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JetBuddy
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RE: Leeham: Boeing Changes 737-7 Strategy

Tue Feb 23, 2016 11:13 pm

Quoting Coronado (Reply 68):
Delta as far as I can calculate got an average 58% discount (i.e. paikd 42% of list price) on their 120 737-900ER and their 45 A321, paying between $42 and 44mm each. This is end of the line pricing.

I guess rather than focus on the discount can any one tell me why list prices are so stupidly high? To me list prices are insane. You might as well say that a Ford Fiesta should have a list price of USD40000.

Everybody talks about this order being worth $2bn at list prices. Nobody has paid list price, nor more than 55%-60% of list price on a 737NG for ever. List prices are the biggest bogus numbers in aviation.

List prices on cars and on airplanes are not even comparable. It's apples and oranges. Nobody walks into a Ford dealership and expects a 50% discount on a brand new car. And the planes you're talking about, the 737-900ER and the A321 are not the same as the 737-700, which is the model we're talking about. What discount they got on these models is completely irrelevant. What is relevant is what discount they got on the -700, because that's the model which is directly competing against the CS300.

Everyone knows list prices are list prices, and what you end up paying is something completely different. But I'd like to see numbers from you backing up your claim that nobody has ever paid more than 55-60% of the list price of a 737NG. That's a very bold claim to throw out there.

Quoting roseflyer (Reply 66):
There is no way that an outsider can determine if they were selling at a loss or not. It is also virtually impossible for a news website like Leeham to understand how much the price was discounted and what the actual purchase price was. This is what WSJ said: The paper also reported that UAL might order some twin-aisle jets to “offset” the low prices of the latest 737-700 order. As last year came to a close, Boeing salesmen were hopeful to land another order for 10-13 777-300ERs to help bridge the production gap.

It sounds like Boeing sold one airplane at a bargain rate to secure orders for another. No one will know if this was for a loss and I don't think you can definitely say that. The purchase price is not know. When an airline makes an order, included in that price is the cost of entitlements like maintenance documents, training services, etc. An airline can waive those entitlements and use the money for other purposes. UA probably doesn't need any training, and the cost of configuration on the additional 737-700s is probably nothing since that cost was included in the previous order. UA also recently ordered 777s and could be using some of the entitlement costs from that order to get a better price on the 737-700s. Airplane sales contracts are complicated and have many terms.

From the very same article: "Then Boeing swooped in and sold 40 current generation 737-700s to UAL at what LNC was told was priced in the low-to-mid $20m, well below what BBD could offer. There were also other considerations, LNC was told." We don't have anything else to go by than Leeham's word regarding the purchase price. There's no point in trying to discredit the article, and then try to defend the content.

If Boeing sold brand new 737-700s to United Airlines for $20-25 million, that would almost definately be a loss. We all know airlines don't pay list price unless they need a plane right here, right now and are not willing to wait for an open production slot. But according to your logic, the list price might not be a loss.. which means Boeing's price for the aircraft includes a 350-400% markup. That's just not credible. Buy a brand new 737-700, get 3 for free! No.

Boeing sold the -700s at this price to kick the chair out under Bombardier's C-series. They could just as well have given them away for free, which I think they would if it was legal.

Quoting DfwRevolution (Reply 72):
Spying on Bombardier would be playing dirty. Stealing data from Bombardier would be playing dirty. Lying to customers would be playing dirty.

Offering a better deal is not playing dirty.

You bet they're spying on each other. They all are. But that's not what we're talking about.

Offering a good deal is not playing dirty, but offering a deal where you sell 1 aircraft, and give away 3 for free... at an almost certain loss, at a time you are laying off hundreds of workers, and then blame it on Airbus aggressive pricing.. just to squeeze out the competition's superior product. That is playing dirty.

Quoting N1120A (Reply 77):
Did you dislike Airbus for the original Frontier deal? JetBlue? EasyJet? Republic?

I dislike it when any duopolist mega company squeezes out the little guy by selling products at a give away price. I would be similarly upset if Airbus did the same thing. The examples you're providing are not even comparable. I don't know the Republic case, but regarding the others it was Boeing vs Airbus. Two similarly sized companies who shared the marketplace between them, and where one side was reluctant to sell (Boeing), while the other jumped at the chance and offered a good deal. This is not even remotely the same situation.
 
XT6Wagon
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RE: Leeham: Boeing Changes 737-7 Strategy

Tue Feb 23, 2016 11:14 pm

So, Why is everyone taking this 70% reported discount as fact? Its one source, with no supporting evidence.

One source that many here believe has an agenda.

My biggest issue is no context to any of this. We don't know HOW he got 70%.

My guess is they were sold at a normal price, and there were discounts on things other than the frames included.
 
AirbusCanada
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RE: Leeham: Boeing Changes 737-7 Strategy

Tue Feb 23, 2016 11:27 pm

Quoting planemaker (Reply 94):
It should be self evident to anyone that has been following the CSeries and knows the history of the orders. Moreover, several publications have reported on the risk of CSeries orders being cancelled. You honestly believe that Republic is going to take delivery? Or that an airline that is crowd funding is going to take delivery? Or Porter, or Iraqi, or etc....


Let's Take one airline at a time shall we.

Porter airline:
Porter's order was always conditional on YTZ expansion from day one. NO surprises there.

Iraqi Airways:
Government funded Iraqi airways need the CSeries more than ever to maintain connection with the outside world. Unless BGW gets run over by ISIS, chances of Iraqi airways cancelling their CSeries order is ZERO.

Odyssey Airlines:
Are you suggesting Odyssey airline's business plan is to crowdfund $100 million in seed capital?
You gotta be kidding me.

Odyssey Airlines is offering a very lucrative product that no other airline can match at this point.
LCY to NYC non stop both ways. I am sure institutional investors will see plenty of value in it.

The crowdfunding operation was a carefully designed marketing exercise. Worked very well for them, they Achieved their funding goal of 1 million pound and got plenty of free publicity while doing it.

Here is a quote for you to from a CNN article written on their crowdfunding effort.
"We're trying to get our name out and raise our profile.It's (Crownfunding) a way to engage early on with our would-be customers, who also could be early investors". Odyssey CEO.

Last but not least, Republic Airways:

I have noticed lately, you have been beating a dead horse called " "Republic's cancellation of CSeries order" over and over and over and over and over and over and over and over and over and over again.

Let's put some facts on the issue.


Republic could have easily cancelled the Csereis order when the 319NEO order was announced.

"There were unconfirmed reports that Airbus had gone so far as to offer to pay Republic’s cancellation fee for the CSeries order."

Link: http://business.financialpost.com/ne...nt-so-wrong-with-the-cseries-dream

Even after the Frontier's A319NEO order, Republic had plenty of chance to dump the CSeries(without paying any penalty) when bombardier announced multiple of delays for the CSeries the program. They did not.

In addition, Republic had ample opportunity to engineer a deal with Bombardier that would offload their order book to a number of the airline/leasing companies that have placed sizable CSeries order since 2011. (Air-canada/ Macquarie Air Finance/IFC). They did not made such deal.

