Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Fri Mar 11, 2016 8:26 pm

Quoting Devilfish (Reply 48):
I don't think airlines and passengers would prefer a 289 seat 757.  

I don't think airlines care what Y passengers think to be honest. It just needs to be minimally acceptable to those passengers and flexible enough to accommodate the premium passenger effectively. Call me cynical.

Quoting parapente (Reply 49):
Boeing will just have to walk away from this small sector for a few years.It won't kill them.But they will be back (post 777X) with a brand new game changing narrow body aircraft - and it starts all over again! Hell it's not as if they have not had their monies worth out of the 737! (The clue is in the middle number)

Well if this comes in 2023 as recently rumored than it will be a good 7 years after the A321neo entered service that this NMA/MOM enters service. A solid amount of time to ensure better engine technology, aero improvements, and material science.

tortugamon
 
User avatar
seahawk
Posts: 9627
Joined: Fri May 27, 2005 1:29 am

RE: New 757 Replacement NMA Information - Part 5

Fri Mar 11, 2016 8:37 pm

Quoting tortugamon (Reply 50):
I don't think airlines care what Y passengers think to be honest. It just needs to be minimally acceptable to those passengers and flexible enough to accommodate the premium passenger effectively. Call me cynical.

Question is how premium heavy the typical MoM route would be. I dare say the demand for premium seats is limited on routes below 2500nm.
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Fri Mar 11, 2016 9:03 pm

Quoting seahawk (Reply 51):
Question is how premium heavy the typical MoM route would be. I dare say the demand for premium seats is limited on routes below 2500nm.

I think there are a lot of routes with premium opportunities at that stage length.

LAX/SFO-JFK/BOS.
HKG-NRT
Plenty of Inter-European traffic that could be premium.

I understand fragmentation in 1 or 2 hour long flights but 5-hour flights are increasingly uncomfortable in Y.

tortugamon
 
User avatar
par13del
Posts: 10248
Joined: Sun Dec 18, 2005 9:14 pm

RE: New 757 Replacement NMA Information - Part 5

Fri Mar 11, 2016 9:34 pm

Quoting Amiga500 (Reply 43):
Sorry for repeating myself, but IMO, that is the only way Boeing can make this work - MoM has to be looked at as a part, probably a loss-leading part if considered in isolation over 15-20 years, of NSA.

Well part of the MOM issue is that the A321 now in any guise is taking significant market share against the 737-9 any variant.
So a time factor is obviously one reason why a 737-MADMAX is being considered, quicker to market.
Clean sheet NSA will not be looked at until the 777X is being pushed out, so the question, is Boeing prepared to let customers who do not presently operate A321's move for X amount of years without a Boeing alternative, the sub question is, which airline that purchases an A321 now, will drop it for a NSA in the next 10 or 15 years?
Lessors are also looking to lock up clients for at least 10 years.
 
Planesmart
Posts: 2891
Joined: Sun Dec 05, 2004 3:18 am

RE: New 757 Replacement NMA Information - Part 5

Fri Mar 11, 2016 9:39 pm

Quoting roseflyer (Reply 13):
Quoting roseflyer (Reply 13):
These anecdotal opinions result in endless threads and opinions which can be fun, but those aren't really about airplane design. Here are the 8 top reasons why airlines choose one airplane over the other:

Financing cost, purchase or lease
Fuel Efficiency
Maintenance intervals
Maintenance costs per cycle and block hour
Training
Seat capacity required
Route network/schedule structure
Range requirements

Nothing about being "more modern" measurably affects these (unless you start going down to maintenance costs of cables & pulleys). If being more modern is a competitive advantage for the A320, why is it that for the exact same capacity, the 737-700 has an OEW about 84,000 lbs and the A319 has an OEW of about 87,500 lbs?

Which can be summarised as life time ownership costs, or cradle to grave. Or as Airbus will price, pre-cradle to grave.

This desire for certainty, has seen a vast increase in power by the hour type maintenance contracts, now extending to the airframe and interior.

I would include insurance as a subset of finance.

An important, but overlooked factor in your eight, is residual value, hence the more widespread use of agreed buybacks.

Call me old, but as 'modern' increasingly means more software, don't be surprised if 'more modern' translates to lower residual values and/or shorter economic lives versus 'less modern'. For example, if oil remains at current values, I predict A330's will lose less % value over the next decade, than either the A350 or 787.
 
JHwk
Posts: 577
Joined: Wed Jan 30, 2013 2:11 am

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 12:56 am

Quoting Amiga500 (Reply 39):
Would I be right in saying you are an accountant?

Ouch! Engineer! One semester of engineering economics goes a long way, along with being a business owner.
 
User avatar
Boeing778X
Posts: 3268
Joined: Sun Nov 17, 2013 7:55 pm

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 1:20 am

Quoting tortugamon (Reply 50):
Well if this comes in 2023 as recently rumored than it will be a good 7 years after the A321neo entered service that this NMA/MOM enters service. A solid amount of time to ensure better engine technology, aero improvements, and material science.

   And a 2023/2025 time frame seems like it would work, especially if they go with a cleansheet approach.

Clearly, the A321neo would have a sales lead, but if Boeing does it right, they could have a product that could potentially be a superior one (for the respected missions), which could potentially work out better in the long run.
United Airlines: $#!ttin' On Everyone Since 1931
 
sv11
Posts: 221
Joined: Tue Jun 01, 1999 6:26 am

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 1:44 am

Can 737 accomodate engines of 40K thrust even with new wing and landing gear? Seems difficult considering the high bypass nature of today's engines. Without the 757 BA is stuck between a rock and a hard place. Customers probably are not willing to pay a premium in price for a new design either.

sv11
 
User avatar
par13del
Posts: 10248
Joined: Sun Dec 18, 2005 9:14 pm

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 3:28 am

Quoting Boeing778X (Reply 56):
Clearly, the A321neo would have a sales lead, but if Boeing does it right, they could have a product that could potentially be a superior one (for the respected missions), which could potentially work out better in the long run.

By 2023 when this superior a/c comes on stream, Airbus would have made significant funds from the existing A321 which will allow them to use the same technology on their clean sheet which will not take 10 years to market.
Now if they spend a few million putting some high lift devices on the 739 to reduce its take-off roll...........still not a A321 but it may make it less of a pavement hog 
 
dare100em
Posts: 278
Joined: Tue Dec 23, 2014 9:31 am

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 9:15 am

Don't you think if they could significantly improve the 737-9 takeoff performance by "spending a few millions" they would have done it?
 
User avatar
seahawk
Posts: 9627
Joined: Fri May 27, 2005 1:29 am

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 10:19 am

Quoting tortugamon (Reply 52):
I think there are a lot of routes with premium opportunities at that stage length.

LAX/SFO-JFK/BOS.
HKG-NRT
Plenty of Inter-European traffic that could be premium.

I understand fragmentation in 1 or 2 hour long flights but 5-hour flights are increasingly uncomfortable in Y.

tortugamon

Intra-European has no demand for such service imho. Most routes are too short and te business class seats offered are anything but premium. And those routes you mention already show a demand that would be enough to fill a widebody. By 2025 most of those will probably see widebodies.

The MoM allows you to connect secondary cities directly, but the traffic from those is rarely showing a high premium demand.
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 7:03 pm

Quoting seahawk (Reply 60):
By 2025 most of those will probably see widebodies.

All the more reason to make an MoM...if it has narrow body economics but close to the size of the widebodies it would be very valuable to operators.

Quoting seahawk (Reply 60):
The MoM allows you to connect secondary cities directly, but the traffic from those is rarely showing a high premium demand.

But I think that is just it. Its the premium passengers that care about flying direct. Its the leisure passengers that don't mind connecting if they can save a buck. This MoM will live/die by an increase in passengers wanting to bypass a hub and secondarily, increasing traffic without increasing frequency (upgauging).

tortugamon
 
User avatar
seahawk
Posts: 9627
Joined: Fri May 27, 2005 1:29 am

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 7:51 pm

Quoting tortugamon (Reply 61):
All the more reason to make an MoM...if it has narrow body economics but close to the size of the widebodies it would be very valuable to operators.

Only if you have the slots to replace the widebodies.

Quoting tortugamon (Reply 61):
But I think that is just it. Its the premium passengers that care about flying direct. Its the leisure passengers that don't mind connecting if they can save a buck. This MoM will live/die by an increase in passengers wanting to bypass a hub and secondarily, increasing traffic without increasing frequency (upgauging).

But if you look at many routes the MoM will serve outside of TATL and TransCon many of those are currently one stop connections with basic/standard single aisle configurations. If you replace those with something offering a J, Y+, Y cabin with s slightly lower standard than the widebody fleet, you are already offering a superior product.
 
User avatar
enzo011
Posts: 1854
Joined: Tue Jun 21, 2011 8:12 am

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 8:19 pm

Quoting tortugamon (Reply 61):
All the more reason to make an MoM...if it has narrow body economics but close to the size of the widebodies it would be very valuable to operators.

If this was possible would they not have launched it already? Either it will be a single-aisle or it will be a narrow twin-aisle which has the disadvantage, as you argue, of more drag for a wider fuselage. You will either have 2 LD2s in the cargo hold or 1 LD3, the same as the narrower single-aisle. So you would have little cargo space for the fish and more drag due to the wider fuselage as well. But this may just be the design that has the least amount of compromises for the airlines. We will have to wait and see, but lets not casually throw around that the MOM could have single-aisle economics at wide-body size.
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 9:03 pm

Quoting seahawk (Reply 62):
Only if you have the slots to replace the widebodies.

Sure but how many airports are really slot restricted out there. Airports keep investing and growing. We keep predicting this eventual brick wall that we never hit. Traffic adjusts. Connecting traffic looks for the cheapest way and it used to be through LHR for TATL and the UK has messed that airport up so the fees are so high that it AMS/CDG/FRA has picked up the slack. And in a lot of ways this MoM does improve slot restrictions because instead of having 15 flights a day JFK-ORD or LAX-SFO or EWR-LAX then you can upgauge a few of them to the MoM and reduce slots.

Quoting seahawk (Reply 62):
But if you look at many routes the MoM will serve outside of TATL and TransCon many of those are currently one stop connections with basic/standard single aisle configurations. If you replace those with something offering a J, Y+, Y cabin with s slightly lower standard than the widebody fleet, you are already offering a superior product.

Well I am not convinced that you can't offer a solid product on a narrow body aircraft. Look at AA's A321T with something like 100 seats or look at the new J configuration with lie flat seats on Aer Lingus. It can be done.

There are plenty of routes without widebody direct service that this aircraft could make possible. I think it is a de-hubbing aircraft.

tortugamon
 
Planesmart
Posts: 2891
Joined: Sun Dec 05, 2004 3:18 am

RE: New 757 Replacement NMA Information - Part 5

Sat Mar 12, 2016 11:37 pm

Quoting tortugamon (Reply 64):
Sure but how many airports are really slot restricted out there.

Very few if you can persuade / dictate to customers when they fly. Far more if you aren't in that fortunate position, or the neighbours don't support / permit 24 hour operations at either the departure or arrival airport.
 
User avatar
par13del
Posts: 10248
Joined: Sun Dec 18, 2005 9:14 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 12:56 am

Quoting dare100em (Reply 59):
Don't you think if they could significantly improve the 737-9 takeoff performance by "spending a few millions" they would have done it?

Let's remember the history of the 737-9 and the A321, when the a/c was initially put out it was the 900, then as that had range issues they went to the 900ER.
Now the market is moving towards the 737-900ER capacity and the A321 is where they are going, why exactly do you think Boeing is now looking at a MADMAX and a new MOM, its because the market is shifting and their product in the space is getting less and less competitive.
New a/c are always preferred, incremental upgrades are usually more for existing customers. The primary complaint on the 900ER is the take off roll, if they could improve that it may buy them some time, which is what they need.
How do we know all this talk of a MOM is not a smoke screen?
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 1:34 am

Quoting Planesmart (Reply 65):
Very few if you can persuade / dictate to customers when they fly. Far more if you aren't in that fortunate position, or the neighbours don't support / permit 24 hour operations at either the departure or arrival airport.

And how many of those airports have 737/A320 operations that this NMA will improve? Personally I don't buy it. I have seen Fokker 100s flying into LHR. I lose all respect for slot restriction logic when I see that happen.

tortugamon
 
User avatar
seahawk
Posts: 9627
Joined: Fri May 27, 2005 1:29 am

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 8:07 am

Quoting tortugamon (Reply 67):
And how many of those airports have 737/A320 operations that this NMA will improve? Personally I don't buy it. I have seen Fokker 100s flying into LHR. I lose all respect for slot restriction logic when I see that happen.

tortugamon

Wrong line of thought, because these small jets also play are role for the hub they are coming from and often those routes see are extremely high frequency. I am not convinced that you can 3 MoM flights can replace 5 A319 flights with similar customer satisfaction on such routes.

And then those little jets allow connections to tertiary airports that often have just this connection to longhaul flights. If a legacy would use lots of MoMs, they will imho open options for attack by the LowCos, as they will have to drop frequency and some destinations.
 
User avatar
scbriml
Posts: 18974
Joined: Wed Jul 02, 2003 10:37 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 9:59 am

Quoting tortugamon (Reply 67):
I have seen Fokker 100s flying into LHR. I lose all respect for slot restriction logic when I see that happen.

Heathrow being slot restricted is not 'logic', it's a fact of life. KLM still fly small planes to Heathrow. They got the slots and they use them, but those flights are not from Amsterdam, they're from secondary/tertiary Dutch airports like Rotterdam, etc. They also fly small planes to a lot of UK secondary/tertiary airports.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
mjoelnir
Posts: 9391
Joined: Sun Feb 03, 2013 11:06 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 11:46 am

I think Boeing does not have the money to start a MoM or a 737 MAD MAX. The coffers are empty, the 777X will still eat heaps of Money before Boeing sees a return, the 777-200LR/F/300ER sees decreasing orders and will see further reduction of production rate, the conversion of production from 737NG to 737MAX will temporarily reduce the flow of profits and the 787 is still a basket case.
If we look at 2025, Boeing having cut cost through the enterprise, with the 787 having hopefully having pulled down a big part of the deferred mountain, Boeing will have the money to do something again.
 
User avatar
par13del
Posts: 10248
Joined: Sun Dec 18, 2005 9:14 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 3:13 pm

Quoting mjoelnir (Reply 70):
I think Boeing does not have the money to start a MoM or a 737 MAD MAX. The coffers are empty,

So they go for launch aid.............just because they have never done it and the US government has never done it does not mean it cannot be done, after all, it is the preferred method that the EU via its WTO case want al and sundry to use.
If the US government offers it I can see Boeing jumping on it immediately.
 
mjoelnir
Posts: 9391
Joined: Sun Feb 03, 2013 11:06 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 5:07 pm

Quoting par13del (Reply 71):
Quoting mjoelnir (Reply 70):
I think Boeing does not have the money to start a MoM or a 737 MAD MAX. The coffers are empty,

So they go for launch aid.............just because they have never done it and the US government has never done it does not mean it cannot be done, after all, it is the preferred method that the EU via its WTO case want al and sundry to use.
If the US government offers it I can see Boeing jumping on it immediately.

Than they loose the ability to complain over launch aid to Airbus.      
 
User avatar
SQ22
Moderator
Posts: 1829
Joined: Sat Feb 25, 2012 9:29 am

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 5:20 pm

Quoting mjoelnir (Reply 70):
I think Boeing does not have the money to start a MoM or a 737 MAD MAX.

I do not expect a clean sheet, but I would not be surprised about something based on an existing frame like a 737 variant.
 
User avatar
Revelation
Posts: 23736
Joined: Wed Feb 09, 2005 9:37 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 5:24 pm

Quoting par13del (Reply 71):
just because they have never done it and the US government has never done it does not mean it cannot be done

It cannot be done due to the ideology of the US Congress. Those on the right were able to block the EX-IM Bank due to ideological grounds, and that was merely loan guarantees. Those on the left will argue (correctly) that the USG already provides enough corporate welfare. There's no way we're going to see the US Congress vote to bankroll Boeing's R&D unless Boeing was on the verge of insolvency (just like the USG is, sigh...).
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
 
fcogafa
Posts: 1246
Joined: Fri May 16, 2008 4:37 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 5:35 pm

Ref reply 69, totally incorrect


All KLM flights into LHR are from AMS and have been for many years

[Edited 2016-03-13 10:37:42]
 
User avatar
RayChuang
Posts: 8138
Joined: Sat Jun 24, 2000 7:43 am

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 5:51 pm

I'm not even sure if Boeing wants to build the NMA. Remember, even with potential large orders from AA, DL and UA, that could counts for maybe 350 to 400 planes at most; I'm not sure if the European charter airlines want it, especially now that European charter airlines would rather get the 787-8 or even the A330-800neo for their longer routes and the A321neo for the shorter routes.
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 10:04 pm

Quoting seahawk (Reply 68):
I am not convinced that you can 3 MoM flights can replace 5 A319 flights with similar customer satisfaction on such routes.

I actually see it upgauging an A321-flight or an existing 752 flight or being one of the frequencies of a 10+/day route. 5 A319s to 3 MoMs would be unlikely for the reasons you mention. Look at what TK does with their 738s/739s/A320/A321s and matching the exact capacity to the exact route and wouldn't they like another option that is slightly larger. I think so.

Quoting mjoelnir (Reply 70):
I think Boeing does not have the money to start a MoM or a 737 MAD MAX. The coffers are empty

Where do you get that from? 10 years ago about when they launched the 787 they had half the orders, half the cash, half the revenue and half the stock price they do now (that is from memory).

They can always borrow; they have a well capitalized balance sheet and an excellent bond rating.

tortugamon
 
sv11
Posts: 221
Joined: Tue Jun 01, 1999 6:26 am

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 11:23 pm

How much will a new design cost? Assuming BA can sell 1000 units and dev cost is $10 Bn, comes to $10Mn/aircraft. They can use the fuselage and systems for a 737 replacement in future. Wonder if they will do Al fuselage/composite wing like 777 or keep it all Aluminum. Size of 757-200/300 with range 5000 nautical miles.

sv11
 
mjoelnir
Posts: 9391
Joined: Sun Feb 03, 2013 11:06 pm

RE: New 757 Replacement NMA Information - Part 5

Sun Mar 13, 2016 11:38 pm

Quoting tortugamon (Reply 77):
Where do you get that from?

Looking at the annual accounts. There are no reserves. The Equity is less than 9 billions, everything else is on loan. Also the 28.5 billions deferred production cost, it is written as inventory and is on loan. So when the 787 starts to make money that is were it goes, filling in 28,5 billion not producing free cash. The cash you are talking about is on loan, to be repaid some day. That is the reason Boeing is cutting cost. Empty coffers.
 
KD5MDK
Posts: 831
Joined: Wed Mar 13, 2013 4:05 am

RE: New 757 Replacement NMA Information - Part 5

Mon Mar 14, 2016 5:31 am

Quoting dare100em (Reply 46):

Exactly. By the logic [to bring in profits with just a few hundret sales] every investment has to be judget by the medium-term sales of the first, say 10, years. Neither Boeing nor Airbus could ever start a new typ again based on that. If you follow this the future can only bring re-engining of existing typs with absolute minor chances.

This seems like an entirely plausible outcome to me. A world where the aircraft available are:
A320neo series (most sales A321)
A330neo series
A350 series
B737MAX
787 series
77X series
all getting upgraded engines every 10 years and minor adjustments, but no new models launched until 2035 or later.
 
User avatar
seahawk
Posts: 9627
Joined: Fri May 27, 2005 1:29 am

RE: New 757 Replacement NMA Information - Part 5

Mon Mar 14, 2016 5:55 am

Quoting tortugamon (Reply 77):
I actually see it upgauging an A321-flight or an existing 752 flight or being one of the frequencies of a 10+/day route. 5 A319s to 3 MoMs would be unlikely for the reasons you mention. Look at what TK does with their 738s/739s/A320/A321s and matching the exact capacity to the exact route and wouldn't they like another option that is slightly larger. I think so.

Turkish is one of the airlines who would probably by 100+ of the plane as it would allow them many interesting options in their network. I am also sure that the big US airlines would be buying it in huge numbers. In fact I think nearly every major airline would be buying it. The problem is that so far nobody is building it and getting 5000nm range with a full payload and being competitive at routes around 1500nm is a challenge. I am sure a challenge Boeing´s engineers will solve with excellence.
 
barney captain
Posts: 2332
Joined: Tue Nov 06, 2001 5:47 pm

RE: New 757 Replacement NMA Information - Part 5

Mon Mar 14, 2016 7:35 am

It's too bad very few have an opinion about this NSA/MOM 

Seriously though, some very well thought out viewpoints and some nicely stated arguments.

I just hope they build it before I retire!
Southeast Of Disorder
 
dare100em
Posts: 278
Joined: Tue Dec 23, 2014 9:31 am

RE: New 757 Replacement NMA Information - Part 5

Mon Mar 14, 2016 9:29 am

Quoting KD5MDK (Reply 80):
This seems like an entirely plausible outcome to me. A world where the aircraft available are:
A320neo series (most sales A321)
A330neo series
A350 series
B737MAX
787 series
77X series
all getting upgraded engines every 10 years and minor adjustments, but no new models launched until 2035 or later.

If that really will be the case [I doubt it] COMAC will be a really big player in 2035 [wich will happen eventually anyway].

[Edited 2016-03-14 02:34:38]
 
Amiga500
Posts: 2645
Joined: Tue Mar 03, 2015 8:22 am

RE: New 757 Replacement NMA Information - Part 5

Mon Mar 14, 2016 10:25 am

Quoting KD5MDK (Reply 80):
This seems like an entirely plausible outcome to me. A world where the aircraft available are:
A320neo series (most sales A321)
A330neo series
A350 series
B737MAX
787 series
77X series
all getting upgraded engines every 10 years and minor adjustments, but no new models launched until 2035 or later.

Problem with that being the max is gonna really struggle to take another engine (assuming ever increasing fan diameter and bypass ratio for improved sfc).


Boeing need to re-baseline their single aisle. Yes, its going to cost in the short term, but it's something they need to do* to avoid future market irrelevance.


*not now, they'll survive on the -8 sales for a good 5 years. But by 2020 or so, they'll really need to think about a NSR launch - probably centred around the -9 space.
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Mon Mar 14, 2016 10:43 pm

Quoting mjoelnir (Reply 79):
Looking at the annual accounts. There are no reserves.

Honestly I am wondering if you and are looking at the same set of financials.

Quoting mjoelnir (Reply 79):
The Equity is less than 9 billions, everything else is on loan.

Do you get that Boeing has been generated positive free cash flow of $6-7 Billion each year for quite a few years now? And that they are returning $3.5-$8.5 Billion to shareholders each year with stock buybacks and dividends? Those type of activities reduce cash and equity then if you just kept it. But it would be an idle asset on Boeing's books as they do not need the cash. Hell they could pay for the whole 77X program by suspending dividend and buyback for just 1 year.

Quoting mjoelnir (Reply 79):
Empty coffers.

Are you picturing some Scrooge McDuck vault of cash somewhere? Boeing could get Billion in loans if they needed it they have a great credit rating and high enough liquidity with a positive 1.24 current ratio and a ~$500 Billion backlog that does not show up as an asset.

Quoting seahawk (Reply 81):
Turkish is one of the airlines who would probably by 100+ of the plane as it would allow them many interesting options in their network. I am also sure that the big US airlines would be buying it in huge numbers. In fact I think nearly every major airline would be buying it. The problem is that so far nobody is building it and getting 5000nm range with a full payload and being competitive at routes around 1500nm is a challenge. I am sure a challenge Boeing´s engineers will solve with excellence.

Yep me too. Hope it happens if only for a change of pace with these guys. It will be good to have another type flying.

tortugamon
 
mjoelnir
Posts: 9391
Joined: Sun Feb 03, 2013 11:06 pm

RE: New 757 Replacement NMA Information - Part 5

Mon Mar 14, 2016 11:40 pm

Quoting tortugamon (Reply 85):
Do you get that Boeing has been generated positive free cash flow of $6-7 Billion each year for quite a few years now? And that they are returning $3.5-$8.5 Billion to shareholders each year with stock buybacks and dividends? Those type of activities reduce cash and equity then if you just kept it. But it would be an idle asset on Boeing's books as they do not need the cash. Hell they could pay for the whole 77X program by suspending dividend and buyback for just 1 year.

Yes and build at the same time a big black hole. In the inventories of the 2014 annual accounts is a big nothing. 25 billions of USD that are not there in reality, called deferred production cost. The work of the 787 program will be to fill that hole, because the "free cash" was taken out beforehand leaving in the coffers a huge IOU. 2015 this big nothing producing the "free cash" has grown to 28.5 billion. What does not seem to enter your expert mode in financial statements is that this black hole is serious, it will not disappear by itself, it has to be filled and the earnings needed to fill it have to come from somewhere.
This big black hole, the IOU called deferred production cost, is balanced by an equity of less than 9 billion USD. This money loaned from the black hole has not been used to build reserves, than you would see a much higher equity, but has been used on bonuses, stock buybacks and dividends. That is why I say the coffers are empty, they have been used up and Boeing is now living from hand into mouth.
 
roseflyer
Posts: 9602
Joined: Fri Feb 13, 2004 9:34 am

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 1:16 am

Quoting tortugamon (Reply 85):
Quoting mjoelnir (Reply 79):
The Equity is less than 9 billions, everything else is on loan.

Do you get that Boeing has been generated positive free cash flow of $6-7 Billion each year for quite a few years now? And that they are returning $3.5-$8.5 Billion to shareholders each year with stock buybacks and dividends? Those type of activities reduce cash and equity then if you just kept it. But it would be an idle asset on Boeing's books as they do not need the cash. Hell they could pay for the whole 77X program by suspending dividend and buyback for just 1 year.

Tortugamon, you can't argue with him about how much he detests program accounting. In another thread about cost reduction, he repeated his opinion about program accounting dozens of times. There are some who think it is unfair and biased to spread development costs over the entire forecast production run. While the 787 does have significant deferred costs, that deferred cost could be written off in a few years even if the 787 doesn't achieve profit projections, since Boeing does have a strong balance sheet and profit margins.

So yes 787 deferred costs are high, MAX development is taking cash, 777x development is taking cash, which is resulting in some trepidation about putting a significant amount of money into development. That may result in a more cautious approach in the middle of the market, but no the coffers are not empty and Boeing is not living from hand into mouth. With that said I won't even try to refute him since he is going to repeat his opinion about deferred production costs relentlessly. He is right that having deferred production costs on the 787 along with development work on the 737MAX and 777X is probably going to make the board more conservative when it comes to approving a new program. That doesn't mean that they will not do it, just that it will have to be a very careful and well thought out business model with a number of airlines committing to it.

[Edited 2016-03-14 18:26:11]
If you have never designed an airplane part before, let the real designers do the work!
 
User avatar
Matt6461
Posts: 2956
Joined: Wed Oct 16, 2013 9:36 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 1:39 am

Quoting roseflyer (Reply 87):
Tortugamon, you can't argue with him about how much he detests program accounting.

Second this. I think he believes that Boeing owes somebody $28.5bn in cash or something. Incoherence all around. Engagement is useless.
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 4:24 am

Quoting mjoelnir (Reply 86):
The work of the 787 program will be to fill that hole, because the "free cash" was taken out beforehand leaving in the coffers a huge IOU. 2015 this big nothing producing the "free cash" has grown to 28.5 billion.

When the program makes profits those profits will be offset by that so-called IOU reducing taxes. You level out the profit on a P&L by debiting this account...this is not a cash flow item. Its purely financial reporting. I really thought you had a good handle on this stuff mjoelnir until now.

Quoting roseflyer (Reply 87):
Tortugamon, you can't argue with him about how much he detests program accounting. In another thread about cost reduction, he repeated his opinion about program accounting dozens of times.

Well said and reasoned. Surely its a hill to climb and it will impair earnings for a bit, but again, that is kinda the idea.

Quoting Matt6461 (Reply 88):
Second this. I think he believes that Boeing owes somebody $28.5bn in cash or something

Yeah I keep thinking there is some magic genie looking for a check. When its just a documentation item and the cash flow and the health of the overall balance sheet that is really what is important to track to determine whether or not they can finance another program.

The company has the biggest backlog it has ever had while delivering more aircraft than any OEM has ever had while delivering crazy high cash flows....and the coffers are empty.  

tortugamon
 
User avatar
Boeing778X
Posts: 3268
Joined: Sun Nov 17, 2013 7:55 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 4:43 am

Quoting Amiga500 (Reply 84):
Problem with that being the max is gonna really struggle to take another engine (assuming ever increasing fan diameter and bypass ratio for improved sfc).

Boeing need to re-baseline their single aisle. Yes, its going to cost in the short term, but it's something they need to do* to avoid future market irrelevance.

And this is the issue I have with a "Mad-MAX" idea. It won't do what the 757 did and it probably wouldn't do what the A321neo or possible A322 could do.

It would be inferior right off the bat.

And then 8-10 years from now, we're going to be having this same discussion when Boeing really needs a new aircraft after having spent $10B or so developing the Mad-MAX, and would have to spend another $15B or so to develop a new type.
The only Boeing narrowbody product that may be selling "well" at that time would be the MAX 8, but in that time frame, Airbus' narrowbody market share would have increased from roughly 60% to 80% (an educated guess), because here within 5-7 years, those first NGs might actually be looked at for replacement. What are they going to be replaced with?

Nevertheless, the MAX 8 is a solid product for the time being, so at least Boeing has that going for them.

A cleansheet 757 size aircraft is indeed an expensive prospect, there's no denying that. However, a 737 "Mad-MAX" is going to cost more in the long run.

You'll have a brand new, competitive frame that'll likely get more or less 1500 orders throughout it's life, that could then be derived into a 737 replacement 8-10 years from now, when some technology has matured further to be 20-30% more efficient than the MAX (again, an educated guess.)

So Boeing better make some good decisions. The A320neo is ahead, pricing of the A330neo could be attractive over the 787 and Leahy will not shut up about how much better the A350 is over the 777/777X, ESPECIALLY if Airbus launches the A350-8000, which is a concept that I think is starting to be taken rather seriously in the market now!

In an article written a few weeks ago about the MoM, it was stated is that the A321neo has filled a bit of the market the MoM would supposedly fill, but not all of it. What if the MoM were a little bigger than the 757-200?

[Edited 2016-03-14 22:00:02]
United Airlines: $#!ttin' On Everyone Since 1931
 
User avatar
seahawk
Posts: 9627
Joined: Fri May 27, 2005 1:29 am

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 6:25 am

Imho there are lines of thought.

1. go with the MadMax

It means less developments costs but will also end with a product full of compromises. On the positive side it also means that you could probably add parts of the development to the MAX. Especially the new MLG could open the chance of another new engine to be installed by 2027.

2. do the new design

It means less costs but it allows you to do a design without any compromises. On the negative site it is likely that the smallest version will even be in competition to the 8MAX, it makes the business case for the NSA more difficult because both programms would see some serious overlap in the market space. If you use it as the basis for the NSA you allow Airbus a good look at what they need to achieve when they replace the A320. (or do a big modernisation)


and then there are the risks for both options

- Airbus could be faster to the market with a A322
- Airbus will be able to be very aggressive on price challenging from above with the A330NEO and from below with the A321NEO
- will airlines be up for single aisle long haul?

And there is another thing that needs to be considered. The A321 is selling very well, but the difference between it and the A320 is also much bigger than between the 737-8 and 737-9. So in the end it might be the small difference between the 8 and 9 that is hurting the 9 and not the A321. I personally think Boeing should know quite well why some sales campaigns did not work out for them and with that knowledge it might be easier to decide the next step.

For example if airlines did go for the A320 series because they wanted to use containers in the cargo hold, the MadMax would not change the outcome. If Airlines did go Airbus because they offered lower prices, neither the MadMax nor the MoM are probably going to change that.

Imho the best option is to sit tight for 5-7 years and then do the NSA family to be ready by the late 2020ies early 2030ies. Around that time the improved engines alone will make sure that the efficiency gain is sufficient for a new program.
 
barney captain
Posts: 2332
Joined: Tue Nov 06, 2001 5:47 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 8:02 am

seahawk -

Perfect synopsis - thank you.
Southeast Of Disorder
 
mjoelnir
Posts: 9391
Joined: Sun Feb 03, 2013 11:06 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 8:14 am

Quoting roseflyer (Reply 87):
Tortugamon, you can't argue with him about how much he detests program accounting.

What I am talking about has very little to do with program accounting, rather with Boeing spending the extra early income provided from program accounting straight away.
So all the same if you use normal accounting or program accounting, the extra money is gone.
 
mjoelnir
Posts: 9391
Joined: Sun Feb 03, 2013 11:06 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 8:18 am

Quoting Matt6461 (Reply 88):
Second this. I think he believes that Boeing owes somebody $28.5bn in cash or something. Incoherence all around. Engagement is useless

That is exactly that, Boeing does owe 28,5 billion in cash they have to put back into the system.
 
User avatar
enzo011
Posts: 1854
Joined: Tue Jun 21, 2011 8:12 am

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 8:20 am

Quoting tortugamon (Reply 89):
The company has the biggest backlog it has ever had while delivering more aircraft than any OEM has ever had while delivering crazy high cash flows....and the coffers are empty.

What would a record amount of deliveries help if each delivery loses the company money? You are just losing money at a record pace, right?

Quoting tortugamon (Reply 89):
Yeah I keep thinking there is some magic genie looking for a check. When its just a documentation item and the cash flow and the health of the overall balance sheet that is really what is important to track to determine whether or not they can finance another program.

If the deferred cost is nothing more than documentation and it doesn't really mean much in terms of the financial health of the company, which it seems to be what you are trying to portray, why include it at all? Now I don't think it is all doom and gloom as other do regarding the financial position of Boeing, I also don't believe it is as good as you seem to think it is either. The warning signs has been there, since the CEO said that there will be no more moonshots. I don't think he was looking at technology only, more along the lines of financially we will not spend billions on programs for the foreseeable future. Lets not forget that Boeing still has programs it is working on, yet they are looking at reducing staff and costs. Seems weird for a company to do that if it is all rosy and fine.

What does this have to do with the 757 replacement? Well the financial health and ability of a company to launch a new program is relevant to the discussions of what the 757 replacement will look like.
 
User avatar
KarelXWB
Topic Author
Posts: 26968
Joined: Sun Jul 15, 2012 6:13 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 9:21 am

Quoting Boeing778X (Reply 90):
So Boeing better make some good decisions.

You're saying that like it's an easy thing to do. How do you tell the board to make a $15 billion investment in current market conditions?
What we leave behind is not as important as how we've lived.
 
WIederling
Posts: 9291
Joined: Sun Sep 13, 2015 2:15 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 9:27 am

Quoting RIX (Reply 8):

The A320 was a major tech step up in how systems work and interact.

The basic A320 has all the prerequisites of todays new designs
and that aid in their efficiency gains.

With that kind of framework every detail can be upgraded to keep current.
Murphy is an optimist
 
mjoelnir
Posts: 9391
Joined: Sun Feb 03, 2013 11:06 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 9:57 am

Quoting roseflyer (Reply 87):
Quoting Matt6461 (Reply 88):
Quoting tortugamon (Reply 89):

Do you really think money comes out of thin air? You use program accounting and get a profit when unit cost account would give you a lower profit or loss. The deferred production cost is a cash loan, to be repaid.

The assets can only cover the liabilities, because the program cost are declared as an asset in inventories.

I do not expect Boeing to go bust, but do well in the future. IMO the main point is that Boeing would have problems to fiance and additional program like the MoM or 737 MAD MAX.

[Edited 2016-03-15 03:27:46]
 
User avatar
scbriml
Posts: 18974
Joined: Wed Jul 02, 2003 10:37 pm

RE: New 757 Replacement NMA Information - Part 5

Tue Mar 15, 2016 9:59 am

Quoting Enzo011 (Reply 95):
If the deferred cost is nothing more than documentation and it doesn't really mean much in terms of the financial health of the company, which it seems to be what you are trying to portray, why include it at all?

Can you imagine the impact on share price and, more importantly, executive bonuses if Boeing dealt with that "documentation" and wrote off all the deferred costs this year? Wall St. would go into melt-down.   
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.

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