Wednesday, January 28, 2015

The Bridge to The 777X Is on Solid Ground

Jim McNerney is confident about spanning time with the 777-300-ER order book. At least through 2018 and beyond during its transition to the 777X family of aircraft. Why, is a reasonable question anyone who doesn't believe anything coming out of Boeing? Sixty-three 777-300ER were ordered in 2014 because there is no comparable aircraft existing for its range, capacity and passenger comfort. This is a legacy aircraft worthy of another advanced protege. Referred to as the 777X project. It will reach fruition by 2020. Boeing simply needs a 300 unit backlog between now and 2020 for its current model 777-300ER. It now stands at only 237 orders to go since starting the count-down at the beginning of 2014. Watch 2015 and each succeeding year for 777-300ER orders or current customer reorders.

What an Airline would consider is its own transition period to the 777X from the 777-300ER. The classic model (777-300ER) is very efficient and has a proven capability that is unrivaled in today's airspace.

What about the A350-1000? Once built it may be optimistically equal to the older 777-300ER from its brochure pitch. That is what is driving the classic orders today. The A350-1000 has received about half as much ordered in five years than what the 777X received in one year. Once airlines factor in a new 777-300ER, they will see a bridge order from Boeing which will beat a new order from Airbus' largest A350. Boeing intends on about 407 seats on the 777-9X and 350 seats on the 777-8X. It's a Market crusher attacking both the A350 and A380 at the same time. The Boeing Aircraft tool kit will have more sizes in aircraft than Airbus. Each will exceed or meet airline expectation, when they structure its routes and services tuned to market demands. Or it will have the right equipment for piloting in a new or expanding routes with many Boeing airplanes available.

There is only one area Boeing needs to address in the next five years. It is either with the bottom end of the the twin aisle or the top end of the single aisle. The 737 200c is a consideration for trans continental or announcing a roomier twin aisle  787-300 seater for trans-oceanic travel of 5,000 miles. Boeing is already committed with Ryan Air on an order for 737-200C's for about 199 seats, but no more than 199 passengers. Many competitors are looking at its metrics and are waiting to see if Ryan Air clobbers them in Europe with this particular MAX. If they do, many more 737-200C's will follow. Probably in the Indonesia region. Boeing has not yet zeroed in on the low end of the twin aisle 787 until after the 787-10 is in delivery mode. It will be a easier effort to do so after the -10 moves through testing as the -9 had completed its testing with a no mishap in process. A four type 787 is Boeing's ultimate goals for this family of aircraft.

Now for Business meeting quotes from:

Boeing Identifies Order Bridge to 777X

McNerney about the 777 current orders:

We expect demand for the [current] 777 to remain healthy through the end of this decade,” said McNerney. “With the new airplanes scheduled to entere final assembly in the 2018 time frame, this transition will leverage new manufacturing processes and technologies being proven on the current 777 to optimize the 777X production system.” Boeing’s backlog for the current 777 stands at 217 airplanes, enough to cover more than two years' worth of production. Boeing delivered ninety-nine 777s last year."

I think it is a sign that the capability is an enduring capability and the competition is…I hate to say it this way, but there is not much competition with capability,” added McNerney. “So we’re in a fortunate position here, and it’s one we’ll shamelessly take advantage of.” 


The company saw further positive developments in the widebody sector with deliveries last year of 114 Dreamliners, setting a new record for any twin-aisle airplane. Company CFO Greg Smith reported that unit costs for the 787-8 dropped by 30 percent over the span of time it took to deliver the last 175 airplanes, and that he expected the program to turn “cash positive” this year, ahead of a production rate increase from 10 airplanes a month to 12 in 2016.
The commentary by McNerney and Smith came as Boeing announced an increase in fourth quarter profits of 23 percent on record deliveries of 195 airplanes, and $12 billion worth of orders driven mainly by strong demand for 737s. Boeing Commercial Airplanes saw a 15-percent increase in revenues to a record $16.8 billion during the period.


Sunday, January 25, 2015

The Cheaper Fuel Pyramid Leads To More Boeing 737's

Boeing is putting its best foot forward as Oil per Barrel prices plunge under $50 a barrel, Certain market elements are the free radicals driving more sales. These free radicals will drive the order market rather than impede its growth.  Conventional Wisdom (CW) makes the assumption cheaper oil will collapse order books as Airlines will sit on cheaper ticket prices flying older equipment, because the cheaper oil is a hedge against competition. Is it a fuel price opportunity where weaker airlines will sit on not making further capital investments until they squeeze the life out of its current airframes.

CW then proceeds forward with the Premium Airline Crowd where they are always thinking about sound airline purchases while taking a hold on capital investments, as it will take the "opportunity" binge by swapping out high tickets for lower ticket prices when riding the fuel price dump Bull. These two examples illustrated dynamics of CW marketing on low fuel prices. Its what everybody thinks, until you talk to a Boeing optimist.

Boeing suggest, that a free radical pyramid exist for the opportunist:

Just Order
Opportunity is low fuel prices
Rise in traffic benefits the Revenue stream
Lower Ticket prices from Cheap fuel increases Cash Flow
The purchase window not affected by capitalization during fuel price drops.
A continued growth model takes into account capitalization needs during fuel price drops.
Finally, the goal is stay ahead of the competitors through sustained growth and better equipment.  

The zig-zag of the fuel price chart line will make you crazy over a ten year chart. The airplane growth line is built on regression analysis which is not so Zig-zag, but more of a nice swooping straight line upward. It takes into consideration seasonality influences such as fuel cost. I would be willing to bet the airline cost factor has changed it coefficient a bit downward at the glee of those looking at the upward swing on the revenue line after offering slightly lower ticket prices. Its more than that. A traveler indeed has cost before they attempt a ticket purchase. It takes them half the cost to fill-up their car going to the airport. Tires go cheaper, food is cheaper and so forth. Bottom line, a customer has more spendable cash for a vacation going over seas. Hence, increased airline revenue. It rapidly becomes, "It's the oil economy stupid", for the Boeing speech to its own customers. The Airlines aren't blinking by canceling orders, but are beginning to pour it on the order book as the growth line keeps swooping upward.

The price of oil will go back upwards to $80 a barrel until next year. An Arab Oil Sheik told me so! The airlines won't have lost its place in the production line by staying tight with ordering more airplanes, an airline exec told me so. Economics is simple as long as someone tells you so.

The 787 Remarkable Seat Range

Before you get out your calculators and slide rulers here's the sum of it all. The 787 has a range of anywhere from 195 seats to 375 seats. In a prior Blog, The "Art of Seat Wars", the air space was ploughed through with the following seat range.