The following is a extract from in the"Risks Related To Our Operations" section from Republic's 2014 annual report:

"As of December 31, 2014, we have 41 50-seat regional jets operating under fixed-fee code-share agreements which are scheduled to expire between August 2015 and May 2016. In most cases, the term of the aircraft lease or debt agreement exceeds the term of the aircraft under its respective code-share agreement. To the extent that aircraft are removed from service, we must either sell or sublease the aircraft to another party in order to cover our carrying expenses for that aircraft. Our inability to sell or sublease aircraft that are removed from fixed-fee service could have a material adverse effect on our financial condition, results of operations and the price of our common stock".

I do not see any mention of CSeries there. Do you?


Do you honestly believe Republic will pay cancellation fees and cancel their entire CSeries order this late in the game without disclosing the risks involved to the shareholder?

Republic will either operate the CSeries (branded or contracted) or sell the slots to the highest bidder. In any case, those 40 aircraft has much higher odds of getting delivered than getting cancelled.
 
mham001
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RE: Leeham: Boeing Changes 737-7 Strategy

Tue Feb 23, 2016 11:53 pm

Quoting JetBuddy (Reply 65):

And Boeing is almost definately selling at a loss. 70% discount is insane,

People need to settle down a bit. First, the article said low-mid 20's. So it is not 20 million, like it has been often repeated here. Could be 22, could be 27 million. Second, this is really nothing but a rumor. "a source....".
 
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TheRedBaron
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:03 am

I wonder what would happen if Airbus reconsiders and buys 52% of BD... just to have a small jet to a big whale lineup...

Boggles the mind.... I am still in the dumping camp 20 to 25 mill for a 737, is simply non believable, apply the same margin for other frames and you see the gargantuan profit margin....

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Ty134A
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:16 am

it makes perfekt sense for boeing to give away the MAX700 for free. just imagine a CS-100/300/500 fleet with the A320NEO and 321NEO on top. you could blow away any boeing 737 fleet with that mix. i think that therefore it makes sense for boeing to stay in the game this way.

i do see the MAX800 to be superior to the NEO world if used as low cost option with a sole fleet of 800s. there is a fair market share for this kind of ops. but i am still convinced that mainline ops will prefer the NEO (not the 319NEO though).

but there is a certain feeling that the MAX is very maxed out and little gain is left in this rather old concept! hopefully boeing comes up with a new single aisle family seating 180/220/260 pax in three models. i think this is were the future will be, a family like the CS fromm 100 to 160 seats and another one from 180 to 260 seats. you would have a lot covered with these two single aisle options. and for long range something around the A359 and A3510 or even more so a 789 and 7810 in 3+3+3 config!
TU3/5,T20,IL8/6/W/9,I14,YK4/2,AN2/4,A26,A28,A38,A40,A81,SU9,L4T,L11,D1C,M11,M80/2/7,
AB4/6,318-321,313,332/3,342/3/5/6,712,703,722,732/3/4/5/G/8,741/L/2/3/4,752/3,763,
77E/W,J31,F50,F70,100,ATP,142/3,AR8/1,SF3,S20,D38,MIH,EM4,E75/90/95,AT7,DHT/3/4,CRJ/7/9
 
XT6Wagon
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:17 am

Quoting theredbaron (Reply 104):

I wonder what would happen if Airbus reconsiders and buys 52% of BD... just to have a small jet to a big whale lineup...

Airbus has a tie with ATR, so... no.

Also there is no possiblity right now of Either Airbus or Boeing taking a controling interest due to anti-trust concerns. My personal guess is that even 20% would take a government backed deal right now to get past all the different regulators around the globe.
 
planemaker
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:22 am

Quoting WaywardMemphian (Reply 95):
At that time... as with the AC deal, things change.

Airbus is not going to buy the CSeries Program... there is not any relevance to the AC deal.

Quoting JetBuddy (Reply 100):
I don't know the Republic case,

Airbus bumped aside the 40 CS300s that Republic ordered for Frontier.

Quoting AirbusCanada (Reply 102):
Let's Take one airline at a time shall we.

It isn't just the few that I listed that are at risk...

Quoting AirbusCanada (Reply 102):
Do you honestly believe Republic will pay cancellation fees and cancel their entire CSeries order this late in the game without disclosing the risks involved to the shareholder?

There are no cancellation fees. It is BBD that wold have to pay penalties for very late delivery. It is very convenient for BBD to play this charade that the orders are still valid.

Quoting AirbusCanada (Reply 102):
Republic could have easily cancelled the Csereis order when the 319NEO order was announced.

And they didn't because they thought that they might be able to profit from the slots... and that has been a major fail.

Quoting AirbusCanada (Reply 102):
n addition, Republic had ample opportunity to engineer a deal with Bombardier that would offload their order book to a number of the airline/leasing companies that have placed sizable CSeries order since 2011. (Air-canada/ Macquarie Air Finance/IFC). They did not made such deal.

BBD doesn't want Republic to cancel their order. Not only are they N. American launch customer, they are the largest airline customer (until the AC LOI is converted into a firm sale). Furthermore, it would put BBD 40 frames further short from their claim of 300 firm orders by EIS.

Quoting AirbusCanada (Reply 102):
Republic will either operate the CSeries (branded or contracted) or sell the slots to the highest bidder.

They can't and they won't. The slots are worthless. And you took a look at their FS... it should be abundantly obvious they are in no financial shape to take on the risk and liability.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
Hamlet69
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:22 am

Quoting JetBuddy (Reply 100):
But I'd like to see numbers from you backing up your claim that nobody has ever paid more than 55-60% of the list price of a 737NG. That's a very bold claim to throw out there.

You mean like all the numbers and sources others have been putting up when they say:

Quoting JetBuddy (Reply 100):
If Boeing sold brand new 737-700s to United Airlines for $20-25 million, that would almost definately be a loss.

Or another:

Quoting BlueSky1976 (Reply 4):
I will not believe Boeing has such high margin over the cost to produce a single 737NG, until proven otherwise.

Or:

Quoting JetBuddy (Reply 9):
70% off is a guaranteed loss on Boeing's part

Oh wait. . . that last one is the same person. With no numbers or sources. . .  


For the record, while a 70% discount is not common, it's not unheard of, either. I know of a few deals from both Boeing and Airbus that approached or reached 70% discount. To my knowledge, none of them were sold at a loss, either.

Quoting anfromme (Reply 2):
Question is - how likely is this to work in the mid to long term?

Not trying to take a swipe at all at you, but that really isn't a question worth asking. We're talking about a massive discount for an end-of-the-line product. Boeing only has to worry about it till the variable NG slots are filled.

And honestly, for all the 'fear' that posters here are saying if, say, WN came to Boeing and asked for 'UA pricing' - I honestly don't think they'd have a problem with it. If WN, or FR, or another large customer came to Boeing and asked for 65-70% off in exchange for 50+ NG's, I'd be willing to bet Boeing would make the deal again.

Quoting BlueSky1976 (Reply 21):
It is illegal in the US to sell any product at loss, as far as I remember the law prohibits it.

