Tuesday, October 29, 2013

ROI Verses ROI


The two worlds meet often in the fight for supremacy. Especially in Technology and Fashion. The first ROI represents, a Return on Idea meeting the Return On Investment. The Idea is born out of brain storming, pride and the need for human relevancy. Frail human mental functions are subject to public rejection, no matter how well intended. Think of Blue Jeans and Mini Skirts for great long lasting ideas. Then again reflect on Bell Bottoms Pants, and  Eight Track Tapes. Horrible Ideas that burned out in the public conscience. The Return On Ideas either continues or are buried quickly.

The Second ROI is the Return On Investment. It is a measuring stick measured on corporate balance sheets for the investor's intrigue.  For every dollar invested what do you get in return. The four engine aircraft are rapidly becoming the bell bottoms of aviation.  Akbar Al Baker, reminds how whimsical appearing a customer may seem. Al Baker states he does not want 787-10's or any more A-380's, signaling a fashion change for multi-billion dollar purchases. It affects his Qatar airlines ROI plans. Al Baker wants what makes money in his airline network around the world. He bought tons of A-350's and 787's. Sorry for the late entry of the 787-10 and for the four engine A-380 reorder book.

Qatar Readies More Orders as Al Baker Studies Boeing’s 777X 

"The CEO said he would assess any stretch model of the A350 model beyond the -1000 he is already buying, but has no interest in the 787-10X, which is too close in size to the A350-900, a variant that the carrier is also purchasing.

The carrier also has no interest in additional Airbus A380 double-decks, of which it will receive the first example early next year, he said."

The Return on The Idea has flown the coup for Al Baker.  That does not mean the Idea for those models he passed on is done, but it does mean he has set his plans for his Investments in concrete. He will look at the 777X and any Airbus follow-on, if it has two engines. The two engines is the "Blue Jean" workhorse that will carry his mini skirted airline into the future. No Eight tracks in electronics bay. The 787 is a great airplane and will settle in on a remarkable career. It is approaching 100 units flying and going beyond 200 flights a day. The 787-10 does not fit Al Bakers extensive back log and his own inventory at this time. He is more cautious for his financial ROI than impulse ROI. An Idea is taking a back seat at this time until he can solidify his investment.

The Idea return is when the vision and desire, conspire into its own reality no other can touch. The investment is the structured journey to a successful end. Where no Idea can be ignored or can set aside if valid. The Boeing problem is unappreciated genius verses Airbus' more simplistic approach of lower risk. In the end Boeing hopes for its return on its Idea over the Airbus Return on Its Investment. Will the Idea win over the customer? That is the war we are seeing waged at this time. Airbus has sneaked a march into Boeing's stronghold in Japan having a 31 unit A-350 order with Boeing's Stalwart friend, Japan Airlines. No explanation is given in the press for that order from Japan Airlines. Strangely Airbus has not succumb to its usual gloating. Something is more going on, than just a better deal. Japan Airlines may have traded off the JAL Idea for a different Investment. That is where the soul of this war is being fought. The Idea vs the Investment.  Boeing is currently selling an investment full of hiccups that is a great Idea. Airbus is trying to sell its four engine behemoth out of its pride shop, which has not even reached a break-even point as of yet, since its introduction on the flight-line in 2005.
Boeing may have lost a battle in Japan, but Airbus lost the war in Toulouse. ROI verses ROI is separated by Risk. Japan decided its Idea risk is too high and opted to a lower Investment risk with Airbus, or is spreading out its risk with Airbus. It does not mean the 787 is a risky airplane, but it means Japan has spread its ideas broadly with its network by an Airbus purchase. If the Boeing matures into the Vision that Boeing seeks, then it will win. Airbus' near sighted vision cannot compete with the Boeing 787 when all Glitches are retired. Japan Airlines blinked in its vision so others may pass beyond them from its A-350 order.

The 777X and Al Baker are at a cross road with QATAR's stuffed inventory. Over 250 units are on back order (undelivered). Al Baker has  spent the cookie jar at this junction and can wait for the 777X process to reach completeness, before ordering a boat load of 777-X9's. He is free to speak of no 787-10's and A-380's with extreme wise sounding quips about stuff he doesn't need at a time like this. It's no reflection on the aircraft that he castigates as unwanted, but its more of a reflection he his Ideas and Investments are full up at this time. His Dubai order will be his vision through sunglasses protecting him from eye strain while others order at Dubai (uhumm Emirates).