Originally Posted by
CargoOne
I do not recall seeing a good trustworthy analysis how much exactly profit was made on 747. If you ask my opinion, the main reasons why the profit was made 1) much less costly initial development and certification process compared to the current rules; 2) huge grandfathering of certification (cheap one see point 1) into next models; 3) success of -400. There is no way 747 can make money today for Boeing be it a fully new model. While -8 managed to grandfather quite some elements, it is not making money. Apart from -8, there was about 1400 produced but it was split over 5 different major variants and about 20 engine models - doesnt work today.
The 747 has been a reasonably profitable product for Boeing - particularly the 747-400 with nearly half of the over 1500 747's built being -400s. However it was never the huge cash cow that Airbus thought - during the 90's the wide body cash cow was the 767.
The rules of the game have changed dramatically over the 50 years of the 747. When the original 747 was developed, certification time and costs were a small fraction of today, and 'break-even' production numbers were small (when launched, the 747 break-even was projected to be ~100 units, and total production ~200 units). As a rule of thumb, 40 years ago you could figure half of the sales price represented what it actually cost to screw the aircraft together, and half went to repaying the development costs, overhead, and of course profit. Between the lower cert costs and higher markups that were charged, limited market aircraft like the 747SP could be developed and certified profitably - and the engine companies paid Boeing the costs of certifying new engine installations (and the economics of the engine sales would be worthy of it's own thread, but basically engine companies sell the engines at cost - the profits come from spares and maintenance).
In the 1980s things started changing - Airbus became a viable competitor while Lockheed dropped out, and the rapid expansion of air travel caused aircraft sales to soar. Instead of production runs of a couple hundred, a successful program meant over a thousand (or in the case of the 737/A320, thousands) - larger production runs meant costs could be spread out over many more units, which was fortunate because at the same time the regulatory burden skyrocketed - with a corresponding massive increase in the certification costs (which in turn made small production 'specialty' aircraft unprofitable). I became a DER in 1988 - the changes in cert between then and when I retired a couple years ago were simply mind boggling - worse most of the changes had minimal impact on safety (some have even had negative impacts on safety).
As for the 747-8, it was developed assuming a relatively small production run (the numbers were similar to the assumptions for the original 747). At the current six/year production rate, it's basically a break-even, but Boeing is still hopeful for an uptick in demand for the Freighter - if they can get the production up to 12/year they can actually make money on the deal. The 747 remains without significant competition as a freighter - if you want to carry more than 100 tons it's the only game in town - and the existing fleet is getting very long in the tooth (most non -8 747s still flying have over 100,000 hours).