Is that a joke? Seriously?

In case it's not: No, it is most definitely NOT illegal to sell products at a loss in the US. Retailers across the board do it all the time. Cars, trucks, computers, TV's, you name it. It happens everyday. As already mentioned up-thread, a very big example is Amazon.com. They constantly sell their products for a loss.

Quoting scbriml (Reply 30):
It will destroy any chance of getting a decent price on any further NG sales to any customer - "Oh yes, we'll take 30 as long as we get UA's pricing!" But given where they are in NG to MAX transition, I don't suppose they're that worried.

  

Quoting Gabrielz (Reply 57):
I would expect Bombardier to launch a NAFTA/WTO proceeding.

Incredibly unlikely. And stupid if they did. First, a company cannot take another company to the WTO. It has to be the country. So it'd be Canada filing a complaint against the US to the WTO. And what would happen THE NEXT DAY? The US would file a complaint against Canada for the money giving to support Bombardier. And exactly how do you think that would go?

Quoting seahawk (Reply 60):
You can bet that the guys at Southwest and Ryanair have taken note of the deal and this deal is now the starting point for future negotiations.

Absolutely. So? As I mentioned, I don't see Boeing really having a problem giving them the same discount for the same sized order. If it's true that this is also tied to a 77W order, Boeing would probably demand a larger order from either of those 2, since neither is exactly 'in the market' for 777's or 787's. . .  
Quoting JetBuddy (Reply 9):
I'm disliking Boeing as a company more and more.

I'd be curious who you do like, then. Embraer? It certainly can't be Airbus, since they did the exact same thing when easyJet said they were seriously considering the C-Series. Or did we 'forget' that?


Hamlet69
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crimsonchin
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:28 am

Interesting, but A.net wisdom used to tell me Boeing never gives steep discounts? I thought such desperate moves were reserved for their lesser competitors like Airbus?
 
Hamlet69
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:30 am

Quoting crimsonchin (Reply 109):
Interesting, but A.net wisdom used to tell me Boeing never gives steep discounts? I thought such desperate moves were reserved for their lesser competitors like Airbus?

Only if you believe Boeing fan boys. Or those who just bring that up every thread as a 'dig'.

Hamlet69
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Viscount724
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:59 am

Quoting polot (Reply 24):
Quoting BlueSky1976 (Reply 21):

That is not true at all, you are allowed to sell goods at a loss. There is even a term for it: loss leaders.

Supermarkets do it every day to get customers in the door. You almost always see a few loss leaders since they know the average customer is going to buy a dozen or more other products with higher margins.

Quoting roseflyer (Reply 35):
I don't think Boeing would have much interest purchasing Bombardier.

That would be ironic considering that Boeing bought one of Bombardier's predecessors, De Havilland Canada, then owned by the Canadian government, in the mid-1980s. That was when the Dash 8-100 and -300 were in their prime but Boeing still lost close to $1 billion during the few years they owned DHC. They sold it to Bombardier in 1992, for less than they paid for it, and Bombardier's acquisition was heavily subsidized by both the Canadian federal and Ontario governments.

Boeing hoped that by taking DHC off the Canadian government's hands it would put Boeing in the driver's seat for the large AC (then government-owned) order to replace their 727-200s with 737s, but AC ordered 30+ A320s, amid charges of bribery and kickbacks by Airbus to Canadian government officials, including then-Prime Minister Brian Mulroney. Those charges were never proven and Mulroney later settled out of court when he sued the Royal Canadian Mounted Police for defamation. By the time that issue was settled, AC had been privatized.

[Edited 2016-02-23 17:11:51]
 
JoeCanuck
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:59 am

Quoting planemaker (Reply 94):
It should be self evident to anyone that has been following the CSeries and knows the history of the orders. Moreover, several publications have reported on the risk of CSeries orders being cancelled. You honestly believe that Republic is going to take delivery? Or that an airline that is crowd funding is going to take delivery? Or Porter, or Iraqi, or etc....

Remember a couple of weeks ago when AC absolutely, positively, definitely wasn't going to order the CSeries? That was also self evident to anyone that has been following the CSeries and knows the history of the orders...several publications included. (I know right...? It's totally shocking that you can't believe everything you read).  

Technically, until an order is either delivered or cancelled, asking for an absolute answer goes against logic or reason. Since neither even can actually be proven until it takes place, all anyone has is speculation, which is guesswork. Right now, you can't technically prove it will be cancelled any more than anyone else can technically prove it won't be.  

Maybe they'll get cancelled...maybe they won't. Maybe we'll have the second coming of Christ by then, maybe not. Maybe Adam Sandler will make a funny movie by then...but probably not.  

You've been Chicken Little-ing it forever; By now, the sky should have fallen so often, it would sound like a drum solo. I mean, you've been beating that dead horse for so long, it's foals have whip marks.  

Care to grab the danglers and let us know when can we expect the announcement? Come one...you've had your panties in a bunch about the Republic order since it was made....(how many years has that been now?), and there it is....still on the books. So when will the announcement be made? Tomorrow? Next week? Will we have to be blessed with 5 more years of predictions of Republic order cancellations?  

Maybe we can start an office pool on it...5 bucks a square. The money can go to a charity...or beer. 

If the order does get cancelled, I promise I will stand and applaud your ability to, at long last, after years and years and years of ranting about something, to be finally.....right. Totally reason to celebrate.  

Of course, like the old saying tells us; even a broken clock is right twice a day...unless it's digital...then it's just a crappy radio.  
What the...?
 
DfwRevolution
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 1:04 am

Quoting JoeCanuck (Reply 112):
You've been Chicken Little-ing it forever; By now, the sky should have fallen so often, it would sound like a drum solo. I mean, you've been beating that dead horse for so long, it's foals have whip marks.

I stand by Planemaker. For the last 8 years, he's been way more right than wrong on the C-Series.

I've been very pessimistic on the C-Series business case over the same time frame and I'll admit the AC order caught me completely by surprise. I'm willing to say I was wrong on that. But, if we are to be honest with ourselves, that is still a long way from making the C-Series remotely successful.
I have a three post per topic limit. You're welcome to have the last word.
 
JoeCanuck
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 1:30 am

Quoting DfwRevolution (Reply 113):
I've been very pessimistic on the C-Series business case over the same time frame and I'll admit the AC order caught me completely by surprise. I'm willing to say I was wrong on that. But, if we are to be honest with ourselves, that is still a long way from making the C-Series remotely successful.

I've never denied that the CSeries may be a total bust in the long run. I've also never been shy about believing that there is a business case for it. Any order can get cancelled at any time. That's business.

Frankly, I don't care if BBD gets bailed out, or Airbus or Boeing get subsidies, or Emb is handing out bags of money to get sales. I've worked in enough of the world to know that people are on the take everywhere. One man's envelope of cash is another man's political contribution.

My point is that the CSeries is just like Monty Python's plague victim; it's not dead yet.

So it has a bunch of less than 1st tier orders; big deal. They are still on the books. Maybe they will be cancelled. Maybe other AC type orders will come down the pike.

