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More KC-46A woes....

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More KC-46A woes....

Old 27th Mar 2018, 00:56
  #641 (permalink)  
 
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Originally Posted by Preemo View Post
I thought I had read earlier in this thread that Boeing's margins were razor slim on this deal...now they can be profitable with a $2B over-run means they must have 10%-15% profit in their price. In 2017 their operating margin was 11% so it looks like this was a good deal for them from the get go....or accounting magic happening here.
The margins for the KC-46 development program were razor slim - not so much the production program.
Even with all the hiccups on the 787 program, Boeing Commercial has been operating with around a 10% margin on the production side.
With a ~$30 billion KC-46 production program, Boeing should still do OK in the long - just not as well as they would if the program had been properly managed and executed...
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Old 27th Mar 2018, 01:09
  #642 (permalink)  
 
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Originally Posted by tdracer View Post
The margins for the KC-46 development program were razor slim - not so much the production program.
Even with all the hiccups on the 787 program, Boeing Commercial has been operating with around a 10% margin on the production side.
With a ~$30 billion KC-46 production program, Boeing should still do OK in the long - just not as well as they would if the program had been properly managed and executed...
ITS Called Program accounting - sort of a deluxe version of the Gillette razor blade method- Sell the razor at cost ( or less ) and make the real $$ on blades and future support. ( spare parts, unique parts, service and maintenance )

Boeing gave Military a fair price on the B-52 a few years ago and . . .

Last edited by CONSO; 27th Mar 2018 at 01:10. Reason: typos
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Old 27th Mar 2018, 14:06
  #643 (permalink)  
 
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Originally Posted by Preemo View Post
I thought I had read earlier in this thread that Boeing's margins were razor slim on this deal...now they can be profitable with a $2B over-run means they must have 10%-15% profit in their price. In 2017 their operating margin was 11% so it looks like this was a good deal for them from the get go....or accounting magic happening here.
The current contract is to develop and certify the tanker and produce and deliver 18 production aircraft. The margins are razor thin and between the cost over runs and the likely penalties for late delivery, Boeing will almost certainly take a loss on this contract. The production contract for follow on aircraft does not have such razor thin margins. It will clearly take longer for Boeing to turn a profit on the total program than if the development and initial production program had gone to plan, but absent some huge miss step, Boeing will most certainly turn a profit long term. And not just from support, but from actual production.

Last edited by KenV; 27th Mar 2018 at 14:24.
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Old 27th Mar 2018, 14:21
  #644 (permalink)  
 
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Originally Posted by CONSO View Post
ITS Called Program accounting - sort of a deluxe version of the Gillette razor blade method- Sell the razor at cost ( or less ) and make the real $$ on blades and future support. ( spare parts, unique parts, service and maintenance )
Yes, BCA does Program accounting, but no, its not what you described. Boeing has THREE independent divisions: BCA (Boeing Commercial Aircraft), BDS (Boeing Defense and Space), and BGS (Boeing Global Support). So BCA does not get most of the support profits. BGS does. It may be subtle, but its significant.
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Old 27th Mar 2018, 15:11
  #645 (permalink)  
 
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Originally Posted by KenV View Post
Yes, BCA does Program accounting, but no, its not what you described. Boeing has THREE independent divisions: BCA (Boeing Commercial Aircraft), BDS (Boeing Defense and Space), and BGS (Boeing Global Support). So BCA does not get most of the support profits. BGS does. It may be subtle, but its significant.

My point is and was - regardless of ' division '- the profits ALL flow to the bottom line for THE BOEING COMPANY and the resulting dividends in $$ are not labeled. Money and profits and losses are fungible.

for but one example --Many years ago, a military program was essentially "keeping the lights on" for a large chunk of the commercial part company by providing a place for many of the ' valuable " employees who might otherwise been on layoff.
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Old 27th Mar 2018, 16:07
  #646 (permalink)  
 
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Originally Posted by CONSO View Post
My point is and was - regardless of ' division '- the profits ALL flow to the bottom line for THE BOEING COMPANY and the resulting dividends in $$ are not labeled. Money and profits and losses are fungible.
I got that. My point was not about your basic argument. My point addressed the preamble of your argument, to wit: "ITS Called Program accounting". Program accounting has NOTHING to do with it.

