Tuesday, July 14, 2015

Conclusion: Dreamliner 787 Profitability Will Power Boeing In 2017

Much to do about the Dreamliner is very Shakespearean since 2005. The Dreamliner will fly faster higher and longer driving Boeing forward. All this is based on assumptions that litter the Boeing Journey until this accounting point from 2005 until 2017. Good news comes from further analysis, which has noted Boeing is about to burst the profit/loss bubble in the future during 2017. Not from the strengthening 787-8 output, but from its larger sibling coming online by...

"On Tuesday, JPMorgan Chase analyst Seth Seifman joined Boeing’s bullish boosters, saying the Dreamliner program likely will swing from a $2.5 billion loss this year to a $1.7 million profit in 2017. Seifman also cited the heavier mix of big Dreamliners in the backlog as a key reason for the shift."

By the end of this decade, Boeing could turn its current $20 million loss on every Dreamliner it sells into a profit of up to $56 million per plane, analyst Myles Walton wrote in a research paper for the bank’s investors.

It is further stated the 787-10 will make money starting in 2017 with the 787-10.

Walton estimates it currently costs $163 million to build one 787-9. By 2020, the production costs should decrease to $115 million per plane. With an estimated sale price of $156 million by 2020, the 787-9 should bring a profit of more than $40 million on every sale.
The 787-10’s performance should be even better — an estimated sales price of $180 million minus production costs of $124 million for a $56 million profit per aircraft.

This is the first report I have seen expressing when a solid profit will turn for the program as a whole. Considering it will have gone halfway through the current backlog by more than half with the bulk of the largest aircraft remaining to build with the highest profit potential. Boeing will have obtained the high ground in these ten years, since the first roll out of the 787-8 frame during July 7, 2007. But the immense profits will come from the 787-9 and 787-10 production types. It will have become a remarkable and true profit mechanism consistently churning cash and raising profits for Boeing going forward through 2020.

Winging It Quote: December 2012  

Amazing prediction by "Winging It" now that analyst agree with it.

"I said in a prior posting, that I believe Boeing will reach Break-even when 150 787-10's are sold or delivered.  I don't know when that will happen but, I believe this can be done well before 2021, but not by 2015. Boeing will have to exhaust a significant portion of its order backlog through deliveries by 2015 to meet that goal. However, by 2015 Boeing will have all risks retired, and certainty of "when it will exactly meet, the profitability barrier beyond 2015".  A 2015 forecast for the year 2017 from Boeing, is a better forecast than this years 2012 forecast for 2015. Two years from now a solid view to the future will excite the investor, and I believe Boeing will state it will make money by 2017, not 2021. A  financial cushion  of time would lean towards 2018. Boeing will make money on the 787 project as a whole surging past its break even point late 2017 or early 2018.

Note: More orders are coming and that will bode well for Boeing to think about a gap filler from single aisle to duo aisle replacing the 757 and slapping the A-321 NEO back a few orders in 2020. The 777X should be well into the mold by then and meeting new friends.