The AC deal is from a top airline....period. So is the LX one. Do small airlines always cancel their orders? Is that a guarantee? Oh my lord...what if....these orders from these crappy airlines actually get filled over the next 5 years?

I can read a chart and play the odds as well as anybody. What I haven't seen so far, is these orders being cancelled yet. What I read are things like Republic will cancel and lots of excuses, (without having any facts to back them up), why they haven't done it yet.

Heck...I can make those kinds of predictions. Toronto will win the Stanley Cup. There...I'll post a bunch of charts and quotes from knowledgeable pundits who agree with me to make me look even smarter. Then I'll keep making excuses why it hasn't happened yet. Every year, there's a chance I'll be right...and you know what? It may actually happen and if it does, I'll look like a genius. If it never happens, it will have been going on for so long that it will seem like it has.
What the...?
 
planemaker
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 1:41 am

Quoting DfwRevolution (Reply 113):
I stand by Planemaker. For the last 8 years, he's been way more right than wrong on the C-Series.

Thank you. Some people just can't handle the truth.  
Quoting JoeCanuck (Reply 114):
I've never denied that the CSeries may be a total bust in the long run.

Yes you have. You have been one of the most ardent CSeries "supporters" on here that believed everything that BBD spun.  
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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lightsaber
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 1:42 am

Quoting anfromme (Reply 19):
Those 737-700s ordered at low prices aren't a long-term investment in the same way a MAX/NEO/CS order placed today would be. So while UA may not place a CSeries order today because those 737-700s serve their capacity needs just fine for now (they'll all be delivered by the end of 2019 if I'm not mistaken), it's perfectly conceivable that those very -700s will be replaced by CS100/300 that they were supposed to keep out of UA's fleet. O

100% agree. The lower the sales price the shorter period of operation required. UA is avoiding finance risk and risks on the new engines. Nut it wouldn't surprise me to see a replacement order early. If UA does a sale/leaseback, at these prices they could rotate the planes out at six years.

UA has many options. A future C-series order after other debug the type could happen.

Lightsaber
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WaywardMemphian
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 1:47 am

Quoting theredbaron (Reply 104):

I wonder what would happen if Airbus reconsiders and buys 52% of BD... just to have a small jet to a big whale lineup...

Embraer would rejoice. Likely no more Q400 or CRJs.

A question that I have, is how much of a stretch would it be to make a smaller C series in the range of 75 to 80 seats for a regional option if the CRJs are dumped. A manufacturer could offer commonality from the regionals to domestic main lines since 50 seaters are fading fast in the marketplace. Wouldn't that make a young pilot's transition from a regional to mainline easier and also be a marketing edge?
 
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Polot
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 2:04 am

Quoting WaywardMemphian (Reply 117):
A question that I have, is how much of a stretch would it be to make a smaller C series in the range of 75 to 80 seats for a regional option if the CRJs are dumped. A manufacturer could offer commonality from the regionals to domestic main lines since 50 seaters are fading fast in the marketplace. Wouldn't that make a young pilot's transition from a regional to mainline easier and also be a marketing edge?

1) Embraer already offers that with the E[2] jets. It is not much of a marketing edge, as the regionals are separate airlines so the commonality does not matter as much as you might think.

2) The C series is likely to large/heavy to make an effective shrink without sacrificing significant commonality.
 
DDR
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 2:26 am

Quoting crimsonchin (Reply 109):

I am an Airbus man 100% but this post is pure flame bait.
 
JHwk
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 4:06 am

The idea of Boeing buying up the cseries to be the NSA is intriguing to me. Could they do a CS100mk2 that has family commonality elements to the 787 to create a similar situation to Airbus?

Airbus doesn't get the same value out of the product as Boeing, and if for $1B Boeing can build their NSA, doesn't seem like a bad deal. $3.2B to buy the company is peanuts...
 
AirbusCanada
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 5:01 am

Quoting planemaker (Reply 107):
It isn't just the few that I listed that are at risk...


That link you have provided is for CSeries nothing but a Table with some keyword,lacking any proper insight or Analysis. You are going to provide much better data than just a Table with Keyword like "Country Risk" or "Crownd Funding" to prove your point that CSeries backlog is at high risk.

Quoting JoeCanuck (Reply 112):
Technically, until an order is either delivered or cancelled, asking for an absolute answer goes against logic or reason. Since neither even can actually be proven until it takes place, all anyone has is speculation, which is guesswork. Right now, you can't technically prove it will be cancelled any more than anyone else can technically prove it won't be.  

        

Quoting planemaker (Reply 107):
BBD doesn't want Republic to cancel their order. Not only are they N. American launch customer, they are the largest airline customer (until the AC LOI is converted into a firm sale). Furthermore, it would put BBD 40 frames further short from their claim of 300 firm orders by EIS.

Bombardier does not want anyone to cancel their order. Unfortunately,the decision to place or cancel an order is taken by Customer(Republic), not the OEM(Bombardier). At this point Bombardier has much more bigger things to worry about than selling 300 airframe by EIS. IF Bombardier wanted to fill the books with Fake aircraft order, it wouldn't be that difficult for them sell 300 aircraft.



Quoting planemaker (Reply 107):
There are no cancellation fees. It is BBD that wold have to pay penalties for very late delivery. It is very convenient for BBD to play this charade that the orders are still valid.

Are you suggesting two publicly trading company are colluding to keep a multi billion dollar cancelled aircraft order on the books for mutual benefit.

Please provide us with some data and facts to backup speculations like this.

[Edited 2016-02-23 21:12:59]

Quoting planemaker (Reply 107):
And they didn't because they thought that they might be able to profit from the slots... and that has been a major fail.

Is that a Fact or just pure speculation on your part.

Quoting planemaker (Reply 115):
Thank you. Some people just can't handle the truth.  

I think you are confusing the difference between "truth" and "speculation".


[Edited 2016-02-23 21:15:37]
 
AirbusCanada
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 5:08 am

Quoting planemaker (Reply 115):
Thank you. Some people just can't handle the truth.  

I think you are confusing the difference between "truth" and "speculation".
 
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 5:37 am

Quoting enzo011 (Reply 12):
Will be hard to convince staff that pricing pressure is causing layoffs when you are literally giving away 737s

Not if they had to lower the price to sell the frames.

Quoting TWA772LR (Reply 52):
Could there even be collusion between Airbus and Boeing to keep BBD down? If so, could the WTO or even NAFTA stop it?

There certainly could, but I don't see any reason there'd need to be. It's pretty clear that the neo was in many respects driven by the CSeries and that the MAX followed for the same reasons. Both builders know what's at stake.

Quoting AirbusCanada (Reply 53):
Any glitch in the supply chain will pile up inventory like never seen before.

And who has deeper pockets to withstand that, Airbus, Boeing, or Bombardier?

Quoting seahawk (Reply 60):
That deal will haunt Boeing. You can bet that the guys at Southwest and Ryanair have taken note of the deal and this deal is now the starting point for future negotiations.

For what? NG's? So what - there aren't many hundreds of slots remaining, and I'm sure Boeing would love to fill them sooner rather than later.

