I Smell Politics On Boeing's Big Deal With Norwegian

Boeing is on the cusp of making a 20 Dreamliner deal for its 787-9 with Norwegian. A funny thing happened on the way to market place. The DOT slowly answers and makes an approval for slots into US air space with Norwegian through an Irish registry. This slow process has scared Norwegian off and now its pulling back, not surprising since time and money are rare commodities in the cut throat business of aviation.

Like everything I have found out there are two ways government works or doesn't work. The way it works is when it follows a prescribed rule process and assures the public that it is doing its due diligence. Otherwise Norwegian should jump through the prescribed hoops with the DOT and get a simple answer.

However, the second process where government fakes work by having political powers and lobbyist pour money its way that would cause an agency like the DOT, to do its due diligence in a way of following administrative rules within said agency, that would align with political outcomes. The XL PIPE LINE, mystery denial, is clogged by bureaucrats from everywhere including the environmentalist who don't have a case. The Norwegian example may as well be another XL pipe line to America. They, Norwegian, tried using Irish credentials to punch through for its 787-9 type destinations in America. They, the DOT, has not figured out if they should do that little thing. I, me, believe there is some serious money avoiding this allowance into American air space where unions, government and other airlines have a dog in the fight. The 787 is a game changer and Norwegian is just finding out what that really means. Pressure is put on them and Norwegian is backing off by reconsidering an order with Boeing for 787-9.  The game changer is changing the aviation map in a way Boeing had not considered, where it is too effective and Governments are now just beginning to control flights in and out by controlling model types that are too effective in beating its own domestic markets. Its just because out-of-country airlines have a 787 market beater. Its another "The 787 Effect".

A second battle front has opened up in the area of commerce and Boeing will excerpt pressure there asking some embarrassing questions of its government. What is important in this case, 20 787-9 represent billions of trade dollars. The XL pipe line is also billions of construction dollars with many more billions of oil flow dollars. So the Norwegian case is of smaller national importance and will slide by DOT with not to much written about it. I am only commenting because free trade sometimes is a political myth as in this case. Norwegian is regrouping and exploring other options because it wants its 787-9's. It now has to find and assign a need for them. The skies are beginning to fill with 787's and Norwegian wants to put its routing foot in the door before others get its own 787's.  

Hainan Sells The 787 At Its Conference In China

Randy Tenseth is not leaning back in his chair thinking about where to go next in his constant pursuit of selling Boeing Aircraft. He is deviously planning taking  over the world  with nothing but, Boeing Aircraft. China is a burgeoning market with a few New 787's flying to and fro. Both Hainan and China Southern are making a Chinese splash. Something Airbus at this time cannot brag about, but will shortly try to brag upon as  entry into service is nearing with its newly minted A350's. 

Meanwhile back at the big shows, especially in China , Hainan is taking the lead sales position at the 2014 World Travel & Tourism Council (WTTC) Global Summit. The is a mouth full just saying it. Randy picks up a phone and  calls Chen Feng, HNA Group Chairman, and says, " How's it going, ...ah huh, .... Gnarly Dude!" No Randy doesn't talk like that, but I do, so I added my own speaking  font, just North of San Diego's speaking font. The point being is that Hainan knows it has become one of the leading Airlines in its region. Somehow, owning the 787 is so fashionable, because of what it brings to the table. So to the table they go, at the 2014 WTTC Global Summit. Randy, sits back and enjoys the ride. Randy's customers are selling 787's. Now he needs to go out and ask how many 787's, and tell them when to deliver those superb flying machines.

Actual News Reference: (I am doing the work)

Travel Daily News (South East Asia Reporting)

SANYA, China - The 2014 World Travel & Tourism Council (WTTC) Global Summit, the annual event for tourism organizations worldwide, was held from April 23 to 25, 2014 in Haitang Bay, Sanya, Hainan. To facilitate dialogue among the travel industry's decision makers, the event, themed "Changing world, new perspectives," focused on major issues facing the global tourism industry today. Diamond sponsor Hainan Airlines, a member of HNA Group, was a key participant. HNA Group chairman Chen Feng gave one of the summit's key speeches. The event, which brought together industry leaders and the media, hosted discussions on topics like development of China's and Hainan's tourism industries, demonstrating the vitality and prospects of their tourism sectors.

Hainan Airlines' booth at the summit attracted numerous visitors during the entire event through its booth design, route recommendations, and its on-site exhibit of cabin offerings. This demonstrated its many worldwide successes achieved in recent years as well as its plan to add new international routes going forward.

