Its Been Awhile Since Mentioning The Zumwalt

Back in early April 2016 an article was posted about the Zumwalt. 

At Sea Aboard the Zumwalt Defense News Feature.

It was a walk through in words and pictures of the Zumwalt DDG 1000 dress rehearsal before acceptance trials. It mentioned in this article it would be about two years before its weapons load would be accomplished. The Zumwalt at that time was bare of weapons and munitions. The weapons systems were not on board but awaited a San Diego port duty station for up grading DDG 1000 of its weapons. In fact a debate was on whether to install a rail gun which turned out to be a punt on fourth down procurement cycle. A later follow-on Zumwalt class destroyer would be fitted with the "Rail Gun".

USNI News photo

The interim period of time from then to now, the Zumwalt has been fitted with a vast variety of weapon systems, which have yet to be completed throughout an estimated June 2018 time frame. All first time installations and testing’s of a new class of ship such as a Zumwalt should expect time to drag on until the Navy knows what it has or will have.

Seven months out from June and 18 months since builders trials the Zumwalt has gained funding for the final phases of equipment and systems installations. 

Navy Updating Missions Systems Equipment

The Zumwalt will rapidly become ready for war in a way potential adversary will have an almost impossible task of stopping its capability. The North Korean turmoil will miss the Zumwalt's presence in the current situation. The former Zumwalt-Winging It article mentioned the ship was similar to a submarine configuration as all activities would be held under its skin except aviation access and a few other "outside" sea going tasks. Everything else would be held under closed view from natural light.

It becomes mind boggling as to what this ship will able to do. If the F-35 is a flying computer synchronizing the battle space from above, then the Zumwalt has the same only from the surface. It will have in the future an advanced dual band radar  AN/SPY-6  just for the navy.

The summary of it all is a 3D radar system that can capture and lock down movement of any objects from a specific or broad band sensing. Currently the most advance Radar systems being installed are on the CVN 78 Gerald R Ford i.e.  AN/SPY-3 types.

The AN/Spy-6 is so classified there is no other capability existing in the world. The Zumwalt will be able to coordinate current military systems outside the ships battle space under and above the seascape.

Expect the Zumwalt to be loaded with a full array of destroyer type missiles, torpedoes and other hidden weapons of mass destruction. All will be automated, plug and play type systems for which the recent funding award will hook-up.

   

Jet Airways of India Inks 75 Max 737's

It may have been a well known deal in the making or maybe it wasn't, but Jet Airways did sign in on the 737 Max for 75 units as a firm order. What is further a big get for Boeing is another 75 possibilities are on option from Jet Airways. The Boeing single aisle is taking over the Airbus single aisle bookings for 2017. 

When Airbus closes its order year it will have to have some big late year A-320 NEO orders to even hold the Boeing surge off. It is becoming increasingly difficult for Airbus to wall off a Boeing single aisle order surge since its backlog is so very large and its rate of production currently has slowed down for the A-320 family of aircraft.

Boeing can now add 75 single aisle units to its order book, which was standing at 398 gross units at the end of September. Back in April 2013 and then in March 2014, Jet Airways had ordered 75 Max Jets with 50 and 25 respective unit orders. It was announce this last June 2017 that Jet Airways was in the market for up to 100 narrow bodied aircraft. However, about 100 days later comes the news that Jet Airways just firmed up another 75 Max 737's, This recent disclosure would make Boeing's single aisle order book bounce upward towards 490 gross single aisle orders during YTD October 2017. Airbus at the end of September had booked a gross of 263 of its single aisle aircraft. Without having any Airbus order data an assumption is made, Boeing has about a 227 gross order lead over Airbus for the single aisle type at this time.

If this order relationship remains constant until the end of the year, Boeing will have significantly reduce the Single Aisle order lead Airbus currently holds. 

AirAsia X Has(d) 66 A330 NEO's

AirAsia X has entered negotiations with Airbus into converting 66 A-330-900's it had already ordered into a like number of A-350-900's. It also mentioned talking to Boeing about its 787 as if an insertion into this news slice. This also opens up a huge topic for Airbus. It only shows 206 A-330-900 NEO's ordered program-to-date, noting zero booked for 2017. If it does switch that order to 66 A-350's, it would harm the A-330 NEO program immensely. As an Airbus A-350 switch deal confirmed, Airbus could then show only show 140 A-330-900's in a one for one deal. AirAsia X holds the the life force of the Airbus aspirations for its A-330 NEO campaign.

Currently, Airbus has Booked 858 A-350's with 114 of its type delivered. An AirAsia X switch to the A-350 from the A-330-900 NEO would effectively stun the Airbus NEO program. The other part of the program is the A-330-800 with only 6 ordered. The NEO program would shrink to 146 A-330-NEO's booked which places that Airbus program as a lost leader program feeding into its A-350. 

Airbus plan "B": If an Airbus deal is struck for switching to 66 A-350's from the A-330 NEO's it will not catch Boeing's hold on the medium wide body market. In fact this may be something of Airbus' own making. In addition the deal may only involve going from 66 A-330 NEO's to 50 Airbus A-350's. There are many possibilities in this transaction, but all have Boeing's gun held to the Airbus' head.

