JayinKitsap
Posts: 1722
Joined: Sat Nov 26, 2005 9:55 am

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Thu Oct 24, 2019 5:08 am

SEPilot wrote:
When you are talking about a product that costs upwards of $100,000,000 and takes upwards of two years to deliver from when it is ordered you cannot afford to build very many without solid orders. Boeing of course knows how many are sold and when they are to be delivered. They can also see how many they need to sell to keep the line full. And airline execs do not just pop into Boeing’s showroom and buy a few. They must have a pretty good idea of how many will be sold in the coming months based on existing sales campaigns. And they have decided that they are not going to be able to fill all the holes in the schedule. So it makes sense to plan for an orderly slowdown rather than be caught with a lot of white tails. Then, if orders pick up unexpectedly, they can either cancel or reverse the slowdown.


The boost to rate 14 from 12 will have run around 2 years so 2x12x2 = 96 added planes produced and backlog reduced, a good thing to have done. This covered opening the slots for AA and others for their orders. As you noted, with new orders the rate can be adjusted again.

Boeing probably expected several 787 campaigns to have been firm orders by now, EK is an example of what was an expected order that has not materialized over a few years.
 
Orlik
Posts: 39
Joined: Sun Jan 06, 2008 9:34 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Thu Oct 24, 2019 6:10 am

JayinKitsap wrote:
SEPilot wrote:
When you are talking about a product that costs upwards of $100,000,000 and takes upwards of two years to deliver from when it is ordered you cannot afford to build very many without solid orders. Boeing of course knows how many are sold and when they are to be delivered. They can also see how many they need to sell to keep the line full. And airline execs do not just pop into Boeing’s showroom and buy a few. They must have a pretty good idea of how many will be sold in the coming months based on existing sales campaigns. And they have decided that they are not going to be able to fill all the holes in the schedule. So it makes sense to plan for an orderly slowdown rather than be caught with a lot of white tails. Then, if orders pick up unexpectedly, they can either cancel or reverse the slowdown.


The boost to rate 14 from 12 will have run around 2 years so 2x12x2 = 96 added planes produced and backlog reduced, a good thing to have done. This covered opening the slots for AA and others for their orders. As you noted, with new orders the rate can be adjusted again.

Boeing probably expected several 787 campaigns to have been firm orders by now, EK is an example of what was an expected order that has not materialized over a few years.


In Czech we have a nice theatre play about reaching the North pole. https://en.wikipedia.org/wiki/Dobyt%C3% ... _p%C3%B3lu Unfortunately, leader responsible for the food supply made a detailed and precise calculations, but he forgot to multiply this twice for the homeward journey. Simple error, so next time .... You are on safe side, here we come usually to 48 .. 12x2x2 ...
 
Noshow
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Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Thu Oct 24, 2019 7:03 am

Is it true that Boeing did not take any questions from NYT, WSJ and Seattle Times during the press call after the Q3 presentation?
 
Sokes
Posts: 474
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Sun Oct 27, 2019 5:28 pm

asdf wrote:
william wrote:
WOW, Boeing still made a profit for the third quarter. That in itself is amazing.


why?
I guess the xxx groundet MAXes are embedded in the report as assets in the value of the expected selling price

what is kinda interesting is not profit but cashflow in such a situation ...
very rare
cashflow normaly is not that important in a healthy company


From the link of the OP:
https://s2.q4cdn.com/661678649/files/do ... ad4efb.pdf :
-Under "Consolidated statements of financial positions"
inventories increased from Dez31 to Sept30 from 62,567 billion $ to 73,279 billion $, so roughly 10,7 billion $.
-Strange enough, under "cashflow statement 9 months"
inventories decreased cash by only 9,565 billion $. Does Boeing make the average payment to suppliers one day later now?

Just like you, I assume this inventory increase is caused to a large extend by the MAXs.
Just like you I also don't concern myself too much with cashflow. But I don't think this situation is different. Boeing is not going to run out of cash.