"As an important member of HNA Group and a SKYTRAX 5-Star Airline, Hainan Airlines is China's only airline that operates the Boeing 787 Dreamliner on the North American routes. We will also offer nonstop service from Beijing to Boston, beginning on June 20th, marking a further improvement of our North American routes network," said Hu Yi, general manager of marketing at Hainan Airlines. Hu further added that Hainan Airlines provides passengers with five-star services on its major flights, including Bvlgari amenity kits, molecular gastronomy offered by chefs from Taiwan, as well as the Spanish Torres Sangre de Toro wine, winner of the Best First Class and Business Class Wines on the Wing awards by Global Traveler.

With its growing fleet, addition of the 787 Dreamliner to its fleet, roll out of new international routes, and continued offering of The Beauty of the Orient service, Hainan Airlines has grown into an international airline with comprehensive routes throughout China that connect the country to Asia, Europe, and North America. As the diamond sponsor of the WTTC Global Summit, Hainan Airlines has demonstrated its commitment to the development of China's domestic tourism industry and transformation of Hainan into an international tourism destination, connecting travelers from China and around the world with this stunning and magnificent island.
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With electronic scissors in hand I will put this in my scrap book, Everyone else have a great day.

Now I am in a serious font of mind. (Not possible). Randy's team of hard workers is starting to really pay off when you have customers telling audiences "how we roll", with the 787. They are explaining they are unlocking "The West". Unlocking the Orient is so 1850. Hainan has supreme sailing ships happily taking customers westward for both vacations and business. Hainan can fly "Go West Yong Ming" or go East to get to the west. It doesn't really matter which way you go, Hainan will get you there, that is our secret (not). We have  Hot deals settling through the tea infuser and out comes the best fuel sipping West, erh, East of the Yangtze  river. The point is, we will reach the World in four directions. Flying West Europe is Just there, and Flying East you have North America. Flying South you have vacations with both Australia and New Zealand, "savvy"? A hand goes up in the back of the room, "What about North". Answered smartly, " I'm glad you asked that question, Yes We Can, next question!" The conference is lead by Hainan people and they are selling its leadership position from Hainan Provence, or in Randy speak, "The 787".

Terminate The Batch

Is it Richard Branson accent or did I spell Batch wrong and it needed an "i" instead of an "a" for the batch word? Richard Branson from Virgin (everywhere you name the region). Has reached a point of no return for Airbus and its A380. Back in 2000 he was an early order for 6 mega Buses. Nothing happened for quite a while. Then the favorites were played by Airbus with Singapore, Emirates, and BA to name a bunch. Branson then proceeded to defer on the first six and its second six A380 options. Several times no less! Anyways, Branson may terminate the batch for the A380.

I Bugged the Virgin Atlantic Deal

Richard and the calendar are enemies to his bank account as he building a gigantic aviation empire. On any given day no one can just write a check for 350 to seven hundred million dollars on that day of the week when the A380 needs a dance partner in Paris.

Every Month another 6-10 newly minted 787's take-off to everywhere, following the same  Branson theme,  once again he gets scorned by competitors in and around Australia.  "Why can't that be me", as Branson, bristles the hackles on his back of his neck, "I'm calling O'Leary at Ryan Air, he makes me calm down. You know what, that 787 hauls a bunch for less money and everybody seems to like it too. Do I have to be a PT Barnum fan and fly the A380? Well no, I don't! Somebody get me Randy's Phone number on the west coast."  Put Ryan on hold I'm calling Tinseth now. Hello Randy, I need a dozen 787-10 and those 16 787-9 I've already ordered, stat. Will gold bullion work or do you need a check?"

Randy then tells him that the 787-10 has only 132 units in line, and the 787-9 line is at 406 units waiting. However, "we have people who can't finance its way out of a wet bank bag". Branson responds, "Every time someone delays or pushes back, I want that spot. Here is my Swiss Airplane buying account, xxx-xxxxx-xxxxxx, Okay!"

Randy Tinseth then tells him that we will  have a new production list coming out for the 787-10 next month. "I can only promise you 3 spots near the front of the line on that first go around! Richard then answers, " that works fine, you got my Swiss Number?"

Randy, "Of Course and Boeing is ready and willing to be your new BFF from this point forward."

I had a hard time getting this super secret phone recording from office bugs and other clandestine efforts. Richard is moving forward while the A380 sticks on the flight line.

Boeing-Mc Nerney First Quarter Flight Line

Article Link

Boeing ‘Confident’ in Smooth 777X Transition

Article basis from AINOnline in bold font:
LiftnDrag Observations in Blue font:

Boeing CEO Jim McNerney seized the chance to impress upon securities analysts on Wednesday his confidence in his company’s ability to execute a smooth transition between production of the current 777 line and the 777X around the turn of the decade. Now delivering 8.3 of its flagship widebodies a month, Boeing expects some “feathering” of production once it approaches the point at which it fully integrates the 777X, said McNerney. 