Quoting theredbaron (Reply 70):
They just opened a big can of worms because WN and other huge customer have a big leverage against new orders, WN could order 100 frames tomorrow at 23 million, and derail the whole 737 and MAX production plans, and if they don't make their demands meet I am sure BD and Airbus would make anything to secure such an order (yes even dumping).

WN isn't going to run to either of the other builders if Boeing doesn't bend over a la Ryanair in 2002-ish. That's not to say that Boeing wouldn't try to take care of them, but it really is a Limited Time Only/Current Inventory Only type of sale.

And in regards to dumping, I WISH Bombardier would "dump" the CSeries on the market so that we can see it gracing the skies for decades to come. The problem to date is that they haven't.

Quoting EnviroTO (Reply 96):
2. It would be hard to stop Bombardier from buying 737-7s off airlines considered strategic, and reselling them almost at the same cost as part of a CSeries for 737-7 swap deal.

I'm guessing that when Boeing offers extreme discounts that they include verbiage in the contract from such practices. I'll defer to those in the industry (Hamlet69?) to elaborate.

Quoting JetBuddy (Reply 100):
Boeing sold the -700s at this price to kick the chair out under Bombardier's C-series. They could just as well have given them away for free, which I think they would if it was legal.

Why would they have? They obviously didn't need to.

Quoting JetBuddy (Reply 100):
I dislike it when any duopolist mega company squeezes out the little guy by selling products at a give away price. I would be similarly upset if Airbus did the same thing. The examples you're providing are not even comparable. I don't know the Republic case

Well, the Frontier/Republic/Bombardier/Airbus drama was all over these boards so you could probably do a search and read up on some of it.

Quoting AirbusCanada (Reply 102):
Republic will either operate the CSeries (branded or contracted) or sell the slots to the highest bidder. In any case, those 40 aircraft has much higher odds of getting delivered than getting cancelled.

I would love for you to be right, but every day (year) that passes without them getting sold is one more day (year) closer to them cancelling the order. Who do you think they are going to fly them for? Nobody in the US has such a scope clause available and Republic has shown zero evidence that they are either preparing to introduce them or have any idea where they're going. For quite a while now it's been painfully clear that they were hoping for a deal (since they likely have great slots and prices) but low oil and aggressive A/B have combined to dash their hopes.

Quoting AirbusCanada (Reply 121):
Bombardier does not want anyone to cancel their order. Unfortunately,the decision to place or cancel an order is taken by Customer(Republic), not the OEM(Bombardier). At this point Bombardier has much more bigger things to worry about than selling 300 airframe by EIS. IF Bombardier wanted to fill the books with Fake aircraft order, it wouldn't be that difficult for them sell 300 aircraft.

This wasn't/isn't a "fake aircraft order". it's more like a likely stillborn order at this stage.

Quoting AirbusCanada (Reply 121):
Are you suggesting two publicly trading company are colluding to keep a multi billion dollar cancelled aircraft order on the books for mutual benefit.

Why not? Virgin Atlantic ordered their Airbus A380's in April 2001 - 15 years ago! They have now been pushed out to 2018 and I think are finally going to go away, long after it was believed they no longer wanted them.

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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 6:14 am

Quoting planemaker (Reply 89):
BBD had already approached Airbus to invest and they declined.

At the time, the price and terms weren't right. Wait until the desperation factor increases, and Boeing start talks.
 
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 7:56 am

Quoting AirbusCanada (Reply 122):
I think you are confusing the difference between "truth" and "speculation".

No confusion. I pointed out the problems that BBD was going to go through way before they had even started to cut metal: the management failings; the delays; the deceptive spin; the financial problems; the competitors' responses; $40 oil; the failed sales campaigns, etc, etc. etc.
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 8:08 am

Quoting atcsundevil (Reply 7):
What makes you think it's illegal? Aviation essentially thrives off of undercutting competitors. How is this any different from Upstart Airline A entering a new market, and having Gigantic Legacy Airline B flood the market with seats and fares the upstart carrier can't match to flush out the little guy?

in theory, at least around here, using pricing *below cost* to drive out competition is open to antitrust investigations and possible heavy fines. And at 70% below list price that may be worth a look.

best regards
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spacecookie
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 8:22 am

As i said in another BBD treat, I think form the view of operation cost / crew training.
It's far more interesting to have 2 big manufactures.
Today it's all about low fares and airlines are loosing money, there is a market for this small 737 7


From another point of view, I fligh

Quoting tommy1808 (Reply 126):

Every new airliners is sold below cost, as said before RR sale their engine below cost,
A388 has become to break even last year so they also sold teir plane below cost...
 
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 8:56 am

What is the usual seat capacity of the 737-800 against the 737-700.

I thought that a 737-800 usually has more than 150 passengers so would require 4 cabin crew, a 737-700 usually has less than 150 so can get away with 3 cabin crew.

So I think there is still a lot of market for a 737-700.
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r2rho
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 9:17 am

Quoting roseflyer (Reply 73):
This is free market economics.

No, it's duopoly economics. Aerospace manufacturing is very far from being a free market.
 
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scbriml
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 9:19 am

Quoting XT6Wagon (Reply 101):
So, Why is everyone taking this 70% reported discount as fact? Its one source, with no supporting evidence.

The truth is, there's never 'supporting evidence' whenever real sales prices are discussed here. But to simply dismiss it as false is mistaken. Look at the circumstances and statements from Boeing's own execs.

Fact - Boeing is selling NGs at lower and lower prices. No surprise - they're filling the last few NG slots before complete transition to MAX. 50-60% is now considered normal, so 70% is not so far-fetched when the following are also factored in.

Fact - United was one of the airlines that Boeing sought accelerated progress payments from in order to boost 2015 cash flow. United will have got something in return.

Fact - Boeing execs openly discussed this order with the employees and told them it was specifically designed to keep BBD out of United. This was done to head off inevitable questions about selling planes at such low prices when job cuts have been announced.

In progress - United appear to be ready to pull the trigger on a further 77W order. This is widely seen as part of the 737 deal "Of course, if we're selling you 737s this cheaply, maybe you could see your way clear to taking some of these 77Ws off our hands?" Those are now being offered at approaching the same discount for the same reasons as the NGs. It's a win-win for United and Boeing.

I don't doubt for one moment that Airbus is/was doing very similar things with the A320ceo.
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 9:22 am

Quoting anfromme (Reply 41):
Even counting firm orders only (which still exclude the recent AC order, among others), the CSeries outsold the A319neo/737-7 combined by a factor of just under 2.5.

True, though the CSeries order book is rather weak.

I'd like to invite you to read the following article:

More than 100 Bombardier CSeries orders at risk of delays or cancellations

CSeries program need more orders like Swiss and Air Canada.

Quoting anfromme (Reply 41):
And that's despite the fact that the A319NEO and 737-7 are members of the two most successful airliner programmes of all time, so they should be very easy sells.

