Saturday, September 30, 2017

Cul-De-Sac The Book Chapter One: It's The Water

The highest priced property should be found in a Cul-de -sac. It is an island within a sea of people. Having never living in one before this year, I found out about the little nuances of  Cul-de-sac: With a front window position for viewing in an arena setting; Watching  the semi circle of things going on in everyone's life; you are changed. The lack of traffic going through as its flow is exclusive to only those who live in the semi circle, makes the magic happen. The vision of the cul-de-sac is similar to a tribal village on the river of life. Neighbor's canoes put-in on its drive ways where expressions on neighbors faces tell the whole story of the day. One neighbor drives fast coming in, spinning around the circle and backing into its driveway. The other (new) neighbor doesn't know the rules of trash yet and puts out a huge TV box for which the city disposal won't pick-up.

After pealing back of layers of the Cul-de-sac culture reveals a trash day for yard leaves in November. I got this tip from my other neighbor on my starboard side. He wanted to know who did my re-roofing. Then went on to explain how he wanted me and himself to get on the irrigation board for the sixteen homes in the  two adjoining cul-de-sacs. The system is for  pressurized lawn watering coming from one well making this "water district". Somehow, I felt important by this subliminal offer for a neighborhood power play. 

My other neighbor didn't even live in the Cul-de-sac. He was from Vancouver, Wa and bought the house for his daughter, who just moved in with her three children. She just went through a nasty divorce as her ex went to live with his boy-friend. Oh-my, unplug the cable TV. I don't need it, its all happening out the front window. She's the one who whips her car around and backs-in her drive-way several times a day. She is rattled and it shows. Another neighbor in the circle is a single guy about age 31 is having trash issues on garbage day. His neighbor on his other side within the semi circle is a single women in her mid twenty's. She is never home during  the year I've lived at the crown of the circle for almost a year. Her dad owns the house and she is never home.

So far I've got this going for this analysis. One neighbor bought his house back in 2005 without even walking through it before buying. The Vancouver Guy drove-in one day and bought his house for daughter because he liked the feel of the Cul de sac. The next "neighbor" a 31 year old, had looked months at countless homes and found this one at an affordable price and bought the day he saw it.

Twelve months ago we turned the corner into the circle when looking at homes and before we got out of the car "we mentally bought the house". The Cul de sac had cast a spell on us within 30 seconds and once walking through the home my son made an offer on the spot for the home. Here we are and it is like living on an Island surrounded by other far flung neighborhoods, only they have continuous flow through traffic and noise.

The must be something going on here that is missed. Maybe it's the water and the water board guy was on to something.  Five homes on the semi circle and five buys with the same story. The houses were sold the day the buyer turned the corner into the cul de sac. No matter the condition or size the house was sold and the tribe began to grow around the circle. Within a year's time we have become a community whether or not it was intended from the start. Being a reclusive soul. I have talked more and gotten to know more in one year of time than ever before in my life. In fact a strange thing happened. The estimated value of our home has increased price by $66,000 in ten months the other homes around us have increased in value with only a nominal increase over the same period of time. The strange part is all we did was just mow the lawn, that's it!

There is magic in the air and now I am considering being a member of the two person water committee within the sixteen homes near us. People have a story to tell but they need to sit in a semi circle to tell it and that is what a cul de sac does. It makes neighbors be neighbors, then friends and finally they have your back (or at least your back fence).

Friday, September 29, 2017

If Boeing Bought Bombardier Then...

This whole Boeing fiasco with Bombardier C-series getting 1.5 Billion in front money from its Canadian government really, really, irks Boeing. Boeing is going for some kind of Pyrrhic Victory-kill shot. In some strange circumstance the audacity for having Mr. Toadian mania exists. (Sarcasm font) "Boeing doesn't really want to sell Canada or UK military its vast military product line when it slams an Irish wing plant supporting Bombardier's  C-series. Boeing doesn't care if another 20 F/A 18's are not sold to the Canadian military." 

It wants its pound of flesh through US tariffs attached to every Delta C-series delivered. The US government is happy when it receives hundreds of millions from Bombardier/Delta tariff money assessed.

Below: Boeing legal team jumps at Bombardier's airspace.

Image result for Pyrrhic Victory

The tariff idea is effective but not efficient as the DoD spends billions more on each of Lockheed's F-35 contracting batches and additionally on its F-35 R&D upgrades or flawed concept corrections.

