Thursday, December 31, 2015

The Death Of The 767 Is Greatly Exaggerated

The 767 isn't dead as it took its largest 767 order in the history of the program during 2015.

Image result for fedex 767

If you would count orders and active considerations, the 767 lives on into the freight world as the type that can make freight business run.

A list of what's up with the 767F: per Seeking Alpha 767 Report

  • FedEx @ 69 with 50 more options
  • Air Force KC-46 @ 179
  • UPS ponders its fleet renewal while considering 50 767 Freighters
  • SF China ponders for ordering 30
  • Amazon ponders for ordering 30-60
With this short list, a total of 258 frames are dialed up with customers during the next decade, ... and if all active considerations are tallied as the potential for the 767, it could mean another 190-767 could turn into hard sales before this decades ends. In other words, the total 767 order book may become resurgent as a tanker, freighter and possibly passenger airliner in the upcoming years with a potential of 448 frames identified by customers from this point forward. More to come...?

The semi-truck of the skies doesn’t need 787 like GPM (Gallons per mile)rating. It is lighter than a 787 hull and is needed for freight hauling. Having a reliability rating of over 98%, and an almost zero delivery waiting period, makes the 767 desirable for freight operators. Even some second tier airlines see a niche for the 767 for its fleet as a passenger carrying capability traveling under 5,000 miles. For the long haul, the 787 would be a better match for any airline.

The magic number of 20% efficiency variance with the 787 defines the niche for the 767 as an effective tool for going from point A to B just hauling everything. The military couldn’t even put the 767 dog down, since it bought 179 KC-46 tankers as an effective military component. 

The A330 with a superior passenger configuration did not beat the 767 when morphed into a tanker bid. The 767 is very much liked for its durability and reliance, a key component for military service. It’s not so strange when thinking about freight, it rises to the top of the buy list when thinking about Mack trucks and air freight.

Seeking Alpha illustrates  how burning 8,000 gallons on the 787 is the same as burning 10,000 gallons on the 767 while going to the same place. Sounds semi-truck like, using fuel numbers compared with an RV. The current price of Jet A ranges according to region, nation or locality. Seeking Alpha went with a visual, but used a math number of $5.00 a gallon for a thumbnail in its estimation, which is good enough for an illustration. The fuel cost cash receipt difference, from the 787 or a 767, factors about $10,000 dollars cheaper for the 787, since only burning 8,000 gallons when going the same distance as provided from the above example.  

The purchase price interest rate cost, when buying a new 767 for $199 million versus the 787’s $250 million purchase price, would mitigate additional operational fuel cost by a significant portion. Additionally, even buying a used 767, the fuel consumption cost compared with buying a newer efficient aircraft, and has a significant impact when applying a 767's diminished interest cost as counted in operations accounting, or as compared with any other airplane type or maker. 

A new or used 767 would considerably reduce its accumulated operational accounting cost (bank loan interest is included on books) significantly, and a used 767 purchase makes more financial room for any additional fuel cost when compared with buying new generation (787) or when acquiring any 767 instead over the purchase cost of another type.

If buying a 777 freighter, the business plan would include extra-large loads or uniquely configured freight bulk. Hence, charging a larger per piece freight charge. The 777 requires a greater revenue stream supporting its higher airplane purchase price. A business can easily see a need for letters, packages and sundry via 767. A freight business tends to charge via parcel quantity movements, priced at a rate supporting a 767 operation. If moved on a 777 freight, it would require a different price rate table or freight type in order to stay in business. 

The 767 has a business niche unmatched and will stay unmatched since any newly developing competitor airplane equaling the same haul capacity would make its new airplane sale price so high it couldn't compete or could it obtain any profitable scheme competing with "the long paid for R&D, on a new/not new 767 purchase price." Therefore the 767, will be around awhile until unit costs drop with the plastic airplanes competing with the 767 business case.

Rare Wine.jpg
The 1767 Lafitte Credit: Pricy Spicy

One of the rarest bottles ever sold was purchased by Christopher Forbes for a mere Â£105,000 ($160,000). It was an unmarked green glass bottle with the inscription of “1787 Lafitte Th. J.” (now known as Lafite and thought to be owned by Thomas Jefferson), found behind a wall in Paris. The third president of the U.S. is also associated

Boeing is positioned for optimized profit every time one is ordered. Long gone are the R & D expenses, and entry into service costs when refining the concept with its customers. The 767 has a cost refinement down to achieving optimal production output with optimal profit margin. The 767 has a 98% reliability history.  Boeing has aged the 767 as a fine wine, into a vintage blend of optimal manufacturing efficiency with optimal function efficiency when keeping the 767 going into the freight market position.