Boeing 747 Order Update 2-Unidentified

Boeing, listed today, it had sold two of its 747 to unidentified customers on August 31, 2017. No details about model type or whether it is tied to prior references of Qatar or Turkish Airline as mentioned by Winging It contributions. It was a good time to roll out the Winging It version of Boeing's own website chart.

See links below: 

Did someone say 747 Freighter? (Qatar information update)

The 747-8i Is Putting Up A Good Fight To Stay Alive

Boeing Updated orders 2017

United Knows How To Go Long With Its 787-9's

United Airline will open the Sydney Australia to Houston Texas long route January 2018, going 8,576 miles on a 787-9.

There is more than just fuel and passengers that go into a long range flight. Often called the "Long Thin Routes".  In comparison is the meaty end of flying with the single aisle going from one mega city to another at around 500 miles. Los Angeles to San Francisco is an example. It could be called a commuter flight leaving one air terminal in fifteen minute increments during morning hours, and returning later in the afternoon at the same pace every fifteen minutes, until evening closes. Those are South West or Alaska Airlines territory. 

However, United Airline will soon have eight of the ten  longest flying routes for US carriers such Delta and American airlines, who have not mastered the art of going long as well as United has accomplished.

So what is United Airlines secret for making a long thin route successful?  

• The first  metric up is hard work with its crew working seventeen demanding hours with its passengers.
• Next is right sizing the passenger load for the market, fuel requirements for long range flights. 
• United made the 787-9 seat limit at 252 seats optimally matching its long thin routes.
• Ticket Price must be competitive but having a profit margin. It must sell all its seats to work!
• The route/market must be developed at destinations. It must have a symbiotic travel pairing.
• Bottom line, airline reputation nurtured at both ends.

This is a starting point list and not end-all marketing for which United Airlines has developed. To be successful on a risky venture having a limited passenger opportunity, especially on long thin routes, increases the risks significantly for failure. United has tasked itself for understanding every phase of travel for profit. The crew must maintain a customer efficiency over a 17 hour journey. It too gets tired and exhausted on long work shifts so it must have crew who will  relay in and out during a long trip. This will achieve several goals. Having the smallest number of crew members doing more on the journey with its passengers. It may rotate the ships compliment in and out service during four hour segments. It also may rotate  crew members in a layered approach. Every hour  up to two crew members may retire for a four hour rest period. The layering effect would achieve a goal of less crew giving better service.

 Competition comes into play on this next item. A route must have revenue generated for its profits and a lower ticket price must be balanced against the seats available. Passengers are kilograms and weight kills any fight's duration. The luggage extended food service and extra crew can cut miles out of a targeted. The United goal is selling the most tickets at the lowest price going the farthest. A computer model may give United an optimal answer for a trip complexity. If a competing airline can do it on less ticket price it would certainly would like to how it can do it.

A target for United on its 787-9 is 252 seats going long. It optimized its airplane type for the task. The seat count draws a line in the sand for weight fuel and distance. The other factor is load. An oft used  term which assigns a metric for loading an airplane with passengers at both end of its routes. If an airline has two hundred and fifty-two seats going 8,500 miles it can do it comfortably when selling out every seat. The airline seeks a 100% load factor in its operation. When an airline only sells 210 seats in this case it is only a 83% of filled seats for what it can do. The load factor would be 83% over time if it averages 210 seats sold each time. United would have a metric on averaging what one passenger would weigh, luggage and supplies expended causing a fuel consumption of "X" amount per passenger going 8,500 miles during its seventeen hours of travel. The seat price is also determined by all these factors.

The fuel load would be reduced with a 83% load factor, thus reducing the fuel required for the flight. It becomes a very scientific measure when calculating wind and weather. Its harder to fly in hotter weather or with headwinds as it would burn more fuel. This becomes an inexact forecast as weather can change mid flight.

The ticket price takes all things into consideration and it becomes the make or break element in an airlines profitability. A whole separate discussion would not be enough as it would take a fat book explaining what it "all" entails.  Passengers seem to always seek the cheapest price for its own purpose. Going 8,500 miles will cost more per seat than just going 500 miles. Passengers understand that distance cost relationship. Competition drives prices downward, thus making airline margins as thin as a route. A thin route is considered a route where fewer potential customers exists for its segment. United in this case must fill an airplane's 252 seats reaching optimal profitability. If the performance of its business case measures a loss at a 85% load factor, then its margin for profit stops at 214 tickets sold with its the seat prices offered. It must generate customers at both ends with robust marketing and form a culture of United customers.