Boeing loves it when a plan comes together with its "B" team. The cheering from its legal department is deafening or is it screaming we hear as the Boeing wolves find bottom after reaching terminal velocity when biffing up its leap towards Bombardier C-series.  AKA,  "going off the edge".

Forbes values Bombardier at 3.6 billion US or the equivalent of  about 24 Boeing 787's at list price. Just buy 51% of Bombardier then let it sell all the regional aircraft, locomotives and ATV's into infinity that it wants to. Boeing would sell more F/A 18's, Chinooks and "other Military industrial complex stuff to Canada, Ireland and Great Britain as it helps Bombardier grow in Canada. Also invite Canada to supplement more funds to Bombardier/Boeing types of projects going forward, so it will rapidly turn the situation into the proverbial win/win tactic of big business.

But Boeing is playing small business instead because its pissed and it doesn't matter what others think.

NMA- Boeing Won't Launch What It Hasn't Already Sold

All the Boeing excuses for not launching the NMA (797) comes down to one point. It needs several hundred firmed NMA sales before any announcement.

Image result for cartoon airplane

Boeing has quipped market research, design maturity or the "right moment" which has all passed in time during the last five years. The research is done and various start-up programs have reached completion. Boeing had a plan-in-hand years ago after it stopped making the 757 back in 2005. It needed to build the 787, 777X and the Max before it could devote resources to the "NMA". Most of all it needed firmed launch customer firming of sales. No MOU's, Intents or order Conversions as experienced at the Max-10 launching. It just needs a stand-alone sales number for its NMA before launch announcements, then Boeing excuses of using market research, timing and design maturity makes sense.

Boeing already knows the NMA plan as it awaits for its customer(s) for pulling the trigger. The bigger the launch in unit numbers, the greater the long term success. 

Let's face it, the 737 Max-10 announcements at Paris was underwhelming with all the conversions intents and MOU's announced at the show. No one took anything away from Paris except from John Leahy's Boeing bluster comments about how few real firmed sales had during Boeing's 737-Max -10 launch announcement. Launch momentum was lost at the show by the plethora of conditional transactions where it only had less than a hundred direct and firmed 737 Max 10 sales for its launch. Quietly, Boeing is picking off one MOU at a time by turning the Intents into firm orders without much fanfare.

A new aircraft launch is all about the show and not accountant's sharpened pencils and legal pads of information telling a story having 360 737 Max 10's with firmed orders, MOU's or Intents including any options.

Boeing wants to bring clarity to any launch going forward. People in the industry walked away confused after the Paris announcements for the 737 Max 10. After months of analysis since Paris, the analyst can only factor in what has happened since the show and no one is paying attention much to the 737-Max 10 launch announcement with some of its MOU's, since firmed up.

My own data on the 737 Max Launch, indicates the following 360 or so Max 10's where agreed upon where 63 are newly firm orders classificaion, 90 remain MOU's and  214 are purchases out from Conversions classification (those from prior 737 orders booked). It remains a mess to sort out the launch other than say About 360 Max ten's are probably in play having sacrificed some of Boeing's 737 Max-8 orders to get to a 366 number.

The Boeing's NMA launch doesn't want a cluster of different announcements for its new family of aircraft (AKA 797). It just wants about 300 units ordered representing its launch customers before anything is announced! 

Boeing is waiting those customer's signatures and then using this interim time period for do due diligence aircraft R & D going forward. The timing for a launch should be from 2016-2019. Some say Boeing has waited too long for an Airbus answer. and should of already been way down the road from a NMA  launch date. If there is no answer to an unknown NMA configuration in the market place, time does not play into this process only to the extent of available resources and obtaining customer's firm ordering.

Thursday, September 28, 2017

Ryan Air Re-positions Vacations Like A Cruise Ship's Makes Seasonal Changes

A seasonal adjustment not caused by climate but by under planning has caused Ryan Air to cancel flights through March 2018. This affects about 400,000 of its passenger customers over the same period of time. Since Ryan Air has captured a market for 129 million travelers in its vast airline system, the impact affects only a small percentage of its customers over the next six months. The margin of customers inconvenienced is amounts to  .62% of its customer base for the next six months or about 99.4% of its passenger will not be affected.

The problem stems from scheduling adequate  vacation time slots for it pilots and crews. The perfect work storm has occured and there is no way out of the fix until it sorts out vacation schedules while at the same time expanding new staffing resources. The flight cancellations directly affects Ryan Air's revenue stream for those estimated 400,000 customers who will not travel with the airline during the next six months. This lost revenue stream has altered several of Ryan Air's aspirations for fleet expansion and further canceling a merger with Alitalia from Italy.