Further, the decision to pursue the RFP is made at the division level, NOT the corporate level. The division must prove it can make a profit before the program is even launched. And the BAC division will almost certainly make quite a bit of profit. Just not as much as hoped and certainly not as soon as hoped.

Last edited by KenV; 27th Mar 2018 at 16:49.
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Old 28th Mar 2018, 03:42
  #647 (permalink)  
 
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Further, the decision to pursue the RFP is made at the division level, NOT the corporate level.
Nice theory - but in the case of the tanker it was NOT that way. Way back in 2000-2001 as the initial tanker fiasco was aborning, it was corporate that pulled the strings and responsible for the resulting major FUBAR despite and over the objections of the ' commercial division ; It went like this - BA commercial wasx to build the airframe- and deliver it ( green ) to military division ( on paper ) Miitary would fly it to wichita/st louis where it would be partially disassembled and refit with mil standard stuff, ad naseaum.
Thru a set of circumstances not really pertinent here in this thread- I was at the time in a unique position to be an ' observer ' and party to a few discussions as to how the initial 767 tanker lease offer really came to be- and how it was screwed up- not by commercial but by the MDC whiz kids of which one spent time in Club fed

When the 737navy - P8 came along- it was renton commercial who ran the whole show.

But when the tanker again came on the scene- the st louis turkeys essentially froze out the commercial troops who had been building767s for a few decades - and started over again.

And in all cases, its the program accounting game used by Boeing which allows' losing' programs to eventually recover via volume/quantity bean counting- eg 7 late 7 is the current poster child.

Perhaps the meme should be - "we lose money on the first (xx) or each one but will make it up by volume."
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Old 25th Apr 2018, 11:18
  #648 (permalink)  
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US Air Force, Boeing still clash over KC-46 delivery timeline

WASHINGTON — Meetings between Boeing and the U.S. Air Force on the KC-46’s schedule appear to have stagnated, with both parties still at odds about when the first tanker will be delivered.

“We have had meetings with Boeing, and additional meetings last week to get an agreement on a schedule,” Air Force Secretary Heather Wilson told the Senate Armed Services Committee on Tuesday. “We believe — the Air Force believes — that the schedule that Boeing has is still overly ambitious, and we’d like to get agreement on a delivery date and drive to that delivery date.”

Last month, the Air Force projected that the first KC-46 delivery would be delayed yet again — an assessment with which Boeing has vehemently disagreed.

Based on the service’s estimates, Boeing may be able to deliver the first KC-46 aircraft by the end of the year, with a contractually required delivery of 18 tankers slipping from October to spring 2019. But Boeing asserts it will be able to deliver the first aircraft this summer, with a total of 18 tankers delivered by the end of the year. “We are working with the Air Force to complete all the required testing and are committed to delivering the first tanker as soon as possible,” a Boeing spokesman said in a statement. “Discussions are ongoing as to a specific delivery date.”

Missing the October deadline for required assets available, or RAA — in this case, 18 certified KC-46As and nine refueling pods — could trigger another round of penalties for Boeing, which is locked into a fixed-price contract that leaves the company financially responsible for schedule delays and cost overruns. Boeing has already had to pay about $2 billion post-tax out of its own pocket.

The fiscal 2019 budget requested an additional 15 tankers, he added. “Do you agree that is an adequate number, an achievable number and a desirable number?” Wilson said that it was. Air Force Chief of Staff Gen. Dave Goldfein added that the 15-aircraft-per-year rate was the best way to sustain production as the weapon system comes online. “We are a global power because of our global reach, and it’s all of the services that rely on that tanker force, and our allies and partners, to be able to project power globally. So it’s a critical capability that we need to bring on as fast we can bring it on,” he said.

