User avatar
speedbored
Posts: 2207
Joined: Fri Jul 19, 2013 5:14 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 2:56 pm

Quoting racercoup (Reply 43):
Not quite. At 1,300 deliveries Boeing will have paid off a good portion of the "sunk costs"

Well if the analysts in the OP article are to be believed, at 1300 deliveries, Boeing will still be further away from program break-even with the 787 than Airbus are with the A380 program today.

But who cares? What is spent is spent. As long as both manufacturers get their programs to unit break-even, they will carry on producing two excellent aircraft types.

Let's learn lessons and look forward to the future instead of dwelling too long on past mistakes.
 
User avatar
BaconButty
Posts: 803
Joined: Tue Aug 06, 2013 3:42 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 2:57 pm

Quoting Faro (Reply 48):
The article only talks about deferred production costs. How much pure deferred development cost, ie design, prototyping, certification, etc, does Boeing also have sitting on its balance sheet?

"estimated by most analysts at a further $20 billion or more" according to the article.
Down with that sort of thing!
 
mjoelnir
Posts: 8508
Joined: Sun Feb 03, 2013 11:06 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 3:02 pm

Quoting WIederling (Reply 41):
Quoting mjoelnir (Reply 40):
so the 777 and the 737 would produce real profits.
....
My question would be, why James McNerney introduced it and why the use on the 787 is nearly limitless.

program accounting must have been used before the NG production meltdown. see:
http://www.bloomberg.com/bw/stories/2002-05-19/boeings-secret

I was wrong Boeing is using program accounting for a long time. This article should be a must for anybody still believing that program accounting for cost is more transparent than accounting to IFRS, that does not allow this.

It is also strange how people are always trying to show that Airbus is trying to do the same tricks. As in contract accounting. Yes it moves profit forward, no it is not program accounting, as it is fixed to single contracts and it will move at Airbus about 400 million EUR between the years and not 30 billion USD.

Activating intangible asset. Yes Airbus is activating intangible asset, like patents, goodwill, trade marks and so on, but so does Boeing. In accounting for cost you transfer production costs that you can not book as intangible asset.

Just saying it plain, take the "profit" Boeing is advertising, deduct all the deferrals Boeing is doing that year and you get to the real profit of Boeing, that is than comparable with the real profit of a company not doing program accounting for cost.

[Edited 2015-10-19 08:24:28]
 
User avatar
KarelXWB
Moderator
Posts: 26968
Joined: Sun Jul 15, 2012 6:13 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 3:10 pm

Quoting travelhound (Reply 29):
From memory the 787 is going to 144 unit deliveries per year from the current 120 at the end of the year.

Boeing have already stated by the end of the decade they will substantially increase production again.

Except Boeing is not selling at 144 per year. With some 1,100 sales since 2004, we have an average of 100 sales annually. And now the program is facing pressure from the A330neo below. That means at some point in the (nearby) future, the backlog will become depleted and the production rate will have to be lowered again.
What we leave behind is not as important as how we've lived.
 
glbltrvlr
Posts: 973
Joined: Wed Oct 10, 2007 4:28 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 3:17 pm

Boeing has the same problem as Airbus does with the A380 - the time value of money kills you. It's compounding interest in reverse. Yes, they may be able to reapply some of the knowledge developed on the program on future programs, but that's not hard dollars. And while the assets and tooling developed for the 787 can be applied to future programs, those assets have to be transferred at their book value. In effect, they have to be purchased by the new programs - they aren't free.
 
User avatar
Stitch
Posts: 26388
Joined: Wed Jul 06, 2005 4:26 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 3:21 pm

Quoting zeke (Reply 24):
I dont understand if all the cash being talked about in the article from 29-34 billion includes supplier risk sharing partners and engine manufactures, or if it is just Boeings exposure. Japan was supposed to have invested 5-10 billion into the 787 as well.

I imagine it is an amalgamation of the entire cost base across all companies involved with the 787 program.


Quoting Faro (Reply 48):
The article only talks about deferred production costs. How much pure deferred development cost, ie design, prototyping, certification, etc, does Boeing also have sitting on its balance sheet?

It should be none. See below.



Quoting StTim (Reply 50):
What is Boeing's accounting procedure on development costs?

As I understand it, Boeing is required to record R&D costs in the quarter they are expended. So Boeing should have already accounted for all of their portion of the 787's development costs as well as the write downs for the first three frames that were retained by the company..

[Edited 2015-10-19 08:22:32]
 
frmrCapCadet
Posts: 3136
Joined: Thu May 29, 2008 8:24 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 3:24 pm

Quoting mjoelnir (Reply 49):
ing frmrCapCadet (Reply 42):but the price has been paid
The price has been deferred, not paid.

Boeing, and for the most part Airbus, have paid for the development and production costs of the 787/380 out of current earnings. There is no or very little debt to be repaid. Airbus does have some.

Cash accounting is about history. Program or project accounting is a guess as to how the program will work in the future. Of necessity predicting the future is based upon assumptions. Boeing is likely going to announce some changes in assumptions. This will have no direct impacts upon its bank account. It will have an impact on expected future earnings. The Times article suggests that Wall Street has already expected future earnings to be less than Boeing had expected.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
mjoelnir
Posts: 8508
Joined: Sun Feb 03, 2013 11:06 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 3:30 pm

Quoting Stitch (Reply 56):
I imagine it is an amalgamation of the entire cost base across all companies involved with the 787 program.

It is at Boeing only, read the annual reports.

Quoting Stitch (Reply 56):
Quoting Faro (Reply 48):
The article only talks about deferred production costs. How much pure deferred development cost, ie design, prototyping, certification, etc, does Boeing also have sitting on its balance sheet?

It should be none. See below.

Quoting StTim (Reply 50):
What is Boeing's accounting procedure on development costs?

As I understand it, Boeing is required to record R&D costs in the quarter they are expended. So Boeing should have already accounted for all of their portion of the 787's development costs as well as the write downs for the first three frames that were retained by the company..