The set back should be a one -off problem during 2017-2018 flying season. Ryan Air expects to resume its full-on growth program by 2019 as it finds more pilots, crews and air frames for its growth. Having a better control for its vacation scheduling by March of 2018 should right its operational ship.

Ryan Air is no longer considered a small player in the airline business as any kind of operational mishaps of this nature tend to spell big financial impacts, if not addressed ahead of time.  

Tuesday, September 26, 2017

F-35 Concurrency Leaves 108 of Its Type Behind

There was a theory called "concurrency". The methodology for concurrency is to make an initial copy and then return back to that copy for updating it into some futuristic version from its origin. The F-35 is that prototypical attempt. The concurrent theory puts versions 2F, 3i and 3F to the test. Each reiteration of software is a concurrent up grade of the aircraft where the maker can go back and upgrade the aircraft within its own configuration. The other aspect of concurrency allows the maker to change firm upgrades when innovation solves a problem such as in the case of ejector seat malfunctioning and it can go back concurrently with new ejector seats and replace the faulty ones in all previously delivered aircraft. Concurrency is depended upon as the F-35 evolves through its development phases, but now a problem arises with the F-35.

The initial F-35 delivered are so far away from being concurrent with the new F-35's coming off the assembly line it makes the first 108 F-35's obsolete as a war fighter and it cannot be mustered for combat without billions of dollars spent renovating those first F-35 already fielded. The early 108 F-35's are a pain to make it concurrent as a fully capable war fighter. The military is considering making the early copies as training aircraft since the Air Force Navy and Marines have no dedicated 5th generation training fighters in its inventory, as all those currently flying should be marked for full combat capability as soon as the F-35 development phase ends. 

A decision would be made by the time Full Rate Production begins. If Lockheed can produce 140 F-35's a year at a full rate and at lower cost it would be a matter of months before every of the 108 early builds could be replaced with fully capable war fighters. The military does need training aircraft and the most expensive F-35's are all those early builds which may be turned into 5th generation training aircraft it sorely needs. Concurrency works after the development phase is completed.

The bottom line, is concurrency has put the military into a fine fix as Ollie from Laurel and Hardy would say. It just so happens that Tax Payer money is expendable.

Monday, September 25, 2017

Paper On The Ground Says Boeing Sets UP 797 Office

Boeing 797 Office is phase one of setting up.
Image result for Portable office on the street

A memo was discovered saying Mark Jenks will lead the 797 program forward, but that's not all. The former 787 program chief will also lead a group towards making a way forward for new designs and innovations for its aircraft making. My own take.

Reference: Rueters news

The slip of information is not a confirmation for a 797 program commitment or announcement for a the next "airshow debut", but it does validate more money is being spent for office space having big blue doors with 797 stenciled on it.

The Paris airshow 2017 offered a "797" teaser and it may announce as early as 2019 as a follow through at the next Paris Airshow and right in front of the Airbus Pavilion😜

Even though it was earlier stated by Winging It, (an 797 announcement would come at Farnborough 2020), this latest on-the-floor memo indicates a ramp-up for the next Paris extravaganza in 2019. Boeing is further along than anticipated with its 797 concept.

Ever Wonder What a Millennial Is?

I keep hearing the word millennial every day on the news or on tabloids its the buzz word to make you pay attention without a proper explanation for who or what a millennial is. Here is the official breakout of generational references from the website:

  • Gen Z, born 1996 to present
  • Millennials, born 1977 to 1995
  • Gen X, born 1965 to 1976
  • Baby Boomers, born 1946 to 1964
  • Traditionalists, born 1945 and earlier
You are a millennial if you are the age of 28-40 during 2017. Anything above 40 years of age is probably a GenX. I am a baby boomer at age 65.

CDB Leasing Says "Book'm Dano" Boeing's Momentum Order Update(MOU)

CDB Leasing, a Chinese airplane leasing company just signed for 60 Boeing Aircraft for about $8.2
Billion at list price.