The Government Accountability Office estimates that RAA “could slip to May 2019, 21 months from the original schedule, if risks are not mitigated.” The agency’s findings were in an report on the program released this month. Those risk factors include ensuring all aircraft are in the correct configuration and fixing a number of deficiencies, including one that involves the boom scratching the receiver aircraft. Boeing will also have to complete 6,550 test points in a window of February 2018 to June 2018 to meet its schedule projection, which GAO says amounts to a rate of double its current pace.

Addressing the boom-scraping issue, a Boeing spokesman said the company had begun flight testing a software enhancement that is expected to improve visibility.

Despite the schedule issues, lawmakers have generally been supportive of the program. Oklahoma’s Jim Inhofe, currently the top Republican on SASC, told Wilson that the committee was “anxious for the first KC-46 to get delivered” to the service.
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Old 25th Apr 2018, 17:00
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"Addressing the boom-scraping issue, a Boeing spokesman said the company had begun flight testing a software enhancement that is expected to improve visibility.'


Who'd have thunk it!
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Old 25th Apr 2018, 23:41
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Ha. May explain this Whine Spectator 91-pointer....

The Air Force seems to have worse relations with its contractors than any other service. Hardly a week passes in which some senior official doesn't question the performance and priorities of top contractors.

https://www.forbes.com/sites/lorenth.../#6fbd443fe3a8

Mean ol' air force. Expects you to deliver what you contracted to deliver.
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Old 26th Apr 2018, 08:22
  #651 (permalink)  
 
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And at the contract price!!!!!!!!
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Old 26th Apr 2018, 18:36
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Originally Posted by George K Lee View Post
Ha. May explain this Whine Spectator 91-pointer....

The Air Force seems to have worse relations with its contractors than any other service. Hardly a week passes in which some senior official doesn't question the performance and priorities of top contractors.

https://www.forbes.com/sites/lorenth.../#6fbd443fe3a8

Mean ol' air force. Expects you to deliver what you contracted to deliver.
There are two ways to approach the job of oversight:
1. You can take an adversarial approach and look for ways to hammer the contractor.
2. You can take a team member approach and look for ways to develop and implement solutions.

USAF tends toward the first approach. They took the first approach on C-17 for the first several years of that program's life. But eventually they switched to the second approach. Shockingly, the program flourished, costs went down, performance went up, and the C-17 become a "model acquisition program" after that switch.
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Old 26th Apr 2018, 19:07
  #653 (permalink)  
 
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I have to say many of the USAF types were exceptionally difficult to work with - and simply would not listen to common sense. There were requirements for my engine system which may have made some sense 50 years ago, but were simply foolish for a commercially derived aircraft with modern FADEC engines - but when we tried to bring this up with the Air Force brass and point out there were better (and cheaper) ways to do it, the response was 'what part of mandatory don't you understand'. This sort of thing drove millions in unnecessary costs just in my area - and I seriously doubt I was exceptional in that regard.
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Old 26th Apr 2018, 19:30
  #654 (permalink)  
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In my days as a system engineer there were three types of requirements:

1. Those that were mandated and had to be achieved in the manner specified.

2. Those were end result was mandated, but the means of achieving the end result was open to negotiation.

3. Those that could be waived if th end result could still be guaranteed to be achieved.

Signing a contract and then attempting to negotiate away class 1 requirements always lead to substantial heartache for the manufacturer. To quote your contract compliant questioner - which part of mandatory did you not understand?