  • Japan Airline 195 seats slide into place on its newest 787-9, not a possible 375 passengers, 
  • Norwegian air seats 291 passengers on its smaller 787-8,
  • and Jet Star's "per passenger smaller" 787-8 seat 331 compliant passengers
The game has shifted from Boeing to the airline entrepreneurs everywhere. Let's face it Boeing, you have built a travel tool and those wise Guys of business are re-writing the travel books over its aircraft efficiency. Who wins is the traveler. Whether you pay $600 a seat or $199, a traveler is going somewhere fast. Much like the astronauts of old. The technology has shifted to a few cubic feet allotted each passenger. Seat technology has entered the Aviation Renaissance. Control what you can control", is the seat makers motto. So, taking ideas from early NASA they will bend a passenger into a very comfortable small space with plenty to do even sleep.

The space under your seat is up for grabs at this time. It is currently, the habitat for handbags, computers, and brief cases. Since overhead bins have grown substantially on the 787, it is expected the under seat world will become high price real estate for passengers. The pitch wars have begun in earnest. The passenger sitting behind you, kicks your seat back, cusses and gives out rude gestures freely as you recline. Here are some ideas under review.

Freeze the hard shell of a seat back which contains the behind passenger's, entertainment screen, food tray and magazine pocket. 

Take-away the under seat space from the passenger in front currently has, and reserve this space for seat pitch flexibility as a passenger adjust its seat from upright to recline.

Build a drop down a "glove box" from the overhead bin bottom where carry-ons reside. This is where you would store your purse, coat, case etc. for the trip. The "Glove Box" in measured to seat width and sits behind lighting and airflow controls, is 14 inches deep by four inches thick.     

Finally, is the seat mechanics itself. When going to recline option, the foot rest slides further forward under the seat in front in synchronization with the seats recline, and while the seats inner shell slides into recline position having the backs outer shell remaining in place. The fixed back is reserved for the passenger behind own entertainment system. No matter what the passenger does, front or back, it doesn't impede any other passenger space. It's that passengers space refined and limited to the cubic seat space, flexing within the space allocated. 

The end of borrowing space from another passenger when a passenger reclines, beckons a solution for ending passenger seat wars. Extending pitch geometry going under the seat in front will give all passengers comfortable space. When a window seater needs an aisle entry for doing his rest area work, a simple pop of the seat button, by each passenger, will upright them allowing this exiting window passenger room. 

A beveled angular seat back carved from knee level to ankle area forward is a permanent feature for the unmovable seat frame portion in front, allowing recline dynamics for seat behind and its passenger leg room.  When the reclining seat frame inside, rotates within the main fixed seat frame, its slides into recline position, the front lip of the seat pad will drop over the edge slightly, just as a roll top desk cover does when sliding up during opening.

Clever astronaut-like seat design keeps the passenger comfortable, within its space and private. Getting in or getting out is not a gymnastic floor exercise. The space they have rented is defined and impenetrable from children kicking from behind, and obnoxious sleep-overs reclining from the seat in front of them. It will provide a systematic corridor for co-passengers running to and fro in your row space. Push "upright" and give your seat mate a "Nice Trip".

All this seat research was done getting on and off the 737 single aisle and it made me think how could this be better when stacking cord wood for the fuel burn. Allocate space to others where others are not even aware of, and keep the monsters out of my assigned space. New seat rules need to written.

  • What's under their seat is my space.
  • What's behind my fixed seat back stays behind my fixed seat back.
  • A false bottom of the overhead storage is "ours" for carry-on private storage.
  • I'm an astronaut and I intend staying in orbit for at least one continent.

Okay Seat Makers, this is your challenge! "Just Do It"

Thursday, January 22, 2015

The Art Of Seat Wars

Japan Airlines is about to engage the customer in the "Art Of Seat Wars". Its 787-9 could hold easily 375 paying customers, but instead it chooses to artfully seat only 195 paying customers. One could ask, "how can that be and make money?".

Let's go into the study of seat wars a bit. If a max carrier of a 787-9 hauls 375 compliant tourist, business and fugitives from here to there, the ticket may cost $500 dollars one way. However, if you only load 195 passengers the cost of that same travel spot should go up accordingly per seat. The ticket should now become $962 US instead of $500. This would equal the total theoretical revenue of the 375 seat sold out airplane.

Since Japan Airline will not pay for the weight in travel as with 375 customers, nor does it buy additional fuel as needed for that weight. The 195 customers use less services than 375 customers use when eating, snacking, and sleeping on long trips. Japan Airlines can estimate its way towards an average ticket price into a relevant range of a great experience.

Consider the Motel-6 motto of: “We will leave the light for you", for $39.99". The proverbial 375 seat 787-9 will leave the Light on for you.  Japan Airline is going for the Hilton Crowd for $118.99 sleep-over, or should I say Seat-over. What do you get on Japan Airlines' move to travel treatments? Forty-four full flatbed business class Sky Suites. Premium Economy for thirty-five, and One hundred and sixteen economy that extend beyond traditional economy in a better 2-4-2 across set-up. This is juxtaposed against the nine across 375 economy seater in hockey arena seating.

The point, is Japan Airlines have gone to great lengths analyzing the business model for 195 seats. The mixture of business, premium and economy seat prices. Combined with fuel not burned or servicing costs of customers, Japan Airlines has reduced the risk of filling 375 seats for its "Premium" routes. I believe this to be a pilot hole drilled before the A350 arrives. I only see the A350 as a market tap into Europe, as it will be a pleasing European sentiment when flying the A350 to Frankfurt or London.

Premium routes are those high demand routes with little or no competition from others. Japan Airlines will, and now can assign the 787-9-195 seater maximizing the efficiency in operation and offering a reasonable price for its customers. A $700 dollar range ticket price for flying 12 hours in a spacious configuration is its target market. If you fly halfway around the world, you may as well go in the seat and space that is suited for twelve hours of travel.


Sunday, January 18, 2015

The A380 Is An Airbus Side Show.

It is not my want to dive into Airbus but in this case the A-380 needs some attention. It is the Airbus side show. The CEO stands outside the A-380 tent barking compliments on how wonderful the aircraft is and how much anyone with a thin little ticket stub can come in a see the "fat lady" sit on a "oh so small stool". Wouldn't you like to see its upper deck or walk through a vast space of vastness while flying at Mach .82? I would, but not until I see the main show with the 787-9 at center ring.

Much like the Ferris wheel at the fair, it has become the Icon of amusement in a sedentary repose since the 19th century. Even though it looks like a lost leader of aviation tickets, it will continue on in light of more exciting and pleasurable rides. People see the grand Canyon by the Millions because of its amplitude of bigness, color and depth. Not because the canyon is so efficient to cross over to the other side or does it have a level trail to the bottom. It's because PT Barnum said so.

The Airbus executives have announced break even in 2015. I take umbrage with that bravado since early prediction said the cost and contribution margins from sales would take over 260 A-380's delivered. Now that number is estimated at 460 A-380's delivered, even with crack wings fixed, and all. However, never underestimate French bravado. They will break-even at about 180 units, amazing. It all about who you hire in the business office. Accountants can do that little thing, by writing-off short electrical wires, cracked wings and engineering redo into another category, as it protects its mysterious static break-even point. It comes with a stamp of certified audit to boot. The real cost of the A-380 will deplete the stock price somewhere north of reality. It won't make real money in my lifetime. It still remains the Airbus side-show. The center show ring is for the 777X. The ticket price for that show will erode the "side-show" further back behind the carnival Ferris Wheel. People will come to the A-380  out of the need to have said, "seen it, done it, been there". Then comes the know it all snide self importance customer saying, "I rode on the A-380 enough. I don't like the A-380 crowd once disembarked, I prefer walking with my exclusive group from  the 777X."