  • 42 Max 8's
  • 10 Max 10's
  • 8 787-9's

The sixty ordered closes off a long negotiation period since the Paris Airshow June 2017. CDB signed its MOU/intent with Boeing at the Airshow. Boeing has not posted this transaction to its order book until its weekly updates are posted. A firming of a MOU is a final step such as the Turkish Airline deal for 40 787-9's were is at the MOU stage and the MOU deal would not be booked until that MOU/intent was finalized with Boeing. There remains a doubtful Malaysia Air intent announced at the While House last week for purchasing 8 787-9's, but it will become finalized in due time. Boeing is building up a back-log of 787 MOU's, for which some or all could be finalized by year's end and then could be reflected by customer name at its discretion.

Sunday, September 24, 2017

787 Book To Bill Graphic

Since 2004 Boeing has booked 787 orders but started delivering in 2011. each year an ideal number is for every unit booked a unit is delivered, thus indicating a 1-1 ratio of Booked to Bill. A graph  below shows this relationship. The Blue line is booked (orders) and the orange line is billed (delivered )787. The goal for 2017 is to have the two lines intersect at year's end thus equaling a Book To Bill ratio of one.

The graph below below is an example of  Boeing's goal over the last six years since its first delivery was made in 2011. The Book to Bill ratio intersected in 2012 and 2013 during  production start-up period. However, in 2017 with the year incomplete there is a possibility the lines will intersect when accounting is done with Boeing's numbers.

Saturday, September 23, 2017

A Sunday Read: 797 A Blended Wing Body??

Once in a while the blog features a Sunday read for those who like sipping coffee and Sunday morning toast. The reading assignment for slackers below has a link included out of courtesy.

Link to source 

"Dear Mr. Berko: In January 2010, you advised me to invest $10,000 in Boeing. I bought 157 shares at $63. Thanks to you, I’ve quadrupled my money, and the $5.68 dividend, which has increased every year, is a 9 percent yield on my cost. Thank you from my heart. Now I wonder whether I should sell Boeing because Airbus is leading the market with its A380 jumbo jet, which seats 615 people. According to my stockbroker, Airbus has advance orders for 200 of these planes. He thinks this will “crush” Boeing’s future revenues, earnings and dividends. He says these huge jumbo jets will be the “workhorse planes of the future.” He wants me to sell Boeing and lock in a $29,800 profit because he believes that Boeing will reduce its dividend and trade much lower next year. -- GB, Port Charlotte, Fla.
Dear GB: I’d like to take the credit for that prodigiously profitable purchase. But I’m certain as sin I wasn’t responsible for that Boeing (BA-$253) recommendation in 2010. I wasn’t an enthusiast until April 2012, when I met a minor vice president from BA who acted as if he were a major big shot. He looked like Dr. Strangelove, and I disliked him immediately. But he figuratively kicked me in the bum for being a troglodyte and failing to recognize that war is a “vastly more lucrative business than building 707s, 717s, 727s, 737s, 747s, 757s, 767s, 777s and 787s for peaceniks.” He was so serious that I wanted to ask about what will happen when all the 7s are used up. He told me that stockholders and most of BA’s 150,000 employees cheer when the political, ethnic and cultural differences between nations cause conflict, bloodshed, destruction and death. “God bless these differences,” Strangelove commented, “because revenues from fighter jets, helicopters, guided weapons systems and electro-optical systems account for nearly half of my company’s revenues.” He said that military business is more profitable than civilian business because contracts are competitive in the latter. He bragged that BA has dozens of congressmen on its payroll and then winked at me.
However, BA is no slouch in the jumbo jet business and won’t take a back seat to Airbus, which couldn’t make a dollar if it owned a printing press. Boeing has kept quiet about its new 797, which can fly 12,000 miles at 660 mph. It can carry enough food to feed 1,000 passengers and enough fuel to take them plus several thousand pieces of luggage to their destination. The 797 has aisles that are as narrow as an arrow and seats that are about the size of a child’s booster seat. But BA’s blended wing body, with no clear dividing line between the wings and the fuselage, is a significant advantage over the older, tubular-style structure. This increases the lift-to-drag ratio by 50 percent, resulting in a weight reduction of 25 percent. This makes the 797 33 percent more fuel-efficient than the Airbus A380, which has a top speed of just 634 mph. But bigger isn’t better! You need to be at the airport hours before departure. And after reaching your destination, it may take longer to deplane and retrieve your luggage than the length of time you spent in flight. BA’s giant jumbo should be ready for takeoff by 2021 and is so vastly superior to the A380 that Airbus may have to lay off a significant portion of its 73,000-person workforce.
Boeing expects 2017 revenues of $91.4 billion and earnings of $10.20 a share. In 2018, an expected increase in military contracts may push revenues to $94 billion, and with strong net profit margins of 6.7 percent, earnings may grow to be above the $11 level. Therefore, many on Wall Street expect that today’s $5.68 dividend will be raised to $6.50 next year. Though BA has risen sharply and perhaps a bit too fast this year, please keep this stock. Over 25 analysts agree. BA continues to be a good long-term investment, and I’d not be surprised if the board authorized a 3-for-1 split. The most recent BA split (2-for-1) was in June 1997."