Exactly, the deferrals do not include R&D. So if one is talking about when the program has done a payback, it will be when the program has returned the 30 billion deferrals + the 20 billions booked on R&D.

The R&D cost can be smaller, if there are intangible assets, like patents, you can activate.
 
User avatar
Stitch
Posts: 26388
Joined: Wed Jul 06, 2005 4:26 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 3:34 pm

Quoting Stitch (Reply 56):
I imagine it is an amalgamation of the entire cost base across all companies involved with the 787 program.
Quoting mjoelnir (Reply 58):
It is at Boeing only, read the annual reports.


More than half of that cost is reported as being the combined assemblies that make up the current production block of 787s and Boeing does not make all of the 787's parts themselves. But yes, it is Boeing's in that Boeing will be paying those suppliers for those assemblies as they are delivered over the production block.

Quoting Stitch (Reply 11):
Even if the program never turns a profit, Boeing had to launch it to remain competitive as a commercial airline manufacturer. Let the 737 and 777 generate the profits.
Quoting WIederling (Reply 39):
Are you sure those programs generate "real" profits in the amount needed for compensation?

They may not generate enough money to cover the entire costs of the 787 program, but they did contribute cash flow to allow Boeing to launch the 787. Just as the A320 and A330 provided cash flow to allow Airbus to launch the A350. And both OEMs needed each respective program to maintain their overall duopoly as each addressed a portion of the market where they were at a disadvantage to the other.

[Edited 2015-10-19 08:46:13]
 
User avatar
BaconButty
Posts: 803
Joined: Tue Aug 06, 2013 3:42 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 4:57 pm

Quoting speedbored (Reply 51):
But who cares? What is spent is spent. As long as both manufacturers get their programs to unit break-even, they will carry on producing two excellent aircraft types.

Let's learn lessons and look forward to the future instead of dwelling too long on past mistakes.

That's all well and good, but understanding the financial performs of these programs is interesting, and the reality is since 1990 the record of the OEMs has been patchy to be kind:

Successes
737NG
77W/L/F (Late 90's recapitalisation)
A340 Classics / A330 (If you count them as a single program as I do)

Failures
717 (? Poor sales but as an MD-80 family variant might be considered acceptable)
767-400
747-8
777 first batch of variants
787
A340-500/600
A350 pre-XWB (They were well down the line with that project)
A380/A380F/A380R
MD11

Too soon to tell
A350XWB
A320NEO
737MAX
77X

People might slice it differently, but the bottom line is that program execution has been poor since mullets went out of fashion (outside of country music anyway), to the point where I think banking on the duopoly continuing would be naive.

BTW I'm talking about commercial rather than technical failures here, and I'm grouping them by the commercial decision to proceed. So including the A380F and R because they were part of the initial batch of variants budgeted for - they were failures because they were cancelled, in the case of the freighter after parts had been assembled. Likewise the A340-200 was a failure in it's own right, but part of a program that was a success.
Down with that sort of thing!
 
racercoup
Posts: 408
Joined: Sun Jan 28, 2007 10:48 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 5:48 pm

Quoting BaconButty (Reply 47):
Eh? The A380 starts delivering a profit (production wise) this year, so it will start to repay its development costs and earlier production losses. Given the state of the order book it won't be much of them, but then again it hasn't accumulated nearly as many. The irony is, even if Airbus didn't deliver a single further A380, and even if the 787 program tracks to the most optimistic projections, 787 losses will still be higher. Though it's worth remembering we're ignoring ancillary sales (on both programs).

First of all the breakeven target for this year was assuming a 30 frame per year delivery schedule, which is not going to happen. Deliveries will probably slow to around 18-20.

At delivery of 1,300 frames the Dreamilner program will have paid off a good portion of it's development costs. Airbus wrote off about much, much more.
 
User avatar
Finn350
Posts: 1578
Joined: Tue Jul 09, 2013 4:57 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 5:55 pm

A very good article on the subject matter. There is one inconsistency, though:

Quote:
After losing about $25 million on each jet it delivered in the second quarter, Boeing projects a watershed moment for the plane by year-end: It expects to finally roll out a Dreamliner that brought in more money than it cost to build.
Quote:
The company’s own projections indicate that total deferred costs will peak late next year at around $33 billion.

Either the 787 program will start to generate positive cash flow and the deferred production cost will start to decrease by year-end (first statement) or late next year (second statement), but it can't be both.
 
blrsea
Posts: 1913
Joined: Fri May 20, 2005 2:22 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 6:05 pm

Quoting racercoup (Reply 61):
At delivery of 1,300 frames the Dreamilner program will have paid off a good portion of it's development costs. Airbus wrote off about much, much more

If you read the article, it clearly mentions that the development costs are not included. It says that as per some analysts, for a best-case Boeing scenario, even with 2000 deliveries, 787 program will have at least $5 billion loss excluding development costs of approx $20 billion.
 
User avatar
BaconButty
Posts: 803
Joined: Tue Aug 06, 2013 3:42 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 6:06 pm

Quoting racercoup (Reply 61):
First of all the breakeven target for this year was assuming a 30 frame per year delivery schedule, which is not going to happen. Deliveries will probably slow to around 18-20.

https://www.flightglobal.com/news/articles/airbus-assures-on-a380-break-even-this-year-409534/

Quoting racercoup (Reply 61):
At delivery of 1,300 frames the Dreamilner program will have paid off a good portion of it's development costs. Airbus wrote off about much, much more.

No it won't. In fact it won't have by 2000 frames, in the best case scenario if the analysts are to believed, Boeing will still have $5bn of deferred production costs, as well as $20+Bn development costs. And nothing about this program has been "best case" so far. [Edit: Beaten by blrsea]

[Edited 2015-10-19 11:09:45]
Down with that sort of thing!
 
