787 Cost Accounting For Dummies

Cost accounting is an important tool in deciding which make of airline should be purchased, otherwise you could drive the operation under water filling seats with dead weight. This offering won't explain cost accounting in detail, because textbooks start at 600 pages long in business school.  This is just one book per class taken on cost accounting for that matter. But I will hope to explain the strategic importance of knowing what airplane to buy for what business plan in play. That decision has the element of cost accounting and revenue tracking in a seat/unit relationship selling airplanes to airline customers. Its not about the bigger is better, or smaller is cheaper, its more of lining up the line graphs for one seat and finding the sweet spot for profitability. The secret is finding the right tool for the right job.

Its all about the seats not the wings when Cost Accounting is in play.

Analogy: Equipment is the key. If you have a landscaping business what will you buy, a Backhoe, Bobcat, or Bulldozer? Probably a Bobcat, which is a small piece of equipment that can do many things in a client’s back yard. No Bulldozers needed here, for making piles of cash.

Back to cost accounting and Revenue units:

Each Airplane has seats that drives the mechanism for revenue and profit. What diminishes the earnings margin are costs flows against the revenue stream. The question then arises, how much does it cost to fly each seat weather it’s filled or not? A two hundred seat 787 fly's empty for..., what cost? Finally, how many seats sold where the variable cost plus fixed cost are paid for by the margin? There are some variable cost found in the breakeven model such as fuel, maintenance and direct cost related to the flying activity. At this point, bean counters are just opening up briefcases sorting out the financial mechanism of flying the 787. The next question is what are the fixed cost on a 350 seat Airbus vs a 323 seat 787-10?  So far more questions before even one answer.

Fixed costs are defined by my "dummy definition", as a cost of operating that airplane whether it operates or not. Such as salaries, space costs, Administration and so forth. Variable cost are defined as those costs associated with flying those seats every time the 787 leaves the ground on a revenue flight. The variable is seat space or the number of tickets sold, as measured against cost of flying all seats. A filled 200 seat 787 has costs accruing from crew by the hour, fuel as it burns, and maintenance when it lands, and so forth. The complexity deepens as the book turns its pages in cost accounting. This is why accountants always talk to CEO's with the broad stroke of saying "The Bottom Line", or what falls out in the plus column every time we fly a certain route filling 200 seats. That brings it back to what an airplane can do as a profit engine when we fly on a certain route? Do we fly the Bobcat, or the Bulldozer, The 787-10 or the A350-9. Many airlines are buying both types from the two manufacturers to hedge the bet.

Example, a one aircraft airline:

Airline Fix Cost = $1,000,000 a year whether it flies or not.

Variable Cost = $250 per seat. Or the actual cost of flying that seat from point A to B

Ticket Price = $300 value per seat

Contribution Margin (CM) for each seat.= $50. Revenue (Ticket Price)- Variable Cost (VC) of each flight = CM. Or R-VC=CM.

So, if 250 seats sold at $300 each = $75,000

Contribution Margin towards a profit= $12,500 on this flight and for every flight when sold out ($50 x 250 seats) or in formula mode (75,000 R)-($62,500 vc) = $(12,500 cm)

Or using a calculator you figure the $50 CM will take 20,000 seats sold in a year at $300 to breakeven on the fixed cost of 1 million. The airplane must make 80 fully loaded flights to reach its breakeven point in this example, and start making a profit. If the airline doesn't fill to capacity or lowers its seat price in this model, then the big spreadsheet will change progress to a profit at different rate.  Airline ticket prices on an extremely efficient, fuel savings of 20% and maintenance cost reductions of 30% could allow airlines to beat the competition on lower airline ticket prices and make more money than its competitors. The 787-10 will make a dent on competing Boards thinking and its strategy making, which should come in form of 2014 787-10 Order's Books. That should be a great year for the 787-10 on orders, commitments, and options.

Anybody asleep yet? Back to Seats:

Airlines want to know how many gallons of Jet A burned per seat. Boeing claims a 30% maintenance cost reduction in operating the 787 overcurrent aircraft. It reports a 20% fuel reduction compared to current aircraft. This is what the bean counters listen to before inputting information to the CEO's on what aircraft they should buy. The question then becomes how much money do we want to make? A silly question, but one that is answered anyways.

The 600 page book on cost accounting needs to boil down to a one blogger page in a hurry.

