Boeing says it could end 747 production
 

Good Evening All:

Just read this on CBC web site which is sad news for such an iconic aircraft.


Boeing says it could end 747 production - Business - CBC News

Thomson Reuters Posted: Jul 28, 2016 11:05 AM ET Last Updated: Jul 28, 2016 11:05 AM ET

Boeing Co could end production of its iconic 747 aircraft, as the world's biggest plane maker faces falling orders and pricing pressure, according to a regulatory filing.
"If we are unable to obtain sufficient orders and/or market, production and other risks cannot be mitigated, we could record additional losses that may be material, and it is reasonably possible that we could decide to end production of the 747," Boeing said on Wednesday.
Boeing said it had canceled plans to increase production of the 747 to one plane per month from 2019, and stuck to its plan of halving the production rate in September.
"On the 747 program, we decided to reduce future production expectations and revenue assumptions to account for current and anticipated weakness in the air cargo market," Chief Executive Dennis Muilenburg said on a post-earnings call with analysts.
"Despite the ongoing challenges of the air cargo market, we continue to see the 747 as a unique and significant value creator for our customers over the long term," Muilenburg said.
Boeing declined to elaborate on the filing or the comments on Thursday.
The production rate of the 747, which was 1.5 per month in June 2015, dropped to one per month in this month.
The latest version of the 747 is used by Cathay Pacific, Lufthansa and Air China, among others.
Boeing is not alone in facing problems with sales of the biggest passenger jets - Europe's Airbus has also been hit by weak demand.
Airbus confirmed this week that it plans to roughly halve production of its A380 superjumbo as airlines shun large four-engined jets in favor of smaller two-engined models.
The planemaker said earlier this month that it would cut the A380 delivery target to 12 a year from 2018, from 27 in 2015, to prevent a glut of unsold planes.
The move raises the possibility that Airbus could revert to losses on the double-decker jet after breaking even for the first time last year, but averts the need to start ordering parts for unsold planes - something it has pledged not to do.
Parts for A380s must be ordered up to two years in advance.
Boeing reported a smaller-than-expected second-quarter loss on Wednesday, helped by strong performances in its passenger jet and defense businesses.

This from only six months ago.

"Muilenburg's jumbo jet plan was specific and he argued that 240 large airborne freighters now flying will be over 20 years old by 2019 and ready for replacement.

Several things are in Boeing’s favor for this long wait.
One is that Boeing has nothing else it needs to make room for in the western end of the Boeing Everett factory where workers put together 747s. This means that the financial cost is relatively low compared to a situation where the space could be used for some other production.
In addition, the 747-8F has unique qualities that Airbus can’t match. The Boeing plane can carry 138 tons of cargo, and it can load large objects, such as vehicles, through the nose door. Airbus’ comparable A380, with its two decks, is so ill-suited to cargo that the company doesn’t even offer a cargo option.
“The 747 is a niche market but an important niche market, and one that we think that is sustainable,” Muilenburg said. “This is a great airplane in a tough cargo market. We expect that to recover and we have a perfect asset to align to that recovery.”

meadowrun
I'm pretty close to the action, having worked the 747 in general off and on for 30 years, and the -8 variant when it was still called the '747 Advanced'. I find the timing of this announcement quite interesting and more than a little curious.
Boeing has committed to producing only 6/year - which will stretch the current order book for about 4 more years. But it's not that simple - long lead parts need to be ordered 18-24 months in advance, so a decision to shutdown the line could come as soon as early 2019. Also, producing 747s at 6/year is not profitable - they need to get up to at least 1/month to make money on the deal.
OTOH, as you noted, the 747 Freighter provides capability that's not available elsewhere - if you want more than the ~100 tons of a 777F, the 747 is the only option. And 747-400s are getting pretty long in the tooth - 100k+ hour airframes are becoming the norm. Moreover, passenger operators haven't been parking their 747-400s until they've rung all the life out of them, so it's not very cost effective to convert them to freighters (and of course the conversions lack the nose loading door).
I wonder if Boeing isn't sending a signal to the freight operators - speak (order) soon or you'll lose the chance. When Boeing decided to launch the 747-8, they were very worried about the many open -400 production slots before we started building -8s. So Boeing offered the spots - at a good price - noting they would be the last 747-400s built. Scuttlebutt is that we had more interest than we had positions - we could have easily sold many more.

tdracer, that sounds right on the money. Good analysis. The -400s are just going to be spent in a few years and people are going to want -8Fs.