They can, of course, be changed - at substantial cost to the contractor. After all, they probably underbid the contract assuming they could do it their way regardless of the contract they signed....For example on wiring looms....
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Old 26th Apr 2018, 20:49
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ORAC, I understand what you are saying. But the USAF made many requirements that had to be achieved in a specified manner when the manner specified was quite frankly stupid (and many of these were only listed as 'top level' at the RFP level). When we saw the specifics, we tried to point out that there were much better (and cheaper) ways to meet their requirements than what they'd specified. Rational people would at least discuss the options - but the USAF wouldn't.
One example - the RFP specified '10 minute takeoff' - so we assumed that was the same as the 10 minute takeoff capability currently available. Well, in the commercial world, 10 minute takeoff is only allowed if you lose an engine - come to find out, USAF wanted to be able to use it every single takeoff. Well, that's not the way the engine was certified - since engine failures during takeoff are rare, the engine cert basis assumes the use of 10 minute takeoff would be similarly rare. USAF says we need 10 minute takeoff for hostile areas where we need to get out of man pad range ASAP. OK, gives us a percentage of takeoffs where you'll need 10 minute takeoff and we'll see if that's consistent the cert basis. USAF responses NO, it's mandatory that we be able to use 10 minute takeoff 100% of the time. Recertifying the engine is a massive task - several million dollars, so we started looking at aircraft performance - with both engines operating, - unless you're at or very close to MTOW, you'll climb out of the takeoff rating envelop well before 10 minutes. Further, even at MTOW, 10 minute got you less than 100 feet extra altitude at the 10 minute mark. Again, we tried to explain this to the USAF, but again ' what part of mandatory don't you understand. Even the FAA will at least listen if you think they are being unreasonable - but not the USAF...
Of course, none of this was in the RFP - only the final contract.
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Old 21st Jun 2018, 06:11
  #656 (permalink)  
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http://www.defensenews.com/air/2018/...s-first-kc-46/

Here’s when the US Air Force will get its first KC-46 tanker

WASHINGTON — After months of public — and sometimes contentious — disagreements, Boeing and the U.S. Air Force have finally settled on an October delivery date for the first KC-46 tanker.

“As a result of months of collaboration, the Air Force and Boeing KC-46A teams have reached an agreed joint program schedule to get to the first 18 aircraft deliveries. This includes the expectation the first KC-46A aircraft acceptance and delivery will occur in October 2018, with the remaining 17 aircraft delivered by April 2019,” Air Force Under Secretary Matt Donovan said in a statement. “While the KC-46A flight test program is nearly complete, significant work remains. The Air Force is looking forward to KC-46A first delivery and will continue to work with Boeing on opportunities to expedite the program.”

The new schedule appears to be a compromise between Boeing and the Air Force’s estimated timelines. For months, Boeing has held that it could deliver its first KC-46 this summer, with a total of 18 tankers delivered this year. The Air Force projections have been much more pessimistic, with first delivery at the end of the year, and 18 delivered by spring.

While it’s clear that Boeing will not meet the required assets available, or RAA, deadline — a contractual obligation to deliver 18 certified tankers and nine refueling pods — whether it will have to pay a penalty for being late is still murky.....

The KC-46 currently has three outstanding category-1 deficiencies, the designation given to urgent technical problems with no workaround in place.

Two of the deficiencies revolve around the system’s remote vision system, manufactured by Rockwell Collins..... Boeing believes it can solve both problems with a software fix that retunes the camera system to increase visibility and to make it more intuitive for operators to change the camera settings. That fix is currently being tested with the hope that the deficiencies will be downgraded or completely eliminated in the next few months...... Boeing’s expectation is that if they do not resolve the remote visioning system deficiencies, the Air Force will not accept the KC-46 this fall.

It’s unclear, however, whether the final category-1 deficiency will be fixed before first delivery. The issue involves a mechanical lock on the centerline drogue system, which unintentionally unlocks in certain conditions. Boeing believes it can rectify the problem through a software fix but needs more flight test data to do so. “It’s just [a matter of] when are we going to fix it,” Gibbons said in May. “We and the Air Force have agreed … for a while that the right time to do that is after we gather sufficient flight test information from some of these drogue contacts, go in and update the software, and then we’ll roll it in through the summer and test it out again.”