User avatar
Revelation
Posts: 21403
Joined: Wed Feb 09, 2005 9:37 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 6:08 pm

Quoting WIederling (Reply 41):
Quoting mjoelnir (Reply 40):
My question would be, why James McNerney introduced it and why the use on the 787 is nearly limitless.

program accounting must have been used before the NG production meltdown. see:
http://www.bloomberg.com/bw/stories/2002-05-19/boeings-secret

In fact the article (an interesting read, btw) says program accounting was invented in the 1960s by Boeing and others in the US aerospace industry.

Quoting frmrCapCadet (Reply 57):
Boeing is likely going to announce some changes in assumptions. This will have no direct impacts upon its bank account. It will have an impact on expected future earnings. The Times article suggests that Wall Street has already expected future earnings to be less than Boeing had expected.

I was searching for a good way to summarize the situation, and I think you have provided it. The only ones who seem to be getting upset by this are the accountants amongst us.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
justloveplanes
Posts: 1002
Joined: Thu Jul 08, 2004 5:38 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 6:12 pm

I am not sure I understand deferred production costs referred to here, but do any of these costs go against the COGS (Cost of Goods Sold) of the airplane vice being recovered out of profit margin? That could change the profitability picture quite a bit. These costs (or development costs) can be part of overhead too in some cases.
 
tjh8402
Posts: 957
Joined: Sat Jan 12, 2013 4:20 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 6:23 pm

Quoting Revelation (Reply 20):
I respect you tremendously but I don't buy this line of reasoning. Companies invest in new programs because they feel they will make money on them, not because they will gain things that might be useful on the next program. If they just want to enable technology jumps, there are a lot more efficient ways of going about that rather than running full blown development programs.

Not always the case. Happens all the time in the automotive industry. Carmakers invest in and sell money losing models all the time because of the expected payoffs to future models.


http://www.washingtonpost.com/wp-dyn...le/2008/11/24/AR2008112403211.html
Quote:

That's because car manufacturers still haven't figured out how to produce hybrid and plug-in vehicles cheaply enough to make money on them. After a decade of relative success with its hybrid Prius, Toyota has sold about a million of the cars and is still widely believed by analysts to be losing money on each one sold.


http://www.marketplace.org/topics/bu...are-happy-lose-money-electric-cars
Quote:

Car companies are happy to lose money on electric cars

In fact, Nissan is probably losing money on every Leaf it sells. Still, it could pay off.

"People criticized Toyota for years for losing money on every Prius it sold," says John O’Dell, senior editor for fuel efficiency and alternative vehicles at Edmunds.com. "And now Toyota makes a ton of money on every Prius it sells, and it also dominates the hybrid market because it was willing to invest with losses into a long term strategy."


http://www.fool.com/investing/genera...n-what-it-meant-to-volkswagen.aspx
Quote:

The only thing more shocking than the Bugatti Veyron's horsepower, miles per hour, or price tag is the fact that it doesn't turn a penny of profit for Volkswagen. In fact, it loses roughly twice the amount of its price tag. You read that correctly: Volkswagen loses an estimated $5 million per Veyron it sells, according to Bloomberg.

However, making money was never on Bugatti's list of goals -- making money is for the other 10.1 million vehicles Volkswagen Group sells globally.

"You need prestige projects like this to showcase technological excellence," said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany, according to Bloomberg. "Yes, it costs money, but it won't cause VW any turbulence."

The goal of Bugatti's Veyron was to prove that Volkswagen engineers could accomplish what everybody in the automotive industry thought was impossible. It was supposed to set the bar for exclusivity, elegance, and performance -- check, check, and check. The goal of Bugatti was to produce ridiculous vehicle models that command headline-generating price tags, set world production car speed records, and draw hundreds of people around the very final production unit for sale, as it did at the Geneva Auto Show with the 2015 Bugatti Veyron "La Finale."


http://www.thetruthaboutcars.com/201...t-chapter-5-exam-week/#more-452354
Quote:

Even before the LFA production had started, Toyota made it known that there would be no profit on the LFA. Know just a little about cars, and this will be immediately obvious. The price tag for the development of a regular car is said to be in the neighborhood of a billion dollars. Now imagine how much it costs to develop one that was 10 years in the making, that shares only five parts with other cars of the mothership, a car for which a completely new production technology had to be invented. My walk through the factory sealed my impression of a giant money sink. The 500 people who are lucky to get an LFA are even luckier: They get a deal. The true cost of that handmade carbon fiber car is astronomically higher. So why make it?

I put the question to Tanahashi. He won’t comment on specific plans, but in a roundabout way, he confirms that this is a test bed for how mass market cars in a still far away future might be built. Future cars must use much less of whatever energy they will use. The key to that is weight loss...

...When I met Tanahashi in the morning, he said that “the ideal material for a car body is very strong and very light.” Carbon fiber is that material, but it is far from affordable. As long as people put strips of fabric into a mold by hand, as long as a part must be baked for hours, the price of this material will remain in the stratosphere. Tanahashi and his people are working on bringing this price down to earth.

“Pre-preg is much too slow,” says Tanahashi, referring to the method of manually putting strips of resin-saturated carbon fabric into molds, and baking it in an autoclave. “In the years to come, Resin Transfer Molding will be the mainstay of carbon fiber making.”...

...“I am very confident, that with some more research, CFRP will be ready for volume production,” says Tanahashi. “How quickly and when, I am not sure. We are moving in that direction and we are making progress.” The team around Tanahashi will remain busy for a long time.

So will the next car be a high-end CFRP Lexus under $100,000 at maybe 5,000 units a year? Tanahashi pauses, thinks for a few seconds, reviews where he and his team are on that road to the future, then says:

“It’s not that simple.”

What will happen to the LFA Works at the end of the year? Will Tanahashi, now 59, simply go into retirement? Will the 170 associates who make the LFA go back to making Crowns, Corollas and Camrys?

Tanahashi collects his thoughts, then says:

“CFRP is a very promising material. Even after the LFA project finishes, the carbon factory will be well utilized.”


http://www.autonews.com/article/2013...1079971/toyotas-carbon-fiber-foray
Quote:

When the last $375,000 LFA was built here Dec. 14, Toyota was left with a very costly and sophisticated -- yet nearly idle -- carbon-fiber factory.