All the accounting/cost accounting and revenue accumulation is broken down into little tiny accounting pieces, and then summed up on one gigantic spread sheet. The kind I used to make. Reduce one tiny piece down by 1% and the big spreadsheet's bottom line changes by .00001%  Change a thousand combinations of cost inputs whether fixed or variable, the operations numbers change dramatically by  X%. Bean counters get onto engineering's necks, imploring for financial efficiencies on design parts and innovation. Engineers don't like bean counters! CEO's and VP's are referees between these groups and types of company people. In the meantime buyers listen to the sales spiel on and on.

The thing that makes a difference on the 787-10, as in: Which A350 will it nullify on the cost function, and what is the right size for the right route filling seats? This will take some time to prove out. However when the 777X comes on it will complicate Airbus' sales team or simplify Boeing's sales team job with its Big spreadsheet presentation.

Remember A Seat Is Just Not A Seat. It’s a revenue source towards the Contribution Margin driving the company past Breakeven on a flight. Total Fixed Cost Operations + Total Variable Costs (in seat Units) determines when that point is reached and profitability starts.

The Break Even Point is shown "in a seat that has a green line painted on the floor” for Akbar Al Baker on his 787.

Caption added: (Every seat forward of this keyboard is pure profit (CM) on this aircraft. Everything behind you pays for the flight)

Save $$ and Go 787-9 Air New Zealand With A Friend

KIWI Sky couch in Economy Cabin (No showers available)

The Four Styles  of ANZ travel on 787-9

From Australian Aviation  Headline:

Air New Zealand confirms 787-9 destinations and cabin configuration

Item by australianaviation.com.au at 1:37 am, Wednesday June 26 2013    

• The Business Premier cabin will feature Air New Zealand’s signature chalk-coloured luxurious leather armchair that converts to a lie-flat bed complete with memory foam mattress, duvet and two full-size pillows.
• In the Premium Economy cabin, the airline has worked with US seat designer Zodiac on a customised seat best described as ‘Business-lite’.  The leather seat will have a 41” pitch, a generous 5” wide armrest and a leg rest and extendable foot support which will allow passengers to really stretch out and relax.
• The Economy cabin will feature 16 rows of Air New Zealand’s unique and highly popular Kiwi-designed Skycouch seats.  This is a row of three seats that converts into a sofa-like flat surface for both rest and relaxation.
• The standard Economy seat in the 787-9 feature a slimline seat-back to enhance the feeling of space, sculpted upholstering and a more flexible headrest.

Premier Business Air New Zealand

One is a lonely number, so is Business flying the Airways. Room for a Teddy Bear

 

Looks like an ANA photo

Its all About New Zealand Air's, Marketing Pitch. They will give you 41" to digest on long trips instead of the competitions 34". 

Back to Standard Economy, do you need pictures?  I sure would fly there using a technologically conceived comfort fit in a small space from Zodiac.

Houston, We Have A Problem

United Airlines has had its 3rd mishap as it seems in as many days, but not that often. However, the frequency is often for oil systems , and oil indicator sensors. Its too early for knowing what's the problem. Out of all the airlines currently flying the 787, its United who has a rash of indicators circling Houston, Seattle and ... oh well here is the list:

• On June 24, a United Airlines Flight 94 returned to Houston shortly after takeoff Sunday because of "a brake indicator issue."
• On June 20, a United flight from London to Houston was diverted to Newark, N.J., because of a low engine oil indicator. 
• On June 18, a United flight from Tokyo to Denver was diverted to Seattle, Washington, because of an oil filter problem. 
• On June 12, an All Nippon Airways flight was canceled when an engine would not start. 
• On June 11, a Japan Airlines flight to Singapore returned to Tokyo because of a deicing problem.

Okay, I see a pattern here: these are not excuses, but mere observations.

ANA has the most 787's and should head the list by mere numbers of aircraft by volume. Japan Airlines has the second most 787's and should come in some faults for a new aircraft. United has a good group of aircraft, but three in a row of faults with sensor's, indicators and filters points to bad luck, faulty maintenance checks, or not understanding all the million parts going into the overly sensitive aircraft.

The good news for United, is that everything is doing what its supposed to do. Tell the operator what it needs to know for safe operation. A cold engine that won't start is a "no duh" big problem. The sensor was, it didn't start! Deicing not working is it simply failed. But sensor indicators flashing messages consistently with one airline, suggest many options could be in play.