All this before the A-380 reaches "Break-even Point". Eykes! The A-380 wants to be the center ring, and its relegated to somebody's "Bucket List" on a "to do" when at a side-show behind the Ferris Wheel. See where I'm going with this? Its big and its the Airbus fascination with everything big, wide and biggest. That is Airbus number one technological claim this century. "We are hooked on size matters". Just review the advertising billions. XWB,, Double Decks, Bigger looking windows that can fit inside Boeing's windows. I am beginning to think Airbus has a "Small Frenchman Complex". Egaads! Kind of creepy when they must go the extra inch all the time. But they have out done the market with the A-380 exposition. The show is winding down with the crowd who doesn't want to be in the crowd. It wants a fresh start with the 777X as it has sold in numbers.

I think Boeing manned up with the 747-8i, as its behemoth model was on life support, and remains so unless its repurposing campaign works for the 747. It is not trying to be bigger than the A-380 or have two decks the length of the body. Boeing went with what has been proven as a special design.Where it  lengthened it out efficiency not out of European-Like -Pride, as found on the A-380. They brought across the development canyon; 787 avionics, engines and systems. Now Boeing is waiting for the Jumbo market to sort itself out.The initial A-380 market push is over. The real question will emerge and be answered. What do people really want in this market segment?

Tim Clark of Emirates has boxed himself in with 140 ordered or flying A-380's. Here is another caveat for consideration from his order book.

The Boeing Company Online Data 

Emirates Customer Summary Through December 2014
Model SeriesEngFirst OrderOrdersDeliveriesUnfilledFirst Delivery
Emirates (United Arab Emirates)-Total28990199
777-200RR04-Jun-199233-05-Jun-1996
777-200ERRR04-Jun-199266-11-Apr-1997
777-200LRGE21-Nov-20051010-31-Aug-2007
777-300ERGE19-Jul-2004120714915-Feb-2006
777XGE08-Jul-2014150-150
777 Total28990199
Customer Total28990199
Model SeriesEngFirst OrderOrdersDeliveriesUnfilledFirst Delivery

Analysis of the  chart shows a propensity of 777X ordered in 2014. This is the A-380 tipping point for retirement. Emirates has received about 57 A-380's out of 140 ordered, having an actual remaining delivery schedule of 83 A-380's to go.

A total of 317 A-380's are ordered for all customers where Emirates have 140 of those numbers. Leaving the Airbus order book with the other 17 customers with 177 booked, many of which are delivered at this time. Not only will orders become scarce for the A-380, but its cancellations will dominate the book change.

The Tim Clark conundrum has been addressed with the 777X order. His business model will change in 2020 as he nears 140 A-380 delivered. He may cancel the balance of his A-380 order book when the 777X arrives in 2020, when it is operating as expected. He will be done with the Airbus side-show in 2020, as the market will be well satiated with A-380, subjecting it as the next Ferris Wheel.

Thursday, January 15, 2015

A Briefer Boeing Breif



Don't call it the  Copy-Paste edition but its the best I can do on short notice. Here are the appropriate black letter credits from 
From Cricky black letter edition.
From the Peanut gallery narrative Boeing Snide Blue Font