Doubtless that's true.

But the question is whether enough people will want a > 100-tonne freighter with a nose loading capability, and be able to fill it, in order to sustain a profitable production rate.

A lot of the cargo carried by air is time sensitive and valuable. It's not commonly large, heavy or bulky. Which means you may just as well pack the boxes on a pallet to lower-deck height, and load it onboard the ever expanding fleet of massive twin-engine aircraft, each easily capable of hauling 25 tons or more along with passengers and their bags.

Couple that with a seriously depressed general cargo market, which has been diminishing under the pressure above from integrators, and below from improved logistics planning allowing for slower modes of transport, e.g. road, rail or sea.

The result is rates dropping through the floor for general cargo, with plenty of evidence the general cargo market is hurting badly.

It might very well be, that in 5 or 10 years time the 744Fs are getting too long in the tooth and there's no viable replacement on the market. Trouble is, the carriers cannot fund today a need which may materialise sometime in the future.

Boeing's problem isn't just aviation or even airline driven. As a former US President once said, 'it's the economy stupid'.

Eight years ago the world economy slumped. This should have been the time airlines would have been ordering airframes to replace the 747-400 on a like for like basis.

There are very cogent reasons why they didn't. The trend to twins was, and still is, in full swing. Apart from fuel, spares and maintenance economies the downward pressures on air fares militated for big twins. With stormy economic conditions airlines looked to minimise the cost of fleet replacement. The same economic conditions cut the amount of freight being carried, and freight carried in passenger aircraft holds was, and still is, often the difference between a profitable flight and a loss.

Given a reduced economy, a reduced amount of freight, a reduced overall cost of passenger tickets and the ability of large twins to carry freight and at the same time reduce overall costs, it was a no brainer that the 747 replacement would not be on a like for like basis.

As for pure freighters, they are a niche market and, specialist carriers apart, with reduced levels of freight compared to previous years the major carriers found no need to buy.

Economists are good at telling us that the world economy is, in general, cyclical. What they are not good at, be they employed by governments, banks, companies or airlines, is forward thinking and planning for the cycle. Knee jerk reaction to economic change is the norm, with little forward projection.

What is unusual in the economic conditions experienced since 2008 is the sustained and growing numbers of passengers carried. This shows no signs of slowing and this brings its own problems.

VLAs will be required in the future both to carry ever growing numbers of passengers, large freight and to deal with slot restrictions. Whilst Boeing may well run down and eventually close 747 production, someone, somewhere will have to produce an equivalent.

Currently only three possible contenders for that, Airbus, Lockheed and Boeing itself.

Trracer is correct I think - plus they want to kick the Pentagon into moving a bit faster on the Presidential aircraft

Am I mistaken but I definitely see in media last month, that at Farnborough Volga-Dnepr aka AirBridgeCargo aka Air Cargo Transportation signs contract which will save Boeing and it's 747 production program?

I think you're close to the truth. Fact is, the world economy has slowed down significantly and has barely recovered from the 2008 shock. The 747-8(F) business case, rosy production number forecasts and customer orders date back from the pre-2008 era, an era where there was no end in sight for consumer spending and globaliszation seemed limitless.

Of course the stock markets are up thanks to the cheap money that's sloshing around in the financial system, but everyday people have gained little if anything at all.

As philbky suggested, the trend is clearly towards slightly smaller but extremely fuel efficient twin-engined aircraft, flying more point to point instead of through big hub and spoke systems, throwing a lot of extra belly capacity on an already tight cargo market.