What I find much more interesting are compensations for the troubles the airlines face.
https://s2.q4cdn.com/661678649/files/do ... ad4efb.pdf :
p.16:
" In the second quarter, we recorded an earnings charge of $5,610, net of insurance recoveries of $500, in connection with estimated potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding and associated delivery delays. This charge is reflected in the financial
statements as a reduction in revenue, an increase in Other current assets and an increase in Accrued liabilities.
During the third quarter of 2019, we collected the anticipated $500 from our insurance carriers and reduced the liability of $6,110 by $252 for payments, concessions and other in-kind considerations agreed to with customers. In addition, we reassessed the liability for estimated potential concessions and other considerations to customers. This reassessment included updating estimates to reflect revised return to service and production rate assumptions, as well as latest information based on engagements with 737 MAX customers. Based on this reassessment, we concluded that no significant adjustments to the recorded liability were required in the third quarter. The liability represents our best estimate of future concessions and other considerations to customers, and is necessarily based on a series of assumptions. "

I'm in no position to estimate how much compensation they will have to pay. To Boeing's credit I must say I find 6 billion $ quite high.
Commercial in the first nine months 2018 had a revenue of 41 billion, in the first nine months 2019 around 25 billion. Most of these 16 billion difference must be caused by the delayed MAXs deliveries. If we assume 1 billion for crash victims 5 billion $ are left for the 387 MAXs which were delivered plus the delayed MAXs.
For a rough idea: 5 billion $/ 1000 plane years = 5 Million $/ plane year. I don't think one can compare this to lease rates. A leased plane is used. Airlines get that money for not using it. Anybody knows reasons why that might not be enough compensation?

But I find it strange that a quarter passes without desired news and they don't increase "accrued liabilities". Maybe they knew it will take some time.
Or maybe Boeing got some well-wishers in American embassies? Any country/ flag carrier wants to start a quarrel with Trump?
Anybody knows what "The art of the deal" would recommend the flag carriers?

Also interesting under "Commercial aircraft commitments":
"In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we have entered into trade-in commitments with certain
customers that give them the right to trade in used aircraft at a specified price upon the purchase of Sale Aircraft"
That reminds me of Bombardier. That didn't go too well for them. However Boeing's commitments are neglectable. I object to them by principle.
Why can't the world be a little bit more autistic?
 
Sokes
Posts: 474
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Sun Oct 27, 2019 5:57 pm

Waterbomber2 wrote:
Lessors are the biggest idiots in this.
If Airbus and Boeing don't have the b*lls for it, the lessors should seize the opportunity and take advantage of the low interest rates to buy as many as possible, even if they have to stash white tails in the deserts while waiting for the storm to pass.


That's why monetarism objects to cheap money.
Why can't the world be a little bit more autistic?
 
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lightsaber
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Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Sun Oct 27, 2019 6:16 pm

Sokes wrote:
Waterbomber2 wrote:
Lessors are the biggest idiots in this.
If Airbus and Boeing don't have the b*lls for it, the lessors should seize the opportunity and take advantage of the low interest rates to buy as many as possible, even if they have to stash white tails in the deserts while waiting for the storm to pass.


That's why monetarism objects to cheap money.

Exactly. You have now stored aging assets that won't have all the later PiPs. As much as I am sad the 787 production rate must drop and must admit my predictions were wrong, this keeps a surplus from building.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
Waterbomber2
Posts: 610
Joined: Mon Feb 04, 2019 3:44 am

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Sun Oct 27, 2019 7:13 pm

lightsaber wrote:
Sokes wrote:
Waterbomber2 wrote:
Lessors are the biggest idiots in this.
If Airbus and Boeing don't have the b*lls for it, the lessors should seize the opportunity and take advantage of the low interest rates to buy as many as possible, even if they have to stash white tails in the deserts while waiting for the storm to pass.


That's why monetarism objects to cheap money.

Exactly. You have now stored aging assets that won't have all the later PiPs. As much as I am sad the 787 production rate must drop and must admit my predictions were wrong, this keeps a surplus from building.

Lightsaber



The market can easily absorb 164 B787's per year.
I think that the real issue is that many people don't realise that aviation is growing crazy fast.
Everyone is chasing high margins but the future will be in the volume. If you look at the profitable airlines today, they are the ones with the volume.
Many industries have already undergone these changes and are coming out more profitable and stronger. Those focussing on unit margin, at the expense of volume, will fade away with time.

Take for instance JAL. They alone have 35 B767's that will eventually need to be replaced.
NH also has about 30 B767's to be replaced.

The orders will come eventually, the B787 is printing money for Boeing, so they should keep printing at a high rate.