Speaking during his company’s first quarter earning conference call, he also conceded the potential for some “pricing pressure” resulting from the introduction of the Airbus A350. Nevertheless, he stressed that the existence of a strong “pipeline” of what he called some of the biggest and most loyal customers in the Boeing stable will ensure that the manufacturer’s plan for the 777 will proceed with little or no interruption in the flow of deliveries.

Key statement, is the loyalty statement, that is what Boeing is building on relationships not just aircraft. Many customers have found ways for making money with its family of 777. Those grasping at straws have sold some 777-200, (Air India), and will buy Airbus A320's. The "Flow" of Aircraft will show no breaks in the continuous stream of the 777's when the X plane meets, McNerney's talking-flight -line. Second word of the day is "confidence". Boeing has learned a one-off lesson from its 787 hubris days when being overly giddy with statements like delivery to flight line during the 7-7-7, 787 festive speaches, that the 787 will fly in 9/30/2007.  Then came the three year wait. If the 777x even becomes one year late, both confidence and loyalty are on the line.

“Where do we get that confidence?” asked McNerney rhetorically. “It’s in airplanes sold to date, it’s in proposals accepted, it’s in campaigns that are ongoing today where, as in the case with [Japanese 777 customer] ANA, we’re selling both 777-300ERs as well as 777Xs. The requirement versus the alternatives still is favorable…There will be some pricing pressure associated with that…which is why the most aggressive productivity program we have right now in our factory is in the 777 model.”

Boeing customers have found a very lucrative way of making money for its family of Boeing aircraft. The ANA's of the world, and others have seen a jump on its bottom lines when introducing the latest Boeing products to its fleets. The customers are addicted to money, and will continue to order more aircraft even if they  don't have cash ready money. Results  equals Loyalty. Pleased customers are a secondary issue, but important, when airlines today, affix 11 across and craming 600+ onto the Airbus A380 (Russia). It is interesting to note that Airbus DEMANDS an 18"  width standard when Boeing has a 17.75" width on most aircraft. Then they gladly go for 10 seats across or eleven. That's gamemanship. McNerney recognizes the frailty of market sentiment and is hoping customers stay loyal to the bigger picture of better operations, performance and over-all airplane quality. McNerney hints at pricing will have casualties in the Airplane Wars. However, Boeing's better, "Waking Shoe", will win the war as passengers travel the world.

McNerney added that Boeing won’t begin delivering the airplane that directly replaces the 777-300ER, namely the 777-8X, until some two years after it introduces the larger 777-9X in 2020. “There is plenty of running room where [customers] can reap the economics of the base 777 in conjunction with buying 777Xs,” he said. “So it looks good as we talk to our customers…

Smart market shaping on McNerney's part. Because Boeing introduced the 787-8 first due to unknown risks, it had a big enough and great enough introductory model for a carry-forward to the 787-9. They hit the market in stride. The 787-8 had no competitor and still remains without a true competitor. However, in the 777-8's case, Boeing has recognized that the 777-300ER is its best seller and customers still hold value for that model. It is the 777 transition model. Going from a 777-200 to an 777-8 at this time would not make sense since the 777-300ER is the best seller. The 777-9 is the logical transition model. All other 777 models will template off this one, where they could service the tweener markets. Those are niche markets that specialize in distance and numbers that are scattered through out the world, I'll call tweeners as represented through the 777-8 is that champion for far reaching destinations where the 787-10 won't be flying. The 787-9 would have a larger capacity compared with the follow-on 777-8. Having a later  777-8 build and testing  schedule will assure the 787-9 will be well established with its intrinsic values well into a strong customer following.

“The pipeline gives us comfort…These are not discussions that are happening in a vacuum. These are with people that have both additional 777 needs in the medium term and then longer term would need the new model to significantly increase performance and productivity for themselves.”

McNerney further emphasized the existence of a large “overhang” of order options and other forms of commitments, quite apart from a firm order backlog that fills virtually all delivery slots into 2017.

That statement is hinged on customer confidence. The key point of the day. Customer's and Boeing's confidence is in partnership, or all else is lost.

McNerney is doing some production smoothing not to excite investors on overly optimistic promise, but pointing out Boeing's lessons learned will not be repeated once again on the 777X program. McNerney has changed the Boeing 

motto from; "We're reaching the stars just this afternoon" (so 2007), 

and where it has metamorphised in 2014, "Boeing says what it means and means what it says going forward." 

These statements in 2014 are all doable promises for its testing and production line-up. No more paper airplane promises of three years late. In fact I was so giddy in 2007, I believed in the 787 promise of a September 2007 787-8 delivery for its testing without checking into the Reality Motel.

