Friday, July 14, 2017

Boeing Outlook, Math, and Stuff

If 0 were the center of the universe, then any number is a deviation from that center. True or not the definition of smoothing with statistics or recognizing a seasonal value against a straight line, results with a big math understanding for which all people who aspire to become decision-makers must come to know during their own educational portion of life. Without a written mechanism such as math there would be no understanding of an event occurring and why it occurs.

Image result for chalkboard full of math formulas

To further illustrate this convoluted idea, any action or reaction in nature can be measured with mathematical calculations. A rose grows 6” tall another 24” inches tall from the same plant. What will the third rose grow next to the first two? Math should tell that outcome. One person may take (24-6)/2 and then come up with a 9” Rose for the third growth. A second mathematician goes old school and uses a basic average (24+6)/2= 15”. A third mathematician from college uses seasonality and trending functions applied to the first formula, for a power point show in the Paris Airshow.
The question before the industry is, “What potential does the airline industry have for selling airplanes for the next 10 or 20 years”? 
What demand numbers for each class of airplane exist going forward?

Fortunate for eggheads there are computers which can store dates, data and complex math formulas for those answers. Enter in current date and then a future date to the single aisle aircraft division and the computer heats up a little producing a neatly generated report in both paper and electronic power point manner.

Boeing has just done that with the Jumbo sized aircraft. The world only has only a possible few more orders for giant passenger Jets during the next twenty years. The 747-8i has been pronounced dead on arrival.

After reading through the website for its 20 year 2017 airplane outlook, the numbers change in steps from the 2016 outlook it provided. Instead of 39,000 aircraft looking forward it goes forward with about 41,000 in 2017. Slight adjustments to the whole forecast as expected from YOY accounts.

What changes in the calculation are the data streams which affect things like trend lines and seasonality? The current trend direct is driven by fuel prices at this time, and it has flattened the demand for wide body orders. The seasonality issue is a factor from refined statistical analysis which is affected by world conditions where people are willing to fly or not and documenting expansions of travel routes during financial cyclic periods or driven by other factors.

Imputing data and formula bundles in the computer is a continuous process, where every day a change occurs in the market place or industry and a math adjustment follows those changes. The outcome is a snapshot in time where next month after the show those forecast numbers have become old and stale but at a small rate of change. Any change is then added to the forecast formulas thus updating what has been presented.

The conclusion to all of this mumbo-jumbo, is Boeing can chose its own data complimentary to its own goals and skew outcomes towards slighting its competition and likewise from the competitor for doing the same thing to Boeing. 

A further conclusion is the 747-8i has faded and the A-380 is rapidly following the 747 into oblivion. The rising stars are small to medium wide body and the Jumbo replacements such as the 777X family of Aircraft. Airbus has thrown down on the A-350-1000 but it will not match the Boeing 777X, however it has its own niche above the 787-9 and just below the 777-8X capacity. The 787-10 is another specialty airplane using its regional range while not having an unused long range capability like the A-350-1000 has in its own separate market zone. The 787-10 is an intercontinental people mover and the A-350 -1000 is built for World -wide travel competing for the few 777X in that market segment.

This digression of this discussion is an offshoot of the above forecasting whimsy. The Boeing data aligns with its corporate strategy without using biased assumptions for its math modeling. Boeing made a case to bury the 747-8i once and for all and pulling the A-380 down with it. This opens a door for the 797, a small mid body mid-range aircraft having a disclosed 5,000 unit market potential, as mentioned in its Paris outlook reports.