Flight ANA Goes Fishing And Catches A Fare with Vietnam Airlines?

The significance of ANA buying into Vietnam Airlines (VA) incredibly enhances Boeing's chance of selling more Dreamliners. Since Vietnam Airlines already has a strong order book for wide body assortment of aircraft, it buys both Airbus and Boeing in a hefty supply for a smaller carrier, Vietnam Airlines may tilt further in Boeing's direction. Currently, Vietnam shows eight 787-9 Booked, but has more optioned, greater than the sum of the Airbus A350's on the order list.

Vietnam Airlines looks to sellshares to foreign investor soon

Vietnam Airlines will gain ANA spinoff expertise in managing its fleet from the ground up, as it now has just introduced the 787-9 to its fleet. The ANA share power going into Vietnam will certainly influence the future of VA's decision-making. This move strengthens VA's footprint in Southeast Asia.

Least We Not Forget The 777X

I didn't forget about the 777X, its folding wing and plastic to boot. The winter is long, but not that long. I can hardly wait to pull the wrapper off the 777X during 2016. First things first is the wing fold. They (military) did it every day for almost for seventy-five years. It's nothing new and it has never been tried before in commercial aviation. Why, nobody knows they (Boeing) havn't tried it? Its time has finally come and it’s about time. A simple fold will add twenty-four feet to a magnificent albatross like 777X wings that people will actually pay money to see while in flight. Did I mention I can't wait already? Yeah well you know about excitement the people had who flew in World War II from the then miniscule flat tops.

The design is Patented (Boeing), and added to the World's Largest twin engine passenger Jet at Boeing, the 777X.

 

If Boeing has the wing, they need a plant for which to build the "all plastic wing", so the concept won't come unhinged. Therefore, they built the huge plant for building the plastic folding wing.

In 2016 Boeing will start the 777X building process in a series of rather large steps. Boeing has mapped the steps from autoclaves, buildings, and 787 like advanced technology. Even though the 777X won't emulate the 787 in all aspects, it will borrow deeply from the paid for (well almost paid for $30 Billion pit) 787 technology for appropriate application on the 777X. A drop-off from the 787 designs to the 777X techno design occurs by not including an all-electric system core Boeing had exploited earlier with the 787, but will incorporate 787 like windows and tinting. Rumor has it that the window shade people are close to perfecting a total blackout window which some flying customers insist on having. These could and should show up on the 777X.

The 777X importance is found during 2016, since design freeze has happened and the wing plant is huge. The sum of all Boeing's accomplishment is packed into the 777X. I am excited.

Boeing Once Again World's Largest Airplane Manufacturor

The grand Total is 762 Airplanes "delivered", making them once again world's largest producer of aircraft. So it begins:

Aircap-Recap 2015

Let's do this by type delivered.

 Type               # Delivered

737's/BBJ all types: 495

747's all types:         18

767's all types:         16

777-300ER:              79

777-300F:                19

787-800:                 71

787-900:                 64

----------------------------           

Total:                     762


Book Price recap: does not include actual price Boeing has received during a sale. Since, Boeing's price is often discounted on bulk sales, or price increased during a customization of any aircraft, hence changing the actual sale price. Therefore the book price is used as a guidance number only until final accounting numbers are reported.

Boeing's Gross 2015: Sales

The Boeing Recaps

787 Family-2015 Gross Orders

737 Max

737 NG

747-F

767-F

777-300ER and 777X

777-300-F

Note:

There are 10 orders not listed in the above subsets as Boeing announces 878 total orders where Winging found only 869 orders from Boeing Charts. I have accounted for 8 unidentified 737's not included in the above charts. Two others are unaccounted for making up my 10 missing orders.

2015 Grand Total Gross Units Sold: 878 of all types before adjustments.

The Net effect comes from cancellations or prior orders having book changes from one model to another, therefore making a -110 adjustment during 2015. This is applied to the Boeing book account netting 768 aircraft total slotted for production, and entering the Boeing Backlog.

Accounting exponentially smooths 787 Ride To Profitability

Math majors and coffee cup geeks seek a smoother answer for 787 profitability, if you develop an extremely risky product like the 787. Boeing kept pouring $Billions at it before delivery and $Billions more after delivery, until it becomes a successful product from the design and development aspect. 

However, there is the financial stream remaining which is equally daunting, as it shadows the project. The 787 program expects a $33 Billion hole before accounting can get its arms around the 787 where it becomes pleasing for investors. In essence, Boeing has a real profit for the program when its $33 Billion money pit is filled.