Boeing’s measured view of the future may not have MAXed out

BOEING COMPANY
Moderator:  Wilson Chow
January 13, 2015
8:30 am PT
Wilson Chow:  Good morning and welcome to this Media Round Table. I’m Wilson Chow with Boeing Commercial Airplanes’ Media Relations. I’m joined today by John Wojick, our Senior Vice President for Global Sales and Marketing for Boeing Commercial Airplanes; along with Randy Tinseth, Vice President of Marketing for Boeing Commercial Airplanes. We’ll start with some opening remarks from John and Randy and then take your questions about 2014 orders and deliveries.
and.... here's Johnny (old tonight show bumper music)
Please be aware as well that we are now in our quiet period in advance of our fourth quarter earnings call, which will be Wednesday, January 28. Because of the rules surrounding the quiet period, we cannot give any guidance surrounding delivery or sales numbers for 2015.
John Wojick:  Good morning, everyone. I’m really pleased to be here on the call today. We’re here to discuss what has been a truly phenomenal year for Boeing in 2014.
For the third consecutive year, we have delivered the most airplanes with the most value to our customers around the world. We had a record-setting year for orders, with 1,432 net orders and 1,550 gross orders, and our backlog is bigger than it has ever been, with over 5,785 airplanes in backlog as of today. These records are really a testimony to an incredible value that our customers place on our products and that we bring to the marketplace, and they’re also really a testimony to the hard work and dedication of all the Boeing people around the world and to our suppliers that support us everywhere in the world. I’m really proud that we’ve accomplished this in an exceptionally competitive environment.
True, and True, all true. The Boeing underpinning has strategically moved itself out flanking Airbus with production numbers and has significantly closed the sales gap about a 60-40 Airbus lead four years ago to a 52-48 competitive market share backlog today.
Our customers around the world are expecting more for less everywhere. Our competitor is extremely fierce and we are fighting for every deal around the world. I’m really proud that we’ve won some campaigns this year that I think no one expected us to win, and I think it really validates the value that our products and that our Boeing employees around the world bring to the marketplace, and I couldn’t be prouder.
What about the Delta order? It was one to win, but Boeing lost it to Airbus. We all know it was a timing thing for Boeing's loss. But it hurt just the same. Boeing will have to come back and offer a "Boeing Transition Package" designed at flipping Airbus customers. The 777X metrics must be awesome to do so. The 787 family must evolve its standards through interior design with a proprietary innovation effort for customer comfort. Airbus claims a half inch per seat over Boeing in some cases. Privacy appointments may be the new black in travel configuration.
In the face of this fierce competition, we have achieved some really incredible things this year. We delivered more 737 airplanes than ever before, and in fact, for the first year in a long, long time, we’ve delivered 50% of the single-aisle airplanes in 2014. We also delivered more 777s, more 787s than we’ve ever delivered previously, and in fact, we delivered 63% of the twin-aisle airplanes in 2014, and we outsold the competition by almost three to one on dual-aisle airplanes; truly a phenomenal accomplishment by our teams around the world. So, we have half the market in the single-aisle and more than 60% of the market in twin-aisles, and that’s what market leadership is all about. It truly sets a standard and it speaks to the depth and the quality of our backlog and the quality and capability of our products around the world.
Yadda, Yadda, Yadda. and so forth. Boeing stabs  the Airbus heart once again as it kicks the can down the Jetway.  Boeing loves it  when a plan finally comes together. 737's, 787's and 777 are a few of my favorite things.
We filled our skylines for years to come, we’ve created a solid foundation for our business for many, many years to come and we’re building on the – we’re going to continue to build on that success for the Company and for our shareholders and for our employees and colleagues around the world for many years to come. I’m really excited about what we’ve achieved and being truly the market leader in commercial airplanes for the third year in a row is really a very proud accomplishment for Boeing.
Hey he needs a paper bag to blow in. He's hyperventilating, somebody catch him before he falls.
Now, I’d like to turn it over to Randy and he’s going to make a few comments about the market.
Captain Wry Smile is up next. I am ready for some inside clues on what's going on at Boeing's front door. Tells you more about what they are pushing out the back door.
Randy Tinseth:  Well, good morning, everyone, and welcome and happy New Year, by the way. I thought I’d make a few comments on the market, talk a little bit about our products and then John and I’ll take some questions.
First on the market as we look at 2014, I think by every year, a very good year for our customers. We saw passenger traffic grow at about 6%, we saw cargo traffic recover, growing at 5%. That’s a very good year for the cargo market after some challenging years. I think we saw our customers managing their business better than they ever have before. They’ve been focusing on profitability, efficiency, they’ve been taking cost out of their networks, and as a result, we expect to see record profitability for our customers in 2014.
Now as we look at 2015, we expect those trends to continue. Passenger traffic should grow at or above 6%. We expect another strong year for cargo, and with lower fuel prices, we expect a continued tailwind for our customers in terms of profitability. We’re projecting with IATA another year of record profitability for our customers.
On the product front, I think the first thing that I think of is the success we’ve had on the 737 MAX. Not only have we grown our order base to more than 2,600 airplanes, we’ve almost doubled our customer base for the MAX in the last year, going from approximately 30 customers at the beginning of the year to 57 customers at the end of the year. We also had a major milestone in launching the MAX 200 at Ryanair. This is an airplane that is ideal for the low-cost carrier market. It’s an airplane that will provide a 20% improvement in efficiency for our customers of the 737 today.
And then finally, when I think about products, I think about the great success that we had on the 777. We sold 63 777-300ERs and 777 freighters in 2014. We helped work very hard on the bridge between our airplane today and our airplane of the future. We brought in several firsts in 2014; China Southern, China Eastern and China Airlines all took delivery of their first 777-300ERs. In the last two years, we’ve added nine operators, we’ve added 20 operators in the last five years and we’re working hard to make sure, again, that we have a successful transition from our airplane today to our airplane in the future.
I believe when you take a look at our product lineup, it is second to none. We have complete market coverage. We have a family of products that complement each other in terms of their size, in terms of their age, in terms of their economics and in terms of their passenger features and comfort. We’re well positioned for the future. We look forward to 2015, and with that, John and I will gladly take any questions.
Did he do that in an under 90 second commercial break pace, or did I miss something? Okay, Mr VP Tinseth you are holding out on us again. What he couldn't say was anything about the 747-8i and how nice the sun set was during  today's programs. 
Operator: Our first question is from the line of Stephen Trimble from Flightglobal. Please go ahead.
Stephen Trimble:  Hi, good morning. We confirmed this morning, of course, that Airbus will have a new product out in 2019 with the long-range A321 and I’d like to get your thoughts about that, about their aircraft and how, you know, you see the market right now. Do you think there is a market for a thousand of these aircraft out there, and what are you doing in that space?
John Wojick:  Well, it’s interesting that Airbus is talking about a product that – and a market space that Boeing’s been offering product capability in for a long, long time. The 777 – or the 737-900ER has more range capability than the A321 today and if you add fuel tanks in the lower hold, which we do today on our BBJ airplanes, BBJ1, 2 and 3, and the 3 – BBJ3 is based on the 737-900ER, that airplane can fly up to 6,000 nautical miles if so desired. So, it’s interesting that Airbus is talking about trying to catch up to the capabilities that we already offer today in our product line.
In terms of the market size in that capability, it’s an interesting market space between the single-aisle airplanes that we produce today and the 787 in terms of both size of airplanes and range capability of airplanes. It’s a market space that we’re currently looking at in terms of what is the real size of that market space, and depending upon what our airlines working with us really define as the real requirement in that market space, we’re going to look at what we can do in that market space potentially to satisfy our customers. I think it’s more important to look at what the customers are really desiring in that market space rather than just pushing a product that we already make today. Try and satisfy that demand with a product that we already make today. If they were satisfied with that product, they’d probably be buying lots of them today, and they currently aren’t, so it’s interesting.
Airbus doesn't have a 737-9, and needs one for its own customer's, needing A-320 commonality for its collective fleets. Hence the A-321, a 737-900 knock-off,  just for Airbus customers with its other A-320's in the fleet. Excuse me, Sorry Randy, I had to jump in.
Randy Tinseth:  Hey, Steve, just to put a little perspective on that, if you take a look at today’s 757, there’s equivalent to about 50 to 60 757s actually flying on those long-range markets today, so the thought of 1,000-airplane market is – of an airplane of that size, frankly, is a little bit laughable.
Mr. Tinseth, its all John Leahy all-the-time, talking on a fools errand. I am so sorry he considers you his peer. He wants  needs to sell Boeing an idea for his needed result, making  Boeing do a  knee jerk move with  a different 737-9. When in fact Boeing could reopen the 787-300 case for a 5,000 mile market buster. In fact a single aisle stops becoming practical after 189 passengers get-on, get-off, or are served food in one skinny aisle.
John Wojick:  But, you know, it’s a market space that we’re looking at. It’s an interesting market space, so we’re trying to understand what the customers’ demands – requirements really are in that market space, and we’ll look at what we do in the future to try and satisfy our customers’ real requirements.
Space again?
Stephen Trimble:  But it’s – I was getting a little confused. I mean, if you think that the market size is laughable, why would you be looking at it?
John Wojick:  No…
Randy Tinseth:  Let’s put it this way. The market space between today’s ’37 and today’s 787, there is a space there. I’m talking about what’s happening today. Remember the A321 simply, LR is an airplane that catches up to the range capability of our airplane today, so ’57s today flying on those long-range missions are relatively small. When we take a look at that market space between the ’37 and the 787, right now it looks like an airplane that’s probably a little bit larger than today’s airplane. It’s an airplane that flies a little farther than today’s airplane. They’re really two different marketplaces.
787-300, anyone?
Operator:  Thank you. Our next question is from the line of Julie Johnsson from Bloomberg News. Please go ahead.
Julie Johnsson:  Airbus also said today that they’re – they will be adding I think about 20 more seats to their largest A350. Just wondering if you’re contemplating any tweaks to the 777-8X to go after that niche between 350 and 400 passengers.
John Wojick:  I guess I’m trying to truly understand the question. Airbus putting more – trying to put more seats in the same size fuselage is really not changing any dynamic in the marketplace. Customers, you know, select the number of seats in their airplane based upon the comfort level that they’re trying to provide to their traveling public. They haven’t actually changed any of the dynamics of the airplane. We obviously work very closely with our customers in terms of their requirements, both for range capability as well as comfort levels in the airplanes, and we think we cover the marketplace really, really well in terms of both size and range capability in that 300 to 450 seat size category, and we do it with three different airplanes, the 787-10, the 777-8 and the 777-9. So, we have three different airplanes all with different capabilities that allow our customers more choices in that market space to fit the real requirement that they’re trying to address, both in terms of seat size and range capability.
Julie Johnsson:  Speaking of the 787-10, we haven’t seen any orders for that variant for a while and 2014 was a little bit of an off year in terms of 787 orders. Just wondering if you can address the demand that you see in the marketplace and whether we might see more activity this year.