McNerney’s comments came as Boeing announced what it termed strong first quarter results for its Commercial Airplanes division, which posted $12.7 billion in revenue on higher 787 and 737 deliveries. First-quarter operating margin improved to 11.8 percent, reflecting the delivery volume and mix and lower period costs partially offset by higher research and development costs.

Once again, McNerney reaches from the 787 lessons learned play book by avoiding saying, Boeing has achieved its original 787 like it promised three years late. The first quarter is a change as a result of corrective corporate actions for all its airplane building programs. Boeing has finally awaken, as if it were some sleeping giant. It woke-up after Airbus has been pounding Boeing senseless for the last twenty years. Airbus has been producing and selling 40 A320 a month. Then Boeing woke-up. After many years of just doing 32-34 737's a month the accounting office figured out that sales is not revenue and Boeing needed revenue from production delivery, and they then needed more sales. Boeing needed to get with if it wanted to survive. They watched Airbus come out with the NEO, they watched Airbus revenue grow and then sales grow. Everybody at Boeing got off their butts, and started to move. Here comes the Max, there went the 787, and now the 777X family is pinning down the A350 family to mediocrity. Nothing is more loyal than the fat bottom line in corporate world and its customer's. Boeing is going for it and is no longer a sleeping giant with only 32 NG's a month flying out from Renton. It has 42 a month just in these last few years and will go for more in the near future. Now they are 10 a month for the 787 which contains Space Shuttle like complexity. Airbus worries too, but can't match Boeing's executed plan. 

During the quarter, the 787 program reached a 10 per month production rate and completed preliminary design review on the 787-10. The company selected the Everett, Washington site as the location for a new composite wing center for the 777X. In April, the 737 program reached a production rate of 42 per month.

The awaken giant cannot stop for even investors, so they better get on the train before it leaves the station.  Boeing has a thirst for capacity as it becomes more centered on the United States participation. More specifically the Northwest and West coast at this time. A new wing plant at the Paine field arena. Offices moved to Southern California and a continuous renovation at Renton, WA. Everett is gearing up for a two types of 777 production. The old backlog with 777-300's and the New Orders of 777-9's. A new wing plant built adjacent to Boeing's giant factory, means Boeing is done shopping and experimenting with production. Boeing senses a kill shot is needed now, so they call all hands on deck at Everett, Wa. This by no means they are gong to slight its suppliers. Those who exceed expectations will continue and expand with Boeing. However Boeing will put its arms around those things that are critical potential show stoppers, such as the folding wing that they are the best in the world at doing. They also build fantastic 777's.

To conclude this thought, Boeing isn't messing around this time since its a kill shot on Airbus' aspirations.

Commercial Airplanes booked net orders for 235 airplanes during the quarter. The division’s total backlog stands at 5,100 airplanes valued at $374 billion.

I actually expected a greater number booked, but because of paper work, dickering and sales time taken through building aircraft relationships for forming a real partnership, it takes months if not years to book aircraft. Boeing has many outstanding promises not yet booked. It just sold another 50, 16 NG's and 34 MAX to Shandong Airlines that will not appear on the books until the customer is ready. ANA has not booked its 777 orders as of late April. Some other customer promises exist and are without turning out any other WIP work orders. Boeing has a continuous momentum in both the sales and production arm of the corporation. Production turns directly to revenue. Sales are like pawns on the chess board that blocks an opponents move. The more pawns in play the less the competitor has to play with reducing its own eventual revenue.

Prognostication:

If you were playing basketball in a corporate sense, Boeing has successfully put players in better position around the basket for a rebound. They have better offensive scoring from the guards. They are in a better position to win it all than its competitors. They are once again exceeding expectations.

Boeing Deftly Playing Two Markets

Long ago I made a prediction for Boeing, stating that Boeing would reach a break-even for the 787 project in late 2017 or perhaps early 2018. In order to break-even Boeing has to reduce the per copy production cost total below the expended investment for the 787 development bringing it to market. They, Boeing, felt that 2015 is obtainable for reaching the break-even production unit during that year.  What comes into play is Boeing two markets, the Sales Market and the Stock Market. The more 787's per month that Boeing can deliver to its customers off-sets the investor angst towards paying more for a share of Boeing in the financial market. By saying it will be in 2015, that every 787 delivered during time , will give Boeing profit dollars is an extreme goal.

After taking a glance at what Boeing has wrought in the form of set backs and change, it is well established that Break-even reality if farther out than sometime 2015. I gave it the 2017 or a little later proclamation, big deal huh? So with those divergent thoughts in mind let's ponder the process. Boeing needs an actual 10 a month delivery by years end, they can't keep piling up 787 at Paine field collecting sun light. Scattering some to Portland, California and Texas for residual work. The room at Paine will become a premium if they produce 10 units out of the factory each month when not ready for completeness and delivery. They say they will produce 110 this year, but will 110 units have its customer money prepared for that many deliveries?