Accountants like straight lines on graphs, as a lumpy program cost from start-up graphing is to be avoided. The lines must look uniform and organized. The 787 expenditures for its research and development during the 787 program had no known limits, other than it had a ceiling under some company breaking point. Did the 787 program break Boeing's financial back? The answer is "no" for that question. However combined with other successful Boeing programs it was saved with a Boeing holistic profitability margin. The sum of all its parts came to the rescue for the 787 program. Enough time and resources were available to get the 787 financial pig going in a straight line. When Boeing builds about 1,300 787's, it makes money from the start of the program to this point. Additionally, during this time, the 787 reaches beyond a pure breakeven point without footnotes and sunk cost set-aside on current accounting. It will be paid for straight -up!

Motley Fool has come forward with this 787 Financial Assessment

Quoting them is better definition for those who drink copious amounts of coffee in the morning, and for those who like neat and tidy lines on graphs smoothing out personal problems of a messy slope. Mathematically, the 787 $33 Billion money pit is filled in by the 1,300th 787 delivered.

"Boeing initially set the 787 accounting block at 1,100 units when it began deliveries in 2011. It increased the accounting block to 1,300 in late 2013. Essentially, this means that after 787 production becomes cash positive later this year, Boeing expects to recoup the $33 billion in deferred costs over the rest of the 1,300 unit 787 accounting block. That will be roughly 850 planes."

For a cogent look at Boeing's financial accounting dynamics summarized, I would rely on Motley Fool's assessment as a snapshot in time using Boeing's variables driving the Fool's outlook. In other words it’s a point in time looking forward with all things considered.

"Thus, Boeing expects an average cash profit of nearly $40 million on the last 850 Dreamliners in the accounting block. And since production costs will be declining steadily, the last few hundred could be even more profitable, bringing in perhaps $50 million each."

The best conclusion anyone draws from this, is that Boeing has retired enough risk on the 787 program. The accountants now have free reign for formulating straight lines on the graphs through exponential smoothing, while painting over the lumpy curves of cost on said graph. By a 787 unit #1,300, it becomes midnight and all is well in building 40-24, and a straight line is painted in Chicago. 

Boeing has delivered 363 787's. Boeing has already Booked 1,143 787. They will need selling 157 more 787's before reaching its accounting block of 1,300 booked. At the rate of 135 787's a year delivered, Boeing has  about six years for accomplishing selling 157 more 787’s or 1,300 787's booked. Reaching seven years out allows Boeing to deliver them build and pay back the money pit in total.

Evening Addition: Boeing repose

Every day comes a new chapter with the Boeing /Airbus fight. Rather than ruminating on the two giants, it is better that one sits back in a repose and ponder the greater issues of what is best for the passenger. The real danger lies before the passenger is riding in equipment not ready for prime time rather than buying the next best thing. Fortunately both giant manufacturers, and of a bevy of other single aisle makers are constrained by a due process of vetting new aircraft safely.

No recently made aircraft introduced in this decade has crashed, such as the 787 or A350 to be certain. Many things go wrong during daily operations for any aircraft type. Air India is supported by a robust press who likes to dedicate its full page for 787 reporting when a Dreamliner experiences another maintenance code for replacing a part. Those instances of flagging maintenances issues were announced to those seated in seats as an bull over the PA system, "stating the maintenance is changing out a flap actuator or the computer has identified a fault which will take 45 minutes to resolve". However this goes to press in India too often.

Evidently those days are gone and everything 787 is a news flash in India's skies. A two hour delay is the headline. A twenty hour delay waiting for a part and an installation by qualified 787 techs is the world wide news. What has happened to air travel where the complexity of every aircraft currently built takes an overhaul of said system before departing? The things that are saving customers are now the things that make us impatient when traveling.

This is a warning, travel will always remain a risk and will always encounter an uncertain nature when continuation on a journey starts. The 787 is no different than any other classic airplane flying before it, and it is not news any longer having a 787 on stand-by until it meets a flyable status. The high tech of 787 governance found internally is terrific, as it is monitoring millions of parts, and potential 787 issues during operation. If a line of code detects the 787 needs attention somewhere, it becomes a headline in India. They should report more on its economy than routine issues found on the 787.

Since there are only about 300 787's flying at any moment, it is a small portion of aircraft in the air compared with all others types in service. I have been delayed in Tucson to Seattle, and switched to another airplane type entirely, without even a nary mention from any news source for what problem had occured after having passengers switching out from a scheduled flight. Not so for the 787, since it is front and center for everything glitching. Airplane faults makes the papers every time. Thus making the passengers always more edgy. 