John Wojick:  You know, we’ve seen actually a very – continued very strong demand for the 787. This year, we sold 65 gross airplanes, as well as 41 net airplanes. The only reason we didn’t – we don’t see more is we’re offering airplanes out in 2020 and beyond. We have filled the skylines very solid for the 787, and I think people are, you know, looking at their fleet plans that far out but obviously planning six years out is a very big challenge for any business, and as we progress forward, we’ll see more and more continued demand for 787s. We still have 843 787s to deliver, and we’ve delivered 228 to date, so continued very, very, very strong demand for the 787; and the 787-10, obviously it’s the last family member of the 787 family, and consequently, it has the fewest orders at this point, but we think it’s going to be a very, very strong seller.
Okay again, good question and 2015 will be an exceptional year from my own predictions. Airlines take time to digest what they would do to incorporate a 787-10 into its fleet dichotomy. Once a delivery is made for a -10, and how a competitor uses it in the "market space", the rush order will be on for gaining a position for the next 100 787-10. It happened for the 787-9 and going to happen for the 787-10. The 787-8 is a market tween-er in "space". People didn't know how to use it at first, but got in line immediately at the start, because it was so revolutionary and far out performed anything built back in the mid-decade. The year 2015 brings this to the forefront. Retired risk for the 787. Experience using the equipment and actual profit modeling will validate the 787 advantage. I would predict another 100 or more 787-8,787-9 ordered this year. The Boeing team are not loosed lipped on this matter, because they don't want to panic John Leahy of Airbus. They worry about Leahy's emotions and health when Boeing goes off in its order book.   
Operator:  Our next question is from the line of  John Beards from AFP. Please go ahead.
John Beards:  Thanks for the call. What are you seeing – what is your outlook as far as fuel prices going ahead, and how has the drop in oil prices and fuel prices affected your orders in these last few months and how do you see it going forward?
Randy Tinseth:  Well, I think it’s clear that when you take a look at our order performance in the last few months and you take a look at how our backlog has grown, there hasn’t been an impact of the lower fuel price. I think as we look at the near-term situation, this is clearly going to add some tailwind to the profitability of our customers, which is a good thing. My guess is it will actually help to boost airplane utilization and traffic growth in the next year because some routes that were not profitable have become profitable, and I think that’s good for our customers. I think long term, we expect supply and demand to push the price of oil higher, probably somewhere in that $80 to $100 range over time. I think that’s where our customers believe it’s going, but frankly, no one ever knows where oil prices are going. But ultimately, we see – continue to see strong growth in the market, airplanes are aging out there, airlines have to replace them, they’re in that replacement cycle and we really don’t see any near or potentially medium-term impacts as a result of the fuel price.
Operator:  Thank you. Our next question is from the line of Dominic Gates from Seattle Times. Please go ahead.
I need to step in and say what the Big guy didn't say. Customers are capital starved and the fuel price decrease is a God send opportunity for the coffers of starved airlines. Fleet renewal and expansion keep going forward at a relentless pace. Capital is needed for wise equipment updates. Low fuel prices give the airlines a financial source for this continuous need of aircraft. Higher fuel prices benefit the most efficient airlines. Lower fuel prices benefit those airlines needing capital investment power, from a cut expense line from lower priced fuel cost.
Dominic Gates:  I’d like to go back to the launch of the A321 long range. I take your point about the – how Boeing’s products shape up, but in terms of orders, the A320 Neo family is still outstripping the MAX in terms of orders, and where it’s doing it seems to be in the A321 Neo category against the MAX 9. So, the A321 Neo now has 755 firm orders, including 183 last year, and now they’ve launched this new longer-range version. You haven’t released the number of – broken down the number of MAX 9s versus other models but it appears to be about 8% of your orders, just over a couple of hundred, so in that particular matchup, what does Boeing do? The MAX 9 does not seem to be getting customer approval compared to the A321 Neo.
John Wojick:  You know, the marketplace is very competitive. It’s interesting that the Airbus customers are identifying the A321 versus the A320, and consequently, the same thing is true with our marketplace in terms of the 737 MAX 8 and the 737 MAX 9. At this point, your numbers are roughly correct in terms of the MAX 9s versus MAX 8 percentages, but at this point, that’s the way the orders are stacking out. We think we have a very, very competitive product line in terms of the middle of the market. The majority of the orders from both Airbus and Boeing are in that 737 MAX 8 size category. We like where we’re positioned in that size category, and we’ll be very competitive with the 737 MAX 9. It is 80 inches shorter than the competitive airplane, so consequently, they have the capability of having a few more seats in their airplane than we do.
But we outperform them, both in terms of fuel burn per seat as well as range capability of the airplanes, and that’s without putting extra fuel in the belly of the airplane. So, anything they can do in terms of additional range, adding to the capacity of the airplane by adding belly fuel tanks to the airplane, we can offer the same thing.
Dominic Gates:  But why are they getting so much more traction for that size category than you are?
I am just waiting for the Boeing Group to finish weighing in on this question. In debate teaming, we had somebody keep talking until someone comes up with a solid rebuttal to the question or goes to a pregnant pause mode hoping somebody say something brilliant, does anybody need more claim chowder in the room?
John Wojick:  Obviously, they’re pushing that size much harder than they are the A320, so I’d ask the other question; why aren’t they getting more traction in the heart of the market, the A320 Neo versus the 737 MAX 8?
Randy Tinseth:  I mean, when we look at the market today and we look at the long-term market around the single-aisle marketplace, I mean, the heart of the market continues to be around that 160, 165-seat 737 MAX 8 or the A320, whatever you want to call it. Probably somewhere around 70% of the demand will be there, approximately 20 to 30% in the larger variant, the A321, 737 MAX 9 and probably, you know, 5 to 10% on the lower end of the market. We’re extraordinarily well positioned in that part of the market with the MAX 8, and I think one of the things that I want to emphasize, about 30% of the deliveries we’ve been making on the 737-800 have been at or near exit limit, so an airplane configured around 189 passengers, and with the launch of the MAX 200, we’re able to open up that exit limit to 200 passengers. There’s a big market there, so we expect to see even continued growth and expansion of that middle of the market with the MAX 200 and the MAX 8.
Wow, I am amazed at the Q&A saving last response from Randy. I see Airbus jumping the Market with the NEO. Pent up A321 energy exists from its own customer base when they announced the single aisle family. Boeing was slow out of the gates and had been building the 737-900 NG for sometime, so its customer base was well fed. Boeing lacked internal demand because of this market conditions at the time of the Max announcement. Boeing lacked a true tweener for the 737 to 787 transition. Boeing is exposed for dropping the 787-300 concept in 2005 and Airbus made its move with the A-321-NEO trumping Boeing with 722 or so A-321 orders. Boeing couldn't do four diverse 787 models in the same family, until all new technology has finished its maturation process. Now is the time for a 757 or a 787  tweener model, and maybe that is what they are not saying anything at this time on purpose. Something is in the works in 2015 or  2016  for an announcement. The 1,000 plane market is not for a 737-big but for something bigger. 
Operator:  Our next question is from the line of Al Scott from Reuters. Please go ahead.
Al Scott:  Okay. Just curious, you lost out to Airbus on net sales obviously last year. What is your strategy? You mentioned fierce competition. Is this a price battle, or can you talk about your strategy on how you’re going to beat them on orders next – for 2015?
John Wojick:  Well, to be quite honest with you, net orders, gross orders is not what we truly focus on. What we’re truly focused on is how do we provide good backlog, solid consistent backlog that actually results in deliveries and delivery market share, because that’s really when we get paid. So, you know, orders are indicative of future performance potentially but the real reality and where the rubber really hits the road is when airplanes actually deliver, and we’re really pleased with the resultant of our backlog in terms of actual deliveries and delivery market share, and we’re very, very focused on adding good quality solid backlog for the Boeing Company to fill our skylines for years to come.
When you look at the 737 MAX in particular, you know, Airbus continues to have a slight advantage in market share versus us on orders. You can look at the same thing for single-aisles in general over the course of time. We have worked very, very hard to get to rough parity at 50% market share this year in terms of delivery market share. You look at what we are projecting for our deliveries going forward, which we have announced in the past, and we are very confident that we have a very solid backlog and we are going to be able to fill those skylines at the rates that we’ve announced, and that’s our objective.
Randy Tinseth:  Yes, just to emphasize – Al, just to emphasize that, you know, I just took a look yesterday at backlog and I looked at it again today. I think Airbus has had a bigger backlog than we have for 14 out of the last 15 years, and I think it speaks highly of the quality, the depth, the breadth of our backlog that we have a product line that is now, three years in a row, delivering more products. So, we got a great backlog, we have the right customers, we have the diversity in backlog we need and, as a result, we’re delivering more airplanes because at the end of the day, that’s the most important measure by which we can be measured.
Look, out the window, a bird! Next question.
Al Scott:  Okay, thanks. Can you just follow up on – I mean, delivery is a production function. Your investors care about orders as much as anything. Don’t – you’re basically saying you’re not interested in winning the order battle as long as your factories can churn out more planes than Airbus. Is that what you’re saying?
Randy Tinseth:  Again, it’s about the quality, the depth, the breadth of that backlog and what you’re able to do with it. I mean, you’ll have to ask our investors, but I think what our investors want to see is revenue growth, strong margins, improved productivity, a great full product line; all of those types of things we’ve been able to deliver on that.
John Wojick:  Yes, so it’s – orders are important but it’s not just orders; it’s also quality of that backlog and quality of that order. So, we’re focused both on the quality of the orders, as well as the quantity of the order and not just…
Al Scott:  So, are you saying that if there’s a non-quality order, you’re not going to book it? I mean, that just – I don’t understand what you’re saying by quality of orders.
John Wojick:  We work very hard to do business that we believe will result in actual deliveries come time for delivery, and granted, 100% of our orders do not result in deliveries but we have a much stronger track record of order to delivery completion than our competitor. So, if you focus solely on just winning the order battle, I’m not so sure that’s the only measure of quality going forward.
Jump in time. There are two forces in play here. Capitalization and efficiency. Capitalization is associated with a sales price and Efficiency is associated with the cost of operation for an airline. In essence capital outlay must exist to make an order. An efficient airline anticipates the delivery.  A quality order maybe a Moody book rating of an airlines soundness. If a company orders 100 737 to be delivered starting around five years out. Will that airline be in business for the delivery? If so, they are a quality order. Moody analysis rates company quality and soundness. Look for the quality orders with a sound financial rating. 
Al Scott:  Yes. So, you know, it’s clear that ((inaudible)).
John Wojick:  It’s important. It’s not the only thing that’s important to us.
Randy Tinseth:  Yes, so our – yes, like I said, our investors are focused on our revenue growth. Our investors are watching our orders, they’re watching our deliveries, they’re watching our margins, they’re watching our productivity, they’re looking at how we’re investing in our product line, and one thing I forgot that’s very important, they’re also looking at cash generation, and so if we do all those things, we’ll make our investors happy. I think that we have – we’re coming off a great year and we’re looking forward to 2015 in terms of what we can do.
Boeing you are on the right track, period!