Boeing isn't selling B787's because they're asking higher prices at a time where airlines are hesitating to buy. But even that is relative, because the high season demand is crazy, fares and traffic are up all over the place.

There are thousands of widebodies needing replacement within the next decade, we have record low interest rates, a lot of capital on the markets and most importantly, people are flying, a lot.
This is like the hot girl of your dreams laying on the bed and the industry leaders chickening out on her.
What the freak is wrong with people on this board blindly applauding to this idiocracy?
In light of the MAX saga, it doesn't seem to take much to be a Boeing CEO. I can say with confidence that I would have handled that much better than he did.
Stop putting these corporations on the pedestals, most of the time they don't know what they're doing

From IATA's August report:

Capacity growth remains slower than demand
Industry-wide available seat kilometres (ASKs) grew
by 3.5% year-on-year in August, after rising 3.2% in
July. In SA terms, the level of ASKs continue to follow
the moderate upward trend that began in the summer
of 2018. Since then, SA ASKs have grown at roughly
3.5% in annualized terms, almost half the pace
observed during the period from 2016 – mid-2018.
With the trend in RPKs being stronger than that of
ASKs, we have seen passenger load factors reaching
all-time high levels in the recent months. This was the
case in August as well, with the industry-wide load
factor reaching 85.7%, in what is yet another monthly
record in our 30 year-long series (See Chart 4)
.
 
sxf24
Posts: 911
Joined: Wed Aug 15, 2007 12:22 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Sun Oct 27, 2019 7:51 pm

Noshow wrote:
Is it true that Boeing did not take any questions from NYT, WSJ and Seattle Times during the press call after the Q3 presentation?


Yes, it is true. Although Dominic Gates complained about it on Twitter, we don’t know if NYT and WSJ were even in line to ask questions. An earnings call isn’t intended for the media, who can call spokespeople at Boeing all the time. On the other hand, investment analysts are given the same access and can really only engage during earnings calls and a few other limited situations.

I think Dominic Gates is grandstanding. He wanted everyone to hear him publicly asking questions that he can (and probably does) ask every day.
 
Sokes
Posts: 474
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Mon Oct 28, 2019 9:49 am

Waterbomber2 wrote:
...
This is like the hot girl of your dreams laying on the bed and the industry leaders chickening out on her.
What the freak is wrong with people on this board blindly applauding to this idiocracy?
In light of the MAX saga, it doesn't seem to take much to be a Boeing CEO. I can say with confidence that I would have handled that much better than he did.
Stop putting these corporations on the pedestals, most of the time they don't know what they're doing

From IATA's August report:

...
With the trend in RPKs being stronger than that of
ASKs, we have seen passenger load factors reaching
all-time high levels in the recent months. This was the
case in August as well, with the industry-wide load
factor reaching 85.7%, in what is yet another monthly
record in our 30 year-long series (See Chart 4)
.



Yes, missing out on redundancy is unbelievable irresponsible. Many of us would have done it better.

What if the woman on the bed has a veneral disease?

Monetarism doesn't say you are wrong short/ medium term. You might be right. But low interest leads to risky behavior. So long term monetarism believes you are wrong. Next year or in fifteen years? Who knows? The most suitable example for today's situation is probably Japan.


Image
source: https://en.wikipedia.org/wiki/Lost_Decade_(Japan)


"For three postwar decades, overall real economic growth was impressive - averaging 10% in the 1960s, 5% in the 1970s, and 4% in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the aftereffects of inefficient investment and the collapse of an asset price bubble in the late 1980s, which resulted in several years of economic stagnation as firms sought to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession four times since 2008."
https://www.cia.gov/library/publication ... os/ja.html

"The Lost Decade or the Lost 10 Years (失われた十年 Ushinawareta Jūnen) was a period of economic stagnation in Japan following the Japanese asset price bubble's collapse in late 1991 and early 1992. The term originally referred to the years from 1991 to 2000,[1] but recently the decade from 2001 to 2010 is often included so that the whole period is referred to as the Lost Score or the Lost 20 Years (失われた二十年, Ushinawareta Nijūnen).[2] Broadly impacting the entire Japanese economy, over the period of 1995 to 2007, GDP fell from $5.33 trillion to $4.36 trillion in nominal terms,[3] real wages fell around 5%,[4] while the country experienced a stagnant price level.[5] "
https://en.wikipedia.org/wiki/Lost_Decade_(Japan)

Comparing interest rates to Japanese growth does not make me believe low interest rates are a long term solution to growth. But then there are so many factors. Who knows what will happen?
Why can't the world be a little bit more autistic?
 