Now, engineers are looking for ways to repurpose the plant and channel the company's newfound carbon-fiber expertise into other products. For the first time, Toyota is planning to use the expensive, high-tech material in a car besides the LFA...

...Still, Toyota says its carbon-fiber experiment can pay off because know-how gained on the LFA can be applied elsewhere. Aside from making spare parts for the LFA, the in-house mill will soon start pressing carbon fiber for other models...

...Toyota says it is evolving its technology as well, seeking to improve productivity and cut costs. In the future, it sees itself shifting more toward RTM and away from pre-preg. Its RTM process uses lower pressures than older techniques, vacuum assist and injection presses, which allow it to be more flexible and faster than traditional methods.

At the very least, Toyota's experiment with carbon fiber gives it an insight into the costs and manufacturing technologies involved.

Toyota has a history of gauging its suppliers' prices and quality by making similar parts in-house as a benchmark. It then uses that expertise in negotiating prices with suppliers and working with them to find efficiencies.

The carbon-fiber factory means Toyota will know the ropes for those parts, too.

"This is a success because we have nurtured an expertise in developing the technologies and techniques needed to make the carbon fiber," Toyota spokesman Keisuke Kirimoto said. "When advancements are made in speeding up the curing time of the resin, this accumulated knowledge will be used in the future."
 
nema
Posts: 480
Joined: Fri Feb 24, 2006 3:18 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 6:29 pm

"Boeing’s accounting assumes it will quickly reverse its current per-plane loss, and build another 900 Dreamliners at an average profit of more than $35 million apiece."

Wow, even considering the scale of things, that $30m profit per sale is a cheeky little mark up me thinks, ..
There isnt really a dark side to the moon, as a matter of fact its all dark!
 
justloveplanes
Posts: 1002
Joined: Thu Jul 08, 2004 5:38 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 8:22 pm

Quoting nema (Reply 68):
"Boeing’s accounting assumes it will quickly reverse its current per-plane loss, and build another 900 Dreamliners at an average profit of more than $35 million apiece."

Wow, even considering the scale of things, that $30m profit per sale is a cheeky little mark up me thinks, ..

One thing Boeing said last year was that they were increasing deferred production costs to streamline later production efficiency. I am guessing this may be additional tooling, process re-engineering, etc. It may have been B.S., but perhaps it really was to enable a higher profit per plane down the road.

It's worth remembering Boeing is starting to really crank these things out...fast. Better efficiency and hence, elevated profits and margins could/should be part of this. Right now they are coming out faster than one every three days (albeit on two FAL's), which was the original goal.
 
ContnlEliteCMH
Posts: 1382
Joined: Wed Mar 02, 2005 8:19 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 9:31 pm

Quoting speedbored (Reply 36):
Would shareholders be better off right now if things had been done differently? Yes, of course. But the fact is that Boeing screwed it up, the money has been spent, and it can't now be unspent. No point crying over spilt milk. Better to concentrate on making the most of what happens from here on in.

I wonder if you realize the difference between spending money and accounting for it. The essence of this discussion is not about what Boeing has done, but about what it must still do in the future. Specifically, Boeing has not accounted for the kabillions of dollars it has spent or for which it is obligated to spend for production costs. The distinction between flowing the cash, and recognizing the cash flows, are wholly separate activities. One of them has already occurred or will occur soon (flowing the cash); the other has yet to occur (accounting).

Worrying about how Boeing is going to handle the accounting can not be crying over spilled milk because that milk is still in the container, and it must be poured at some point. Given the enormity of the money involved, this is a legitimate concern for Boeing and its shareholders.

We should all be aware that Boeing...

... has spent billions of dollars for which it has not yet accounted.
... must at some point account for this money by showing it as expense on the P&L.

To be Dickensian about this, The Ghosts of Accounting Past have had a grand run due to program accounting. Each quarter's Ghost of Accounting Present hopes that his quarter is not the one in which Boeing decides to take a $10 billion hit to right the balance sheet with short-term bad news. And the Ghosts of Accounting Future face a grim future since their earnings have already been claimed by their forebears.

Boeing might be doubling down by increasing deferred production costs. They believe they can make it up by greater-than-expected production efficiencies. If they can, then the Ghosts of Accounting Future may still resent what was taken from them, but they can still be merry. If not, then you can be assured that a few quarters of negative earnings in the *billions* of dollars will have a destructive effect on the stock price, even if it improves the balance sheet and does no harm to Boeing's cash position.

[Edited 2015-10-19 14:33:20]
Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!
 
User avatar
Ncfc99
Posts: 778
Joined: Tue May 31, 2005 2:42 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 10:22 pm

Quoting justloveplanes (Reply 69):
(albeit on two FAL's)

Was the original plan for only one line in Seattle? I thought it was but was told they always planned for 2 lines. Maybe the original plan was for 2 lines in one place. Can anyone help clarify?
 
WIederling
Posts: 8888
Joined: Sun Sep 13, 2015 2:15 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 10:30 pm

Quoting justloveplanes (Reply 69):
It's worth remembering Boeing is starting to really crank these things out...fast.

They already are in 10 a month mode and just now in a position to break even ( or not. and how is this "break even" obfuscated by the intricacies of program accounting?).
Increasing that to 14+ doesn't release much in the way of scaling efficiencies.
Production started about 9 years ago. Is there still so much to learn to bring vast improvements from the process side?

They need two FALs to produce at a rate that was initially planned to be emitted
by just one FAL line alone with a ramp up that would have taken every-bodies breath away.
The process work volume in no way matches initial planning.

Assume that this escalation continues back up ( or down depends how you view it ) the supplier hierarchy.

Most suppliers are troubled and in a position to just about make it or go belly up ( to be rescued by Airbus !?.)
It is doubtful if Boeing can lean on them even more to deflate cost.