The millions of lines of code, makes the aircraft download data each day during a monitoring cycle has made the 787 just plain safe, and has not the travel nemesis the all India news dwells on and on concerning the 787. The airplane has carried hundreds of millions of passengers and Billions and Billions of miles. Is it clear to everyone that knowing everything about everything 787, is the reason that is keeping it out of harm's way in a big way? The 787 maybe the first airplane to never experience a hull loss due to its own mishaps or failures. 

PS: The Vietnam Airlines A350 has been grounded in Paris for two days because something went glitchy. You find it in the headlines!

ANA is Moving To Buy A380

Japan is high density as any part of the world's mega population. It stands reason an airline who has courted Boeing for so many years would dabble with the A380 as a stop gap-loosening for its high density routes within ANA's reach.

The purported pending order is for three giant A380s. Airport congestion is in play for ANA. One A380 airport slot can eliminate having several airport slots for moving traffic. However, where will the A380's land. The US, Europe and Southeast Asia are the obvious destinations. The 747 is fading and the A380 is the newest design sinking over the 747-8i. The Boeing 747 aircraft just doesn't move enough people in and out of Haneda using only one airport slot. The 777-9X isn't ready nor does it have an immediate production slot for ANA's purchasing timing for having a quantity people mover other than heir apparent A380.

Not saying that A380 is a superior aircraft over the Boeing suite of aircraft, but it is an option for meeting current needs and growth plans for ANA. Ordering three A380's solves several issues in a one type buy where current Boeing types could cover those ANA issues. As mentioned at the top, ANA needs a congestion buster even as the A380 is also a congestion maker on the ground. ANA is keeping an airport slot while moving 550 passengers in and out using its current available Haneda positions makes some sense. Even though the A380 will congest the airport landing 550 people at one gate, where it then becomes an airport problem not a ANA problem.

Grasping at straws is a strategy. The Airbus A380 ANA grasp goes only so far in a fleet family. I would be concerned for Boeing if they ordered as many as Qantas did before they discovered another way, and started buying 787-9's as part of its flexible move in the market. The operational inflexibility of the A380 is a stop gap measure for relieving only one part of ANA's airline's problems when moving passengers.  

The Big IF for Boeing

The single aisle wars took a turn against Boeing during 2015, the A320-321NEO outgunned the 737 MAX during the year. That wasn't supposed to happen and even Boeing aficionados are left wondering what happened. An analysis has started by Boeing on what to expect next year, and what's going on where they didn't shrink the Airbus lead over the MAX. Before any bridge jumping starts by Boeing execs, let's us try to spin an answer.

• The big picture is the very big picture, is a solace in any industry
• The lead in the market is something first places loses not what second place takes.
• 2014 spent Boeing energy dampening 2015's potential
• Is the Max really the MAX
• Let's see what 2016 does before resigning and base jumping from buildings without a plan

Starting with the big picture point, it’s a marathon not a sprint kind of approach allows for off segments of time. Boeing hit the hill a little later than Airbus in this race, as Airbus was sprinting downhill on the course. Is this notion an imaginary hopefulness of wishful thinking on Boeing's part or is Airbus turning a positive corner for its single aisle going way beyond Boeing's own expectation?

The answer is so complex where "time" shakes out the truth on the matter. The Winging It take: is about the A320NEO entry into service during January 2016 causing a market ordering flurry in 2015. Emboldened purchasing by more Airbus customers and some new Airbus customers, and adding orders during the 2015 line-up? 

Otherwise getting in-line sooner rather than later, while amping up orders for the NEO before its entry into service arrived. 

In summary, a trickle down impact occurred for Airbus, as the entry into service factor joined the market. The Max is now facing a order saturation with the market sponge before its own entry into service arrives. The Max will increase its sales during its moment of entry, but will have less market absorption room because the NEO was first to enter service.  

However, the other take is the Airbus NEO was a better deal for the customer. The big picture numerator over the time denominator will say who is right on this matter.

Having a lead in time and space remains up to second place to take away from the first one out with the single aisle announcement. The 787 vs A350 battle proves there is merit with this assumption. Boeing jumped first with an all new plastic concept of the unproven wide body. It now maintains a lead over Airbus by a significant margin as its lead is 1,142 to Airbus' 775 booked, as both wide bodies are flying, Airbus struggles to catch Boeing. 

In the A320NEO case this is true when comparing with the MAX. The Airbus announcement head start will carry for a decade its first place position, and before any reasonable analysis can conclude a meaningful outcome.

In 2014 Boeing ramped up closing on orders suspended by customer hesitations. Now 2015 came and went with order potential already spent. Boeing knew this at the beginning of 2015, as it forecast sales for only 755 units will be sold per guidance. The year 2016 will be an interesting wild card year for Boeing guidance, and should be adhered to by investors. If the bigger picture plays out in Boeing's favor, then 2016 will reflex the order book in a snappy way often found when letting go of a stretched-out rubber band. It will spring back with a solid 2016 order book yet to be disclosed.

