Sunday, January 24, 2016

Looking Back Then looking Forward

Farnborough is in the books June 2014 and some spectacular comments lend to further study in 2016.

Steve Udvar-Hazy was given his usual welcome to the Boeing chalet...

"He said that Boeing should be able to sell the Dreamliner at peak production rates of 160 to 180 airplanes a year for at least 15 years, assuming a stable global economy, which would mean deliveries could exceed 2,500 aircraft."

Some kind of calculation came off Hazy's magnificent spreadsheet with all the financial tools implement before speaking.

Evidently Steve flew the 787-9 prior to Farnborough 2014, and was duly impressed as he remarked, "it is a magnificent airplane"

This brings Winging It to the topic at hand will the 787 actually take-off as Steve Udvar-Hazy has stated. This is quite a series of comments coming from a Boeing/Airbus customer. He has a vision for 160 to 180 787's a year at peak production during its lifetime cycle. That statement takes us forward as to what the 787 is capable of in the world market place.

Randy Tinseth (VP Boeing Marketing) has his own data flattering the Boeing Stock Holders, but he always has a realistic side to his comments allowing for wiggle room during a down order years as 2015 has just completed. I can trust his vision for the market with relative assurance his ball park numbers are in line with what Boeing will achieve going forward.  His continuous presentation found in the Boeing outlook chapter is for those who are tasked with gauging opportunity for its own business models.

Boeing is in the Market For growing 2,000 more wide bodies by 2034 than current 2014 inventory of about 1620 and expanding to 3,800 by 2034. This does not take into account inventory churning when replacing older equipment, it only represents the Boeing view on airline growth of medium sized wide bodies needed for keeping up with passenger growth. During the twenty year span there will be many retired medium wide bodies like the 767 or older 777-200 for replacement which is not included in the 3,800 number. The 3,800 is the size of the medium wide body market by 2034, not the number of medium sized wide bodies to be built by 2034 from 2014. The number of medium wide bodies from 2014 to 2034 for the market is a far greater number than the net change of going from 1620 to 3800. There should be an estimation of about 3,000 or more new wide bodies sold between the years 2014-2034 exceeding the net change number for its growth. 

Steve Udvar-Hazy view is very plausible and conservative when he says between 160 to 180 787's a year will be needed during future periods. Boeing is tasked with upping or lowering production with little interruption for its capability to produce the 787. Even with the Max/NG 737 production, Boeing's intent designs its production floors with the Just-in-time philosophy as the ebb and flow of ordering is smoothed on the production floor. 

The Boeing future focus does not rely on an Airbus like backlog of greater numbers of single aisle aircraft awaiting delivery. It is more a symbiotic relationship of Production and market. Boeing intends on selling the Max at a greater volume once it flies. Right now Boeing is at 3,000 Max awaiting delivery and Airbus has gone beyond 4,000 NEOs. A forty-sixty split in the market is the Airbus lead. Boeing will become the tortoise in this race and not make any missteps in order to regain parity.