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Mammoth Building Projects Underpin 777X Plan

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Mammoth Building Projects Underpin 777X Plan

Old 10th Jul 2015, 07:35
  #21 (permalink)  
 
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SWH

I don't think there was any confusion on what break even meant. It wasn't inferred that meant anything on the level of having paid for R&D, delays and the grounding, etc. I suggest it shows a postive trajectory especially when coupled with other metrics indicates that the program is far from a failure and that characterization as such seems uninformed or is intentionally skewing opinion for personal reasons.

What I trust with some reservation is compliance with basic business strategies, in this case both with the airlines and Boeing.

What I trust with some reservation is a Boeing's confidence that there's a market for a new product, to introduce and then continue with the product, especially on the scale of $ the 787 has cost.

What I trust with some reservation is the consumers continued purchase of a product even after teething pains. It shows a great deal of confidence in the aircraft and an understanding of how it can change the business dynamics.

Boeing, the airlines and leasing companies are following fairly basic business concepts, giving me a strong belief the 787 will eventually make Boeing a great deal of money, if not today or tomorrow.

What I don't trust with some exceptions is anonymous posters offering opinions about highly complicated matters especially when the opinion is only backed by a sentence or two.
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Old 10th Jul 2015, 11:17
  #22 (permalink)  
swh

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A program can actually never break even despite having broken even on a production basis. It comes down to the manufacturing learning curve. On the current learning curve the 787 will break even (assuming the -10 is like the -9). The R&D costs are still increasing on the 787 program for the -10.

Not sure if I follow your suggestion of the consumer continued purchase confidence as the rate seems to be lower than competitor product despite the efficiency advantage. I would have expected the 787 to outsell the A330 since EIS with a flood of new orders.
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Old 10th Jul 2015, 12:43
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Mammoth Building Projects

Ah there's nothin' like building your own mammoth!

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Old 10th Jul 2015, 16:27
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SWH

It comes down to a simple concept really, Boeing wouldn't continue to build the aircraft nor expand the stable of variants if they didn't believe they could make money eventually.
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Old 10th Jul 2015, 18:05
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Like the 747-8 ?
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Old 10th Jul 2015, 18:39
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I'll offer you the opportunity to return to my post and review what I wrote...

"Wouldn't continue to build the aircraft"

Boeing is paring back production for what is currently contracted and I would suspect when the govt purchase of the -800 is complete that the program will wind down.

Anyway, I do believe the discussion is about the 787, which I believe has a bright future.
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Old 12th Jul 2015, 10:54
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West Coast - there are numerous articles in the flying and financial press about the cost to Boeing of the 787 and the deferral of true break even.

They are able to continue production because they are big enough to finance the 787 thro' to break even from other programmes - a smaller outfit (say Bombadier size) would be broken by this

They also use some legal but non-intuitive accounting rules to spread their costs over a large number of so far unbuilt aircarft
This isn't Boeing v. Airbus - Airbus's accounts are even more opaque and I'm sure the A.380 is in a similar hole

see this article from Flight in April 2015

Boeing 787 unit loss declines, but deferred costs rise - 4/22/2015 - Flight Global

Cost control on the Boeing 787 programme showed some improvement on a unit basis in the first quarter, but the company remains far from break-even.

If deferred production, unamortised tooling and other costs are factored in, Boeing lost an average of $30 million on each of the 30 787s delivered in the first quarter.

That represented an 11% decline from a $34 million unit loss on each of the 35 787s delivered in the fourth quarter of last year. Boeing still plans to reach break-even on a unit basis by the end of this year on the 787 programme.

“The programme continues to make improvements on unit costs,” Greg Smith, Boeing’s executive vice-president and chief financial officer, said in a first quarter earnings call with analysts on 22 April. “We’ve still got a long way to go, but we’re making a lot of progess.”


The unit accounting losses on each 787 do not show up directly on Boeing’s quarterly balance sheet.

Instead, Boeing’s programme accounting method defines a block 1,300 aircraft expected to be delivered and builds in a predetermined cost and operating margin for each aircraft delivered within the block. Actual losses on each aircraft delivered so far are added to the programme’s deferred production cost. Boeing also has a separate line item for unamortised tooling and other costs.

The combined deferred production and amortised tooling costs rose by $905 million in the first quarter to exceed $30 billion.

Although overall costs are still rising, the first quarter represented the first three-month period that the figure was held under $1 billion since Boeing started delivery 787s in the fourth quarter of 2011.

The unit cost improvement in the first quarter could have been greater if not for supply chain problems. Zodiac Aerospace has fallen behind on deliveries of premium cabin seating. GE Aviation also discovered a quality problem with a component that delayed shipments of 29 GEnx engines. Both issues are expected to be resolved in the second quarter.

“We do have a high confidence in the plan to resolve” the Zodiac seat issues, says Boeing chief executive and chairman James McNerney. “”It’s not going to disrupt our production plans.”
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Old 12th Jul 2015, 15:07
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Post A few Facts and Data re Boeing

I wonder why the majority of posters in this thread dont bother to get look up or even read the super secret documents put out by Boeing- known as the ANNUAL REPORT. ?


It usually does a fair job of explaining program accounting, employment figures, etc. With some effort, one can go to the Boeing site known a Boeing: The Boeing Company and search and find a huge bundle of info and PR pics, videos, etc Need not be a shareholder or employee !

For example on the Boeing site search on ANNUAL REPORT and one can get

http://www.boeing.com/assets/pdf/com...ual_report.pdf

etc.

As to the 777X and the buildup - versus 787 mess, it is true that there is around 30 Billion ( with a B ) expenses to be recovered hopfully with enough volume ( approx 1300 at last count ) for the 787.

This does have an effect on any future program. At the moment, its the 737 program which is the major cash cow.
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Old 13th Jul 2015, 15:45
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Indeed SamP

I'd guess the lack of (current) enthusiasm in Seattle for developing a 757/767 replalcement is driven by the need to get the 787 programme properly into the black first

I'm sure they'll do it unless there is another global meltdown
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