• Faulty performance of part
• Faulty Part like an oil filter
• Faulty System as in brakes

or

• Supplier quality control
• Maintenance oversight could not detect non performing sensor or part.
• System anomaly hitting just one airline
• Bad Luck

I don't believe in bad luck but statistical weirdness can happen.

Since United has the smallest fleet of the above mentioned 787 operators, I would as a United employee would want to examine all protocols for maintaining, setting systems parameters or procedures concerning the affected areas. Boeing and United will find out what happened in every instance.  The glitches, except the engine no start can be classified as annoying new aircraft problems that can occur in normal operations. Boeing doesn't want to go there with a press release of that ilk. They want to remain proactive with due diligence and clean-up of system issues even if everything falls on just one customer like United. Statistics say it is unlikely an airline would bear the burden of glitches, but not impossible. So they will go forward of checking and rechecking until they isolate the problems that occur as individual events, regardless of why United got hit for three in a row in a short time. Hence the rule of threes. "Bad things seem to happen in groups of threes". A very non scientific or statistical conclusion. A belief no one should establish for safe flying.

United will continue to seek answers with Boeing, one incident at a time. Until answers come forward as part of the 787 maturation process for operations. A new book is being written by customer operations over the world for this extremely complex aircraft. This will be true for the A350 when it starts service. Hopefully all the debugging is found in testing.

 

"The Secret Is In The Sauce", Ala "Fried Green Tomatoes" Fame

Remember that subtle little movie a long time ago, "Fired Green Tomatoes". Kathy Bates (1991), actress, was the star who concocted the secret sauce that eliminated a big problem.  Boeing is now the Kathy Bates of Aviation spinning a special tale and sauce to its competitors.  Motley Fool a favorite site, expounds on the secret nobody talks about in this article. Boeing Stock Has a $10 Billion Secret Weapon !

Please take stock in this secret item making Boeing a saucy buy..  Its the Chinook 47 helicopter. Who wants one? Those who don't like the Likes of Osama Bin Laden. You know the zero dark thirty entourage that flew into Pakistan and swooped up seal team six, secret materials and OBL.

Source: Wikimedia Commons.

Motley Fool Credits and Quotes:

"The best offense is a great defense businessOver on the other end of its business model, Boeing stock has a secret weapon that's getting far less attention than the vaunted Dreamliner -- and far less attention that it deserves.

That business is the business of building helicopters -- the CH-47F Chinook heavy-lift helicopter in particular. Over the past week, Boeing has received two blockbuster orders for its big bird. First the U.S. Army granted Boeing a contract to buy 177 Chinooks over the next several years, at a total cost of $4 billion. The Army says it may up that buy by a further 38 helos, potentially pushing the contract value past $4.8 billion.

But that's not all. Within days of receiving the Army contract, Boeing landed a second multibillion-dollar contract -- this time to build an unspecified number of Chinooks for the militaries of Turkey and the United Arab Emirates. Boeing's base contract here is quoted at $3.4 billion in value. If "optioned" helos are ordered on top of the base number, however, the value could rise to just under $5 billion.

Result: close to $10 billion in new revenues for Boeing."

It ain't the A400 but it doesn't have to be a cargo lifter, or troop deployer, or mission compliant tool. Because its much more and in smaller packages with Mission flexibility on a changing battle field. The case of Osama Bin Laden. A super secret stealth helicopter crashed at the compound and battlefield dynamic changed in seconds. The Chinook was held off station somewhere secret, new orders, go in and support the mission hauling out secrets, people and provide cover for evacuation. Everything the A400 could not do in a heavy lift capacity.

Now several countries are wanting the Chinook including the US wanting more. The changing battlefield needs its versatility with a common Rapid Battlefield Management lift.

"Long story short, these are big revenues, and high-margin revenues, that Boeing has coming down the runway. The more Chinooks Boeing can sell, the better it will be for Boeing stock.

Boeing operates as a major player in a multitrillion-dollar defense market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. The Fool's premium research report on the company provides investors with the must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Textron. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insightsmakes us better investors. The Motley Fool has a disclosure policy."