Airbus could conceivably flip its A-330 NEO customers into A-350 customers as a last ditch maneuver. If it did do a flipping maneuver it, would signal the A-330 is a non starter and the A-350 needs support from its other offerings. Sixty-six is a big number and Airbus could make a better impression on the wide body market place by turning AirAsia X into a large A-350  customer since it already has 10 A-350's on order.

Boeing was mentioned earlier, and it would seem it has little or no chance disrupting this situation. The mere mention of Boeing to Airbus through media reporting benefits AirAsia X for receiving a favorable pricing offer from Airbus. It has a disadvantage with AirAsia X for it too can lever a favorable market price offering. It's an AirAsia X gotcha effort. 

If Boeing were to give away the 787 to AirAsia X in a bid, Airbus would be inclined to do so in response. It's coming down to a medium wide body end-game. 

If AirAsia X wants to kill the A-330-NEO program it can by accepting an A-350 like order. If Boeing wants to kill Airbus aspirations in this market segment it can give away some airplane as if making an Airbus kill shot targeting two of its programs at the same time. 

However,  Boeing may have more fish to fry elsewhere and will probably defer its WB order efforts in a different direction and let Airbus kill 66 of its own A-330-NEO's and enhance its A-350 order using low ball pricing for AirAsia X. Boeing will go north of 1,300 787 orders this year without squeezing off an forced deal in this direction.

Azerbaijan plans to buy six-ish Boeing airplanes

This tittle is just a sampling of what's behind the Boeing curtain before year's end 2017. If reading further the discovery for ten 737 Max, four 787 Dreamliners, and two making 16, could be finalized before year's end. However, the back story does not end there. Winging It has for some time stuck to its guns by saying the wide body 787 family will rip up the stalled order year. It has already gained 83 net 787 orders. There are orders not to be gained but more of to be signed since many orders are in MOU limbo. Boeing will close in on a multitude of finalized 787 orders by year's end.

Boeing vs Airbus for 2017 Orders

Using a tack of caution will sensibly move the 787 book close to 100 units ordered by year's end. Additionally, the Max book has not been lying idle this year as it is consistently outpacing the Airbus A320 NEO order book throughout the year. This statistic causes analyst to pause over Airbus single aisle order book. There is a limit to everything and perhaps Airbus has booked its easy customer orders while Boeing is beginning to gobble up the "reflective" single aisle market during 2017. Problems that Airbus encountered with its productive success have been marred by engine failure or supplier lag. It has addressed those issues, but created an opening for Boeing's Max with a more reliable CFM 1B engine and is moving seamlessly forward with enhancing its 737 Max production after its first 30 units delivered and maintaining the NG production pace. Boeing has waited a long time for making more single aisle per month than Airbus. Boeing delivered 57 NG/Max 737 during September, 2017.  Boeing booked 61 single aisle orders in September. Airbus delivered 40 and confirmed 40 orders of the A320 NEO/CEO single aisle in the same period.

Its obvious to see Airbus has been longer, at building the A320 NEO, but lags behind Boeing in its production pace by 17 units tallied in September. 

Furthermore, during 2017 Boeing has confirmed 398 gross single aisle orders to Airbus' 263 gross single aisle orders. Ten months is long enough time for some kind of trend conclusion, Boeing has turned a positive corner and Airbus a negative corner. Boeing has more potential and Airbus has spent its potential in the single aisle category.

Going back the the WB division it is clear Boeing is sustaining a stable order influx for its 787 family of aircraft and the year 2017 has had a surprising 787 order strength in a "down year". It may exceed 100 787's ordered and become one of Boeing's strongest 787 order years. Not only has it garnered 777 orders but the 747-8F has not died. A steady trickle of 747-8F orders are emerging and several more will be added to Boeing's order book at the close of the year. It's still only "life support" and the urgency from customers ordering continues before a program could close. Qatar and Azerbaijan are ordering the 787-8F and "others" are considering 747 orders. The few orders hanging are considerably more than the A-380 non orders.

It's still too early to dismiss Airbus from expanding its order book as they often hold announcing year end orders until the first week of the following year or the last week of any given year. Boeing, is of course beginning to play this game as well, and it is expecting a robust December order book emerging, wrapping up most of its hanging orders it has since filed from the Paris airshow. A majority of the Paris deals had MOU's or LOI signed during the event. It has already closed some of the Paris LOI deals since June 2017. There are about 236 MOU units remaining from Paris as not finalized, and many should be by years end. The Paris count goes as Follows by Winging It.  The are about 225 MOU's outstanding both for Max 8's and Max 10's. There are about 9 MOU's for the 787 and 2 MOU's for the 777's from the Paris Airshow last June. These paper intents could be finalized by year's end.