Waterbomber2
Posts: 610
Joined: Mon Feb 04, 2019 3:44 am

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Mon Oct 28, 2019 10:55 am

Sokes wrote:
Waterbomber2 wrote:
...
This is like the hot girl of your dreams laying on the bed and the industry leaders chickening out on her.
What the freak is wrong with people on this board blindly applauding to this idiocracy?
In light of the MAX saga, it doesn't seem to take much to be a Boeing CEO. I can say with confidence that I would have handled that much better than he did.
Stop putting these corporations on the pedestals, most of the time they don't know what they're doing

From IATA's August report:

...
With the trend in RPKs being stronger than that of
ASKs, we have seen passenger load factors reaching
all-time high levels in the recent months. This was the
case in August as well, with the industry-wide load
factor reaching 85.7%, in what is yet another monthly
record in our 30 year-long series (See Chart 4)
.



Yes, missing out on redundancy is unbelievable irresponsible. Many of us would have done it better.

What if the woman on the bed has a veneral disease?

Monetarism doesn't say you are wrong short/ medium term. You might be right. But low interest leads to risky behavior. So long term monetarism believes you are wrong. Next year or in fifteen years? Who knows? The most suitable example for today's situation is probably Japan.


Image
source: https://en.wikipedia.org/wiki/Lost_Decade_(Japan)


"For three postwar decades, overall real economic growth was impressive - averaging 10% in the 1960s, 5% in the 1970s, and 4% in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the aftereffects of inefficient investment and the collapse of an asset price bubble in the late 1980s, which resulted in several years of economic stagnation as firms sought to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession four times since 2008."
https://www.cia.gov/library/publication ... os/ja.html

"The Lost Decade or the Lost 10 Years (失われた十年 Ushinawareta Jūnen) was a period of economic stagnation in Japan following the Japanese asset price bubble's collapse in late 1991 and early 1992. The term originally referred to the years from 1991 to 2000,[1] but recently the decade from 2001 to 2010 is often included so that the whole period is referred to as the Lost Score or the Lost 20 Years (失われた二十年, Ushinawareta Nijūnen).[2] Broadly impacting the entire Japanese economy, over the period of 1995 to 2007, GDP fell from $5.33 trillion to $4.36 trillion in nominal terms,[3] real wages fell around 5%,[4] while the country experienced a stagnant price level.[5] "
https://en.wikipedia.org/wiki/Lost_Decade_(Japan)

Comparing interest rates to Japanese growth does not make me believe low interest rates are a long term solution to growth. But then there are so many factors. Who knows what will happen?


Your "paper knowledge" of Japan's lost decade does not reflect the reality in the field.

Japan has seen a bubble and burst.
At the height of the bubble, land especially in Tokyo reached high 5 digits USD per m2. People with secure high incomes could take loans against such real estate, only to find their investment melt and lose value in the years that followed.
Now land prices can still reach 5 digits in USD per m2 at some locations in downtown Tokyo.
The lost decade applies to those who bought land at the height of the bubble rush and then could not make up for it.

However, that Japan stopped growing is not a reality.
In the 1990's, Toyota and Sony became global supercompanies. Toyota continued in that direction and still is number 1 in the world today, while Sony lost out to the Koreans who were heavily subsidised, only to see Matsushita's Panasonic take a similar scale and even a leadership role in relevant battery technology.

Tokyo has expanded and is now a city stretching out over 100 kilometers with population inching towards 40 millions.
People are and have been paying over 3% interest on their loans, a healthy interest rate, since before the bubble burst.

Japanese have record savings and Japan is now world's bank and number 1 creditor, despite its government deficit.

Shinkansens are full to the gills and running tight schedules, railway companies can barely handle peak demand with the slightest incident causing major delays.

JAL and ANA are running widebodies domestically and are commanding world's highest yields and HND is bursting at the seams, so that they had to beg Yokota AFB to give back some airspace to be able to increase slots.

All of this despite repeating natural disaters wiping out billions out of local economies every 3 to 5 years.

Does this look like an economy in distress to you?

Go ahead, compare A and B's production rate in the 1990's to today's, heck compare them to the golden 3 decades, and come again to say that we're in a lost decade.

