BA 777 on fire in Las Vegas

[DaveReidUK]

Originally Posted by readywhenreaching

doubtful to me they spend dozens of millions for a 16 year old ship

You don't think that the reports it's going to be repaired are correct? I'll admit to being surprised that it is, but there is no reason to suggest that it has been misreported.

Insurance would pay anyway. An unprecedented repair like this is likely to be pricier than buying one from the desert or 2nd hand.

The insurers will likely have been party to the decision to repair the aircraft.

[hunterboy]

More like BA don't want to join Malaysian Airlines in being the only airlines to have written off 2 777's, whether it was an accident or not.

[Tay Cough]

Perhaps figure lifetime operating costs for a new build 777 into the equation.

Maybe the manufacturer was keen to avoid another write-off as that could affect future insurance premiums for all hulls...

[msbbarratt]

Maybe the manufacturer was keen to avoid another write-off as that could affect future insurance premiums for all hulls...

Well if it did have an affect that would hardly be fair - the 777 has been extremely good for many years now.

Arguably even the incident involving BA at Heathrow shows that given half a chance the 777 will keep everyone alive and mostly unharmed in the most trying of circumstances. That should have a positive affect in premiums.

[booke23]

I must admit I was also surprised when I heard they were going to repair it.

Some interesting comments on possible reasons for repairing it. I wonder what the current availability of 777 airframes is like. Obviously a new 777 will normally have a long lead time, which might influence the decision to repair. But what about used airframes in storage.....perhaps there are just none available at the moment which had perhaps made a repair the better option for the airline.

[keesje]

• It seems Boeing / GE don't want a BA 777 write-off because of an exploding GE90.
• Then there is that 2011 FAA 777/GE90-85 AD GE & Boeing tried to kill.
• Returning it to flight cleans the track record.
• GE picks up the ticket it seems.

[llondel]

If Boeing/GE want it fixed then I assume they're going to be eating the costs, because BA and their insurers will presumably have an upper limit on what they're prepared to pay to fix it.

[RatherBeFlying]

Given the apparent thermal weakening of the wing attachment structure, a fuselage and left wing replacement should do the job

[SeenItAll]

All of this talk about BA/Boeing/GE/insurers making decisions to repair or not to repair based on wanting to avoid a bad record or reputation are bunk. First, all of these entities are sophisticated profit-maximizing entities. They will make their decisions based pretty much completely on the basic economics of whether repairs cost more or less than the replacement cost of the frame. Note that based on recent statements by Delta Airlines, used B777's are going quite cheaply, so the cost of these repairs cannot be more.

Further, while if you bang up your automobile, you may decide to repair it privately so as not to alert your insurer and maybe cause your rates to rise, this situation is completely different. The incident has occurred and has been widely publicized. Every airline or insurer who has an interest in these matters already knows that this BA B777 had an engine failure and fire. If it is going to affect BA's insurance rates or BA's or Boeing's or GE's reputation, it already has. No repair/replace decision made now will affect things.

[DaveReidUK]

Originally Posted by SeenItAll

All of this talk about BA/Boeing/GE/insurers making decisions to repair or not to repair based on wanting to avoid a bad record or reputation are bunk. First, all of these entities are sophisticated profit-maximizing entities. They will make their decisions based pretty much completely on the basic economics of whether repairs cost more or less than the replacement cost of the frame.

Mostly, but not entirely.

While the economics are no doubt a prime consideration, and aviation insurers are certainly a hard-headed lot, Boeing and GE (and to a lesser extent BA) will also have half an eye on what the analysts think will be the effect, if any, on the stock price of the preferred course of action.

[Rwy in Sight]

Originally Posted by SeenItAll

They will make their decisions based pretty much completely on the basic economics of whether repairs cost more or less than the replacement cost of the frame. Note that based on recent statements by Delta Airlines, used B777's are going quite cheaply, so the cost of these repairs cannot be more.

Since the repair will be carried out by Boeing and GE personnel using spare parts of those companies so (with a small experience in the transport sector) these companies can influence the cost of the repair by (a) suitable pricing. I know there limits to how low you can invoice something but they know what prices to give to avoid a write off.

Regarding stock price I am not sure how much an impact of a write off would last.

Rwy in Sight

[keesje]

I'm almost sure the cost for the planned repair are several times as high as the restvalue of this 16 yr old 777.

In a write off scenario, we would have to take out al re-useable, valuable parts of the BA 777, such as the remaining engine, landing gear, APU, cockpit and Avionics bay LRU's, controls,flaps, actuators maybe interior and see what value is left in the badly damaged airframe.

E.g Delta bought a reasonable complete 10 yr old 777 for $8 million recently.

I guess this repair including all dramatic structure replacements, testing and recertification is going to costs easily over $25 million, maybe 50. In a few years A350 start streaming in with BA and this then off standard, heavier 777 is probably the first to go.