Back to the secret in the sauce theme. This saucy Chinook looks like a flying warehouse, has no masculine looking gun pods or rocket launchers. But what it does is ensure mission success under a hostile changing field of war. Going into battle with stealth copters and coming back with the Chinooks is the secret. Boeing has positioned its helicopter as the needed battlefield "Game Changer".

ITS GO TIME

On Home Turf Show, Airbus Steals Boeing's Thunder

KOMO News Headline and Article

Hats off for Airbus For Waiting on Paris announcing its plethora of orders during Paris, why not? The illusion is complete, the orders are real. The illusion, is that one part that troubles Boeing from Paris Air Show to Paris Air Show. A subliminal message crafted in front of everyone. How Airbus can annonce so much at Paris yet lose the annual count, which is a truer picture of a company's sales performance. Boeing has taken the low route, announcing only when customers are ready. Airbus may take the high route of incentivizing customers and wait for Paris to beat Boeing at the world's largest aircraft show. I have alluded to PT Barnum before and may mention him again in the same paragraph with Airbus.

The illusion is the excitement Airbus tries to generate in making its case, that they are the World's Largest Aircraft manufacturer at every Paris Air Show. What is not known is how long in the making are these "timely order announcements"? Just focusing on Paris as Airbus does, is marketing hype. End of year numbers should have its own Airshow, Perhaps in the The US down in South Carolina!

Boeing's March To Paris:

   January 2013 Orders Detail

737	Total
2	2

February  2013 Orders Detail
126	11	42	179
737	777	787	Total

March 2013 Orders Detail

737	747	777	Total
28	3	8	39

 April 2013 Orders Detail

737	777	Total
50	1	51
May 2013 Orders Detail 737 777 Total 223 9 232

Total Boeing Pre Paris Show Orders from January 1, 2013

 2013 Orders Detail as of May 31, 2013

737	747	777	787	Total
429	3	29	42	503

Now Add Paris Air Show Numbers

ALC

30, 787-10

3, 787-9

SIA

30-787-10

United

20,787-10 * (10 conversions)

British Airways

12, 787-10

GECAS

10,787-10 

CIT

30, 737-800

Ryanair

175, 737-800

Qatar

9, 777-300

Korean Air

5, 747-800

6, 777-300

              Adding Paris June 2013 with OCO's (Orders, Commitments, Options)

737	747	777	787	Total
634	8	44	144*	830

*Does not net the account from a prior year swap on the order books with United's 10 -9's changed to 10 United 787-10 order, at the Paris Air show in 2013. This is how United got to 20 with 10 new orders and 10 swapped orders from -9's in a prior order period.

This fall will add more orders from Dubai. Clark has stated he doesn't want the 787-10, a Red Herring statement. Boeing is silent on this Clark effort, where he mentions the -10 several times, where the 787-10 is not his cup of tea. Strange he keeps mentioning it?  Is that code for something big is coming in the way of the next airshow? Maybe! What he really wants is the 777X! That would "Complete Boeing" this Year. Paris is incomplete work, since the 777X is unresolved in the order book. I can't wait for Dubai. Airbus has emptied the order tank at Paris, Boeing has not. No predictions here, just a hunch. The Arab nations region is a Big Airplane Type Place to announce orders, and the 777X is a big airplane type. "I don't want the 787-10, its not big enough", is Clark's statement! Translation decoded, ("I want the 777X its as big as I want it to be in two models.")  Boeing gets another 4 months to present its X case for final configuration and customer specs, then we'll see.

So now we know how the year is going for Boeing from its Paris perspective. I admit I may have missed some orders, but this week's Airplane exchange has been hectic, and some smaller orders may have fallen through my mental cracks. Boeing.com, will do my head checking by the end of June. I will update when the smoke clears, thanks for patience. Airbus puts all its eggs in one basket when announcing orders giving high excitement on the biggest stage. If the US did an Airshow in December, it may finalize its books Airbus style, and make a big deal on its own home turf. Every Two years in Charleston might make Paris just a pit stop in the airplane race.

I Love Showoffs, 787 At The Paris Air Show Showingoff

The sound you hear is a noisy A400 parked in the foreground with engines running blotting out the silent 787 flying by.  Towards the end of the video you can hear the 787 flying in low tones, gracefully by under 200 naughts. Enjoy the sky dance over Paris as the 787 moves around the airfield only, airspace at Le Bourget. What a ride you won't get when buying a ticket on Air India's flights.