Boeing’s When-iffy Year

Boeing has captured world aviation attention with the recent announcements. Orders for its 787 are mentioned in a barrage of announcements. Forty here eight there and another four for good measure are recent topics. In all it amounts to 52 787’s mentioned as orders coming from Turkish Airlines, Malaysia’s MAB, and Japan Airlines respectively.  

These are airlines no one was talking about until this last week. Those announcement are more smoke than fire but it indicates a fire is smoldering in the wide body world of orders. The pace will quicken at year’s end where Boeing is keen to mark its order book up with confirmed orders. It almost guarantees a plus 100 wide body order year depending on when paper-work is signed over to Boeing. Counting the current 82 gross orders and adding 52 more makes for 134 gross ordered 787’s. Becoming one of Boeing’s best 787 order years since counting started for the model.

Boeing 787 O/D Program Recap YTD 2017
Yearly Net Orders
Annual Delivery

The net total for 2017 stands at 78 units having 82 gross orders. Adding another 52 units by year's end would put 2017 in great order year company. Even if all the recently announced 787 orders were not finalized by year’s end, it would be a very solid 787 year with a standing net 78 count.

The top six order years since 2004:

  • 2005 -197
  • 2006 -99
  • 2007 -269
  • 2013 -181
  • 2015 -99
  • 2017-(134?)

If 2017 finalizes its pending order intents of 52, then a 134 order year would become Boeing’s fourth largest order year since the program’s inception. But having only 78 orders ranks it as the sixth most productive order year. It was a Winging It's estimation earlier this year, Boeing would have 50 orders coming in from all the various customers.

As Noted by Winging IT March 18, 2017, “Boeing should go plus fifty 787 orders in 2017”.

At that time of year Boeing only booked seven of its 787’s and it now stands at seventy-eight.

Having a plus 130 order ceiling is a possibility and will not impede its 2018 order book. The potential has been identified by Boeing and 2018 too may go beyond a 100 unit order year for the 787. This is why Boeing is going for a 14 a month pace by 2019 because its forecasting and own information is bearing out that is was correct decision.

The A-350-1100 Must Beat The New 777X Proposals In order to Fly.

Qatar recently indicated it would consider an A-350-1100 if it would beat the new 777X proposition. Looking at the statement suggests Airbus would have to build a super efficient twin engine behemoth. 

There are the normal metrics such as seat mile efficiency, Big body pricing, and capacity for the airplane propose. Currently, Airbus has several models in this arena as shown below in the bullet points. Customer's final configuration requirements will affect both seats and range capability.

  • A-350-900  325 seats, range- 8,100 miles
  • A-350-1000 366 seats,  range 8,000 miles
  • 777-8  350 seats, range 8,700 miles est.
  • 777-9  400 seats, range 7,700 est.

If both are proposing unannounced models then that proposal targets where the final battle will occur and what Airbus must do in order to beat is the theoretical 777-10X. It's a thin market for the 777-10X capability based on seats alone. The range becomes a big item for both makers for these ultimate types.

  • 777-10X  450 seats, range unannounced
  • Wing Length for 7778X & 7779X(unfolded) 235 ft
  • A-350-1100X must jump-up with 80-100 seats from its A-350-1000 standard 366 seating.
  • Wing length for current A-350's is 212.4 feet
Boeing won't announce a 777 10X until its proof of concept (777-9X) goes to market in 2020. The answer with this competition comes as several more airshows pass through without an ultimate twin engine announcement. 

Expect Boeing to go for a new GE engine performance for its 777-10X, before selling the concept to customers. The thin market for super-big aircraft with long range is only for several hundred aircraft and a few customers that may want it. 

Airbus will have to address its wing length for an A-350-1100 as it will be confined with its current A-350 terminal slots. If expands the wing length, it will have to find different parking spaces that would allow longer wings. Boeing thought this problem through as it earlier patented a folding wing tip.