• I think some will delay deliveries in blocks of several weeks until money is supplied. 
• I think some will not be ready for acceptance due to its own infrastructure and training issues.
• I also believe the strain of delivery preparation will overwhelm Boeing capabilities. 

At some point in time, the parking lot at all the aforementioned locations may reach grid lock as Boeing won't slow down its ten a month and then 12 a month at the factory door. Does that pace allow for room for the its door pace on the flight line, and enable it to reach the break-even point during the next 24 months? I am just saying there are too many moving pieces where Boeing needs some slack time written into its floor plan as units are brought forward. No two production 787's are the same nor do they achieve the same factory pacing speed. The slack is completed outside even though they go through those same big doors every Xth hour. Consider the millions of parts which arrive, and may not pass testing, or correcting systems during upgrades. The nebulous production issues  make each 787 a unique work of art and those units can tend to build up outside not ready for delivery.

Boeing has a strong mitigation team for those unique situations and have planned to handle each aircraft accordingly. They also work with its customers to gain assurances that its customer will ready for delivery. Boeing has grown-up as a 787 producer of the World's most advanced commercial airplane, including the A350 family of aircraft. Boeing also has matured the 787 from its problematic examples of glitching. The 787 is ready to take to the world aviation market by storm. The 787-9 will really be that dream that Boeing had hoped for during the 787-8 push out in 7-7-2007, when it could only muster a plastic shell for an aircraft. The dream delayed by three years of do-overs, mistakes and change management is a virtuoso in concert today. If Boeing made violins, the 787 would be a Stradivarius Violin. Airbus builds really big Tubas Worthy of October Feast.  Some days I'm tempted too, to take a shot at Airbus, I'm sorry for that digression.

Back to the flight line and the two markets. The markets are in a symbiotic relationship. The sales team has given Boeing a production backlog exceeding Break-even in spite of the cost of getting all the wrinkles out of the 787 family of aircraft grew. Airbus A380 has not sold enough A380's, and will lay up short on the A380 break-even until another decade clicks off on the clock. Counting on where they will eventually sell enough A380's is a risk. The A350 family through its 900 may reach Break-even for Airbus. Enough of Airbus already! The Boeing two markets will reach its apex in 2017. The break-even units will roll out the door during that year. Sales will energize in a second tier buying spree. The financials will no longer bother with any glitches or batteries as they will have long been put to rest. Airbus will change its battery by 2017 saying, "me bad".  They will brag they are the most advanced airline in the world with its NBO battery.  Boeing will be flying the 777X in tests gaining distance towards first delivery. The two markets in 2017 converge into one big realization that Boeing's 737, 747,787 and 777 are remarkable aircraft. Fantasy? No its not, its Boeing's goal for proven Boeing Technology. Its the continuous improvement slog through Boeing's stated goals. The only change from the script is that Boeing will not Break-even during 2015 but during 2017. Once this forecast die was set, it is a matter of execution for things Boeing does best. Build airplanes. However, its wishful thinking skills needs improvement.                  

Hot Dog, Its Shandong Down for Fifty Max and NG from 2016-2020

Just when the order book has a stagnation, and a press writing about thin orders for the first part of 2014; up pops this little press cork about Shandong Airlines from China, boosting its fleet with fifty: 16 NG's and 34 Max Aircraft until 2020.

Airline to buy 50 jets

Xinhua-Global Times | 2014-4-22 0:13:02 By Xinhua - Global Times

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China's Shandong Airlines signed a contract on Monday with the US-based Boeing Company to buy 50 Boeing 737 passenger airplanes.

The airliners, including Boeing's 737 NG and 737 MAX models, will be delivered to Shandong Airlines from 2016 to 2020, said Ma Chongxian, chairman of the company, which is based in Ji'nan, capital of East China's Shandong Province.

Shandong Airlines aims to increase its fleet to over 140 at the end of 2020, which will be a surge of almost 100 percent, Ma said.

Shandong Airlines already operates 74 passenger aircraft, including 67 Boeing 737 airplanes.

Xinhua - Global Times

Boeing is busy booking billions while  the report of the stagnate order book is greatly exagerated. 

2014 marches forward. There are other orders in limbo in the Asia market. Those with ANA promises and others have been reported, but not added to the order book, which is often the case as arangements behind the scenes have not been completed. Boeing will not add orders until the customers consents for a release of the information. Eventually it may end up on Boeing's unidentified customer list for awhile. This Shandong order represents a little more than a months worth of production when analyzing the over-all impact to the production line. Even though they will pace deliveries during the 2016-2020 four year window, it allows all parties a seamless integration of current aircraft with its future Max deliveries.