747-800 Makes A Brief Entrance At Paris

Airbus bags 20 A380 orders overshadows the Korean Air 747-800 with five craft.


WSJ

"LE BOURGET, France—Airbus got a boost for the flagging fortunes of its A380 superjumbo, as German leasing company Doric GmbH placed a preliminary order for 20 of the two-deck jetliners.

If confirmed, the order would increase by roughly 13% Airbus’s backlog of orders for the giant plane. Doric is the first new buyer of A380s in one year and the announcement is the first A380 order since October, when Singapore Airlines Ltd. raised its order for 19 A380s by five planes.

Monday’s deal carries a catalog price of $8 billion, but large customers can receive discounts exceeding 50%. The companies said that they aim to finalize the contract in coming months."

Are you confused yet, no one should be, since the death of the 747-800 has been greatly exaggerated.  This Boeing order is from a customer who already received both the freight and passenger versions, has now validated its decision to buy the 747-800 in the first place. The trial period is followed by Korean's 5 more 747-800 passenger types ordered during Paris week.  Korean will have 10 747-800 passenger models and 7 747-800F freighters on the order book after final terms are met with both Boeing and Korean Air.  

Customer Endorsement:

 “The economics and reliability of these airplanes, combined with the unique passenger experience, played a big part in our decision,” Walter Cho, Korean Air’s executive vice president of corporate strategy and planning, said at a news conference at the show."

Even though both Airbus and Boeing, have reached a saturation of customer support for its super jumbos at this time. Boeing is counting on a niche fill with the 787-800 in high density markets having airport definition for the Boeing 747. The A380 takes additional airport enhancements, in order to receive such a large aircraft on its runways and jetways. This Boeing Strategy will take some time and may extinguish all together as the demand for Super Jumbos rests, with the onset of  plastic and high tech mini jumbos. The 777X may encroach upon demand for the A380, as it would be more flexible in high density routes landing in non A380 compliant airports, yet bring onboard up to 400 passengers in a fuel efficient configuration which both the A380 and 747-800 could not compete with in range or economies.

Paris Has Arrived Before A Large Crowd Of Airplanes (Update)

The Arrival of Paris before a multitude of airplanes, airplane types and airplane hypes is on time. Boeing will dutifully plod through the week without much ado about something and slowly announce it way through the week following up with Randy Tinseth Journal etching out what is accomplished. An order here and there will make people wonder how this will play out when infact Paris and John Leahy are not the main show. The main show happened in the last six months, this is more of a cast party after a movie is released. The new announcements will cause beverage glasses to be raised and cheers, much like a Political convention in the US when it is announced, "The great State of Maine cast its delegate votes for candidate Smith or Jones".  The crowd cheers from the respective camps.

The Boeing camp has a strategic plan.  The Airbus Camp has a show to put on. The sandbagging of orders for Airbus will now come forth. The announcement of the The TEN will have its moment.  The X will wait for fall at the next venue at the show in Dubai.  So its going to be the TENS moment for Boeing and Airbus unloading six months worth of orders. However, Boeing flaunted both the Ten and the 777X before the show, so Airbus had to prepare two acts instead of one. They came out with the A320 orders, in the works for the last six months, of 150 units. The wide Body wars is a developing story.  Boeing has established a beachhead in France and will not let go.  The 777X is floating around the French coastline and has not been deployed yet into the battle.   A Qatar flanking movement is expected  Not much news on the Max yet, but it is well entrenched on the edges of Europe. In the Pacific theatre much is going on whether Paris arrived on time or not, the action is fierce and Boeing is working extra hard to out flank Europe again.  The A350 posses a formidable stopping point in airplane wars. However the TEN again keeps popping its head up in the wide body firefight.

General Ray Connors **** stars, has made his claim that the 777X can compete and will win in the wide body battle. The secret is in the "Wings", forget plastic when its all about wings, engines and things. That is Boeing's engineering battle cry going into Paris for the 777X. By fall the summer campaign will be in the books and the battle will have moved to the desert countries. The 777X will be the darling of the Ball at Dubai. Colonel Mike Sennett, has stopped the Battery complaints and marches forward through engineering restoring the crater left by those "bad" batteries on the airstrip. Okay Major General Tenseth** where are those Max orders. They are ready to roll, so its coming to Paris?  This isn't going to be won in one week in Paris, its going to be won with multiples of flanking actions, feigns, and performance. Almost there with the letter "F" but I digress with no alliteration.  Back to making sense out of the rumble in Paris. Just like a prize fight, round one was some jabbing and moving, then the bell.  Day Two should have some Jabs and false steps saving the best towards Thursday. That is when a better intent is disclosed how the last six months have been.