A folding wing tip is the new norm for getting into every substantial airport available with a very big duo aisle aircraft. Airbus will have to come out with a telescoping wing tip for its A-350-1100 unless Boeing already patented such technology😉.

The 777X wing stands at 467 sq. meters and could go longer within an extended folding tip portion by several feet of length if it needs for a proposed 777-10X. The Airbus wing currently has 442 sq. meters, leaving the Boeing 777X wing 5% larger. When Airbus decides if it will go with an 1100 it will need to add some sq. meters to its current wing for meeting flying specifications for something so large. 

The A-380 has a wing area of 845 sq. meters as a comparison. It gains fuel burn efficiency from a massive wing area. Airbus must go large-wing with a A350-1100 if it wants to remain competitive with the 777X regarding fuel burn efficiency.

Having a 212 foot long wing won't cut it for hauling 450 passengers as it needs to compete with a 777-10X. The A-350-900-1000 wings have maximized the engineering in the current models offered. The cost of scaling upward for an 1100 type would not allow Airbus enough worthwhile profit, if they could even sell 200 frames for this type.

Friday, September 22, 2017

Is Boeing On The Verge Of A 787 Gold Rush?

The question becomes obvious after Turkish Airlines announced its recent 787-9 order for $11 Billion in 787-9 Airplanes. With Japan announcing it was the owner of a prior unidentified order for four, Boeing appears its on the verge of some sort of airplane gold rush to order. The indicators have been sounding off as if it is a metal detector. The shovel ready production projects are nearing completion in Everett, Wa. for its 777X program and Charleston presses on with the 787-10. The whole Boeing landscape is a buzz with activity, if it were unloading supplies for the Klondike.

The first "Gold" exclamation came when Boeing announced it was going for producing 14 787 a month instead of its guided 12 a month pace it had announced in previous years. At that time a loud "Ka-ching" hit the factory floor as it were a cash register making a big sale. Boeing had hoped for even making 16 a month 787 in some kind of fiendish glee heard in a meeting room near a water cooler/vending machine set-up. That brief omission was for stock-holder confidence, but no one believed that was possible. However, stock-holder investment rose significantly as if a runaway bull in the exchange was named Boeing instead of Boo-Boo.

Reality falls somewhere in between gleeful manifestation and depression. In a bi-plane/bi-polar world somewhere in between lies the answer and today it is 14 a month 787's. The formula is simple, 16+12 / 2 = 14. Checking math was given to a fifth grader and it came back as 14 -787's a month from a lengthy Boeing word problem. The work paper was given to a Winging It University (WIU) professor for final correction. The fifth-grader was correct and the problem was added to the University's math curriculum.

The professor gave a lecture last week entitled "14 a Month is an Idea Not a Concept". The following crib notes were discovered in a dumpster nearby the lecture hall. "Boeing must know something about its order book; Thanksgiving is months away, A turkey is what's for dinner, "Dubai me a river" is rising in the charts, A movement in the market is a lonely number. Boeing's campaign for Job One is a stand-a-lone concept. In order to go to 14 a month is not a bravado move, but reflects In-Orders. Net numbers is the same as never-mind."

The remaining notes on crumbled paper were indiscernible. Winging It looked up "Indiscernible" on the laptop and found out you couldn't read the remaining notes. Investigative reporting is hard work. However, a conclusion is made which should enlighten your knowledge and save time on making a decision on whether Boeing is rapidly becoming the one or just lonely (only). Airbus is having a WTF convention this week. The topic is WTF and Boeing Orders.

Back to the tittle heading. A Gold rush is the same as a perfect storm. All the elements must line-up perfectly before it can occur. In Boeing's case, is its control of its 787 backlog which is less than the Airbus A-350 backlog. Producing more wide bodies than a competitor can, would or could. Having the industry standard is better than having a more expensive alternative. Gold and cash are shadow currency to one another. Boeing is entering into the Perfect Gold Rush!

Thursday, September 21, 2017

Boeing Raises Rate To 14 Because It Bagged Some Already

Turkish Airlines and Malaysia Airlines have both agreed to buy the 787. Turkish Airlines intends 40 787-9's and Malaysia political announcement marks 8 787 for delivery sometime in the future. If assuming, which Winging It is able to do, it raises its booked 787 orders for 2017 up to 130 units only when recorded by December 31, 2017. Usually deals like this takes months of haggling between maker and its customers. Announcements like these two recent ones takes more months before Boeing can book the orders. They await final signatures completing an order transaction.

