://leehamnews.com/2020/07/27/apply ... rder-book/

When the article came we talked about it in this thread and it was about at 5,700 using ASC 606 six months ago - another 275 - 300'ish 320's were delivered since then less any orders received in that time as well.

viewtopic.php?f=3&t=1448399&p=22354717&hilit=asc+606+airbus#p22354717

So it's probably around 5,400-5,500 for the Airbus A320. Add another 1,000 to the MAX's 3,200 and it's not that big of a difference.


Check for understanding, where did the another 1,000 MAX's come from?

Rgds


Discussed in many threads and above Rumored big orders from WN and Ryanair - Boeing dropping its pants on pricing to get orders going again - something Airbus does not need to do.
 
Sokes
Posts: 2773
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 7:55 pm

Since I expect that Boeing will be able to sell all the planes in inventory I don't argue with cash flow.
2018: 580 B737 and 145 B787 delivered
2020: 43 B737 and 53 B787 delivered, however 80 B787 in storage.

2018: Commercial has 57,5 billion $ revenue.
2020: Commercial has 16,1 billion $ revenue.

2020: 6,5 billion $ forward loss on B777X as the FAA demands some modification to the design.
B787 deferred production costs reduced from 18,7 to 15 billion $, 3,7 billion $ down.
The tanker had a reach forward loss of 1,3 billion $.

If one adds the 6,5 billion from the B777X and the 3,7 billion $ from the B787 and 1,3 billion $ of the tanker one already gets 11,5 billion $ loss.
Operating loss is 12,7 billion. Interest payments of 2,1 billion $ are taken care of through 2,5 billion $ income tax benefit.
So if one considers all the write downs, Boeing hardly had losses caused by excess labour and excess overhead. That fits to the 12 billion $ profit Boeing made in 2018. I'm positively surprised.

Abnormal production costs B737 Max was 2,6 billion $ in 2020. More to follow as expensed when incurred.

The B787 has near breakeven gross margins. But then a lot were produced for storage.

170 billion $ liabilities and -18 billion $ equity is matched by 152 billion $ assets. Assets include the 15 billion $ deferred production costs of B787. Since I don't consider that an asset, I consider Boeing's equity rather like -33 billion $.

Since aviation is in mess, it's hardly surprising that demand for the new VLA with unproofen engine evaporates. In time it may get an MTOW increase and sell just fine.

Now I wouldn't buy the share. But one has to admit a surprising relative strength of the company.
 
User avatar
Phosphorus
Posts: 1289
Joined: Tue May 16, 2017 11:38 am

Re: Boeing Posts $8.4 Billion 4Q Loss ($11.9 billion full year loss), Delays 777X to 2023

Thu Feb 04, 2021 9:25 pm

Sokes wrote:
.....

170 billion $ liabilities and -18 billion $ equity is matched by 152 billion $ assets. Assets include the 15 billion $ deferred production costs of B787. Since I don't consider that an asset, I consider Boeing's equity rather like -33 billion $.

Since aviation is in mess, it's hardly surprising that demand for the new VLA with unproofen engine evaporates. In time it may get an MTOW increase and sell just fine.

Now I wouldn't buy the share. But one has to admit a surprising relative strength of the company.

Boeing is a public limited company, which means that shareholders are liable only by the shares that they own.
Please correct me if I'm wrong, but if liabilities exceed assets (as in "negative shareholder equity"), but if memory serves me, in many jurisdictions company directors are criminally liable, if they don't disclose this information to a bankruptcy court in a timely manner, correct? In English law, that's "trading while insolvent", and similar provisions exist in Switzerland for sure. Maybe elsewhere too.

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