I am still predicting 150 Tens once the "Announcement", To Authorize (Declaration Of  The TEN's War), are found in the categories: Orders, Commitments, and Options (OCO).   Now I will call order book packages of OCO's.

787-10 Box OCO score=102

SIA=30 C's/Turns into orders once announced
GECAS=10 C's/Turns into orders once announced
ALC= 30
United=20
British Airways=12

Total= 102 or OCO's

Boeing debuts 787-10 with $30 billion of orders

"According to Reuters, the buyers are Air Lease with 30 planes, GE Capital Services with 10, British Airways with 12, Singapore Airlines with 30 and United Airlines with 20. United Airlines is expected to received its first 787-10 in 2018."

With plenty of suitors and no Launch customer officially announced as of today, the TEN is only 48 from my own sales objective to launch at 150.

Now I need to rest until tomorrow's observations, enjoy reading about the airshow and keep it in perspective. There is more going on behind the scenes, than flying overhead.

Here Comes the 787-10

Launching the 10 has been long awaited. Recently, I speculated they would launch when 150 orders where in hand.  However, today's article speculates about 100 orders are in hand for the Paris Air Show. I still believe it will be more and above the 150 I first speculated. Perhaps options will shape it up north of 200 orders on the books.

-10 Has A Launch Customer For The Paris Air Show Prior Blog

AIRSHOW-UPDATE 1-Boeing to launch 787-10 with $30 bln order haul

The reporting must adhere to known facts and quantities and not give into ones own inclinations and instincts for the situation. I put a 150 order block number for the 10 launch based on loose risk calculation, and profitability goals a board would consider for a launch number. Also timing is critical and could move launch date and place of announcement without that golden number of 150 as an absolute for the -10. Several customers are in the wings of decision making, since they would have its own numbers, time and place considerations in play and Paris may not be that moment. 

However, the -10 will launch at Paris with caveats that lead to the arbitrary 150 orders, whether it be in the form of commitments, options or announced orders, remains for the Paris Air Show podium and microphone. The A350 is a planned distraction by Airbus, in PT Barnum's eloquent style.  The bean counters take over at the big show inspite of crowd approval for flyovers of newly minted aircraft. That's why people go to airshows is for flyovers, food, and featured displays. The bean counters want to hear how much money can we make stuffing 400 people into an airplane that will fly 8000 miles. That's where the money sits and the suits sway in awe of hearing maintenance cost are reduced by 30%. "My plane can fly 11,000 miles on a load of fuel". "My airplane can land at any airport in the caribbean flying from Nome Alaska with a load of rich Eskimos." The bean counters are shopping reality. The airshow crowd wants entertainment. Boeing seeks out bean counters, and Airbus seeks crowd approvals as the World's Biggest Airline. This spoken from the mouth of ringmaster Leahy, at the center ring in the big top. This year's show features who has the coolest wing, the gull like wing that flexes above the cabin or the new one with a scimitar rolling tip to cut drag and gain lift.  The engineers are trying really hard to find the ultimate wing package while searching for the El Dorado of aviation. I believe Boeing holds the edge at this point. Engines are a big point. Somehow Rolls Royce and Airbus claim they have given Airbus the best engine, even better than Rolls Royce and Boeing. Wait! That doesn't sound right, how could that be? Remember though Boeing has a  GE card yet to play since Rolls was removed from the 777X  considerations, and suddenly they have the best engine on the A350. Man this is getting complicated like personal relationships on soap operas.

Paris is full fun, foolery and fantasy in the summer. Just go with the carnival crowd and enjoy flying around the grounds. Remember your hotel bill outperforms Rolls Royce any day.

Dance Card Below:

Juggernauts, Jugheads, and Juggling

I like alliterations to make a point. It summarizes  where you want go with a topic in a provoking manner. The big ideas are now on the table with two roads traveled. The Boeing 787 program and Airbus A350 who has thrusted into plastic airplane building. There are three categories up for grabs in this winner's take all contest of aircraft orders, production and performance. Each idea has an overarching approach, defined constraints, and challenges that temper the product. "A test of fire makes the product, oh so fine". So each manufacturer has employed the risk and reward approach from the boardroom down to the factory floors and its suppliers.  Keep that in mind as you proceed through this gauntlet found in a tale of two aircraft giants.