The fast shrinking delivery horizon has not replenished/rekindled the stream of orders coming in.
After the druglike rush for "Black Seattle"   was over in early 2008 the next 8 years brought
a meager 150 frames ( and only due to a new subtype being offered. The remaining order book
is in dynamic stagnation. ( we see cancellations, small compensating orders all dominated by swaps.)
see http://www.pdxlight.com/787a.png via http://www.pdxlight.com/787.htm for the numbers.

I'd be interesting to compare just the running costs for manufacture between 787 and A350XWB.
Murphy is an optimist
 
User avatar
enzo011
Posts: 1687
Joined: Tue Jun 21, 2011 8:12 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 10:31 pm

Quoting JoeCanuck (Reply 27):
The fact is, the 787 exists. It is being built and sold and hundreds are plying the skies. Nothing seems likely to be coming down the pike that is likely to change any of that.

There is absolutely nothing that can be done about money that is already spent, and nothing that will change production or deferred costs...except selling more planes...which Boeing is doing.

Its not about whether the program exists and is producing frames, it is whether it is actually making money for the company. Many companies before have produced products but they have gone down as the products produced was too much of a burden on the company. This is not to say that Boeing will go bankrupt, but if they were using Airbus accounting methods they would struggle to show profits at the moment. That should cause some concern and I think that is the reason for the "no more moonshots" comment as there really isn't cash on hand to go for it.

Quoting Finn350 (Reply 62):
Either the 787 program will start to generate positive cash flow and the deferred production cost will start to decrease by year-end (first statement) or late next year (second statement), but it can't be both.

I think it has been mentioned on here that the 789 will make money per frame delivered this year but the 788 will still lose the company money. So some parts may make money while the whole program still needs to make improvements to deliver profits per frame delivered.
 
User avatar
Stitch
Posts: 26388
Joined: Wed Jul 06, 2005 4:26 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Mon Oct 19, 2015 10:31 pm

Quoting ncfc99 (Reply 71):
Was the original plan for only one line in Seattle? I thought it was but was told they always planned for 2 lines. Maybe the original plan was for 2 lines in one place. Can anyone help clarify?

The original plan was a single line at Everett producing up to an average of 120 frames a year.
 
rwessel
Posts: 2448
Joined: Tue Jan 16, 2007 3:47 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 12:30 am

Quoting Finn350 (Reply 62):
Quote:
After losing about $25 million on each jet it delivered in the second quarter, Boeing projects a watershed moment for the plane by year-end: It expects to finally roll out a Dreamliner that brought in more money than it cost to build.
Quote:
The company’s own projections indicate that total deferred costs will peak late next year at around $33 billion.

Either the 787 program will start to generate positive cash flow and the deferred production cost will start to decrease by year-end (first statement) or late next year (second statement), but it can't be both.

Only speculating, but they can turn a profit on each manufactured unit while still adding development costs to the program (the 787-10 is still in development, for example).
 
mjoelnir
Posts: 8508
Joined: Sun Feb 03, 2013 11:06 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 12:49 am

Quoting rwessel (Reply 75):
Only speculating, but they can turn a profit on each manufactured unit while still adding development costs to the program (the 787-10 is still in development, for example).

Once again, the deferred cost in program accounting for cost, does not include development cost.
 
XT6Wagon
Posts: 2723
Joined: Tue Feb 13, 2007 4:06 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 1:04 am

Quoting WIederling (Reply 72):
They already are in 10 a month mode and just now in a position to break even ( or not. and how is this "break even" obfuscated by the intricacies of program accounting?).

We have statements by Boeing saying the 788 is already bringing in more money than they cost to make. 789 isnt yet, but IIRC was expected to by the end of the year.
 
JHwk
Posts: 564
Joined: Wed Jan 30, 2013 2:11 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 3:19 am

Quoting Finn350 (Reply 62):
Either the 787 program will start to generate positive cash flow and the deferred production cost will start to decrease by year-end (first statement) or late next year (second statement), but it can't be both.

The "average" profit for the block is greater than break even; it will take longer to hit that "average" profit.
 
travelhound
Posts: 1864
Joined: Fri May 23, 2008 9:13 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 4:48 am

Quoting mjoelnir (Reply 76):
Once again, the deferred cost in program accounting for cost, does not include development cost.

...and as far as we know Boeing could be accounting for development costs on each Plane produced.

Even though I would be supportive of Boeing writing down assets on the 787, I don't believe the picture is as bad as being painted.

From where I sit there is a whole lot of new industry and technologies that sit behind the aircraft. If we were to separate these 787 related businesses from Boeing, we could have some very nice stand alone businesses worth a considerable amount of money.

The Charlestown plant is state of the art and has helped Boeing deleverage itself from its Seattle centric manufacturing facilities. Even though the investment could be argued as being a little shaky, this new manufacturing mega hub could be a great contributor for any new aircraft programs in the future.

I suspect, even though the 787 will probably not break even on a program basis, it has still added considerable value to the Boeing company!

I am not too sure what a Boeing without the 787 would have been! I suspect it would have been a company as strong as it currently is!

[Edited 2015-10-19 21:50:52]
 
User avatar
zckls04
Posts: 2784
Joined: Fri Dec 30, 2011 6:55 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 5:25 am

Quoting BaconButty (Reply 60):
That's all well and good, but understanding the financial performs of these programs is interesting, and the reality is since 1990 the record of the OEMs has been patchy to be kind:

Perhaps, but there's no reason to assume a high hit rate is necessary. Venture capitalism being a good example- as long as you have the odd success, many miserable failures don't matter much. All you need is for your hits to be greater in dollar volume than your misses.

Quoting racercoup (Reply 61):
At delivery of 1,300 frames the Dreamilner program will have paid off a good portion of it's development costs. Airbus wrote off about much, much more.

It will barely have paid off its production costs. It most likely won't have recouped a single dollar of its development costs by 1300 frames. The A380 will by contrast start eating into those costs relatively quickly.
Four Granavox Turbines!
 
