Tuesday, July 21, 2015

Boeing 2nd Quarter, EVA Airways plans to buy 24 to 26 Boeing 787 jets

"Boeing Co posts second-quarter results. The company on Friday said it will take a $536 million after-tax charge related to its aerial refueling tanker for the U.S. Air Force. The commercial aircraft business will still show strong underlying growth, after delivering 381 commercial jets in the first half, more than half of its annual target of 750-755 jets. The company also announced that EVA Airways plans to buy 24 to 26 Boeing 787 jets for around $65 billion at listed price, with delivery slated for 2018 to 2019."

Quarterly reports sometimes are all about notations and not the rock hard crunched numbers. The Taiwan Air, EVA, considers 787 in a Boeing purchase footnote, and it comes at time as if it were a smoothing pink solution for Boeing's 787 order book. It’s an indication of Boeing's relentless sales pursuit of note. EVA and 787 are considered a mutually exclusive impression by most people not familiar with Taiwan. However, this drawing board notion becomes interesting, since EVA hauls passengers in and from the region to North America.

WSJ 24/7: 2ND QUARTER pre announcement speculations. "Boeing also may say something about its 777 orders. The company announced a new order Tuesday morning for four of the freighter versions of the plane from Taiwanese airline EVA Air. The company needs to add about 40 to 60 orders annually for the current version of the 777 in order to keep the production line running. The new version of the plane, the 777X, is not scheduled for first deliveries to customers until 2020. 

The second quarter for Boeing becomes a much needed second quarter exhale during 2015. All-in-all, Boeing financials seems to reflect its business churning on several fronts from military contracts, freight orders, and commercial intrigue. This comes as its on the cusp of making its financial goals. Its vulnerability is in the cash flow section as mentioned, since it is a finite positive condition. Boeing keeps using the positive flow propping up its development costs from its production generating the surplus cash, all the while, sustaining its positive position. Boeing can use its cash infusions, applied to its concurrent programs, but at some point cash can become a finite source for pushing its frames to customers. Even though Boeing pushes out the next Boeing 787, it currently costs more than the delivered price. The economic 787 engine has its limits for its cash position, as analysed in the second quarter 2015 report.

Boeing knows this too well and is striving to turn the 787 production efficiency into a financial efficiency by this year's end. It’s well positioned itself by  the end of the second quarter for a positive production condition, only when delivering its 787 as it begins gaining more cash flow above its production cost, even though for a long time it took more cash to build the 787 than it received at delivery. That condition of positive cash will be an announced 2015 benchmark for year’s end. Once more, Boeing claims the build at delivery will have an actual revenue value above  and ahead of the production cost of goods sold. Currently cash is sourced from: stock sales/price, bonds, sales transactions, and debt. 

The Cash position on the 787 by 2016 will stand on its productions shoulders. Cash position vs COGS for every unit delivered.
  • 737 NG +
  • 747-8 +
  • 777 300 ER +
  • 787 - (until January 2016)
  • 737 Max (Cash flowing into the program is considered an investment until its first deliveries)
  • 777X (same status as the Max Program)
Cash will become a scarce commodity for programs unless the 787 turns a corner in early 2016 when Boeing builds each 787 for less than what the customers pay for it.