You always have people complaining and making excuses for things that don't exist.
Boeing and Airbus are complaining that there is a widebody glut, despite that they have never ever delivered widebodies nor narrowbodies at the current pace in their history.

There is no widebody glut, there is just Boeing and Airbus asking ridiculous prices for some plastic and metal put together, airline managements growing lazy looking at cheap fuel prices and easy access to capital assets ie aircraft, not realising that leasing schemes are killing them more than helping them.
Then there are the pink glass managements who think that they're doing well despite not realising that their airline is shrinking and losing market share in a fragmenting and more and more competitive industry.
While AI and 9W shouted it out, Indigo dwarfed both of them, Spicejet is on its way to do the same, Vistara and Goair have major expansion plans to join them.

Believe me, Boeing can easily sell the additional production capacity and make tons on support.
As a big company, they have to look beyond small cyclical ups and downs, the same that brought Airbus to terminate its A380 program prematurely, and the same that brought Boeing to stop the B757 program prematurely. Imagine if Boeing had a set of Leaps on the B757 today... A 6000NM beast with no equals.

Stop sanctifying these industry leaders who don't know what they're doing.
 
Sokes
Posts: 474
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Mon Oct 28, 2019 1:40 pm

Waterbomber2 wrote:
Your "paper knowledge" of Japan's lost decade does not reflect the reality in the field.


"Paper knowledge": do you suggest the CIA lacks the intelligence to make a proper statistic?
Well, considering they didn't foresee the collapse of the Sovjet Union until shortly before it happened, you might be right.

In your favor:
1) I have never been to Japan.
2) If the working population is shrinking, a stable economy is a booming economy.

I just wonder if your observations are also true for rural areas of Japan. If young people move to the big cities economic activity in these cities increase. But does it increase more than the contraction experienced in rural areas? You are right that paper knowledge is not good enough. I shall moderate my views about it. Have you traveled widely in Japan?

Left wing politician Sarah Wagenknecht wrote in one of her books that the history of credit is the history of credit default. Interest is justified to account for risk.
It makes sense. Interest and interest on interest have to be inherent instable. Take a chess board, put one rice corn on the first field, two on the second, four on the third...
Do we live in a more stable world now with extreme low interest? I believe property markets now expect valuation rises worse than fixed deposit savers expected earlier. It's instable again. Anybody knows an economic theory that can undo human greed?

In your favor: I wrongly predict a bust since more than a decade. Therefore: Who knows what will happen?
Why can't the world be a little bit more autistic?
 
KlimaBXsst
Posts: 479
Joined: Wed Jan 23, 2019 4:14 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Mon Oct 28, 2019 2:06 pm

Boeing,

In the future, do not put all your eggs in one NARROW-BODY aircraft basket, should be the lesson learned by the MAX fiasco.
Aesthetically the A 340 got it right!
 
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scbriml
Posts: 18091
Joined: Wed Jul 02, 2003 10:37 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Mon Oct 28, 2019 2:32 pm

Waterbomber2 wrote:
The market can easily absorb 164 B787's per year.


I suspect Boeing knows more about the market than you, and they disagree.

Out of interest, although 787 production rate is supposed to be 14/month, over the nine full months of this year through September, Boeing has only delivered 113 787s at a rate of 12.5/month. Indeed, they've only beaten 12 deliveries/month twice so far this year (in March and June) and failed to even reach 12 four times. :scratchchin:

2019 787 deliveries:
Jan 8
Feb 11
Mar 17
Apr 12
May 11
Jun 19
Jul 12
Aug 11
Sep 12

While I understand and accept that deliveries don't necessarily match production on a month by month basis, over nine full months I'd expect production and deliveries to be closer than this. They're basically a full month's production behind.
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.
 
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Momo1435
Posts: 1056
Joined: Sat Aug 25, 2012 2:33 pm

Re: Boeing reports Q3 results - 787 production rate cut for 2 years, 77X to enter service early 2021

Mon Oct 28, 2019 4:20 pm

There are also 7 Hainan NTUs that will soon be delivered to the new customers for these frames. Plus the 1st QR 787-9 waiting for the suites the suites to be installed before it will be delivered. These 8 would have already counted over the 1st 9 months if there were no issues with the deliveries, bringing the average well above 14.

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