NAV30
Posts: 1080
Joined: Sat Mar 15, 2014 9:16 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 5:45 am

Quoting zckls04 (Reply 80):
It most likely won't have recouped a single dollar of its development costs by 1300 frames.

I really don't think that matters much. Most industries 'separate out' research and development; only aviation seems to expect each aeroplane to pay for itself.

The new B787 technologies were very definitely a big step forward for the whole industry, very much including Airbus.

It seems to be churlish to expect the B787 to pay for all that on its own, research and all. Although, with 1,100 orders so far, it appears to stand a chance of eventually doing THAT as well......  

[Edited 2015-10-19 22:53:00]
 
User avatar
zeke
Posts: 13988
Joined: Thu Dec 14, 2006 1:42 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 6:04 am

Quoting NAV30 (Reply 81):
The new B787 technologies were very definitely a big step forward for the whole industry, very much including Airbus.

Not unusual you cannot see Airbus has contributed anything to aviation. FYI, the 787 uses important A380 technology e.g. ADFX networks, counter rotating spools, TTP Based Cabin Pressure Control System, 5000 psi dual hydraulic systems etc etc. Hundreds of patents were awarded for A380 technology.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
NAV30
Posts: 1080
Joined: Sat Mar 15, 2014 9:16 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 6:27 am

Quoting zeke (Reply 82):
Not unusual you cannot see Airbus has contributed anything to aviation.

Not saying anything against Airbus, zeke? I'm just responding to a specific attack 'rubbishing' the B787?
 
User avatar
Finn350
Posts: 1578
Joined: Tue Jul 09, 2013 4:57 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 6:50 am

Quoting rwessel (Reply 75):
Only speculating, but they can turn a profit on each manufactured unit while still adding development costs to the program (the 787-10 is still in development, for example).

As discussed, development cost is not included in the production cost. Development cost is written off straight away.

Quoting mjoelnir (Reply 76):
Once again, the deferred cost in program accounting for cost, does not include development cost.

That is correct.

Quoting JHwk (Reply 78):
The "average" profit for the block is greater than break even; it will take longer to hit that "average" profit.

That doesn't explain the discrepancy. The deferred production cost of the 787 program is around $32 billion, and there are around 970 of 1300 frames left to be delivered in the accounting block. This requires average profit per frame $32 B / 970 = $33 M at the moment (and the deferred production cost is still increasing, meaning each frame delivered actually increases the profit required from the remaing frames). When reaching break-even, the first frames are basically at zero profit, and the profit starts gradually increase.
 
User avatar
speedbored
Posts: 2207
Joined: Fri Jul 19, 2013 5:14 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 6:55 am

Quoting ContnlEliteCMH (Reply 70):
I wonder if you realize the difference between spending money and accounting for it.

Oh I understand it very well indeed. The problem is that far too many people do not, and they think that these huge deferred costs are something that Boeing is going to have to find cash money to pay for in the future. That is not the case - the cash has already been spent and these are now just numbers on a spreadsheet. Given the fact that the markets are so aware of the numbers, Boeing could almost certainly just write them off right now with almost no adverse impact whatsoever, (except, perhaps, to directors bonuses).

Quoting ContnlEliteCMH (Reply 70):
Worrying about how Boeing is going to handle the accounting can not be crying over spilled milk because that milk is still in the container, and it must be poured at some point. Given the enormity of the money involved, this is a legitimate concern for Boeing and its shareholders.

Why? Any sensible Boeing shareholder knows and understands that it is just an accounting ploy that is allowing the company to provide them with higher dividends now at the expense of lower future dividends. They will already have done their crying and worrying over these costs, when they were incurred, and as the cash was spent, and will instead now be looking at the future.

After all, if Boeing were accounting to IAS, there would be no huge pot of deferred expenses to worry about now, but the company would be almost exactly as valuable to shareholders as it is now, under program accounting. These different accounting methods, over the long term, make little to no difference to the true shareholder value of a company. The true value is in cash, assets and order books, not numbers on a spreadsheet.
 
Ruscoe
Posts: 1737
Joined: Sun Aug 22, 1999 5:41 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 7:19 am

Boeing is going very well.

The path to 787 profitability is clearly laid out by them in their reporting, and thanks to program accounting we have a very clear indicator of their position.

The 32 billion or so the program owes in deferred costs is currently spread over 1200 frames and this is very conservative. Because Boeing do the sensible thing and add back the 32 billion divided by 1200 as a cost of sales for each 787 produced, it means that even after the frames become profitable on a unit production cost basis, and this will be occurring in the next 12 months or so, the program will continue making a loss even though the sale of each 787 is producing positive cash flow.

Further the 32 billion in deferred costs is mostly paid for already, because suppliers, staff and the Govt won't wait beyond the current period for their money.

so where did this money come from?

From the sale of other aircraft, investments, reserves, capital raisings loans etc. The point is Boeing is doing very well despite this and does not have to come up suddenly with 32 billion dollars.

If you look at the Boeing figures all the loan amounts are stable, their are not frantic or large capital raisings, their workers are being paid and so on and on. Unless they are not truthful in their reporting (and many who follow them very closely would be jumping up and down) then they are a profitable well run company with a strategy .
Boeing in fact is returning Capital to shareholders via a share buy back scheme involving billions of dollars over several years.

Airbus are adopting a form of Contract accounting for the 350 which is similar to the Boeing program accounting, except is on an individual contract basis not a program basis.

As all those who follow the Airbus method will find out, and this applies to Boeing also, is that it evens profits out and makes your profit greater in some years, but also makes your profit less in other years, and over many years gives a much better indication of where the company is at.

There are other things Boeing could do to reduce the 32 billion apart from recovering it from 787 sales, such as converting the new technology from the program, which will benefit the comp[any in other programs in the future into an intangible asset. In this way you reduce the size of the deferred cost base, and help the balance sheet by converting it into an Intangible asset. (Airbus quite openly do it, and I think provided it is done conservatively, is a reasonable thing)

Finally I for one expect the real program number to be much higher than 1200.