I guess there will always be a market for specialized oversized loads requiring large aircraft like the 747-8 or AN124, but the bulk of the cargo requirements (consumer electronics, mail, horses, luxury cars, aircraft engines, chemicals, oil drilling equipment etc) will either find it's way into the bellies of passenger aircraft, or onboard smaller full cargo aircraft like (converted) 767'Fs, 777F's, A330F's and the existing fleet of 747's (-400F, BCF, -8F). Any possible future cargo derivatives of the 777X and A350 will only accelerate the 747-8's demise IMHO.

As for the US Presidential aircraft, I can honestly not see them buying a foreign made A380, and since apparently there's a requirement for 4 engines (4 long haul? :E ) there is not a lot of competition for the 747-8.

Was the VDA deal not just a rehash of a previously announced deal? Seem to remember even Boeing stating that of the 20 aircraft, four had already been delivered.

Other possibility is Iran Air, for pax versions? Was their order confirmed?

Already started
"The Air Force on Tuesday gave Boeing the green light to start submitting design proposals for the new presidential aircraft that, by 2024, will shuttle a future president around the world."
A new Air Force One is on the way

there is a market for very large cargo to be loaded without breaking it down but it certainly isn't big enough to allow development of an all new freighter - unless it's the military . But no-one is planning a successor to the C-17, C-5 or the An-124 so you're left with the odd A-400, the remains of the 747 fleet (maybe a few more modded to pure freight) and the possibility of a "Beluga" type mod to the A.380 or the B.777

Maybe 25 years from now when A380 and 748 production has long ended and most examples are retired and a VLA is once again needed, China will be the only one able to field such a plane.

As I have said before, long experience teaches us that, when Boeing make this sort of announcement, they are not simply reporting a news item.

They are carefully adjusting the expectations of their customers, who are almost always also Airbus's customers, towards some end that is deemed desirable in Seattle.

I think Europe and the USA will still know how to design and build large multi engine aircraft 25 years from now....

The know how will still be in Europe and the USA, but the 50 billion dollars (or maybe 150 billion by that time) will be a lump they won't swallow. And the American and European firms would rather be supplying components for the Chinese to put together a VLA.

Comac anyone?

747: "Rumors of My Death are Exaggerated!"
 

Some interesting ideas. We'll have to revisit this thread in 2020~25 and see who is / was right.

My own guess is that we will see the 747F being built for quite a few years yet. If Boeing squeal long and loud enough, it wouldn't surprise me that some military assistance comes along: in much the same way that the KC-10 and KC-767 kept the those production line humming far longer than would otherwise have been the case.

And I suspect that the big bird will still be flying around longer than most of us here. It is an overused term but the 747 was, in every sense of the word, a GAME-CHANGER :D :{ :D

er340790
Sir... I believe you are spot on.

HH, rumor mill says the new AF1 747s have already been built. There are a couple white tail 747-8is that were built for a Russian operator that went bust (if you watched some of the Boeing Founders Day celebrations, one was parked behind the stage). The thinking is those will become the new AF1 aircraft.

So many of you are living in the 1970's
The 747 in it's various forms has been on life support since 2001 when Airbus pulled the plug.
RIP & farewell, you had a good run in those good ol' days

You'll have to explain that one.......

Early 747 photos - WSJ July 27, 2016
 

Some good photos of the 747:

Photos: Early years of the Boeing 747 - WSJ

Boeing Considers Ending Production of 747 - WSJ article July 27, 2016
 

From the Wall Street Journal, July 27, 2016:

Boeing Considers Ending Production of 747 - WSJ

Anyone know what will happen to the two current Air Force Ones when the replacements are delivered?

I'm guessing they have pretty low cycles and are VERY well maintained.

The previous Air Force One aircraft have ended up in museums (there are several at the USAF Museum in Dayton, Ohio, one of the two 707s is at the Museum of Flight in Seattle).
I'd expect the current AF1 to have a similar fate.

You could save taxpayers' money and part it out for the four Air Force E-4B(747-200) Advanced Airborne Command Post.