Patrick Quayle, United’s vice president of international network emphasizes the details of operating efficiency. 

It is important developing a destination common denominator half a world away. People in China have different expectations than people in Denver, Colorado. The plan is to cater to every culture associated with an origin or destination and this requires a ground force working within that cultural environment. A symbiotic relationship builds the route. Details with the respective cultures are what drives a successful effort at both ends. Making sure an airline is in tune with a culturally diverse population is the key to an airlines success and key to filling seats. 

The competition starts with an airlines reputation and that intrinsic value can erode away with one passenger tossed off an airplane in front of cameras A top to bottom training of its employees for dealing with its varied customers, is a difficult task. Every customer is an unknown on how they will react with the airline or its other traveling passengers. 

An investment on long thin routes has a little margin to mess it up with its diverse passenger base. A reputation of trust becomes an invaluable condition. Once an airline has established trust with its passengers it will be able to fill 252 seats each time.  

United's Order Shuffling Nets Airbus Out To 45 A350-900

United and Airbus reached a deal well sort of.  United had ordered 35 of its A-350-1000's a while back using a list price of 359 million in this example. It now turned that order into 45 A-350-900's increasing the Airbus book unit numbers by ten. The list price for each A350-900 is about 311 million.

By The Numbers: $ amounts are list prices

Prior order:        35 (A350-1000) X   $359 Million = 12.57 billion

Converted Order: 45 (A-350-900) X   $311 Million = 14.004 billion

Net Unit Increase =10
Net Value Increase =  $1.5 billion

Airbus gains about $1.5 billion at list prices when signing off with United Airlines on a new deal. Typically negotiated prices are significantly less than list prices as much as 50% less. The actual net value increase would be estimated as a sub $1 billion amount added to the Airbus book values. However, it is a significant win for Airbus as it steps into Boeing territory in a big way. Gone will be United's 777-200 as it reaches 25 years old by 2023. 

Not all is lost for Boeing as it has sold United 18 of its 777-300-ER's for 747 replacements. A consideration by United is the 777X model not yet built or tested. This will occur by 2020 and becomes late to the United's gate for any risks associated with new plane development. It also has a high list price as well. 

The 777-8X is listed  for $379 million and the 777-9X is listed at $409. Both are considerably higher priced models from its listed starting point than that of the A-350-900. If United would have gone the 777X direction, it would have increased costs and risks beyond what it could endure for its fleet renewal. The A-350-900 fits right into its fleet scheme of things for costs and capacity.  

A further note is the A-350-1000 order count now drops to 142 net orders down from 177 net orders. This now pushes the 787-10 orders ahead of the A-350-1000 by a margin of 27 units. The A-350-900 has surged ahead to a 718 count over Boeing's 787-9 order count of 685 units, which gives Airbus a head to head advantage for the model class by 33 units.

However, Boeing still remains far ahead of Airbus for total mid-widebody  advanced technology aircraft. Boeing has 1,278 787's ordered compared with Airbus' 868 A-350's ordered to date. 

The 747-8i Is Putting Up A Good Fight To Stay Alive

If Turkish Airline does agree to buy 8 747-8i for its fleet then Boeing will have outsold the A-380 over the last years. Since 2015 Airbus has netted 0 A-380-800's. It holds an over-all lead over Boeing with an order book count of 317 units sold. Boeing has only booked 132 of its freight and passenger 747-8's.

The recent Air Force One deal picked up a canceled order after a Russian airline abandoned its order due to bankruptcy. The White House talked to Boeing and secured two undelivered but complete flying copies of the 747-8i, taking the Russian airline purchase position after its bankruptcy.

The 747 doesn't have any more low hanging fruit for its sales team and are down to niche buyers and the freight business. A Turkish Airlines deal would be an emergency room Defibrillation jolt. Boeing is going to give them a "deal it can't refuse". Its just a matter of paperwork and financing before it is announced. Turkish Airline is negotiating at this time, and a deal will fall through if it is asking too much from Boeing.