Using a rule of thumb financial scale with, Booking 80 million for NG's and maybe 100 million for each Max, an unofficial estimate would float around at 4.65 Billion $ US . Without out details on future Max aircraft, and only having some actual NG or Max unit numbers availble it is a safe estimate that Shandong needs that much money during the purchasing time frame mentioned.

Delta's Purchase Philosophy For Wide Bodies

Analysis of Delta’s Widebody Replacement Options for 767-300ER and 747-400

Airchive.com presents talking points and analysis of what  Delta may do when it comes to fleet wide body renewal. I will offer some counter points for its interpretations of buying older proven technology vs all new technology, when it scraps the aging Delta wide body fleet.

Delta strategy and philosophic channeling for Capitalization is a key part of its focus.  Buy cheaper older proven technologies, while avoiding high purchasing prices and follow-on high interest costs generated by the newest technology purchasing premium. That strategy will buy a lot of fuel and make up for lost efficiency when using proven current technology purchases like the A350 or 777's. Its a Ryan Air-like approach. On the table are those RFP aircraft from both Boeing and Airbus that are in play as charted below from Airchive,com web site.

Our (Airchive) full analysis is displayed below.

Aircraft	Boeing 777-9X	A350-1000	Boeing 777-300ER	Boeing 747-400
Fuel Cost	$92,739	$80,619	$95,937	$116,084
Maintenance Costs	$13,837	$12,282	$16,687	$20,859
Crew Costs	$20,447	$19,257	$19,257	$19,257
Navigation and Landing fees	$11,286	$10,791	$11,039	$11,694
Total Operating Cost	$138,309	$122,949	$142,920	$167,894
Cost per Aircraft Mile	$25.15	$22.35	$25.99	$30.53
Number of Seats – 3 Class	407	350	360	376
Operating Cost per Seat Mile	$0.0618	$0.0639	$0.0722	$0.0812
Capital Cost	$41,387	$37,037	$24,780	$12,181
Total Operating Cost	$179,696	$159,986	$167,700	$180,075
Total Cost per Aircraft Mile	$32.67	$29.09	$30.49	$32.74
Total Operating Cost per Seat Mile	$0.0803	$0.0831	$0.0847	$0.0871

The A330 NEO is a pending consideration for Delta as it needs further information about the aircraft.

Secondly, it does not fit its philosophy of venturing too far out from the development box, as it did when purchasing the 787 order. Even though they like the idea of going low-ball on the A330-NEO, and obtain an early place in the A330 NEO first delivery line, is a no start issue. The paper efficiency for a A330 NEO is questionable as Airbus has not made its mind up on whether to scrape the A350-800 project or go NEO for an interim period of time, until they get it right for the A350-800.

Delta would would like assurance on aircraft performance and reliability. A proven design is requested on this proposal. Airbus has dumbed down the A350 as it strives to deliver a fault free A350-900. They will thumb its nose at Boeing if it does. Boeing will have close to 200 787-8s and 9s flying by years end, and say it is the most advanced aircraft in the world, while Airbus only can copy with a simpler A350. Both taunts are lost on customers. Airbus would like Delta to stay true to its mantra of only flying what is proven. Boeing has made up tremendous ground with its 787 as proven ground. It will be in service for three years soon.

Back to the prize, the 777X and A350-1000 battle for Delta.  Neither the A350-1000 or 777X have flown. The 747-400 is getting old. What has not been considered in the Airchives article, is the economic and proven ability of the 747-8i. Snap, that fits Delta's own philosophy of sticking to the basics with high reliability. The 747-8i is a dark horse rising. You hear no Lufthansa grips and complaints. Delta could sneak on more than four hundred passengers on this bird, and pass the fuel bill over to the Accounts Payable division, where they may not even notice that 747-8i fuel cost at Delta. Go ahead replace the 747-400 with 8i's they may arrive sooner rather than later with its proven track record, where even the  A350 can't even muster a record, since it hasn't been built or delivered. The 747-8i is not on the above chart. I would like to see the comparison rather than the 747-400 unit costs. It would make an interesting horse race with its many more per seat cost per mile. Delta then could wait for its 777X RFP as it develops. It will receive is 787-8's and find out how well this aircraft operates. Boeing customers have used these 787's during the last three years as Boeing has executed  a frantic catch-up of reacting its proposed value for a Wonder-Plane. The press can't write hardly an article without reaching back reminding the public of its past glitches from the firs two years.