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Old 27th Jul 2018, 06:36
  #657 (permalink)  
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Well that will improve delivery and resolution if any associated problems......

https://www.thetimes.co.uk/edition/b...pute-x66l836qt

Cobham takes dive amid Boeing dispute

Boeing, one of the world’s largest aerospace and defence companies, has gone to war with one of its key suppliers in the UK, sending shares in Cobham, the air-to-air refuelling specialist, plummeting close to 15-year lows.

Cobham is the world leader in producing hoses and the conical drogues that enable tanker aircraft to refuel the likes of fighter jets mid-flight. Earlier this decade Cobham signed up to its single biggest contract, worth $1 billion, as the key partner to fit out the US air force’s new-generation Pegasus aerial refuelling and military transporter plane, the Boeing KC-46.

Already heavily lossmaking and classed as an onerous contract by Cobham, the KC-46 Pegasus programme has ejected more bad news, with the prospect of even worse to come. In an unscheduled statement to the stock market, ahead of its half-year results expected next week, Cobham said it was taking another £40 million loss on the contract. That is on top of the £150 million of provisions it has already booked.

It said that Boeing was refusing to pay its invoices for Cobham’s work on the main drogue refuelling system, which hangs out of the tail of the KC-46, and on the refuelling pods located on the aircraft’s wings.

Worse, Cobham was forced to declare that its customer could well be taking it to court. “Boeing has made as yet unquantified damages assertions relating to the programme,” it said. The Dorset-based company said that it was fighting its corner: “Cobham is formally disputing these assertions.”.........
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Old 27th Jul 2018, 13:15
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Originally Posted by ORAC View Post
Well that will improve delivery and resolution if any associated problems......

https://www.thetimes.co.uk/edition/b...pute-x66l836qt

Cobham takes dive amid Boeing dispute

Boeing, one of the world’s largest aerospace and defence companies, has gone to war with one of its key suppliers in the UK, sending shares in Cobham, the air-to-air refuelling specialist, plummeting close to 15-year lows.

Cobham is the world leader in producing hoses and the conical drogues that enable tanker aircraft to refuel the likes of fighter jets mid-flight. Earlier this decade Cobham signed up to its single biggest contract, worth $1 billion, as the key partner to fit out the US air force’s new-generation Pegasus aerial refuelling and military transporter plane, the Boeing KC-46.

Already heavily lossmaking and classed as an onerous contract by Cobham, the KC-46 Pegasus programme has ejected more bad news, with the prospect of even worse to come. In an unscheduled statement to the stock market, ahead of its half-year results expected next week, Cobham said it was taking another £40 million loss on the contract. That is on top of the £150 million of provisions it has already booked.

It said that Boeing was refusing to pay its invoices for Cobham’s work on the main drogue refuelling system, which hangs out of the tail of the KC-46, and on the refuelling pods located on the aircraft’s wings.

Worse, Cobham was forced to declare that its customer could well be taking it to court. “Boeing has made as yet unquantified damages assertions relating to the programme,” it said. The Dorset-based company said that it was fighting its corner: “Cobham is formally disputing these assertions.”.........
Wonder how different the Cobham drougues on the KC-46 are from their products on other aircraft? Look like some software differences. Seems like a pretty pricy system if they say they are already losing 40 million on the contract, and like Boeing seem to be betting on the future full production orders for profit.

http://www.cobham.com/mission-system...sheet/docview/
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Old 28th Jul 2018, 15:45
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Sounds like the groundwork for a hostile takeover....
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Old 29th Jul 2018, 12:43
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The British MOD, given a chance, could sort this very quick like, you think?


RAF aircrafts can't refuel mid-air so US have to do it instead | Daily Mail Online
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