The airline is trying to consolidate trip frequency going from three a day down to two a day frequency on some routes. The 747-8i would fill this slot well. Turkey would also inquire about 777 units but it may not best serve its niche as well as the 747-8i would.  Buying used 747-400's may require extensive renovations before bringing an aircraft up to a passenger standard and would not be as efficient as the 787-8i at all. Especially, if Boeing offers Turkish Airline a low ball number which is probably the case. The 747-8i may be a pound for pound better deal than buying a 777-300ER.

Article reference Link:

Turkish Airlines negotiates with Boeing for Super Jumbo Jets

Scale and Innovate Boeing Gets Squeamish

It starts at the top for any merger. United Technologies and Rockwell Collins are seeking common ground for a synergistic merger. It will roll two chief Boeing suppliers into one, thus possibly losing supplier competition with Boeing's supplier base.

“The combination gives us the ability to both scale and innovate,” Greg Hayes, chief executive officer of United Technologies, told analysts on a conference call Tuesday, a day after the deal was announced.

Examine what industrial product scaling means and the innovation component that could be lost with one less competitor than a merger will create. Boeing argues that a competitive nature will be lost halving the innovative component after a merger. 

The United Technology CEO, says it gives them the "ability", suggesting they don't have the ability at this time to scale and innovate. With that sentiment, United Technology is stating it can't compete without a merger. Scaling is a simple concept when considering a complicated merger. See article below by Josh Lowry

Scaling: 

This week, I was asked, “What does ‘scale’ the business mean?”  “Scale” is an often used in business and can have different meanings depending on the context.  Some common examples include: “Are we operating the business at scale?”  or “Are we taking advantage of the scale of our business?”  or “Can the product scale-up or scale–down depending on demand?” or “Does the business scale?”  or “We are currently scaling-out the team.”   Below is my attempt to put some structure around the term “scale” for these common scenarios.

Are We Operating the Business at Scale?

Operating the business at scale means allocating and optimizing resources to drive the greatest results and volume across market segments.  Are marketing and sales working together to generate demand and close business?  Are closed deals being transitioned to services/support to be nurtured?  Are partners being leveraged to multiply the company’s marketing, sales and services efforts to reach new customers and displace the competition?  Operating the business at scale is about optimization, not duplication, of efforts.

Are We Taking Advantage of the Scale of Our Business?”

Scale is another word for size. Companies can leverage their size by negotiating exclusive dealings, favorable terms and volume discounts with other organizations. Partnering with large businesses can also provide companies with access to national and world-wide markets to sell products and services. In addition, keeping costs low or unchanged while increasing sales volume provides companies with the opportunity to further decrease prices – new customers, more marketshare – without sacrificing margin (economies of scale).

Can the Product Scale-Up or Scale-Down Depending On Demand?”

Many industries have periods during their calendar/fiscal year where they experience increased customer demand for products and services (e.g., retail industry during the holiday season).  Core infrastructure offerings from organizations like Amazon Web Services enable retailers to increase server capacity (scale-up) when customer demand is high without having to invest in new hardware. Retailers can then reduce server capacity (scale-down) during normal operating periods.  These types of offerings/products let companies pay for what they need, when they need it.

Does the Business Scale?

Companies that scale have operating leverage.  They can growth revenue with minimal or no increase in operating costs (e.g., administrative, sales, etc.).  To illustrate: In Year 1, company delivers $10M in revenue with $1M in operating costs.  In Year 2, company delivers $12M in revenue with $1M in operating costs.  Company scales because it grew revenue by $2M without increasing its operating costs.  This is common with software and other technology companies who develop IP at an early stage and subsequently monetize it at low marginal costs over time.

In contrast, if company’s operating costs increase by the same amount as its revenue, the business does not scale.  That is, if company requires its operating costs to increase by $2M in order to grow its revenue by $2M, the business is not scaling.  Consulting firms like Accenture and McKinsey & Company are prime examples of organizations that do not scale.  This is because there are a fixed number of billable hours in a day, so they have to add consultants on a one-to-one basis to grow revenue.

A common way companies scale is through channel partners. Companies multiply their marketing, sales and services efforts with partner resources in exchange for a percentage of the margin. For example, if company has ten direct sellers, it is limited by the reach of those ten sellers. However, if company partners with a reseller with 50 sellers, company has increased its sales force (in theory) by 500%. Sharing 30% of the margin is less expensive than the cost of hiring an additional 50 sellers.