Delta could surprise everyone with 787-10 and 747-8i's orders.     It would have relative position for both production lines and meet its expectations on reliable aircraft sporting the newest efficiencies. Doe this kill the A330 NEO and the A350-900 or 1000? Yes ,on all three counts. Delta meets its strategic goals as well as keeping its vision intact by buying a Boeing suite of proven aircraft while shocking the airline world.

Air India Bridge Loan From Brooklyn.

The old sayings for having a weakness in your financial portfolio is "you're going to sell someone a bridge in Brooklyn, New York", or I had recently sold 20 acres of swamp land in LA as a measure of obtaining mad money". The problem with Air India is obtaining a "Bridge Loan" for Aircraft, specifically for the 787, within six months. They need $500  million (US) of mad money for a purchase of the next four 787. This is like going for  "Money Tree Loans", before the next paycheck. This covers/plugs a gap in the monthly financial flow, and allows making a timely purchase while not having to wait until its long term financials are set in place.

Why does Air India go there, because they need four more 787 revenue units that have a lower operational cost, which will infuse more money into Air India. The Bridge loan is a bridge cash account until Air India reconfigures its fleet. They are selling three 777's from its fleet. This alone demonstrates a concerted effort for maximizing the fleet. Perhaps those 777 can not be filled, and are flying too much passenger space around at a loss. The economics of the 787 will have fill-able seats quantity arriving at cheaper operating costs than the aging 777.

A bridge loan is a useful tool, but it shows a venerability of Air India's cash position. Demonstrating an inability from its operational efficiency where it has not achieved a plus position on cash flows. Four more 787s and three less 777 would start tipping the balance sheet. Air India is not there yet. The revenue inputs, and reduced operational expenses from the 787 shows Air India, that it needs all of its 27, 787's. This should right the Air India financial ship. If they can get them on the flight line fast enough. The baby steps are taken from Boeing's production schedule and its recieving blocks of money from the use of Bridge Loans.

When Air India goes into long term financing arrangements, they will have a per unit Revenue and cost center for each 787. They will demonstrate how a loan will make Air India profitable, and how it can easily pay for these aircraft from just flying them every day. Air India will demonstrate how it fills seats with these aircraft. It is the right size at the right time. Bankers will nod, look sternly, and stare at one another, and then will defer to its analytical team for a report creation of Air India's loan request. The Bridge Loan is like a credit card at higher interest rates for paying Boeing in behalf of Air India. The long term loan is a consolidation of potential debt under financial arrangements for these next four 787s.

As mentioned before these four aircraft will bring the 787 fleet closer to 20 of its type. A very significant portion of Air India revenue stream and expense reduction as a whole will help Air India over all. Each group of aircraft inducted is a change for the airline, as it opens up new opportunity where it needs to compete. The Boeing 787 is an "Affect" on Air India's financial position, business plan, and success. The company will simple change, because it will eventually have twenty-seven Boeing 787. It no longer will have reasons to fail, or lose money. It will compete with all its competitors until they too can have the 787-8 or 787-9 during the next ten years. Having the sharpest knife in the drawer does matter in this case. The sure weight of having one type of airplane as the core for your fleet makes the difference.

Will The KC-46 Be The Smallest Snowball Coming Down Capital Hill?

The Pentagon and Capital Hill create military spending projects and the "Hill" funds those same projects. A continuous flow of cost expands as a project keeps rolling down Capital Hill's slopes to a catechismic stop at the completion of a project. Think of past endeavors for the Air force. The F-22 which halted at 187 in number for its type. Far short of the initial desired want. The snowball stopped because of money and the cost of support per copy. Then the F-35 came along, a multi-role fighter where is was to be built relatively affordable for all services off the same design points. That is not working so well. It was intended to field thousands of this type and also sell thousands to its allies over a long period of time. The Navy, Marines and Air force are waiting in the wings for its proven batch of aircraft. The cost is rolling down the hill collecting more snow during the process. It will make one large snowball by the time it stops. The Military is not certain for its reliability yet as it goes through the paces.

Reference Link:

Why Boeing's tanker is Pentagon's least contentious multibillion-dollar program

The Navy bought a concept called Littoral Combat Ships. In fact they hedged the bet by building two types from different boat builders. The concept is for a combat ship that plies the coastal waters, like those found on the Pacific rim around Asia. Currently the beef is, they are in testing and they appear slower than was wanted during the the initial proposal period of requirements. So goes the money down Capital Hills Slope in Snow Ball Fashion. It just keeps getting bigger.

The KC-46 tanker project demonstrates not just new technology bolted onto an 20 year old proven airframe design, it uses an all new purchasing process addressing the snowball problem for military projects of its types. Procurement of new weapons or equipment that will stop expanding the cost problem that it currently experienced in former projects. The KC-46 procurement is contained by these types of constraints.