Boeing and Airbus haven't done a lot of effort on 737-7 / A319neo sales.
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 10:35 am

Quoting PlanesNTrains (Reply 123):
Quoting enzo011 (Reply 12):
Will be hard to convince staff that pricing pressure is causing layoffs when you are literally giving away 737s

Not if they had to lower the price to sell the frames.

It's a contradiction from management with another excuse. We have to cut costs and jobs because Airbus is putting pricing pressure on us. But we have to sell at a 70% discount because we don't want the C-Series at United. You could be negative (I will be at the instance) and read that the management is making too many excuses for failing from the company. Both OEM's makes mistakes, one seems intent on putting the blame on the competition as much as possible to hide their mistakes. Again it seems like arrogance where the market is Boeings to start with and any sales are stolen from them, not won by the competition.

I don't think this attitude kills a company, but it sure doesn't help it either. I get the feeling that Boeing will say the right things when the new clean sheet is launched, we will take the lessons from the 787 and learn, but they will only pay it lip service as they cannot possibly screw up that badly again...can they?
 
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 12:37 pm

Quoting PlanesNTrains (Reply 123):
Why would they have? They obviously didn't need to.

Because this:

Quoting scbriml (Reply 130):
Fact - Boeing is selling NGs at lower and lower prices. No surprise - they're filling the last few NG slots before complete transition to MAX. 50-60% is now considered normal, so 70% is not so far-fetched when the following are also factored in.

Fact - United was one of the airlines that Boeing sought accelerated progress payments from in order to boost 2015 cash flow. United will have got something in return.

Fact - Boeing execs openly discussed this order with the employees and told them it was specifically designed to keep BBD out of United. This was done to head off inevitable questions about selling planes at such low prices when job cuts have been announced.

  

Quoting PlanesNTrains (Reply 123):
Well, the Frontier/Republic/Bombardier/Airbus drama was all over these boards so you could probably do a search and read up on some of it.

I've already got it answered, thank you.

Quoting Hamlet69 (Reply 108):
For the record, while a 70% discount is not common, it's not unheard of, either. I know of a few deals from both Boeing and Airbus that approached or reached 70% discount. To my knowledge, none of them were sold at a loss, either.

To your knowledge, yes. The point though, which you're not touching, is that Boeing sold 737-700 dirt cheap to United to keep Bombardier from selling the C-Series. At the same time, they're laying off hundreds of jobs and blaming that on aggressive Airbus pricing. That is playing dirty. I don't doubt for a second that other manufacturers have pulled similar stunts, but it doesn't help the situation.

Boeing the bully just punched little Bombardier right in the face, gave him a wedgie and then stole his lunch money.

Nobody likes business tactics like that, except certain Boeing fanboys of course, desperately coming up with arguments like "it wasn't that cheap", "i'm sure they made money on it", and my favorite; "others have done it before".

[Edited 2016-02-24 04:39:08]
 
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 2:11 pm

Quoting JetBuddy (Reply 133):

Boeing the bully just punched little Bombardier right in the face, gave him a wedgie and then stole his lunch money.

Nobody likes business tactics like that, except certain Boeing fanboys of course, desperately coming up with arguments like "it wasn't that cheap", "i'm sure they made money on it", and my favorite; "others have done it before".

You don't have to like the business tactics, but they happen and I don't know why you have to insult other posters on this forum for sharing their opinions about it. Bombardier did it to the little boys Dornier and Saab and wrestled them out of the market.

Bombardier decided to build an airplane to compete with Boeing and Airbus (that was their decision) and now they are seeing what happens when you try to compete against companies five times your size who have much bigger presence in the market. Bombardier should have known all along that when they start trying to take orders from companies with long standing relationships, just because their plane may be more fuel efficient doesn't mean that they will win the business.

Quoting enzo011 (Reply 132):
It's a contradiction from management with another excuse. We have to cut costs and jobs because Airbus is putting pricing pressure on us. But we have to sell at a 70% discount because we don't want the C-Series at United.

From the articles that I read, Boeing is stressing lowering costs because they are competing not only against Airbus but also Bombardier and other companies. Boeing is trying to cut costs so they can do exactly what we are discussing to Bombardier by undercutting price.

Quoting tommy1808 (Reply 126):
in theory, at least around here, using pricing *below cost* to drive out competition is open to antitrust investigations and possible heavy fines. And at 70% below list price that may be worth a look.

Again no one knows that they are pricing below cost. That is what some are speculating. Again I serious doubt that is happening.

Quoting JetBuddy (Reply 100):

If Boeing sold brand new 737-700s to United Airlines for $20-25 million, that would almost definately be a loss. We all know airlines don't pay list price unless they need a plane right here, right now and are not willing to wait for an open production slot. But according to your logic, the list price might not be a loss.. which means Boeing's price for the aircraft includes a 350-400% markup. That's just not credible. Buy a brand new 737-700, get 3 for free! No.

Pricing and cost to produce an airplane can vary quite a bit. There are many services that an airline ordering just one airplane would have to pay and get it rolled into a single airplane (for example Air Vanuatu or some BBJ customers who bought a single plane). There are significant engineering costs. For example, the airplane interior has to be customized based on the galley/seating layout. The lavatory configuration must decided along with the customized options like carpets, curtains and dividers. Seata and IFE can get expensive. There are many flight deck options as well such as heads up displays, electronic flight bag, etc which can cost quite a bit. The interior and flight deck options can be worth millions when you add them up. Documents also add up to millions. Each maintenance and flight operations document is customized for the airline such as the maintenance manual, illustrated parts catalog, flight manual, etc. These add up to millions of dollars as well. Each new plane needs a paint scheme customized for the dimensions of that airplane, which also needs to be developed. An airline new to the 737 may require maintenance training and pilot training as well as simulator time. Those costs can get rolled into the purchase price, or be completely excluded. In general there are millions in non recurring costs for a new plane that an airline ordering just a single plane has to pay. United doesn't have any of these costs on the 737-700s. There are also ways to shortcut costs. United is redoing its interiors on its current fleet and installing its own IFE. It wouldn't surprise me if they ordered the 737-700s empty or very basic and plan on retrofitting all the components that they want. United has taken delivery of 737-900s with no IFE for example and retrofitted their system onto the airplane. It was cheaper for them to roll the IFE into the retrofit contract than it was for them to have Boeing install it. It would not surprise me if they are doing that with new airplanes. There are quite a few modifications going on to their older 737-700s, so it might be cheaper to order airplanes in a very basic configuration and retrofit the components that they want on so it matches the entire fleet.

My point is that you can't just say it is not credible that the price of production could be in the 20-25 million range. It can get there when all the non recurring costs are excluded and the airplanes are taken without many options. We don't know how the sales contract terms are written, so you can't say it is not credible.

[Edited 2016-02-24 06:19:48]
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seahawk
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 5:07 pm

Quoting PlanesNTrains (Reply 123):
For what? NG's? So what - there aren't many hundreds of slots remaining, and I'm sure Boeing would love to fill them sooner rather than later.

For any 737. Do you think those airlines do not know the price difference between a LEAP and a CFM-56? Good luck trying to tell them that apart from that the fuselage will cost a few extra millions due to the newer engines?
 