Companies also use marketing to scale the business.  Marketing enables companies to effectively (results) and efficiently (cost and speed) communicate to customers with the right message at the right time.  Marketing also helps generate customer demand and drive pipeline velocity for sales, which reduces selling costs.  Driving customers and prospects to one-to-many events (e.g., product launches, solution roadmaps, etc.) is a common way to scale with marketing. For example, it is more efficient to sell to 500 CEOs at once than it is to sell to them separately.

We Are Currently Scaling-Out the Team

Once a company has developed a repeatable sales model, the next logical step is to invest in headcount to accelerate (and scale) the business. In software, this means adding sellers/territories within geographies to localize the business. For example, if company has developed a successful, repeated sales model in Seattle, WA, it can grow (scale) revenue by implementing the same sales model in San Francisco, CA. In the restaurant industry, it is the same theory for selling new franchises. In the retail industry, it is the same theory for opening new stores.

All contents copyright © 2012, Josh Lowry.  All rights reserved.

The bottom line for the argument is enhanced scaling goes with the merger and Boeing has reservations with both the innovation and scaling comment coming from United Technologies.

Innovation is the big item bothering Boeing. It believes competitive innovation makes for better choices for its best and lowest cost systems or parts offering from a variety of suppliers rather than one post merger mega supplier. Losing just one mega supplier to a merger hurts its future chances for having the best and lowest cost option for systems and parts.

In defense of the innovative function, Leonardo Da Vinci worked in a virtual vacuum when he drew up a flying machine. His innovation was off the charts without competition. However, Boeing argues having multiple helicopter makers makes Boeing compete for the best version for the lowest cost and that innovative function should scale down to its suppliers as well. 

Dissolving one company as a result of a merger will hurt the aviation industry as a whole as it would have only one innovator and not two supplying aviation's inventions.

There are two sides to every argument, United Technology and Rockwell Collins want to combine for financial and other stock value reasons, but both have reached a size issue in the world of aviation. There are only so few producers of aviation supplies with this scale in the world. Boeing can't simply go to a garage size innovator and then compete on the world market place using a DIY touch screen from a former techno-junky coming from a garage. 

It isn't scalable to bring these types of innovators up to speed for the size of Boeing's industrial output. In order to compete Boeing would have to hire 10,000 divergent techno-junkies and house them under one roof in hopes management can rope them into making a new avionics suite. 

Its a problem of scalability and innovation when the supplier source is so few and scalability becomes so large. Boeing will press forward making it difficult for a supplier merger of this scale. In other words, its a not so simple. A passenger seat delay can bring both the mega aviation manufacturers to its knees. Just ask Airbus how its production is going while waiting for new seats to be delivered from Zodiac. 

The supplier is over-whelmed and there is no other supplier option in site. Boeing is risk adverse and a merger will increase the supplier risk with rising costs and lower supply options when delivering for its own airline customers.

North Korea Eye On The South

North Korea is blustering its way around Guam, Japan and other military locations, but its eyes are really on South Korea. In a surrogate role for China, whose own aspirations are for the time being the South China sea with a blocking move for all of East Asia's traffic, it would be a strategic mistake thinking it would be just about Guam with a North Korean missile strike.

Game Board:

The target is South Korea with all its technological and industrial might. American's would really get angry if it lost Hyundai-Kia or some other techno product to the Chinese/North Korean aspirations. 

Therefore, like all gamesmanship pieces the options for peace are limited and the probability for war are wide open. The Asiatic Game of Monopoly entails threats from players until the next roll of dice.

North Korea:

• Launching missiles
• Vast hidden bunkers
• A million soldier army
• Nuclear Capability
• A fearful South Korea
• Crazy leadership
• China

The US:

• Launching Missiles
• Vast Military Complex
• Allied partners
• Nuclear Capability
• A Fearful South Korea
• Somewhat Crazy Leadership
• China

China:

• Launching its own stuff
• Vast Military Populations (millions and millions into Tai Chi)
• Secretly using North Korea for its own Aspirations
• Nuclear Capability
• A Fearful Military Complex
• Crazy Leadership
• Itself

Let's play the game with these pieces. The first roll of the dice is launching North Korean missiles willy-nilly with a purpose for scaring sensible people into a let's make some appeasement with the North. Where the US is seeking an elimination of the "problem". 