• The provider of aircraft (Boeing) is to use an existing and functional airframe meeting all mission requirements. 
• Boeing submitted a bid price that is fixed, any overrun is absorb by manufacture. 
• A buffer amount is provided as a result of Air Force change management during build. 
• Financial and timely delivery risks are born by Boeing.

The list for Boeing's do's and don't's is far Longer, as one can see it gets very complicated for the KC-46 project to succeed for Boeing. The GAO has recently completed a milestone review of progress and cost expended on the project. The main concern from the first review completed in 2013 indicated Boeing had gone through a significant amount of the "buffer money", mentioned earlier. Boeing responds with a report of where the  money was applied. Early on at the out-set of the project; there where multiple changes required, and start-up contingencies for a new project of this nature. By the end of the next year those issues would retire as the project matured. The GAO has a concern that the money has become scarce for purposes of including additional engineering into the final design process, and establishing the build process. There is very little contingency money remaining as the KC-46 project moves forward into its pre-production phase.



However, Boeing has a couple cards up its sleeve. One being any changes to the original design required by the Air Force are added on cost. Boeing can absorb cost of the project by using components from its supply chain or within the Company's R & D
catalogue. Boeing has the  ability for cost reduction when the build begins. All current cost are a result of all its new implementations for building this multi-role tanker. This last GAO report is seen more of a "We're watching you Boeing"  because some project money is dangerously low. After all the negatives, the GAO could muster, it seems that Boeing is in good shape for moving forward on the KC-46.

The 767 frame flies well and is strong. The biggest risks are any new technology bolted on the aircraft. Like fuel filling appliances. Defensive counter measures and a host of other features never used before for this type of aircraft. Boeing is banking that it has those items covered and its just a matter of installing and testing. Its not like an all new F-35.  This is a seriously tricked out 767 for military purposes.

Oh That Black Bird Is Back

Many years ago I was intrigued with Lockheed, "Skunk Works", and more importantly the SR-71 project. A top secret  project that left many fantasizing about its merits. I had one family member involved in its R & D and later on as a contracted factory rep with the Air Force, representing Lockheed and the SR-71. I gained little or no insight for its capabilities. All I learned came from books on the subject, and various nods, shrugs, and smiles from my uncle. He gave me a wealth of commemorative objects for milestones flown in the SR-71.



Then out comes this "Second Black Bird" from Boeing and Air New Zealand, refreshing all my memories of those heady days of the SR71. The times when it out flew over Russian, Lybia and Vietnam with missiles shooting at it during the cold war and the Vietnam conflict. How it ate and devoured Fox Bat engines (MiG 25). At the time, Russia (USSR) bragged, it had the world's fastest jet, yet the SR-71 flat-out, out ran every thing with wings, and almost all the missiles of the day. I remember those days, it was reported that the SR-71 skipped around the edges of space and back.

However, here comes the 787-9 from Air New Zealand, with those same eery markings of the SR.71 in an all Black hull.



Those same soulful stirrings are awakened again while looking at this beautiful Black Bird from Air NewZealand. Even though, I never rode in/on an SR-71, only a special breed of Aviators or Astronaut types did, I crave those child hood dreams through this new 787-9 aircraft. Today, a passenger only has to gaze out those huge windows and dream of going Mach 3+ in a SR-71, having its big Boeing wings flexing out its muscles in relative silence over the Pacific. The Kiwi 787-9 will ply those same oceans were the SR-71 once often flew, as it secretly observed the world scene.

Welcome back "Black Bird", you are a graceful and elegant super plane that will make many a dreamer happy like myself.

Even though this paricular Black Bird misses an all titanium hull, and extending engine nacelles for hyper jet speed. It brings its own swagger with its all plastic hull, super computers and newer and more efficient jet engines. There is a taste of titanium in the Air New Zealand's "Black Bird". It doesn't go skipping off space, but the passengers have plenty of space with its travel comfort while passengers are getting there safer and more rested.

The SR-71 did not have a wind tunnel for testing Mach 3+. Engineers of the day used Lake Washington, and various hydroplane hulls when determining final configuration. No wind tunnel would emulate Mach 3+ for testing wing and body configuration.

This new NZA "Black Bird" had a mass of computer models, wind tunnels and no slide rule-ruling for figuring out the optimal hull and wing build. In many ways this "Black Bird" is so far superior to the old Black Bird in its own rights. Both aircraft were purpose driven, but this one, the 787-9, measures how far the aviation frontier has travelled with its passengers. The old Black Bird is relegated to museums like Smithsonian. I salute the SR-71, and applaud Air New Zealand for its first 787-9 in all Black. A fitting tribute for aviation's progress.