As far as I know VC-137C, SAM 26000 is at National Museum of the United States Air Force at Wright-Patterson AFB , VC-137C, SAM 27000 is in the Ronald Reagan Presidential Library.

You can twist it and turn it as many times as you want. You can build in a nose-door, a shower and a bar: The four-holers are doomed.

They certainly have a niche they fill nicely, but never enough numbers to make a production line and operation profitable.

Airbus is bleeding, Emirates is bleeding and Boeing bleeding with their four-holers and no spin can save them.

Airbus is breaking even on the A380, Emirates is making loadsamoney and Boeing is bleeding. Passengers love the A380, the problem is that only a limited number of routes can justify it.

.... that's probably why they discuss shutting down production ......

.... that's probably why they want to hire the renowned crisis manager Christoph Mueller ....

.... on the 748, yes, otherwise no ....

.... yes, and they also loved the Concorde ....

.... now you're getting a tad closer ....

.... about as true as the first quote ....

Keep on dreaming of ancient times buddy!

Airbus is pretty much resigned to the fact that the A380 project was a colossal loss of money. They could have seen it too, if they weren't collectively blinded by the desire to make something really big.
Emirates is making tons of cash. Last year, they cleared over $2 billion in profits. Of course, cheap fuel plays a role, and, with low oil prices, Dubai's losing a lot of businesses, so you can expect them to be hauling less Organic Californian Arugula underneath. Still, their close relationship with the government, which maintains a "business-friendly" (cough) economy, keeps costs down.
Passengers love the A380. They love it for a number of reasons. It's quiet, for example. Not just because of quieter engines and better soundproofing, but also because there's fewer people sitting in those seats. No passenger ever said "It was great, the plane was completely full!"

With the 748 on its way out, and the 777X sounding increasingly like the MD-11 of this generation, Boeing's going to need a new large twin.

their accountants reckon they're breaking even on the A.380

Mr B has a long way to go on the 787 and will never make it on the KC-46 but I expect all 3 will continue in production because, TBH , there's always the cash flow now the development costs are written off and few senior managers have been fired..................

They're breaking even in the sense that each Skytanic™ they build costs them about what they're selling it for, before taking into consideration development costs.
In other words it was a loss of money; it's not losing money any more.
The 787 is still losing money at a dizzying rate. It turns out supply-line outsourcing trades a minor saving in measurable costs for immeasurably huge costs. Mr. B could have known that if he looked at what was happening with to the A380 in development, but I guess he was too busy playing golf with CEOs in Chicago and got burned.

Confusio, on which routes are fewer passengers sitting in A380 seats? Certainly not on Emirates UK routes, or are you just confused?

Well all you boring old lot can talk like accountants for all you're worth. I know it's financially doomed. That's accountants stuff and I'll let the accountants on accountant forums talk about that.

But I'm a pilot. And as a pilot, quite simply the 747 was the most glorious, iconic drop dead gorgeous aircraft I've ever flown. It will always be a film star.

Like the spit, mustang, Lanc and Concorde, it's the one aircraft the public knew the name and shape of, and it was a mighty mighty beast. a true air - liner.

I don't ever see an A380/787/350 pilot getting the same "thing", despite the press trying to steal the moniker to the a380 as the "jumbo", the public will always be clueless. The world will have airline pilots who flew the jumbo and those that wished they'd had a chance at the bird. And I'm glad by luck more than my old skill I did have that chance :-)

After retirement, SAM 28000 and 29000 will most likely end up at a Presidential Library or Air Force Museum. Possibly one could get a spot at the Udvar-Hazy Air and Space Annex located west of the Capital and just south of Dulles Airport.

Last time I was a non rev on an EK 380 it had 150 seats available.
Last time I was a non rev on an EK 777 the whole economy centre section was empty.
Two flights are in no way representative, but EK flies to other places than UK.

I see Boeing still have to recoop $31 Bn on the 787 - they're planning to spread it over the next 900 airframes to reach break even - they've sold around 750 so far

Fingers crossed there is no down-turn............