The US has a treaty card with South Korea and it will use it on the next roll defending South Korea. China has billions and billions of $'s in trade with the US and is really mad at North Korea (not) for causing a problem with its roped in trade partner. It won't supervise North Korea into any sensible resolutions nor does it really want to do that, since it already has a "billion" man army at its disposal. North Korea can be dealt with at a future date after China plays the US out of this game.

The US has a turn because the rules say it has a turn and for no other reason. It flips up a Japan card and moves the F-35 Southward. The dice moves its game piece to Guam while passing "Go". It gets two; "get out the B-1's"  money cards. 



North Korea's turn: It launches its thirteenth missile since January 1, 2017. it then rolls its dice landing a one and then it moves Kim Jung Un deep into the peoples bunker's barber shop for a trim on his edges. Not feeling too edgy he (Kim) orders up a parade showing North Korea's latest cardboard missile cut-out on wheels. 



China rolls the dice and moves its piece to Marvin Gardens for a "I'm getting really mad special". It draws its South China Sea Threat card sending in more dredges for its "floating" sand bar navy. 

 Note: China has has a large Navy of aircraft carriers made of sand in the South China sea. 

Operation Occupy is a knock-off of the America's Occupy Wall Street, China stole the plans from Occupy Wall Street. They just don't move until sand erodes away as nature intended. The US is developing a weather event to wash away sand collecting in the South China Sea.

The spinner, every game has to have a spinner, if it is including dice and cards, moves the US to the White House for a pressor. Its leader proclaims it has a B-2! No one saw that coming(stealth). China chimes up, "me-2!" 

The US draws a Go-To-Hell card. "Do not collect another B-1 card going-around-Go, just go straight-to-hell. Ouch, the US goes for a Community Chest draw and it gets a South Korea "can't we all just get along" card.

North Korea shakes the dice as it shakes the ground when it blows-up an under ground H-bomb, because it can. Kim Jung Un is confirmed to have Rabies from CNN reporting. Someone from his entourage of fearless small people with big hats notices whipping creme on the corner of his mouth. It is a mistake since Kim Jung Un was really slobbering foam from Rabies. The small guy to his facing left with a big commanders hat is sent to an airport and is poisoned.

China again draws the angry card and seeks a way with North Korea to do the US in, as it pivots to the US seeking a way to do North Korea in without any face losing collateral damage. 

It's down to the million man starving North Korean army verses the 10 million man all dressed up and no place to go Chinese Army. 

The US has a B-2, flying behind the B-1 bomber in some kind of natural order. China once again rolls the dice and moves more sand around the South China Sea just for pounding purposes only. The US treaty with China allows it to just pound sand in the Sea's traffic lanes, only if it wants to do that little thing.




The US draws the one and only "Headline News Card". It must find a way to counter the democratically elected arm of the news government as well as the press in the Russia and China. The US goes to the spinner and the arrow lands on "Twitter This!" It can't win no matter what option is presented and it chooses using dice to move away from the Peoples Democratic Elected News. 

It rolls a five and goes forward landing on the B&O railroad location where it's leader promptly begins talking about jobs and trade deals. North Korea launches another missile in some sort of applause metaphor. 




North Korea has run out of missiles until next months replenishment. It must roll the dice and slam South Korea into another fear position. The US sends two more B-1's and one more B-2 in an effort for confusing North Korea with its numbers game. 



All the players are pushing and bumping towards drawing the last card. Being the last card, it would be the war card, where the rules are thrown away and everyone looses. 

How did we get to this point and why did  "the assassination of Archduke Franz Ferdinand of Austria-Hungary, in June 1914, a Serbian-nationalist terrorist group called the Black Hand sent groups to assassinate the Archduke", starting WWI, happen?

The Assassinated Archduke quoted as saying "the Arches of Duke in Belgium have fallen (circa 1914)"!

Germany Attacks France As Assassination occurs in Serbia and... North Korea fires another Missile and so forth.

Boeing.com Orders Update

Boeing updated its website at the end of August with its order count. It added then subtracted 7 single aisle orders suggesting an order change occured from NG to Max thus not affecting gross or net single aisle counts from its 737 family of aircraft in 2017.

Sun Air Express was the order notation when it mentioned a customer has cancelled an order for seven NG's while Max increased by a count of seven during the same reporting period on August 29, 2017. 

Winging It Charting based on Boeing.com numbers reported from its website.