Egad, Dubai is about eight weeks away and Emirates shrinks in stature as Boeing marches on in the wide body zone, all during a reported order down year. Boeing is pushing and shoving its way to an insurmountable lead over Airbus and its A-350 aspirations. The secret 787 sauce is popular and its not just the XWB moniker that customer's crave. 

Boeing market research is now paying big dividends as it guessed correctly with its 787 family of aircraft. Airbus has only sold 8- A-350-800's, 625- A-350-900's and about 200- A-350-1000's. Boeing beats Airbus over the head with both the its 787-8 and 787-9's and is in a parity with Airbus' A350-1000 with its 787-10 bookings. The Airbus book keeps experiencing A-350-1000 cancellation trend as customers transfer down for its more popular model A-350-900. After Dubai, Boeing will exceed Airbus overall with the Airbus family A-350's. Boeing will remain having a significant order lead.

The more important consideration is all of Boeing's sales flood a thin widebody market leaving Airbus with little or no room to expand with its XWB type with sales. 

Secondly, repeat business now favors Boeing as prior customers will add 787's to its fleets when refreshing its wide body fleets ten years into the future. Boeing customers studying the A-350 case will often more prefer the 787 when expanding its fleet inventory because it is a better business model than owning the fractured A-350 family of aircraft.

Image result for Boeing's three 787 models

With the A-350-800 as a none starter and the A-350-1000's suffering some book changes away from the model, the business case falls apart. The 787 family is complete and customer's can step into a proven business case for owning a whole fleet of  various 787's. This is beginning to show in the latest transactions where both Airbus and Boeing were in the order fight and Boeing won those orders.

The 14 a month rate change is more about what orders are pending, and those orders that are verbally committed from reliable customers who usually follow through with its intentions. Emirate's pending order for about 70 medium wide bodied aircraft from either Airbus or Boeing is being delayed once again, and is no longer a key for Boeing's push towards 14 a month production. 

Boeing can wait for an Emirates order when the airline is ready, maybe by 2018. However, Airbus finds itself in a pickle with its own production ramp-up where it will not have enough A-350 orders to keep up with Boeing's production schemes in the next five years. 

The A-350 has entered the market place and customers do appreciate the aircraft because is such an advancement over classic airplane versions, but Boeing is presenting a better business case for operating the 787 in customer's wide body fleets. 

Furthermore, when the 777X starts delivery, the market paradigm will firmly shift to a Boeing preference for a broad spectrum of customers and its family of aircraft possibilities.

F-35 Build and Buy Comparison

It has long been a curiosity of where the F-35 program stands today. Or otherwise how many F-35's have been built and how many F-35's has the government bought during its program history. The answer is hoped to be found in the chart below.

As of January 2017, about 40 F-35's have been delivered during the year. Lot 10 was recently confirmed by the DoD which brings a total of 356 F-35's under contract. However, 240 F-35's have been delivered to those parties both in the US and nations abroad. The total, indicates Lockheed has completed its commitment for the F-35 most of the way through the Lot 9 contract for 57. The next 26 or so F-35's to be delivered will complete the contract for Lot 9 and Lockheed can begin delivering on Lot 10 soon after. 

The Lockheed production line at any given time has about 45 F-35's in the assembly line located in Fort Worth Texas. Having made this observation, it would be safe to say Lockheed is already into Lot 10 work estimating about twenty out of  the ninety contracted are lot ten as WIP (works in progress) planes on the factory floor. These are only estimates, but does give a relative view of delivered vs contract progress by year and Lot number.

A final note is that congress and the military agree on monies spent for Lot Work before a contract is signed and completed, so as to not interrupt the production flow. Suppliers get paid as does Lockheed using interim dollars for a continuos flow of F-35's. Lot 10 production started before its spending contract was passed and signed. The method uses advanced funding for maintaining a continuos production flow. Monies spent in advance will be adjusted affecting the "Lot's" contract balance after its signing.

Tuesday, September 19, 2017

Airbus Will Hail Mary Its A-380 In China

The A-380 needs customers stat! China needs expanded transportation hubs stat! Airbus would like China having the A-380 as a solution going from city to city with 500 passengers a trip. China has its population emerging into a economic surge where air travel is a partial solution for moving about the region. Trains, planes and automobiles are the eventual winners for the honor of people moving in China. The A-380 hasn't sold to anyone for some time and Airbus will give some away pretty soon to keep its production lines open until profitable sales are found.