AirbusCanada
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 6:18 pm

Quoting planemaker (Reply 125):
No confusion. I pointed out the problems that BBD was going to go through way before they had even started to cut metal: the management failings; the delays; the deceptive spin; the financial problems; the competitors' responses; $40 oil; the failed sales campaigns, etc, etc. etc.

No you did not. Not on this thread at least.
All you did in thread is speculate about how bad the CSereis order book is without any single piece of evidence.

Here is a list of "ALL" of your CSeries related comment in this thread, oldest to the newest. I don't think i have missed any.

Quoting planemaker (Reply 37):
This is all quite old news. BBD has been complaining about being undercut by Boeing and Airbus for several years. Exhibit A is when Airbus knocked off the 40 CS300 that were ordered for Frontier by Republic (North American launch customer). Anyone that that thought that Airbus or Boeing was going to give BBD and easy ride were seriously mistaken.
Quoting planemaker (Reply 71):
You can knock a whole bunch off that list, starting with Republic, that will never be delivered. Considering all the posts you have made on this thread, it is surprising that you wouldn't have been realistic about the CSeries sales/order status.
Quoting planemaker (Reply 85):
Indeed. I don't know why the number of CSeries orders was pointed out as being superior compared to A & B a number of times on this thread.
Quoting planemaker (Reply 89):
I am always ready to listen to reason. So if you can prove otherwise that Republic, Odyssey, Iraqi Airways, IFC, etc are going to take delivery, go at it. Otherwise, your post was pointless.
Quoting planemaker (Reply 94):
It should be self evident to anyone that has been following the CSeries and knows the history of the orders. Moreover, several publications have reported on the risk of CSeries orders being cancelled. You honestly believe that Republic is going to take delivery? Or that an airline that is crowd funding is going to take delivery? Or Porter, or Iraqi, or etc
Quoting planemaker (Reply 107):
It isn't just the few that I listed that are at risk...
Quoting planemaker (Reply 107):
And they didn't because they thought that they might be able to profit from the slots... and that has been a major fail.
Quoting planemaker (Reply 107):
There are no cancellation fees. It is BBD that wold have to pay penalties for very late delivery. It is very convenient for BBD to play this charade that the orders are still valid.
Quoting planemaker (Reply 107):
BBD doesn't want Republic to cancel their order. Not only are they N. American launch customer, they are the largest airline customer (until the AC LOI is converted into a firm sale). Furthermore, it would put BBD 40 frames further short from their claim of 300 firm orders by EIS.
 
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TheRedBaron
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 6:28 pm

Quoting JetBuddy (Reply 133):
Boeing the bully just punched little Bombardier right in the face, gave him a wedgie and then stole his lunch money.

LOL, very accurate picture of what is going on here. (and Airbus would have done the same BTW)

Quoting roseflyer (Reply 134):
Bombardier decided to build an airplane to compete with Boeing and Airbus (that was their decision) and now they are seeing what happens when you try to compete against companies five times your size who have much bigger presence in the market. Bombardier should have known all along that when they start trying to take orders from companies with long standing relationships, just because their plane may be more fuel efficient doesn't mean that they will win the business.

That has been proven by the SSJ, where the aircraft has a nice price, great performance, and economics, and its still struggling to get orders... (bad marketing count too)

Quoting roseflyer (Reply 134):
My point is that you can't just say it is not credible that the price of production could be in the 20-25 million range. It can get there when all the non recurring costs are excluded and the airplanes are taken without many options. We don't know how the sales contract terms are written, so you can't say it is not credible.

I bet United being a legacy with tons of other aircraft did not buy econo 737 boxes. Most probably they will have nice interiors etc. They got a killer deal because the had the leverage of buying a product that could spell trouble for A and B.... great tactics BTW but I don't think they have ELCHEAPO 737´s...

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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 6:29 pm

Quoting enzo011 (Reply 132):
It's a contradiction from management with another excuse. We have to cut costs and jobs because Airbus is putting pricing pressure on us. But we have to sell at a 70% discount because we don't want the C-Series at United. You could be negative (I will be at the instance) and read that the management is making too many excuses for failing from the company. Both OEM's makes mistakes, one seems intent on putting the blame on the competition as much as possible to hide their mistakes. Again it seems like arrogance where the market is Boeings to start with and any sales are stolen from them, not won by the competition.

I don't think this attitude kills a company, but it sure doesn't help it either. I get the feeling that Boeing will say the right things when the new clean sheet is launched, we will take the lessons from the 787 and learn, but they will only pay it lip service as they cannot possibly screw up that badly again...can they?

Adding 50+ orders for the 737NG keeps the production lines going, keeps the high rate up and all the workers that go with it. If I work for Boeing, I want as more planes in our backlog and not our competitors. (Not to mention the hundreds of millions of dollars in cash this will bring in, in short order, to fund the cash expensive R+D and new product ramp up)

Or am I missing something?
 
AirbusCanada
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 6:40 pm

Quoting theredbaron (Reply 137):
That has been proven by the SSJ, where the aircraft has a nice price, great performance, and economics, and its still struggling to get orders... (bad marketing count too)

You need two additional in ingredient to this mix, support network and Brand Reputation, which SSJ lacks, so does MRJ.
Embraer and Bombarder worked hard in the last few decadess to build those two key component.
 
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 6:42 pm

Quoting theredbaron (Reply 137):
I bet United being a legacy with tons of other aircraft did not buy econo 737 boxes. Most probably they will have nice interiors etc. They got a killer deal because the had the leverage of buying a product that could spell trouble for A and B.... great tactics BTW but I don't think they have ELCHEAPO 737´s...

That doesn't mean that UA orders them all pimped out, just that they are not el cheapo when they enter service  

CO, for example, would take delivery of 73G/738s without winglets and install them in house instead of paying Boeing to do it (739ERs have winglets as standard equipment so Boeing won't/can't build and deliver them without winglets).

But money is saved because no money has to be spent developing the cabin product tailored for UA, which was one of Roseflyer's points.
 
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 6:56 pm

Quoting polot (Reply 140):
Quoting theredbaron (Reply 137):
I bet United being a legacy with tons of other aircraft did not buy econo 737 boxes. Most probably they will have nice interiors etc. They got a killer deal because the had the leverage of buying a product that could spell trouble for A and B.... great tactics BTW but I don't think they have ELCHEAPO 737´s...