It seems economics is not the top priority in this project, other things are just more important.

[SeenItAll]

It seems economics is not the top priority in this project, other things are just more important

If economics were not important to airlines, why are they so hell-bent on shrinking legroom, raising baggage and other fees, charging you for food in-flight, etc.? So they can afford to pay $50 million to repair an airplane for that they could replace for $15? I don't think so.

[DaveReidUK]

Originally Posted by SeenItAll

If economics were not important to airlines, why are they so hell-bent on shrinking legroom, raising baggage and other fees, charging you for food in-flight, etc.? So they can afford to pay $50 million to repair an airplane for that they could replace for $15? I don't think so.

As explained in the previous posts, it's not the total cost of the repair that's relevant here, it's the contribution that individual parties (in particular BA) that's important.

Clearly Boeing and GE aren't about to buy BA a replacement aircraft (even if it only costs $15 ), but it's equally obvious that they are both going to contribute towards the cost of getting the aircraft flying again. Much of that cost will, of course, be labour and based on past experience a significant part of the work will be done by a Boeing team.

So BA, or its insurers, will end up being on the hook for far less than the amount quoted (and $50 million is a ridiculously high estimate anyway).

[keesje]

"($50 million is a ridiculously high estimate anyway). "

Hi DaveReidUK, could you please explain why $50 mln is a ridiculously high estimate?

For reference; an GE90-85 costs about $15 mln, a 777 Heavy check (without damage) around $10 mln and we are not engineering / replacing / testing / certifying any wing attachments, spars, floor beams, stringers at that stage.

The QF A380 VH-OQA exploded engine repair costed approximately ~US$145m.



Qantas A380 to Fly Again 18 Months After Engine Explosion - Bloomberg Business

Why do you feel this BA 777 would be so much easier and cheaper? (see previous page 33). I think $50 million is on the low side.

Regarding BA, I think BA isn't more demanding than that they want to be compensated for the capacity loss, image damage as soon as possible. If Boeing e.g. gave them a substantial discount on their next five 787-9's they probably would be ok. Where the money is coming from is of less interest. GE is a $150 billion company, they can handle and maybe want to sell some 777-9s to BA later on.

[anartificialhorizon]

Here we go again, around in circles.

The cost of repair has to be economic to insurers who will be footing the bill for the airframe repair. Probably in the region of US$15 million maybe? Therefore when taking into account the agreed value in the insurance policy, economic to repair.

GE (if found to be a warranty type issue),or BA, will fund the engine repair/ replacement bill.

Not so simple to go out and buy a replacement aircraft, even if cheaper. Engine life, commonality, AD/ SB status are all factors which make repairing your own aircraft more attractive.

[keesje]

There's "repairs" and there's "rebuilds".

Apparently for GE it is more economic / convenient to pick up the tab & get it over ASAP, then to explain the NTSB, FAA, public, Boeing, BA, customer base what exactly happened and why for the next 10 years.

This will be the most expensive "repair" to a Boeing 777 ever. Similar to the exploded engine QF A380 repair. That one was less damaged & new.

This paper is also on an NTSB desk. It is better to discuss an aircraft already back in flight, than one on public display in Las Vegas. Common sense.

Failed Engine Type On BA 777 Was Subject To 2011 AD | Aero-News Network

[DaveReidUK]

Originally Posted by keesje

Apparently for GE it is more economic / convenient to pick up the tab & get it over ASAP, then to explain the NTSB, FAA, public, Boeing, BA, customer base what exactly happened and why

I don't see any reason to suggest that GE are planning to suppress information on what happened inside their engine, or that they won't cooperate fully with the NTSB's investigation.

[zonoma]

Aircraft to be fixed not long after a hefty lawsuit is launched? I'm sure the lawyers would find it easier to get a substantial payout after an accident that writes off an aircraft, where as by fixing it the defense can play the situation down and say that the aircraft wasn't critically damaged as it is now flying again. It will not be the only reason, I'm sure there are lots, but it would add weight to the economics of fixing it even if it doesn't make direct financial sense.

[SeenItAll]

Apparently for GE it is more economic / convenient to pick up the tab & get it over ASAP, then to explain the NTSB, FAA, public, Boeing, BA, customer base what exactly happened and why for the next 10 years.

This will be the most expensive "repair" to a Boeing 777 ever. Similar to the exploded engine QF A380 repair. That one was less damaged & new.

This paper is also on an NTSB desk. It is better to discuss an aircraft already back in flight, than one on public display in Las Vegas. Common sense.

Keesje: since you obviously know so much about not only the cost of airplane repairs but also the inside scoop on what major corporations are doing to deceive their sophisticated customers and regulators about the true (according to you) defective nature of their products, I suggest you hire yourself out as a consultant. If, as you suggest, these companies are willing to pay tens of millions of dollars for repairs in excess of the cost of replacement just to cover over these issues, your inside information about this will be worth millions. Good Luck.