There is a dichotomy of travel pairs in China. Single aisle connecting large villages of a million or more and duo aisle connecting large towns for million or more. The A-380 can do people, but it can't do regional airports while China is currently building in abundance for its emerging economy. Airbus insists China will need the A-380 in numbers until Airbus turns a jumbo profit on its A-380. The A-380 would be used for intercontinental travel. Future travel pairs will run into the same trouble the A-380 currently faces. There are only so many world-wide airports for the A-380. A population of 500 Chinese travelers may board the A-380 in Shanghai, but were would it fly?

The mid body duo aisle configured aircraft can go as far as the A-380 but land pretty much anywhere in the globe, though it will carry a load from 250-300 passengers. The single aisle can virtually island hop around the Pacific ocean and can land anywhere in China. 

There are also small villages in China of 100,000 people or more and the 737 will keep those airports in mind. There are multiples of multi-million peopled cities in China and the mid wide bodies are on the case. Where would the A-380 land if it left China? Where would it land in China having A-380 capable airports? 

It obviously can find 500 enough wealthy Chinese for buying tickets and filling an A-380 everyday going somewhere. The pride thing does wonders on a government's mind set. China will buy a handful of A-380's because they can.

The emotional limit will soon be reached for China's want for super big/jumbo aircraft. The transportation plan will come down to having more flights going everywhere everyday rather than having more Super Jumbos going once everywhere everyday. That objective should make it clear for everybody.

Time will play the A-380 out of vogue and onto the desert for a parts bin.

The plan will eventually evolve into a competitive nature. The best wide body operating in the environs of China will win. The best wide body is defined as what gives China the best deal for its economy. That is why both Airbus and Boeing want to build plants in China. The new norm is not importing into China but building foreign product in China for export. The win- win combination is a technological opportunity and a work force opportunity for the Chinese people and nation. China would like to learn how it too can build high tech aircraft for its many reasons.

Chrysler in America almost had Mercedes working with them when creating a better 300 touring car, then it left America allowing a Fiat take-over. In the aviation world there are no scenarios like the Chrysler mishaps with Mercedes and China hopes to land a major air framer long enough in order to build its aviation portfolio. Both Airbus and Boeing know this as well, but the carrot of selling wide bodies and single aisle is too much a temptation for mega makers to ignore. They hope to get in and out before China takes what it wants for stocking its own techno shelf just as Chrysler did with Mercedes. The 300 was one fine car. 

Monday, September 18, 2017

What Will Emirates Do At Dubai?

The airshow is rapidly approaching. The caveat was a wide body order many predicted, but Emirates the big player positioned itself with an order for 70 wide bodies for either Airbus or Boeing. Things change as is often the case. The recent reports is that Emirates has backed off announcing any purchases of wide bodied aircraft at this year's airshow. The reason for that assessment is that the market has slowed for this middle-east juggernaut.

The next step for any fan of any aircraft maker is to always look at the positive after losing out on an opportunity. Both Boeing and Airbus have much to gain with a major wide body order either for its 787 or its A-350 aircraft. The question is what will move Emirates towards making an order announcement at the Dubai airshow. The quick answer is a nominal order with a big option floated about. Emirates would be locking in a price going forward until its aviation market improves. Having said that, a mixing order of types would be the case. Optimism suggests 10- 787-9's and 10- 787-10's are booked with 50 frames optioned into the future. Emirates may further direct options for 20- 787-9's with another 30- 787-10's in a sprawling Boeing order book at the show. 

The pressure is on Boeing to give Emirates the "right" price in light of Airbus chomping at its heels. If Emirates were to wait for its right moment to order, it might be another seven years out before it would start receiving those aircraft and things change quickly, overnight, in some cases. The risk of waiting hangs heavy on Emirates'  buying plan. That is why ordering twenty 787 is better than just waiting. Somewhere in between is always the logical conclusion. 

An Example, Qantas Airlines for a longtime had ordered a multitude of 787's and then cancelled the order, but kept its 787 options intact as it regrouped its financials. It is just now Qantas has begun to take delivery of those former 787 options in a negotiated firming of 787-9's. It may not get all of its options sealed up for delivery but it will gain a substantial lot in the process at a decent price.

Another consideration is what the two makers are offering Emirates. Boeing may have locked a price in with Emirates if it just signs an MOU for 70 aircraft to be firmed in the next 24 months. There are many scenarios for either Boeing or Emirates with this impending order and a commitment at Dubai is more likely than having a hard order.