Saturday, October 14, 2017

The Accretive Max

I am so glad this is not finals week at some University of higher learning. In some class whether its math, business, or science. A popularization of the word "accretive" would show up in a question.  The finals question may read this way.

What accretive example can be given from the aviation Industry?


(a)The first accretive example is Boeing's 737 MAX. First there was the 737 Max -7 followed by the 737 Max 8, and then came the -nine after which came the -ten. It becomes "Accretive" with all its expansion of types, as it battles a competitor's enormous backlog of 5,202 A-320 NEO types ordered. As of September 30, 2017 Boeing has gained firm orders for its 737 Max family in a number of 3,902 units. The fastest accretive rise in Boeing's history for any of its vast airplane types ever made.

(b)Then the business school guy chimes in "wrong answer!" Boeing has made a clean switch going from its 737 NG to the 737 Max on the factory floor. It has already delivered 30 Max types while maintaining a high monthly production rate. The cash upside is incredible and the stock value is off the charts at this time by quickly going past the accretive position into hyper value drive.

(c)Not so fast the science guy chimes in, "while working with the physics of the problem it was discovered that the 737 NG could fly about 2,900 miles on an a full plane load of passengers and luggage into the wind. The accretive nature of the Max program has added passengers, luggage and can go 3,500 miles. This (me) science guy is catching a flight to the Hawaii observatory from the mainland on an Southwest Airline  737 Max 8 as proof of this concept."

Can that be done?

(d)The FAA guys have the accretive proposition for a Hawaiian flight under advisement. Its not a matter of if, it's a matter of when!

When all stories are compared with one another it was was 4-0 in favor the 737 Max was accretive and not just an excellent answer after a recent PW engine Airbus test flight. 

The correct test answer is: (b)

Accretive is the process of accretion, which is growth or increase by gradual addition, in finance and general nomenclature. An acquisition is considered accretive if it adds to the item's value or corporation's earnings per share. 

The business school answer using the 737 Max as an aviation example is the correct answer on this test.