Operator:  Thank you. Our next question is from the line of Steve Wilhelm from Puget Sound Business Journal. Please go ahead.
Steve Wilhelm:  Hi, gentlemen. Thanks for taking a moment here. I just wanted to talk about 747 a little bit. What’s – for one thing, what is your current thinking about 777X orders and to what degree they’re taking up some of that same space? Obviously, Airbus is having its own problems with four-engine aircraft, so what’s your thinking in terms of kind of your internal competition, and also, to what degree does the future of the Dash 8 depend on freight versus passengers?
John Wojick:  Well, obviously, we feel really good about the fact that we have both a freight as well as a passenger model in the very large airplane space, 450 seats or larger, and that’s a very key aspect of our strategy in that market space and we are hopeful that as freight – if freight continues to improve and perform, that will definitely enable us to fill our skylines for the 747-8. Within this marketplace, you know, our forecast is for about – a demand for about three to four – or I should say 36 to 40 airplanes per year in that very large market space. We are at 1.3 airplanes per month or about 18 airplanes per year. We think that’s a sustainable long-term rate for airplanes in the very large category, and we’re working hard to continue that and hopefully a recovery in the freight market would definitely bolster that airplane.
Randy Tinseth:  Hey, and Steve, I want to emphasize, you know, we were very thoughtful and measured and careful when we selected the size of the 777X family. We really wanted to make sure, you know, when we went to market with that airplane, when we launched the market, that we had an ’87 family, a 777 family and a 747-8 family of aircraft that all worked together in terms of their size, range and economics. So, we were thoughtful in how we sized the 777X to complement the 747-8, so there’s really a market space for both of those airplanes.
Steve Wilhelm:  Okay, and just to follow up, you know, most of the – or a big chunk of the passenger orders have been for, you know, individual private VIP planes. What’s – you know, you’ve been saying for years you expect to get more passenger orders and it just hasn’t been happening much. What are your prospects in that arena?
Randy Tinseth:  Look, as you can imagine, the team’s working really hard. It’s a market that hasn’t progressed as well as we or Airbus has expected. We have two commercial customers for the Intercontinental today. We’re going to be adding two more this year. I think the more that airplane gets out in the market, is seen by airlines and it continues to perform as well as it has, I think we’re optimistic about the future.
Steve Wilhelm:  When you say two more this year, do you have some firm orders that you think are going to – I mean, some orders you think are going to ((inaudible)).
Randy Tinseth:  When I say – we have two customers that are coming online with the airplane this year. Today, Air China and Lufthansa fly the airplane and we have two new customers taking deliveries this year.
I wanted to jump in earlier but this is a good time. The 747-8i is another Boeing answer surrounded in mystery. It is in the cusp of breaking out again or collapsing its market with a big zero order, because the 777-9X has chops. So taking my vitamins today, I am have a positive 747-8i outlook. The importance of the 777x is a "space" filler. Buying a 7779x should lever buying the 747-8i as a transitional fleet step. Randy touched on this concept. They are fitting the 747 in a region of capacity bettering the 777X. Looking at the dwindling of the A380 markets tells me Airbus doesn't have a freight compliment for the A-380, and it will wilt on its own order vine. The 747-8i is a Renaissance aircraft with both capacity for people and things to go. It just has to survive our current times through absorbing technology along the way. It's doing that as we speak. Boeing is tasked with identifying need for the new 747-8i.
John Wojick:  Yes, this year Korean will add the airplane, as will Transaero in Russia.
Operator:  Our next question is from the line of Scott Hamilton from Leeham News. Please go ahead.
Scott Hamilton:  Like to come back to fuel prices and the backlog. If fuel prices stay down for – you know, in the ($60) dollar range or below for a year or two, do you see sales slowing at all, and let me say that in 2008, it took two and a half years for fuel to come back up to $100. And then secondly, and these are really connected, your backlog goes out to 2020 and beyond. How many airlines do you really see in a position that they’re going to want to commit – be committing to airplanes in the 2020 decade, particularly as you have low fuel prices? Do you think that some of the airlines just might delay putting orders in because of the low fuel prices and the fact your backlog is out so far?
Randy Tinseth:  Well, I guess I’d look at it this way. I mean, we launched the 787 when fuel prices were around $40 a barrel. We launched the 777-300ER when fuel prices were around $30 a barrel. I think actually the A320 Neo, when it launched, fuel prices were around $80 a barrel actually when it happened. Fuel is an important part of the equation, there’s no question about it, but it’s only one part of the equation. We know there’s going to be continued volatility around fuel, there’s no question about it, and the best way to address volatility in the marketplace is to have the most fuel efficient airplanes possible, and that’s what we are able to do in the market.
So, the strange thing is you actually look at the correlation; as fuel prices – it’s been volatile over the last couple of years – as fuel price goes down, actually backlog goes up. So, is there a strong correlation between fuel price and backlog? I would say probably not. It’s really about how the airplanes are going to – airlines are going to grow, how they expect to be profitable. You know, the ’37 single-aisle airplanes are the backbone of literally every airline’s fleet around the world. It is essential for them to have the most capable, the most fuel efficient single-aisles in the marketplace.
Wide-bodies, that’s a story about capability of the airplane, plus efficiency. You know, once those airplanes get old, it’s not just the fuel efficiency that hurts their performance; it’s also about their utilization of the aircraft, can you keep it in the air, what happens in terms of maintenance costs, all of those types of things. So, we think the dynamics is there to continue to see this industry to grow about 5 or 6% per year. If the industry grows about 5 or 6% per year, there’ll be ample demand for new airplanes.
Scott Hamilton:  So, how about the correlation to the extraordinarily long backlog? You know, I don’t have any data as to what the backlogs were like when the 787 was launched ((inaudible)).
Randy Tinseth:  We’re in new territory here. We’re in new territory.
Scott Hamilton:  So, ((inaudible)).
Seen it, been there, talked about it. Randy hasn't got my memo yet! 
Randy Tinseth:  But I’ll tell you what. When you look at the situation today, you have to also realize, you know, delays in the A380, delays in the 747-8, delays in the A350, delays in the 787 has all built up this really large pent-up demand because of, number one, the demand’s not being addressed and the other thing is we have airplanes that are flying many years past the intended retirement date of airlines. You know, those airplanes will deliver, they’ll go into service, they’ll be used and we’ll – we continue to see strong demand for those wide-bodies.
Operator:  Our next question is from the line of Jon Ostrower from Wall Street Journal. Please go ahead.
Jon Ostrower:  A question about the – kind of the recent history of single-aisle development. Certainly, you guys remember how the MAX came to be after the American Airlines order in 2011. As far as the prospects for the longer-range A321 and ultimately what is a larger aircraft, certainly you guys like building larger aircraft because they can fetch a higher price when you’re dealing with a comparable incremental cost, do you guys see a tipping point in the future in your own planning that could change your thinking around the size of this market or what your strategy is there? And then ultimately, how do you avoid a repeat of the, essentially the conception of the 737 MAX back in 2011?
Hi-Jon good job!
John Wojick:  What we’re trying to do in that market space is to try and understand what our customers are really interested in, and in fact, over the last year, we’ve probably visited 30 different customers around the world and have very frank discussions with them about what the requirement is for those airlines in airplanes that are larger than our 737 MAX 9 and airplanes that potentially could fly a little farther than the 737 MAX 9, and we’re studying that very, very closely trying to understand, you know, how large is that market space and would an investment in that market space be justified. And, as we continue to study that, we’re going to continue to look at what we can do in that market space, Jon, and does it make any sense to do something in that market space.
Market Space the Final Frontier
Randy Tinseth:  You know, and Jon, too, in the development of the ’37 today, you know, there is no question it’s been interesting. I mean, as we’ve gone along the ’37 MAX development program, I think we started with an airplane that was 11% better than today’s airplane and we’ve found ways to improve that to 14 and now with the MAX 200, we’ve increased the performance, so the capability of the airplane to a 20% improvement. So, there’s no question the harder and the longer we work on these airplanes, the better we can make them, and I think that speaks to our design team. It also speaks to the fact that we’re always finding ways to build airplanes more efficiently and more capable over time.
I think the one thing that I want to emphasize, a lot of the conversation has been talked about, you know, kind of up-gauging and where that part of the single-aisle market is. Again, I – we see about 70% of that demand for the single-aisle market around A320, 737-800 or MAX 8 size airplanes, another 20 to 25% on the upper level and then 5 to 10% in the lower segment around the 700. You know, that’s really determined by networks, it’s determined by this whole concept of point-to-point, it’s determined by really how airlines compete. There’s been a perceived push, especially by our competitor, to build, you know, more A321s, but the fact is at some point, airplanes in the market, airlines have to fill them, and we’ve had a couple of campaigns, especially in this last year, where our competition came in with a bigger airplane, an A321, and the airline took a look at it and said, “Yes, it’s a very efficient, it’s a very good airplane. We like both the MAX 9 and the A321,” but the true demand in the markets is around – and our network is built around a MAX 8 size airplane. And, you know, frankly, with slightly lower fuel prices, if they hold up for the next few years, I think that will be even more of the (kicks), that airlines will be optimizing around size and performance of the airplane, and I think the push for up-gauging might be stalled a little bit.
Boeing is sticking to its guns, sorry John Leahy, Boeing has plan and your not in it.
Jon Ostrower:  And, I’m curious, just as kind of a follow-up to the discussion over the summer and the launch of the A330 Neo, certainly something that Ray Conner, and John, you talked about was the – was the concerns about availability of 787s in terms of allowing the A330 Neo to gain the kind of market traction that would really kind of establish it in the market. Now, you know, six-plus months later, more than a hundred orders for that airplane and a major U.S. campaign going with Delta on that, I’m curious, your thoughts on that airplane right now, and ultimately, the flexibility you have with the 787 and the pace of production and cost reductions sort of to kind of get a hold of sort of the price flexibility that Airbus seems to be exercising with the Neo.
John Wojick:  You know, as we discussed, the marketplace is very, very competitive and it presents a challenge for all the manufacturers. The airlines very clearly are looking for the best economics they can get, and they are always looking for, you know, more airplane, more capability for less cost, and we’re working really hard to drive to that answer, and you know, the 787 has a tremendous amount of capability as a product. It’s got the best fuel efficiency and the most range capability of any of the airplanes in that market space. The biggest challenge we have is, you know, that capability is not easy to provide without an awful lot of technology, and we need to continue to work and drive our costs so we can be competitive in any market segment with the 787. So, that’ll be a challenge for us going forward but one that we’re very happy to take on and are working really hard.
Jon Ostrower:  Thanks, guys.
An important point has just been made. Boeing is exploring the 787 potential for additional technology, making it the best airplane going forward. Taking into consideration laminar flow technology. Wing design improvements, and engine technology, perhaps the 787 in its toddler stage of growth. These primary areas have work to be done, before the 787 design is really and truly frozen. The 787 design will freeze when an all new engineered airplane is ready for announcement. However, the base 787 frame will be on the engineers playground for a long time to come.