Ruscoe
 
User avatar
Matt6461
Posts: 2910
Joined: Wed Oct 16, 2013 9:36 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 7:33 am

IMO this whole thread is a tempest in a teapot. As I've said repeatedly in the past, accounting means basically nothing for the smart money - so long as it is transparent/honest. Call it deferred production or "Woopsie! charges," doesn't really matter. Accounting is just a matter of convention.

Quote:
“The stock price reflects already that Boeing screwed up massively” on the 787, he said, so recovering the previously sunk costs is not an issue for Wall Street.

Those of you who disagree - I have a great business opportunity for you. PM me, you need to get in on the ground floor here. My lemonade stand doesn't make any money or even exist, but I'm sure you'll understand how that doesn't matter once you see my spreadsheet.
 
Part147
Posts: 385
Joined: Tue Dec 16, 2008 3:13 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 8:17 am

I'm sure the 787 programme also benefited greatly from the many,many, many tax breaks we hear Boeing had received over the last decade, making their current financial difficulties a little less painful for them.

I'm just so saddened and surprised it's turned out to be so badly managed, executed and accounted for to date!


Still, on the bright side - it's makes for fascinating discussions with engineering students about the effects of Murphy's Law on the current state of the industry - bean-counters vs engineers!
It's better to ask a stupid question during training, rather than make a REALLY stupid mistake later on!
 
User avatar
Faro
Posts: 1931
Joined: Sun Aug 12, 2007 1:08 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 8:18 am

Quoting mjoelnir (Reply 58):

So, the 787 from an economic persepctive needs to cover the following overall costs:

- USD 33 billion in deferred production costs sitting on the balance sheet and not yet amortised to P+L;

- USD 20 billion in pure R&D costs already sunk to P+L;

- Minus any USD-quantifiable production or design experience/advantage that may be carried over into future Boeing programs;

- Minus any risk-sharing partners' shares of the above 2 cost items; and

- Minus the excess of market value over cost of any IP assets generated by the program sitting on the balance sheet.

The USD 33 billion and USD 20 billion have already been paid out cash-wise so no effect on future cashflows.

From a pure, compartmentalized project management perspective the above is catastrophic since there is over USD 50 billion that needs to be covered on remaining anticipated sales of, say, 1,700 frames, or almost USD 30 million per frame B4 production costs.

From an overall company perspective, it is not distressing at all if cash-wise, Boeing will start to make significant net cash inflows on every frame delivered relatively soon. And then there are all of Boeing's other profitable, cash-positive activities obviously that will contribute to amortising the USD 33 billion of deferred production costs still sitting on the balance sheet. A financial failure of an aircraft program on a stand-alone basis, yes, but nowhere, nowhere near life-threatening like the 747-100. And a fantastic technical success let us not forget.

[Edited 2015-10-20 01:47:36]

[Edited 2015-10-20 01:49:46]
The chalice not my son
 
Ruscoe
Posts: 1737
Joined: Sun Aug 22, 1999 5:41 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 9:05 am

Quoting Part147 (Reply 87):
I'm just so saddened and surprised it's turned out to be so badly managed, executed and accounted for to date!

But they did get the concept for the aircraft correct, and that is the most important thing.

The problems in the 787 program, are a reflection of its ground breaking technology, and unlike other companies with bright advanced ideas, Boeing is pulling this one off.

If you guys want to worry about something, start asking how much of the deposits and other income from future production, is being used now to prop up current projects. This applies equally to both manufacturers.

Ruscoe
 
PhoenixVIP
Posts: 374
Joined: Tue Mar 18, 2014 12:41 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 9:48 am

Quoting NAV30 (Reply 80):

Just because one's sad little soiree about how terrible Airbus is we see another ridiculous claim. Airbus and Boeing have both innovated and taught each other many things in equal measures with the A380 and 787 designs. Both were equally responsible and I make another "claim": The new A380 technologies were very definitely a big step forward for the whole industry, very much including Boeing.

Quoting NAV30 (Reply 82):
Not saying anything against Airbus, zeke? I'm just responding to a specific attack 'rubbishing' the B787?

No, whatever Zeke says is appropriate unlike someone here who is the most responsible in rubbish attacks on the A380 and Airbus itself with outright lies. Funny you should say that.

Quoting zeke (Reply 81):
Not unusual you cannot see Airbus has contributed anything to aviation. FYI, the 787 uses important A380 technology e.g. ADFX networks, counter rotating spools, TTP Based Cabin Pressure Control System, 5000 psi dual hydraulic systems etc etc. Hundreds of patents were awarded for A380 technology

  

Quoting Ruscoe (Reply 85):

  
Inspire the truth.
 
User avatar
Stitch
Posts: 26388
Joined: Wed Jul 06, 2005 4:26 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 11:31 am

Of course, the 777X is incorporating a number of technologies and systems developed for the 787, so does the 787 really need to "recover" all $20 billion of it's R&D on it's own or can the 777X's revenue also help "recover" some of that cost? And what of the 747-8 and 737 MAX, which also have some 787 tech in them, as well. Heck, the MAX alone should soak up a fair bit of that $20 billion based on projected sales, and then there will be all the sales of NSA (and perhaps MOM/NMA) on top of that...
 
Part147
Posts: 385
Joined: Tue Dec 16, 2008 3:13 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 11:40 am

Quoting Ruscoe (Reply 89):
If you guys want to worry about something, start asking how much of the deposits and other income from future production, is being used now to prop up current projects. This applies equally to both manufacturers.

Just because you don't see it written down, doesn't mean it isn't being talked about frequently and brought up by the same old posters to derail discussions - time and time again - on the many other non-Boeing threads  


This thread is about Boeing and the 787 turning a profit, or not.


Why should we derail it with 'whataboutery' and mention the 'other' side? - shouldn't the Boeing Fanboys pay attention to the big 787-shaped beam in their own eye first?
It's better to ask a stupid question during training, rather than make a REALLY stupid mistake later on!
 