That doesn't mean that UA orders them all pimped out, just that they are not el cheapo when they enter service

I agree polot. Sometimes the largest airlines are the ones that order the most basic ELCHEAPO airplanes because they retrofit many of their own equipment on it. For example Boeing only offers a limited range of IFE options from their list of approved vendors. UA has been retrofitting it's own streaming system on board. It might be cheaper for United to retrofit IFE on after delivery. Another item could be SATCOM. Boeing offers one system, but some airlines choose to install a different option from a different vendor that is not offered by Boeing. Large airlines can negotiate good prices from after market suppliers and sometimes they save money doing this rather than having Airbus or Boeing go through the process of obtaining new vendors. It is often a lot cheaper to install something through retrofit than it is to get it added to the original design. British Airways for example worked with their own vendor on seats. They took delivery of airplanes without first and business class seats and installed the seats themselves rather than go through the certification process of making them available at delivery.
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RE: Leeham: Boeing Changes 737-7 Strategy

Wed Feb 24, 2016 10:35 pm

Quoting roseflyer (Reply 134):
Again no one knows that they are pricing below cost. That is what some are speculating. Again I serious doubt that is happening

While I find it unlikely not making a loss when seeling at list less 70, it seems likley that an important part of said discount must have been absorbed by CFM. And I can see their intertest in joining such preemptive strike. That of course could help making sure that Boeing did not go cash negative on this deal.
Immigration officer: "What's the purpose of your visit to the USA?" Spotter: "Shooting airliners with my Canon!"
 
mham001
Posts: 5745
Joined: Thu Feb 03, 2005 4:52 am

RE: Leeham: Boeing Changes 737-7 Strategy

Thu Feb 25, 2016 12:21 am

Quoting JetBuddy (Reply 133):
Boeing the bully just punched little Bombardier right in the face, gave him a wedgie and then stole his lunch money.

Nobody likes business tactics like that, except certain Boeing fanboys of course,

Oh it's a mean, cruel world out there.

Quoting enzo011 (Reply 132):

It's a contradiction from management with another excuse. We have to cut costs and jobs because Airbus is putting pricing pressure on us. But we have to sell at a 70% discount because we don't want the C-Series at United.

We don't know that Airbus was not in the mix. Do you? Who knows, maybe Airbus were offering 65% off on this deal, do you think UA excluded them from negotiations? But what is your beef? That Boeing execs did not mention BBD in their cost-cutting announcement? Its the same issue, lower prices to make a deal.

"We" really know nothing about this deal, all of this is nothing more than rumor. But you keep going, it is fun to watch!
 
airzona11
Posts: 1756
Joined: Wed Dec 17, 2014 5:44 am

RE: Leeham: Boeing Changes 737-7 Strategy

Thu Feb 25, 2016 1:15 am

Quoting mham001 (Reply 143):

We don't know that Airbus was not in the mix. Do you? Who knows, maybe Airbus were offering 65% off on this deal, do you think UA excluded them from negotiations? But what is your beef? That Boeing execs did not mention BBD in their cost-cutting announcement? Its the same issue, lower prices to make a deal.

+1
This is the perfect summary. It was a business deal beneficial to both Boeing and UA. The lower capex to acquire the 737 offsets the lower opex benefits of the Cseries (the only CSeries advantage over a 737 at United).
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Leeham: Boeing Changes 737-7 Strategy

Thu Feb 25, 2016 2:13 am

Quoting AirbusCanada (Reply 136):
No you did not. Not on this thread at least.

As I said in the post you quoted, "I pointed out the problems that BBD was going to go through way before they had even started to cut metal". In fact, for over 10 years... and virtually everything I called has happened.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
AirbusCanada
Posts: 647
Joined: Mon Nov 15, 2004 5:14 am

RE: Leeham: Boeing Changes 737-7 Strategy

Thu Feb 25, 2016 4:28 am

Quoting planemaker (Reply 145):
As I said in the post you quoted, "I pointed out the problems that BBD was going to go through way before they had even started to cut metal". In fact, for over 10 years... and virtually everything I called has happened.


Seriously, the best defense you can come up with for your BS comments on CSeries in "THIS" thread is, I predicted their problem in the past and i was right".

Did you pointed any of the problems of 380, 787, MRJ, Global 7000, Falcon 5X, HondaJEt, , ARJ21, Legacy 500, SSJ program too, or was it just the CSeries?

Not sure what you have been predicting over the last 10 year, but I am sure you did not predict any of he following Events.......

AirCanada becoming largest customer of Cseries.
Republic keeping their Cseries order on the book at EIS.
BBD stock going below $1 CDN.
CSeries beating it's performance gurantee at EIS.
Oddesy Airline meeting it's Crowdfunding target.

[Edited 2016-02-24 21:09:56]
 
Aither
Posts: 1293
Joined: Mon Oct 25, 2004 3:43 am

RE: Leeham: Boeing Changes 737-7 Strategy

Thu Feb 25, 2016 4:49 am

The problem with BBD is the product strategy: they offer the best aircraft for the routes... that represent 10% of my revenues...
Put aircraft utilization, crew rostering etc. into the equation and BBD becomes Bye Bye Dier
Never trust the obvious
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Leeham: Boeing Changes 737-7 Strategy

Thu Feb 25, 2016 4:50 am

Quoting AirbusCanada (Reply 146):
Did you pointed any of the problems of 380, 787, MRJ, Global 7000, Falcon 5X, HondaJEt, , ARJ21, Legacy 500, SSJ program too, or was it just the CSeries?

Yup., including the 787 when it was just the 7E7... and several more not on the list. The big difference is that none of the others are run by a family that has been screwing things up pretty nicely ever since just before Paul Tellier became CEO. He started turning things around and embarked on some badly needed corporate governance issues that the "clan" didn't like (obviously) so they unceremoniously tossed him out - which was ultimately the start of their downfall - share price went from just under $27 back then to a dollar this February.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
JoeCanuck
Posts: 4704
Joined: Mon Dec 19, 2005 3:30 am

RE: Leeham: Boeing Changes 737-7 Strategy

Thu Feb 25, 2016 5:05 am

Quoting planemaker (Reply 115):
Yes you have. You have been one of the most ardent CSeries "supporters" on here that believed everything that BBD spun.

Oh I have never denied that I like the CSeries....far from it, I have always believed it would succeed. What I haven't done, is deny it could be a flop. Big difference...but you do seem to have trouble with semantics.   

Though...since it actually hasn't failed yet...I haven't been quite proven wrong yet, have I...?   

Has it...? Has the CSeries been cancelled yet? It must have happened while I was having a nap. Sorry I missed it. Why not fill me in on the details?   

Quoting planemaker (Reply 125):
No confusion. I pointed out the problems that BBD was going to go through way before they had even started to cut metal: the management failings; the delays; the deceptive spin; the financial problems; the competitors' responses; $40 oil; the failed sales campaigns, etc, etc. etc.

Deceptive spin...? Oh my lord....and BBD is the only company on the planet with a PR department. EEK...! Sheesh....you are the sensitive one, aren't you? Deceptive spin....you are calling 'deceptive spin' a prediction? I wouldn't put that on a cv.  

I really did get a good laugh out of that. Thanks...though not exactly calling up the lottery numbers, now is it?

Of course, you also seem to not mention corruption and spin by its competitors. For example...Emb being investigated for corruption and fraud for bribes on foreign sales. Oops.              

You've also gone on for years about how Republic will cancel. You still haven't told us when that will happen...or when the rest will happen either. Come on...you're the self professed expert. Spill the beans from your font of wisdom. How about the other orders? Is there an expiry date on predictions not coming true? Let's get a real prediciton...

In the meantime...are the orders canceled yet?

How about now?

Now...?


Has the CSeries been cancelled yet?

How about now?

Now...?

  
What the...?

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