The spring back includes the MAX being everything Boeing purports it to be, a better aircraft than the NEO version in the single aisle market. When its flight testing begins there maybe two different scenarios Boeing will play. 

The MAX is fantastic, or the MAX meets Boeing's expectation. 

Anything short exclaiming a "Fantastic" report means a long road to market relevance. The market expectation was already set by the NEO even before the 737 Max was announced. If the MAX becomes the real MAX envisioned, then Boeing has a winner making a lot of "should of", "would of", and "Could of" customers, who ordered the A320NEO, blush. I believe the MAX is the MAX and Boeing has a winner eventually flipping single aisle back into Boeing's favor by 2020.

Boeing will have a "No Building Base Jumping" year. The orders for Boeing for 2016 and the over-ordering for Airbus during 2015 will correct the current balance difference, significantly. Boeing will go 1,000 plus orders as the MAX approaches first flight in 2016, and the 787 goes sub "A350 backlog" during first part of 2016, and then goes back up above A350 Backlog from its robust production and order pacing. The 767 finds more freight calls with UPS and others. The orders come from market pressure out of many different ways and means. 

The "Big IF" in most break room conversations regarding 2015, will disappear into comments about how did Boeing do that during 2016?

Remembering Back Two Years

In 2014 I wrote about myself in a remarkable tale. This is why I write the blog. I have matched aviation passion with a will to recover to a former self. The carrot on the stick is about aviation technology, finance and big things. Not all of it is about Boeing, some of it is about pet interests regarding military procurement of advanced technologies, flight and big things.

What I said in 2014 on the 200th blog of the year

Truly a miracle I'm still here and it hasn't been easy to stay with it. I have had multiple events on my heart and with my health. God willing I will keep writing until I become MIA on Winging It. May all of you who follow, and read Winging It, have a prosperous and joyful New Year. Please link back to 2014 and read my state of mind at that time and my recollections about surviving. 

2015 stats: 294 blog articles written in 2015, 782 blogs articles written since 2012.  My goal is to hit a cumulative total of 1,000 blogs during 2016. It's only 218 additions away. I can do it, and do it better.

The Start of 2016 Needs a Look Forward

The usual commentary at years end reflects on what happened to change our lives during 2015. This approach on Winging It, uses what’s going to happen in 2016 when comes to aviation giant Boeing.

MOM is the code word for 2016. MOM is the "Middle of the Market”. Boeing will address the middle of the market. Had Boeing a MOM replacement for its 757, then they could have shared with Airbus A321 NEO already having over 1,000 single aisle sales, before its entry into to service. Since Boeing played the 737 Max card it gained only 219 units sold for its 737-900 Max. Boeing will go plastic and metal making a MOM coming home from the holiday's reality. It has to parry and thrust against the A321 NEO. Only it has to go dual aisle in a muted 787 design motif for the parry. The thrust comes from its new engine technology. It’s what the 787-300 was supposed to be in the first place. However, the 787-300 was swept up by a heady 787-8 moment and discarded.

Winging IT has already predicted a dual aisle seven seats across design hold up to 220 passengers. It’s a way to stop the wagging tongues from Toulouse, and a chance to regain the MOM market cleaned up by the A321 NEO. Boeing was hog tied with too many programs running at one time, during its resurging remake of the Commercial division. Yes, 2016 has to be the year of the MOM announcement, or it will become too little too late.

It shouldn’t be an overwhelming effort building the enhanced 757 concept into a one off airplane from both the 737 Max and the 787-8 emergence. The new MOM will stop the bleeding between the single and dual aisle crater formed by both framers. A MOM would beat the A321 NEO, and it would surge into the gap, having a little bit for everyone concept: starting with the flying public. What would it offer the world market?

• Customer Roominess    
• Airline efficiency with superior turn-around time at the airport.     
• All things 787 in a MOM class      
• All things 737 in an airport fit
• Extended range over the single aisle class
• All things Boeing starting with new diameter engines.
• Laminar flow technology
• A new wing superseding the Airbus Popsicle stick design.
• A phenomenal offload/load cycle
• Electronic windows and so forth.

The boss in command will sign the build proposal saying #2 make it so. Or could Sean Connery step in from his "Red October Sub" and command, “make revolutions for 30 knots”. Boeing has positioned itself for this moment and if it sits on its hands without making any MOM announcement during 2016, then the Corporation biffs it big. The MOM is the missing link needed for selling more MAX and 787-8’s. It’s not how many MOM’s it must sell to make it work, it’s about having a MOM for selling how many more 737’s and 787’s.