Wilson Chow:  Operator, we have time for one more question.
Operator:  Thank you. Our final question is from the line of Guy Norris from Aviation Week. Please go ahead.
Guy Norris:  Yes, good morning. Phew. I wasn’t sure I was going to get in there…. Just a quick question on the 777, sort of on that market. Obviously, you did very well selling, I think it was 63 you said in ’14.
Randy Tinseth:  Right.
Guy Norris:  Just in terms of, you know, that – the infamous bridging the gap question to the X, where are you on that? Is it – was the rate that you achieved in ’14 sort of enough to maintain it towards that – sort of getting towards that gap without significantly having to reduce below the current build rate, or are you kind of at this point accepting that you maybe will have to dip on that rate slightly as you sort of build in towards the beginning of the X program?
John Wojick:  Well, you know, Guy, 2014 was a good year for the 777-300ER and 777 freighter. We did sell a net 63 airplanes this year. Our backlog on the current generation 777 now stands at 278 airplanes, so that’s almost three years’ worth of production, and we need to continue to work diligently to make sure that we continue to sell enough airplanes to keep that skyline full and transition from the 777-300ER, 777 freighter into the 777-8 and 9. But, that’s certainly a focus of ours and the performance that we provided last year has been a good performance to continue to keep that skyline full through 2016. So, you know, we’re going to continue to work that.
Guy Norris:  And do you – the last question from me on that is that do you think that, therefore, still a possibility of an upgrade offerable on that program between now and the beginning of the X? Do you think that might be necessary to fend off the (350-1000) in that – in the interim period?
John Wojick:  Well, actually, we are always continuously working on improvements on our products. We do that on every product, and on the 777, you’ve seen it; as we’ve evolved that product from the original 200 to the 200ER, 300, 300ER – and in fact, we’re working on fuel burn improvements and other items for 2016 that provide equivalency of almost a 2% fuel burn improvement in the 300ER going forward. So, you’re going to continue to see us invest in the product, as is our engine supplier, GE.
Randy Tinseth:  Yes, and just like I suspect Airbus talked about capacity of the A350, there’s things we can do on the 777-300ER that makes more effective use of the space of the aircraft, increases seat counts to improve efficiency. If we can do that with the 777-300ER, we’ll be able to extend those types of enhancements to the 777X. So, when we have opportunities that make sense that improves the performance, the efficiency or the capacity of the airplane, you know, we’re going to go forward with those. That’s what our – that’s what we’ve done in the past; that’s what we’re going to do in the future.
Wilson Chow:  Great. Thank you all for joining today. If you have any follow-up questions, please give us a call at Boeing Commercial Airplanes’ Media Relations. Thanks.
Hold on a bit, my speaker phone is still on, and I have this to say,tap,tap hello? Oh well I'll just talk off the conference phone, the pizza just arrived. The following Talking points I am going to sleep on:

  • "Space"
  • Pole position
  • Continuity of program
  • Space Holes
  • "What's up with that"

A one sentence summary on bullet points. Space the final Boeing Frontier will fill the event horizon, since it has a pole position over Airbus with superior production numbers filling all continuity holes with what's up with that". and thank-you for listening.

Operator:  Ladies and gentlemen, that does conclude our conference call for today. We’d like to thank you for your participation. You may now disconnect.

Tuesday, January 13, 2015

Its Simple: Boeing is World's Largest

After all the gaw-fawing over the books Airbus, as it has tried so hard, to make a silk coin purse out of a less valuable order book, when competing with Boeing.

Aircraft                  Boeing                         Air Bus                  Advantage
Delivered                723                               629                      Boeing by 106 widgets
Ordered                1,432                            1,456                      Airbus  by   24 widgets
A/R  Booked    Net 115 Billion US     Net   79 Billion US     Boeing by   36 Billion US
Revenue Adj    Net   48 Billion US     Net   40 Billion US     Boeing by     8 Billion US

These are probable and closely estimated numbers by Avitas (financial evaluations firm) as a conservative evaluations of aircraft sales, it can only achieve an estimation from usual sales policy, where sales are not priced at stated book value at time of sale. (Valuation estimate denoted as Net)

All data referencing from the Seattle Times article by Dominic Gates *** January 13, 2015.

Airbus’ 2014 sales tally shows Boeing is still No. 1 (Headline title)


What is important to note: both companies are multiple-years away from eating a significant margin into its respective back-log. Customers also need a five year plan for financing, fleet expansion or renewal staging. The aircraft manufacturer who reaches the five year back-log buffer first can harvest more orders sooner rather than later. If Boeing goes to 52-737 a month in production and exceeds 12 a month for 787 production level, they will be well positioned for absorbing more orders by 2016. It becomes a Sooner rather than later appeal, as Airbus now must find a way through its own lengthy order book in a timely manner. Boeing has also positioned itself well for both a 777-300-ER by a "now order" delivering before 2019, coupling it with a 777X "next order" package, which would deliver after 2021. An Airline customer can craft its fleet with this type of transitional ordering over the next eight-fleet-planning-years. They can maintain a five year planning mode with this type of order bracketing.