Friday, October 30, 2015

Leveraging The 787 Has Started

A few airlines are considering expanding its 787 fleet. So today alone the news has reported the following fleet expansion either already done or under consideration.

  • Norwegian Has ordered up with Boeing for 19 more 787-9
  • Scoot is deploying its continuing delivery for 20 with plans for fleet 787 expansion
  • TUI or Thompson is considering another fleet expansion with Boeing for its 787-9's
Why the prepositioning for more 787's? The answer is the first batch is making such a success for each airline already flying the 787. The list will gain length during 2016 as more airlines will buy more 787's from the success of its current fleet of 787's. This is what is called leveraging. Levering an asset value (cash) into another of the same value (787's) when expanding the business. It’s done all the time in business. In this case it moves billions of dollars into the 787 marketplace. This was one of Boeing's strategic development points back in 2007.

"Winging It" sloppy Vision statement: "Once customers get these first 787 into its hands, it will propagate an urgency for more 787's flying more routes through a strategic equipment replacement and route expansions." With what they (Scoot) quickly see with its 787s, is they have an urgent need, as they have already received both 787-8's and 787-9's, which is making Scoot money for leveraging into more 787 aircraft orders.

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Airbus customers are not so fortunate since it has a slow delivery of the A350 at five or six in twelve months, there are no A350's in operation for leveraging (money banked) additional A350 sales booked. The Boeing 787 production yeast has risen the 787 Market bread, where Airbus is still serving an unleavened version of its sales pitch. There is no Airbus product leveraging at this time. Boeing's almost 340 units of 787's flying, is putting more cash in the bank, for buying more 787's for its customers.