Wednesday, April 10, 2013

The 787 When Will It Profit

The words, “when will it profit”, always seems to come up concerning the 787. This latest foray into the unknowns of glitch and change sets all the profit timetables back some, but not out.  The big picture is the overall new technology that will define air travel for some years to come. Whether it will be for the 777X program or for the 787 9-10’s. The profit picture no longer hangs on current sales, but on the overall impact of the change model Boeing has built in the 787. The program is still a risk which is steadily being squeezed down into simple manageable risks. This latest problem with the battery/electrical is a turning point for the program. Once settled there are just a few outstanding items possibly that could turn-up just as a matter of new aircraft refinement. Where hours, cycles and supply chain normally reveal during the maturing process, but only in limited numbers and severity. The electrical area is the big ticket item that requires this process a full understanding, and a full resolution. Airbus has a strategy or tendency for side stepping road blocks by selecting old technology over new when trying to make a mad dash of catching Boeing’s technological advances. Airbus may return to Lithium-ion once Boeing, FAA, and NTSB solve the issues. Airbus sees it as, nothing visible to passengers and nothing risked by its customers keeps aircraft selling. Boeing sees it as a quantum play for leaping ahead of Airbus once all the irons have cooled down in the fire.

Having stated this proposition of how the effects of new technology on the profit line for Boeing, it would be difficult to pinpoint a time when this will show up on the bottom line. Right now it is suspended in a gamblers nightmare of; do you let the money ride while throwing more money in to kept the game alive? If you do, Boeing would make all its money back in bucket loads, when the other hands fold. Boeing is at that crossroad on the 787 gamble. It will stay all in and ride it out, because that is the only way it can win. The investors know it and have responded as Boeing’s stock has elevated during the last three months. Airbus has backed off of Lithium-ion where it will add some weight, lose some battery performance and avoid a timetable crunch to get the A350 airborne.

Does Boeing gain enough by sticking with a heavier encasement for the battery? The 150 pound weight gain found in the 787 battery solution brings it closer to Airbus’s A350 battery weight. However, the performance of the lithium keeps the 787 a better performing Aircraft. I am sure Airbus is keenly watching this development as it has already switched back to the older, heavier and underperforming battery system as compared to Boeing’s Lithium-ion setup  The 150 weight gain may have to come out of reducing some parts items at one ounce at a time. Airbus could switch back to Lithium-Ion once the Aircraft is moved onto the flight line, letting Boeing do all the heavy lifting on this issue.

Quoting The Press:

“In this context, and with a view to ensuring the highest level of programme certainty, Airbus has decided to activate its plan B and therefore to revert back to the proven and mastered nickel cadmium main batteries for its A350 . . . programme.”