User avatar
speedbored
Posts: 2207
Joined: Fri Jul 19, 2013 5:14 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 11:42 am

Quoting Ruscoe (Reply 85):
Airbus are adopting a form of Contract accounting for the 350 which is similar to the Boeing program accounting, except is on an individual contract basis not a program basis.

I think it's a bit of a stretch to call contract accounting and program accounting "similar".

Quoting Ruscoe (Reply 85):
over many years gives a much better indication of where the company is at.

Actually, it does not. Program accounting seriously distorts the picture of really "where the company is at" - that is why program accounting is not generally permitted under international accounting standards.

Standards which, btw, the US authorities played a very major role in defining. They have been holding off implementing them in the US because so many US corporations would have to take massive hits, and report massive losses, during the financial reporting period in which any switch-over took place. I suspect that they are worried that this might give global markets "the jitters".
 
User avatar
EPA001
Posts: 3893
Joined: Tue Sep 12, 2006 8:13 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 12:39 pm

Quoting speedbored (Reply 93):
I think it's a bit of a stretch to call contract accounting and program accounting "similar".

It is. And Airbus only uses this type of accepting for the earliest delivered A350's. The normal accounting will be done as Airbus has always done before.

Quoting Ruscoe (Reply 85):
so where did this money come from? From the sale of other aircraft, investments, reserves, capital raisings loans etc.

Don't forget the Japanese money (subsidies) and the huge tax breaks Boeing gets when it launches such large aircraft development programs.....
 
sharktail
Posts: 136
Joined: Sun Feb 12, 2012 6:41 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 12:50 pm

Quoting Matt6461 (Reply 86):

IMO this whole thread is a tempest in a teapot. As I've said repeatedly in the past, accounting means basically nothing for the smart money - so long as it is transparent/honest. Call it deferred production or "Woopsie! charges," doesn't really matter. Accounting is just a matter of convention.

I don't think most here understand the concern that at least I have:

1) Today, we have the 777 and 737 programs contributing to the bottom line while the 787 is essentially breaking even because of program accounting.

2) Tomorrow, you will have the 777X and 737Max. Those are not going to be contributing near as much profit. They may even barely break even. And the 787 will continue to break even because of program accounting.

So you are going into a situation where there are declining profits. By design. Which may put a stop on investments that Boeing probably wants and needs to make (MOM, new clean sheet narrow body,...)

I don't think it is going to threaten Boeing by any stretch. In fact, I think Boeing is healthy and will continue to be. And they may just need to bite the bullet and take a $ 15 billion write-down.

But I think this is/was creative accounting that was used to give more money to the leadership team at Boeing at the time (McNemey). And that is borderline illegal. That is what I have a problem with.
 
User avatar
BaconButty
Posts: 803
Joined: Tue Aug 06, 2013 3:42 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 1:56 pm

Quoting Ruscoe (Reply 89):
The problems in the 787 program, are a reflection of its ground breaking technology, and unlike other companies with bright advanced ideas, Boeing is pulling this one off.

No they weren't - they were by and large industrialization issues - poor communication or part specification to suppliers and the such.

Quoting Faro (Reply 88):
- Minus any risk-sharing partners' shares of the above 2 cost items; and

I don't believe this is the case. And it's pretty relevant, since one of the ways Boeing will be looking to recoup money is from suppliers - some of which will have had their own need to reach profitability on the program - Spirit is given as an example in the article.

Quoting Matt6461 (Reply 86):
IMO this whole thread is a tempest in a teapot.

We're talking about the point in time that it becomes apparent (perhaps not to Ruscoe) that one of the major green field projects of recent years will turn an overall loss? The second such industry project in quick succession? For an aviation forum I'd say that was big news. I get the whole sunk-costs malarky, but, the bigger picture is that disaster after disaster has ensued, papered over largely by the profitability of the OEMs respective narrowbodies. The problem is, those narrowbody aircraft will themselves need replacing around 2030, and if they don't get a handle on their planning and execution by then well, who knows. Anyway, maybe zckls04 was right:

Quoting zckls04 (Reply 79):
Perhaps, but there's no reason to assume a high hit rate is necessary. Venture capitalism being a good example- as long as you have the odd success, many miserable failures don't matter much. All you need is for your hits to be greater in dollar volume than your misses.
Down with that sort of thing!
 
phxa340
Posts: 1067
Joined: Thu Mar 29, 2012 4:07 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 2:25 pm

Quoting EPA001 (Reply 94):

Thats a little disingenuous if you don't also call out Airbus subsidies as well ....

However your point is still valid and truly does illustrate why there are so many barriers to entry in the aviation industry just due to costs alone.
 
User avatar
speedbored
Posts: 2207
Joined: Fri Jul 19, 2013 5:14 am

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 2:30 pm

Quoting BaconButty (Reply 96):
I don't believe this is the case.

Me neither. Any costs that are the risk-sharing partner's problem will be on the risk sharing partner's books, not Boeing's.

I suspect that a large portion of the cost overrun that Boeing is now having to deal with is due to higher prices and/or penalty payments that they have had to pay suppliers, especially the non-risk sharing ones, due to the late design changes made as a result of issues arising during the test program, and the many short-notice schedule delays leaving suppliers with idle capacity for considerable periods of time.
 
PlaneAdmirer
Posts: 259
Joined: Mon Jul 06, 2009 8:39 pm

RE: "787 Profit For Boeing A Dream" - Seattle Times

Tue Oct 20, 2015 2:51 pm

Quoting Stitch (Reply 91):
Of course, the 777X is incorporating a number of technologies and systems developed for the 787, so does the 787 really need to "recover" all $20 billion of it's R&D on it's own or can the 777X's revenue also help "recover" some of that cost? And what of the 747-8 and 737 MAX, which also have some 787 tech in them, as well. Heck, the MAX alone should soak up a fair bit of that $20 billion based on projected sales, and then there will be all the sales of NSA (and perhaps MOM/NMA) on top of that...

It seems the 787 will be a very expensive education. Hopefully everything that was learned will result on a return on the investment.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos