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DocLightning
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:09 pm

A few years back, I posted that with the 787 development overruns and delays that there was NO WAY that the program would turn a net profit within a reasonable timescale. I was told I was ridiculous and over-dramatic.

I also predicted the year and quarter that first flight would occur, which was almost a year beyond anyone else's prediction. I was pooh-poohed and then when I was right, I was told it was dumb luck.

My general view of the 787 program is vindicated. The 787 program can be most characterized by the spectacular and almost unprecedented incompetence of the BCA management team.

http://www.seattletimes.com/business...says-787-profit-goal-unachievable/

Quote:
But Ron Epstein, an analyst at Bank of America, estimated that cash flowing from the Dreamliner by 2022 will be $14 billion rather than the $29 billion assumed in Boeing’s outlook.

To reach that number and eliminate the almost $29 billion in deferred production costs already accumulated by the 787 program, Boeing would need to generate a profit of $30 million for each of the 907 Dreamliners it projects making for accounting purposes, Epstein wrote.

That profit goal is “unachievable,” he said. Generating $16 million in profit per plane was more realistic, Epstein wrote.

At $16M profit per aircraft, it would take just under 2,000 frames to make up the $29Bn sunk into the program. That doesn't take interest and other accounting practices into account.

For me, this is just another example of the way that the American executive class is destroying American manufacturing.

[Edited 2016-04-21 09:00:17]
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
art
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:19 pm

Quoting DocLightning (Thread starter):
At $16M profit per aircraft, it would take just under 4,000 frames to make up the $29Bn sunk into the program.

Shouldn't that say just under 2,000 frames? $16 million x 2,000 = $32 billion.
 
BlatantEcho
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:33 pm

Who is going to take you seriously when you add filler like this at the end of your post:

"r me, this is just another example of the way that the American executive class is destroying American manufacturing."


Present the facts and let people make their own conclusions instead of trying to force feed your opinion.

Was a good post until you added that little dig.
Want me to blindly cast blame on the overpaid Union workers to balance out your view?

See where this leads us.....

--
Personally, I can't imagine it matters anymore. Costs are sunk, they are building planes and will gain efficiency.

This stuff is complicated and it's easy to cast stones in hindsight.
Big companies place big bets. Sometimes it works, sometimes it doesn't.
The best ones adapt and keep moving forward - just as Boeing is doing.

If they didn't do the 787, then what instead?
 
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MrHMSH
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:35 pm

Quoting art (Reply 1):
Shouldn't that say just under 2,000 frames? $16 million x 2,000 = $32 billion.

That sounds more accurate to me. I think if it is the case that ~2000 sales would see an overall profit on the program, then it's not a hugely unrealistic one, another 900 or so sales from now on, I think the 78X has much more to give. I do wonder how long before Boeing decides that the 787 needs any kind of upgrade (and further investment), but I would wager it would be after sales reach 2000. The consolation I suppose is that the 787 is and will be a success for the airlines.

That said, the A330neo has the potential to drive that breakeven number up in the short to medium term.

[Edited 2016-04-21 08:36:43]
 
parapente
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:37 pm

Yes the 787 is a financial mess - this is well known.But I believe that the 'sell' recommendation and the share price fall are to do with wider matters than just that.You only have to look at the whole aircraft portfolio,the defense cuts and the way that private industry is coming into space flight to see the bigger picture.Not a happy picture.
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:37 pm

Quoting DocLightning (Thread starter):
My general view of the 787 program is vindicated. The 787 program can be most characterized by the spectacular and almost unprecedented incompetence of the BCA management team.

Agreed. Same with A380. Neat airplanes but to "charge off" development costs is not relevant to the decision analysis.

At best, these cost overruns were human capital development programs.

More or less, the contradictions published in Airbus and Boeing press releases over time confirm that leaders were learning how to complete a large program. They were incurring billions in tuition fees to build the skillsets they originally claimed they had.
 
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kelvin933
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:39 pm

Quoting art (Reply 1):
Shouldn't that say just under 2,000 frames? $16 million x 2,000 = $32 billion.

There are already 400 frames delivered which left 29bn in deferred production costs, so at least 2500 needed to recover the 32bn in deferred costs if BCA can get 16m in average profit going forwards.
“Nations have no permanent friends or allies, they only have permanent interests.”
 
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TVNWZ
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:42 pm

Quoting BlatantEcho (Reply 2):
This stuff is complicated and it's easy to cast stones in hindsight.
Big companies place big bets. Sometimes it works, sometimes it doesn't.
The best ones adapt and keep moving forward - just as Boeing is doing.

I believe Doc's point is he was casting stones in foresight. Lot harder. And be right.
 
art
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 3:58 pm

Quoting TVNWZ (Reply 7):
I believe Doc's point is he was casting stones in foresight. Lot harder. And be right.

Yes, I remember when the 787 was rolled out and was going to be flying 3 months later (IIRC). Was it Captain X who said nonsense, it's going to be months late. Much foaming at the mouth when he said that. Then when he said it would be delayed by more than a year the rage was uncontained. He was right and so was Doc, by the sound of things.
 
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DocLightning
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 4:11 pm

Quoting BlatantEcho (Reply 2):

"r me, this is just another example of the way that the American executive class is destroying American manufacturing."

We have seen U.S. manufacturing moved offshore. We have seen Boeing lay off 4,000 people because they can't balance their books and think that employees are a cost, rather than an investment. We have seen a decimation of the U.S. manufacturing sector.

So forgive me if I can't take you seriously.

Quoting art (Reply 1):

Shouldn't that say just under 2,000 frames? $16 million x 2,000 = $32 billion.

Oops. Fixed my typo.

Quoting kelvin933 (Reply 6):

There are already 400 frames delivered which left 29bn in deferred production costs, so at least 2500 needed to recover the 32bn in deferred costs if BCA can get 16m in average profit going forwards.

1,063 Boeing 767s have been delivered. 1,384 777s have been delivered. 1,520 747s have been delivered. So the grand total for the 787 program will have to be something truly unprecedented in widebody aircraft to make back the sunk costs.

Quoting BlatantEcho (Reply 2):

If they didn't do the 787, then what instead?

The same airplane without the outsourcing. Use in-house talent and run the program like the 777 was run. The 777 program has been wildly successful. When you think about it, there were two main innovations introduced for the 787: the CFRP primary structure and the electric architecture. The rest of the airplane is reasonably conventional. Similarly, with the 777 the two main innovations were the "paperless" CAD and the FBW system. You could also add onto that: the biggest engines ever built. So it's not as if the 787 was so revolutionary that there was no way to do it the old way.
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"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
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Amiga500
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 4:24 pm

Quoting BlatantEcho (Reply 2):
Who is going to take you seriously when you add filler like this at the end of your post:

"r me, this is just another example of the way that the American executive class is destroying American manufacturing."


Present the facts and let people make their own conclusions instead of trying to force feed your opinion.

Was a good post until you added that little dig.
Want me to blindly cast blame on the overpaid Union workers to balance out your view?

Away and cry me a river (then build a bridge and get over it).


The execs at Boeing have been manipulating the share price and profits to their own personal ends*. The people who suffer for it are the workers.

Funnily enough, its usually inept management from the top that causes the problems, rarely the folks on the ground. You'd have to wonder why people get paid so much for incompetence... probably because they've went to Yale or Harvard and "networked".



*bonus related add-ons
 
bgm
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 4:28 pm

Quoting DocLightning (Reply 9):
The same airplane without the outsourcing. Use in-house talent and run the program like the 777 was run. The 777 program has been wildly successful. When you think about it, there were two main innovations introduced for the 787: the CFRP primary structure and the electric architecture. The rest of the airplane is reasonably conventional. Similarly, with the 777 the two main innovations were the "paperless" CAD and the FBW system. You could also add onto that: the biggest engines ever built. So it's not as if the 787 was so revolutionary that there was no way to do it the old way.

Indeed. Boeing were penny-wise, pound-foolish with their outsourcing, and it has cost them dearly. It's a good thing that the 787 is not their only source of income, so it's not all doom and gloom.  

Aside from the poorly thought out cabin width, the 787 is a great airplane that will serve airlines well.
████ ███ █ ███████ ██ █ █████ ██ ████ [redacted]
 
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BoeingVista
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 4:39 pm

Quoting DocLightning (Thread starter):
A few years back, I posted that with the 787 development overruns and delays that there was NO WAY that the program would turn a net profit within a reasonable timescale. I was told I was ridiculous and over-dramatic.

You were right, I agreed with you then and still do.

Quoting DocLightning (Thread starter):
For me, this is just another example of the way that the American executive class is destroying American manufacturing.

Huge, massive management failures and a prime example of the looter/taker style of mentality. Boeing allowed itself to be driven into building PR designed wish list of an aircraft because.

a) The 767 was being spanked by the A330
b) The Sonic Cruiser was laughed out of existance

OK I've finished, lets get on with the denial.
BV
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 5:04 pm

Quoting Amiga500 (Reply 10):
Funnily enough, its usually inept management from the top that causes the problems, rarely the folks on the ground. You'd have to wonder why people get paid so much for incompetence... probably because they've went to Yale or Harvard and "networked".

Mind sharing your own resume? Need to understand how your experience in running a Fortune 500 company translates into these sorts of comments.

I'm ok with just looking at your LinkedIn profile.
B727, B737, B747, B757, B767, B777, B787, DC9/MD80, DC10, MD11
A319, A320, A321, A340 (surprisingly no A330 yet)
L1011
ATR77, CRJ200, CRJ700, E145, E170, E175
 
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DocLightning
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 5:04 pm

Quoting BoeingVista (Reply 12):

Huge, massive management failures and a prime example of the looter/taker style of mentality. Boeing allowed itself to be driven into building PR designed wish list of an aircraft because.

The 787 is a reasonable design. The big failure was introducing a completely new management and construction concept in which primary design was outsourced and there wasn't enough redundancy in suppliers.

Quoting bgm (Reply 11):

Aside from the poorly thought out cabin width, the 787 is a great airplane that will serve airlines well.

I'd argue that the cabin width is a major disservice to passengers, but Boeing doesn't sell airplanes to passengers. They sell airplanes to airlines.

So a 787 that is the same length as a given A350 model holds the same number of passengers in a narrower fuselage. That gives the 787 the advantage.

As for me, I won't be flying in a 9-abreast 787 on any flight longer than a transcon. Ever.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
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ssteve
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 5:25 pm

The outsourcing was such an unmitigated cluster.

Time to bury the idea that you can best manage costs down in a complex program by negotiating more supplier contracts of increasing complexity. Which was plainly such a terrible idea that you have to wonder if management's own loathing of its workforce meant drove them to cut off their nose to spite their face. We'd rather bleed money than share gains with those unions.
 
WIederling
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 5:34 pm

Quoting BoeingVista (Reply 12):
Huge, massive management failures and a prime example of the looter/taker style of mentality. Boeing allowed itself to be driven into building PR designed wish list of an aircraft because.

Cargo Culters emulating Airbus. IMHO they still do not know/understand what distributed design/production is about.
( very obvious when the best idea they come up with is to f* the workforce  
Murphy is an optimist
 
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par13del
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 5:40 pm

So is anyone mentioning the other part of the 787 out-sourcing, mitigating the frequent strikes and their associated cost, the benefits of now having major facilities in a state with lower wage cost, how much of the profits from other programs that benefit from this move will be booked to the 787 debacle?
 
Sooner787
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 5:51 pm

I'll be the first to admit that Boeing pooped in the boots executing the launch of the 787 program,

but I'll also give them credit for applying the hard lessons they learned towards the 777X

program and by all appearances, the MAX program.

I'm confident the 787 will be in production 20 plus years, so they might yet

dig themselves out of that hole   
 
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DocLightning
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 6:04 pm

Quoting ssteve (Reply 15):

Time to bury the idea that you can best manage costs down in a complex program by negotiating more supplier contracts of increasing complexity. Which was plainly such a terrible idea that you have to wonder if management's own loathing of its workforce meant drove them to cut off their nose to spite their face. We'd rather bleed money than share gains with those unions.

It seems more likely to me that they came up with these ideas and then manipulated their predictions in their books to give them the desired amount. Their loathing for their own unions and workforce probably figured into it.
-Doc Lightning-

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Stitch
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 6:07 pm

Quoting DocLightning (Reply 9):
1,063 Boeing 767s have been delivered. 1,384 777s have been delivered. 1,520 747s have been delivered. So the grand total for the 787 program will have to be something truly unprecedented in widebody aircraft to make back the sunk costs.

And yet it might just make it. As a design, the 787 probably has 30 years of usable life and it's in the prime part of the widebody market.

Anyway, if it doesn't pan out Boeing will take the hit and move on. The 747 program almost bankrupted them and they survived, so I think they'll survive the 787, as well.
 
Flighty
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 6:23 pm

IIRC the 747 didn't really make money until the 744. That was the real gravy train of the program.
 
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Finn350
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 6:39 pm

Quoting DocLightning (Reply 9):
1,063 Boeing 767s have been delivered. 1,384 777s have been delivered. 1,520 747s have been delivered. So the grand total for the 787 program will have to be something truly unprecedented in widebody aircraft to make back the sunk costs.

For now, Boeing plans to raise its 787 production rate to 12 per month in 2016 and then to 14 per month by the end of this decade, from 10 per month currently.

At a production of 160 planes a year, it will take around 13 years to produce additional 2,000 frames to recover the deferred production cost. If there is no clean-sheet wide-body in sight before 2030, 787 will probably reach that production quantity, making it the first wide-body to pass 2,000 frames.
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 6:41 pm

Quoting DocLightning (Reply 9):
We have seen U.S. manufacturing moved offshore. We have seen Boeing lay off 4,000 people because they can't balance their books and think that employees are a cost, rather than an investment. We have seen a decimation of the U.S. manufacturing sector

Of course the fact that the reductions are in the management ranks and in areas where there is excess manpower that can not be retrained (engineers to line mechanics), and 50% will be early retirements (based on past cuts) isn't going to sway your perception

Quoting DocLightning (Reply 9):
The same airplane without the outsourcing. Use in-house talent and run the program like the 777 was run.

And how much of the 777 is out sourced wings, fuselage, landing gear.. granted the X is different but there seems to be some faulty vision in your argument

Plus some of the 787 expenses include building/buying the Charleston facility which will have uses after the 787 just as the new 777X wing facility has use beyond the 777X production life.
 
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enilria
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 6:42 pm

Quoting DocLightning (Thread starter):
American executive class

Shouldn't it be "American Executive ClAAss". And if it doesn't have lie flat I'm not using it.
 
Amiga500
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 6:44 pm

Quoting nry (Reply 13):
Mind sharing your own resume? Need to understand how your experience in running a Fortune 500 company translates into these sorts of comments.

I'm ok with just looking at your LinkedIn profile.

Yes, because criticism can only flow down from the top of the ivory tower. Not up from the plebs :rolleyes:
 
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enzo011
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 7:18 pm

Quoting BlatantEcho (Reply 2):
Personally, I can't imagine it matters anymore. Costs are sunk, they are building planes and will gain efficiency.

If only the costs were sunk it would have been easy, like the A380 where production break-even means cash in bank. As we have seen with Boeing, they have reached break-even on a unit basis (each unit produced is costing them less than the income for the unit received), they are still working toward program break-even per unit where the program isn't deferring cost to the future. This should happen this year though and it will slowly but surely start paying back its costs. My guess is there will be a charge on the 787 program, for Boeing's sake the will only need to take one charge and not a few more due to overenthusiastic predictions from management.
 
jacobin777
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 7:20 pm

Quoting DocLightning (Reply 14):
As for me, I won't be flying in a 9-abreast 787 on any flight longer than a transcon. Ever.

Unless you are flying in J or F... 
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hivue
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 7:44 pm

Quoting DocLightning (Thread starter):
At $16M profit per aircraft, it would take just under 2,000 frames to make up the $29Bn sunk into the program.

The 737 has delivered ~9K frames with ~4K on order. Why so pessimistic? After all...

Quoting Stitch (Reply 20):
As a design, the 787 probably has 30 years of usable life and it's in the prime part of the widebody market.
Quoting TVNWZ (Reply 7):
I believe Doc's point is he was casting stones in foresight. Lot harder. And be right.

He predicted, apparently correctly. No one can see into the future. (The Boeing executive suite has proved that.)

Quoting bgm (Reply 11):
It's a good thing that the 787 is not their only source of income,

If it had been, you likely would never have seen a 787.
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frmrCapCadet
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 7:58 pm

B has succeeded beyond any expectations - union busting, 10 digit exec salaries, 3rd world taxes to WA and SC.

back of the envelope: in house design along with outsourcing appropriately, half the cost over runs, half the lost production costs, and about half the delays.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
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Stitch
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 8:00 pm

Quoting frmrCapCadet (Reply 29):
back of the envelope: in house design along with outsourcing appropriately, half the cost over runs, half the lost production costs, and about half the delays.

Sounds about right based on the 777 program.
 
BooDog
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 9:18 pm

...but the knowledge gained in the program so far is being applied to the 777X. If the 787 never happened, the 777X would be destroyed by the A350. Boeing had to develop the 787 technology to stay in the game.
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Stitch
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 9:20 pm

Quoting BooDog (Reply 31):
Boeing had to develop the 787 technology to stay in the game.

Boeing had to develop the 787, regardless of technology, to stay in the game because the 767-300ER and 777-200ER could not longer effectively compete in the largest segment of the widebody market.
 
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RayChuang
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 9:26 pm

I believe that the 787 program will be profitable by 2020. Mostly because Boeing would have phased out production of the less profitable 787-8 in favor of the more profitable 787-9 and 787-10. And even more so because airlines well on their way to emphasize point-to-point, not hub-to-hub service.
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 9:41 pm

Quoting hivue (Reply 28):
The 737 has delivered ~9K frames with ~4K on order. Why so pessimistic? After all...

If your comment is intended to say "Hey, Boeing will deliver 13,000 737's so they can easily deliver 2,000 787's", then I fail to see the relevance of the comment. It is obvious that the 787 and 737 are very dissimilar aircraft. Is it not obvious that they serve very different markets, operate far different mission profiles, and offer a different value proposition to their operators? If my interpretation of your statement is incorrect, I trust you will correct it.

But if it is correct, well, I see this line of reasoning all the time about this and other issues. I don't understand it and I doubt I ever will. Details matter, and this line of reasoning chooses to ignore them.

[Edited 2016-04-21 14:43:22]
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 9:48 pm

Quoting RayChuang (Reply 33):
I believe that the 787 program will be profitable by 2020. Mostly because Boeing would have phased out production of the less profitable 787-8 in favor of the more profitable 787-9 and 787-10. And even more so because airlines well on their way to emphasize point-to-point, not hub-to-hub service.

I feel pretty confident in predicting the 787 program will not be profitable by 2020. $29 billion dollars in four years is an awful lot of ground to cover.

I agree that the program as a whole will be a net benefit to Boeing, when you consider the spares market and the fact it gives them a competitive base on which to build profit for potentially half a century or more. But profitable by 2020? I think not.
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DocLightning
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 9:49 pm

Quoting jacobin777 (Reply 27):

Unless you are flying in J or F... 

Good luck trying to sell me a 9-abreast J or F ticket.  
Quoting hivue (Reply 28):

The 737 has delivered ~9K frames with ~4K on order. Why so pessimistic? After all...

Because that's a narrowbody. The market for those is far larger.
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scotron11
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 10:18 pm

Quoting zckls04 (Reply 35):

I feel pretty confident in predicting the 787 program will not be profitable by 2020. $29 billion dollars in four years is an awful lot of ground to cover.

I agree that the program as a whole will be a net benefit to Boeing, when you consider the spares market and the fact it gives them a competitive base on which to build profit for potentially half a century or more. But profitable by 2020? I think not.

Based on their accounting block of 1300 frames of which over 200 remain to be sold! Definitely no profits even through 2022....unless Boeing take an almighty charge....which I cannot imagine they would want to do.
 
hivue
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 10:22 pm

Quoting ContnlEliteCMH (Reply 34):
It is obvious that the 787 and 737 are very dissimilar aircraft. Is it not obvious that they serve very different markets, operate far different mission profiles, and offer a different value proposition to their operators?

How "obvious" was it in 1970 that Boeing would sell 13,000 737s?

Quoting ContnlEliteCMH (Reply 34):
If my interpretation of your statement is incorrect, I trust you will correct it.

OK. Correct it to read "Hey, Boeing will deliver 13,000 737's so it's a tad premature to completely rule out their delivering 2,000 787's."
"You're sitting. In a chair. In the SKY!!" ~ Louis C.K.
 
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DocLightning
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 10:37 pm

Quoting zckls04 (Reply 35):

I agree that the program as a whole will be a net benefit to Boeing, when you consider the spares market and the fact it gives them a competitive base on which to build profit for potentially half a century or more. But profitable by 2020? I think not.

What it gives them is experience working with CFRP structures and with bleedless systems designs. While the bleedless architecture didn't turn out to be the panacea that Boeing hoped it would, I suspect that future designs may have a similar architecture that is more optimized.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
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seabosdca
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 10:37 pm

Quoting BlatantEcho (Reply 2):
Personally, I can't imagine it matters anymore. Costs are sunk, they are building planes and will gain efficiency.

From a cash-accounting, operational standpoint this is correct.

But Boeing (like any other company of any more than the smallest size) is not using cash accounting. The big issue is that Boeing has to decide whether to recognize some of the spending they have already done as a loss, or keep holding out on the basis that eventually they will make that money back. Right now they are forecasting that they will make it all back by 1,300 frames, which seems unlikely. But over 2,000+ frames it's possible, particularly if there is no other new clean-sheet widebody for the next 20 years or so.

This matters a whole lot if you are an investor trying to value shares based on expected future profits.

Quoting art (Reply 8):
Yes, I remember when the 787 was rolled out and was going to be flying 3 months later (IIRC). Was it Captain X who said nonsense, it's going to be months late. Much foaming at the mouth when he said that. Then when he said it would be delayed by more than a year the rage was uncontained.

But there was so much incorrect doomsaying as well. DocLightning can correctly crow that he got the first flight date right, and he never predicted outright doom for the program. But CaptainX eventually said the thing would never fly and no planes would ever be delivered. That was always obvious baloney. The plane was always a decent product; it was the production system Boeing tried to put in place that was the total disaster.

Quoting DocLightning (Reply 14):
As for me, I won't be flying in a 9-abreast 787 on any flight longer than a transcon. Ever.

You live in San Francisco. You travel a lot. I'll bet a bottle of scotch that at some point in the next decade you'll be in Y or Y+ on a UA 787.

Quoting ssteve (Reply 15):
Which was plainly such a terrible idea that you have to wonder if management's own loathing of its workforce meant drove them to cut off their nose to spite their face.

      During the McNerney era, BCA management decisions often seemed like they were driven more by anti-union rage than business logic. I hope that has changed. I think maybe the SPEEA contract is a positive sign in that regard.

Quoting RayChuang (Reply 33):
I believe that the 787 program will be profitable by 2020.

Individual 787 frames will be profitable long before then. There is absolutely no way the program as a whole will be profitable by then. That would require something like $70m profit per frame delivered between now and then. Not happening.

[Edited 2016-04-21 15:38:28]
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 10:43 pm

Quoting seabosdca (Reply 40):

You live in San Francisco. You travel a lot. I'll bet a bottle of scotch that at some point in the next decade you'll be in Y or Y+ on a UA 787.

Not on anything longer than a transcon. I will pay extra to fly a different airline with different equipment before I cross an ocean in a 9-abreast Y 787. Now, if UA introduces a true premium-Y product with 7-or 8-abreast seating, I'll happily sit in that cabin. I've flown on one of JL's 8-abreast 787s and that was a lovely experience.

Oh, and I like Johnny Walker Black.  
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
BlatantEcho
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 11:37 pm

Shrug, I'm just a guy who manages a multimillion dollar business importing and assembling product and then exporting it domestically and abroad. Yeah, I guess I don't know anything about management for something like this.

Anyway.

It's just funny to hear people say 'the managers are exporting jobs and expertise'. Sure they are, why wouldn't they?
They made a decision to build the 787 differently.

It didn't work out, but that ship sailed.
So they adjust and move on.

You can call it incompetence, but it just makes you look silly.
Using the 787 as a platform to rant against globalization and offshoring just shows ignorance, not experience.
Yes, it's great you called this disaster of a program, but you weren't asked or employed by Boeing to help... So it doens't really matter

--
It's complicated, building planes, supply chains, managing labor.
Sometimes you are right, sometimes you are wrong.

Good companies fail all the time, learn, and move on.
Hindsight is 20/20 - but they made a call and stuck with it.

I own 100% of the shares of the corporation I work at, so, I don't have shareholders breathing down my neck, but I still have to make decisions and fix it when I'm wrong. That's what Boeing will do as well, it's not personal, it's business.

(Hence why it's so grating to see people try to use this as a rallying point for non-related issues... Like offshoring)
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Thu Apr 21, 2016 11:50 pm

Quoting DocLightning (Reply 14):
The 787 is a reasonable design. The big failure was introducing a completely new management and construction concept in which primary design was outsourced and there wasn't enough redundancy in suppliers.

No it wasn't, it was not structurally sound and could not be built in the time and to the budget allowed, this is clearly self evident. Also if the design was reasonable why (according to Leeham) is only 40% of the parts carried over to the -9 and why is the -9 bult as a fundementally different aircraft.
BV
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Fri Apr 22, 2016 12:03 am

I believe the 787-9 is different than the 787-8 because I think the 787-9 structural design became the basis for the 787-10, the first components are already under construction for the first prototype, MSN 528, which will fly in 2017.

By the way, I expect the range of the 787-10 to be higher than the current 6,850 nautical miles. I wouldn't be surprised by 2020 Boeing offers a 787-10 with a range of around 7,100 nautical miles, which makes it a perfect replacement for the many 777-200 and 777-200ER models built over the years.
 
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Fri Apr 22, 2016 12:18 am

Quoting DocLightning (Thread starter):
A few years back, I posted that with the 787 development overruns and delays that there was NO WAY that the program would turn a net profit within a reasonable timescale. I was told I was ridiculous and over-dramatic.

The Doctor that was flamed to oblivion... remember that. (You were the UDO version of the A380)

Quoting DocLightning (Thread starter):
For me, this is just another example of the way that the American executive class is destroying American manufacturing.

Amen.

Quoting BlatantEcho (Reply 2):
Present the facts and let people make their own conclusions instead of trying to force feed your opinion.

This is a opinion forum. Live with it.

Quoting art (Reply 8):
Was it Captain X who said nonsense, it's going to be months late. Much foaming at the mouth when he said that. Then when he said it would be delayed by more than a year the rage was uncontained. He was right and so was Doc, by the sound of things.
Quoting seabosdca (Reply 40):
But CaptainX eventually said the thing would never fly and no planes would ever be delivered. That was always obvious baloney.

Captain X had some insider info. He was really angered by the childish remarks towards his predictions.... and as a lot of very valuable member sadly he is gone....

No way the 787 will be a decent program if anything it will be a long suffering wound that will heal with a huge scar.

To pharaprase..flame away flamers!!!

Shame because the 787 is such a nice aircraft after all.

TRB
The best seat in a Plane is the Jumpseat.
 
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Stitch
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Fri Apr 22, 2016 12:25 am

Quoting TheRedBAron (Reply 45):
Captain X had some insider info. He was really angered by the childish remarks towards his predictions....

Considering one of his predictions was that ZA001 would shatter to pieces shortly after her initial departure off Runway 34L at Paine Field and rain CFRP across Possession Sound...  
 
delta88
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Fri Apr 22, 2016 12:46 am

Boeing may never recoup all the money spent on the 787, but it will be a successful aircraft, which will keep airlines and private operators coming for more. Without going into Boeing VS Airbus, Airbus will never recoup the billions spent on the A380, and unfortuantely customers arent coming back for more and more( Emirates is the exception, but one customer cant support and aircraft). The 787-10 will shortly(this year or early next year), begin flight testing and is a larger aircraft than the -8 or -9. As long as the customers are happy, more than likely they arent too concerned about recouping every dime they spent. Many people forget they also have a space program and many contracts with the government and other contractors. As far as Boeing seems concerned, as long as they make money in general and sell aircraft and parts, then they seem happy with it.
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Fri Apr 22, 2016 1:37 am

Quoting BlatantEcho (Reply 42):
You can call it incompetence, but it just makes you look silly.
Using the 787 as a platform to rant against globalization and offshoring just shows ignorance, not experience.
Yes, it's great you called this disaster of a program, but you weren't asked or employed by Boeing to help... So it doens't really matter

I'd say being three years late on your first delivery doesn't exactly qualify as competence.

Quoting BoeingVista (Reply 43):
No it wasn't, it was not structurally sound and could not be built in the time and to the budget allowed, this is clearly self evident.

I'm not aware of major structural problems. There were some minor structural problems, yes. The big delays stemmed from the systems, not from the structure. That said, the first few frames were rushed and so because of improper manufacturing, they WERE structurally unsound.

Here's a good run-down of the Dreamliner issues through 3/14.

For all the minimizing that A.net posters did, this is the most disastrous program introduction I can think of since the dawn of the jet age. Not even the 747's rocky intro holds a candle to the supergiant star of a stuff-up that is the 787 program. http://www.ibtimes.com/boeing-787-co...er-cracks-discovered-wings-1560491

Heck, Boeing even outdid Airbus on their screw-ups with the A380 and that's really saying something.

Quoting BoeingVista (Reply 43):
Also if the design was reasonable why (according to Leeham) is only 40% of the parts carried over to the -9 and why is the -9 bult as a fundementally different aircraft.

Is that actually true? I can't find any such information.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
solarflyer22
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Analyst: 787 Profit Goal Is "unachievable" Part 1

Fri Apr 22, 2016 2:39 am

Quoting ssteve (Reply 15):
The outsourcing was such an unmitigated cluster.

I agree. It has to go down as one of the biggest mistakes Boeing has ever made. It was supposed to save money but it ended up costing more, lower quality parts and taking a lot more time. I hope whoever suggested it was fired.

Quoting DocLightning (Thread starter):
For me, this is just another example of the way that the American executive class is destroying American manufacturing.

I see your point and agree. I would point out that where American Executives get it right, manufacturing works in the US. If you look at Tesla (granted Elon Musk is South African) and Space X, they both produce high quality in high labor market areas at good prices. Even the new Acura NSX, a marvelously designed car by Japan, is manufactured in Ohio at a custom built small footage factory.

The product and project management has to be done properly. There is nothing real complex about it but the devil is in the details.

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