Monday, November 24, 2014

The Road To The 777X Is Paved With Creative Options

The 777X will be coming none to soon after its announcement of its inception in November of 2013. The problem Boeing has is the eager anticipation for the 777X, and what to do with selling a seemly dull prospect of a brand new 777-300-ER, an airline might add to its airline inventory in the interim of time. "Time", once again is biting Boeing in the  foot. Make an announcement on exciting all new airplane, and your customers await impatiently. The old stuff ordered two years ago now seems older before it arrives. The important item Boeing is trying to address is how do you satisfy a customers impatience of needing new stuff for its own customers. Delta Airline when it double reversed Boeing through  ordering the A330 NEO and A350's before Boeing's 777X arrives in 2020. Airbus will start delivering now with the A350, and later with the A330 NEO to its customers while the 777X project is still on the computer graphics card.

Boeing needs to recognize its predicament with both the 777X and 787-10 projects. The 777-300-ER is a great machine but its not new. A Customer's sensibility, which needs to be address by Boeing in more transitional tones. The sales and PR team need to huddle on this one. Neither is the 777X coming soon, nor is the 787-10 coming soon. Even if a customer orders a 787-10 now as a bridge to the 777X, before it can even get a 777X, the customer is stuck waiting just the same. However, Airbus is quick to point out they are starting to deliver A-350's in December.

"We" will start to deliver A 330 Neo's in three years, what do you think about that?"

The customer retorts, "where would I be on the order list?"

Airbus can say, "way further up front in line than you would be, if you ordered the 787-10. The 777-yawner-300-ER is available , but why would anyone even consider that, when "we" have all new technology way ahead of the 777-300-ER?"

People want the new shiny stuff over getting last decades stuff.

Boeing must tackle these perceptions in the market place on with the 777-300-ER as its go-to gap filler, since the 787-10 has not been built or tested as a provisional Gap filler for the 777X. The wait on the 787-8 or-9 is longer than the A330-NEO. Instant gratification is a terrible beast Boeing needs slain, by making a better deal or a creative methodology through a purchasing plan. Boeing could bridge the 777-300-ER to the 777X with a Lease-Buy incentive program. Lease a 777-300-ER through to 777X's entry into service (in 2020), and have a buy options exercised on a like numbered 777X or keeping the leased 777-300-ER when the 777X is scheduled for customer building. The lease can also build equity towards a purchase of the 777X, partnering with Boeing, and the lessor company with those leased the 777-300-ERs during 2016 and later.

The mumble jumbo of it all, It that the customer will win in the exchange of equipment, The leasing company will not have Inventory risk, as it is backed by Boeing with a set buy-back price for each unit leased by the leasing company. Boeing will then have to sell the future returned leased equipment to a secondary market, which it should cultivate during the interim lease period.

That is big picture gibberish, which in all effect there is a heavy discount for the customers leasing a 777-300-ER and an incentive for buying the 777X through options. The Lessor also does well as Boeing sells more of this generation and next generation 777 through the lessor.

Boeing needs to build its own bridge during the 777 process.