The Boeing Journey From The Start

Boeing's overarching mission, accept risks as the game changing element needed to supersede all competitors. Clear back in "003", Boeing began a revolution in commercial aviation by embarking on an all new way to build the highest efficient aircraft of the century. Called, "The Game Changer"(GC), or simply the 787.  These risks not yet proven or mitigated or retired simply made the GC a wild bet for winner-takes-all, kind of change management approach of beating its main competitor, Airbus, who had not figured on going in that direction at all.  They blinked and they are about to fly its first rendering of an all plastic airline, the A350 this Friday. Boeing's game changing big picture altered aviation's direction in a big way. It took Airbus about 4 more years to respond and I'll explain that direction in the next paragraph. However, Boeing went after it without holding back on ultimate technology and change. The only constraints were time, sensible progress, and money. The big picture was really big, and Boeing has now waded through ten years of time to get to this point. Even though Airbus was in the denial phase of planning, they secretly pushed in Boeing's direction to counter.

The Airbus Journey From The Finish

Airbus did not take an overarching mission approach, since it had time to make up, and strategically used more off-the-shelf technology to bridge that time gap.  Its mission was defined by Boeing. If Boeing goes off the deep end, don't follow suit, build a plastic airplane and build it bigger. They proceeded to "borrow" technology  with lower risks as they went for panel fabrications with CFRP, and used Rolls advanced engine building progress from both of Rolls Royce and Boeing's engine programs. They will have good engines and efficiencies but with lower program risks. The theme here: is to build on the fly with proven advance technologies, and run down Boeing quickly, as they were grabbing market share on plastic airplanes. Don't over arch on advances, let Boeing struggle with innovation and catch Boeing at the finish line. Is this year's Paris Air Show the finish line? Airbus stayed with hydraulics technology, that had weight adding fluids, pumps and pressurized lines. They stayed with a more conventional looking airframe that would accommodate plastic panels, not barrels. Airbus built bigger, and it stuffs the airplane with customer comforts giving the traveler the feel of the latest and greatest in aircraft travel. This is done through the illusion of new features over laying conventional  aerospace architecture not including the  all new plastic parts.

Boeing's Millstone  Of Risks: Marshalls Its Resources, Uses Time And Exhausts PR With Delays.

Boeing high risk penalty has caused a bumpy halting journey to deliver almost 60 airplanes. That weighs  customer patience and caused Boeing to use extended political capital, as well as money to arrive at this years Paris. The high risk road has brought Boeing within Airbus's sights, what Boeing is counting on is that its state of the aviation advantages will out perform Airbus for many years. The recent electrical problems clearly state this strategy that it must not lose any technical ground  to Airbus less energetic advances with  the A350, hence staying with the Lithium Ion battery at all cost.  The battery is the high risk/high cost example of exceeding Airbus. Where Airbus sought the old version of the Nickel-Cadmium battery solution
that weighs more and is lower performing with lower risks. Boeing's all electric design has not been tried before, which is another aviation innovation which Airbus refused to travel down. Boeing used electrical wires to electrical motors without using bleed air by-pass to move flight surfaces during and before flight. All this computer operated systems allows Boeing to fly the most sophisticated and highest performing airline today, in the world. Airbus brings a plastic counter part that it say it can fly better with hydraulics, Rolls Royce Engines, and an all plastic body. The Friday test flight will start to answer many questions of who is right. Many believe the long road belongs to Boeing and the short road pulls Airbus just several hills back on the journey. That is why Boeing can't, and won't fall back on any of its newly formed risks through its innovation.

Airbus Shorter Shorter Way Strategy Will Fall Short 

Airbus as mentioned above, illustrates lower innovation and lower risks, promising no Boeing like delays or problems. That is true for the most part. The testing phase is just beginning for Airbus. If one could measure all the differences for the aircraft in a comparison you would see two completely different models and strategies on building Airplanes. Boeing started with a overly optimistic pulse and Airbus came in with an anemic blood type. The race will be decided by the longest endurance stamina.

Airbus's hopes to  become the juggernaut.