Assets Equals Liabilities 101

What’s Boeing Worth and other accounting 101 confusion? The asset is a valuation of what a company owns even though it may have borrowed money for its ownership. An asset is typically valued by amounts of cash in the bank, buildings and other material items. The liability is a matter of debt value when acquiring its assets. Market capitalization is the value of outstanding stock it has with its stockholders. It falls on the Liability side of the balance sheet. Remember Assets equals Liability and outstanding shares of stock is a liability equaling, in part, its asset value. A corporation uses stocks to expand its existence. In other words, it issues more stock as a financial source for corporate uses.

When a liability is reduced, then the asset must reduce as well with same value. A better understanding of corporate stock value clears up one part of the balance sheet. Outstanding stock is a liability until the corporation buys back its outstanding stock. In order to do this the cash/asset position is reduced by the same amount of the current stock buy back value. 

It gets weirder, when considering all the liability meanderings on the right side of the balance sheet. There is another category or two such as Owner Equity and Dividend paid out. We are just getting started and accountants are paid the big bucks for just taking care of one item off its balance sheet. When all the flows trickle through the accounting cycle there could be an increase to Owner’s equity while offsetting some sort of liability or Asset proposition. 

Dividends declared reduces cash while paying out a value to its stockholders but does not reduce its own stock capitalization value. You now know it as outstanding shares with corporate market values, which sounds kind of like a debt or liability where it may offset the asset by the same amount (left side) of the balance sheet. Stockholder trading is different than corporate trading. Therefore the usual accounting entries become a nominal exercise. Sometimes a reduction in a liability is offset by an increase of a liability found within another account. Sometimes a reduction of an asset (i.e. cash) is offset by an asset acquisition such as equipment. Accounting becomes an Organized Mess at this point.

Back in my university days a very wise professor told the freshman accountants to-be, “all accounting is a bunch of numbers that add up to zero”. I wrote that down just in case it was on my next test. Back to Market Caps before I digress with zeros. There is a stock called “treasury stock”. It is not outstanding nor is it a liability, so it must fall on the left side of the balance sheet as an asset nominally. The company owns it and will issue it (outstanding) as a reserve source of cash liquidity.

If it does sell the stock, the sale value becomes an “outstanding” liability in the same amount of what is deposited into its asset cash vault. It also becomes another owner’s equity liability. So what was the liability offset before the treasury stock was sold? Some kind of debt on the books I suspect. When the company sold its treasury stock for cash it may have paid off some of its debt reducing the asset and liability netting another zero somewhere on a journal near you. Accounting is getting fun as a board game of Monopoly.

Capitalization value is the total value of outstanding stocks sold having a value in some point in time. There is a whole another accounting floor taking care of Market Cap values. Boeing has a Market Cap and it shows with its dichotomy of various share value outstanding over its history of company issued stock transactions. Boeing can issue new stocks on the market increasing its Market Cap. It can buy back shares thus reducing its Market Cap by the sell price of each share. 

The stock market is driven by stock sellers and buyers and not by Boeing in this example. However, perceptions drive the market giving stock a perceived value. Many things drive the open market value of stocks. Just look at the news and watch stock values rise or tumble with the news. However, Market Caps comes from the value of stock sold by the issuing company and not the stock traders or investors. A perceived "Corporate Market Cap" affects stock pricing traded in the open market. It could represent how much a corporation has in "outstanding share value" which may shadow its asset values to some extent. Bringing clarity to the forefront is Winging It's goal of bringing the score to null.

Boeing September Orders and YTD Summary

Below is an exclusive Winging It Chart which tries to track what Boeing documents not what the press reporting has indicated. These are two different world's. Boeing post's only what the customer has confirmed as an order and additionally only reports the customer's name when that same customer allows its naming on Boeing's web site. Sometimes the press becomes vague with its assertions and results  in reporting intents as firm orders and firm orders as intents. This becomes a general confusion for aviation followers who seek firm answers.

Boeing added firm orders in September 2017 by 72 units for all of  Boeing types. Boeing also reported it had delivered 78 units for all its types during September 2017. The important metric of book to bill rate is .92 for September. The goal each month is a solid "1" for a book to bill rate. Boeing fell six orders short having only 72 orders when examining the above chart. The chart also reflects an annual net YTD order total 498 units. The adjustments or cancellation metric is a -67 units applied to the gross orders. Boeing has already pushed forward with 565 gross orders for all its airplane types offered.

A special tracking by Winging It is for Boeing's medium wide body 787 aircraft since it needs to retire a 27 billion deferred cost amount. Boeing has now expanded its 787 accounting block to 1,300 units. The accounting block's intent is an analytical position for when Boeing will retire all costs held in suspense after each 787 delivered profits money. That profit margin on each 787 goes towards retiring its program deferred start-up debt. The accounting block becomes a marker on the trail towards ultimate profitability. Boeing will not pay-off its 27 billion remaining deferred costs during the next accounting block. Tracking Boeing 787 orders is an important key for estimating when it will reaches its program milestone of retired costs.

Boeing has now booked 1,283 units of its 787 family of aircraft. An important footnote for the program is that it has less than 100 of its more costly production 787-8 type, and the more production efficient 787-9 and 787-10 will contribute with a higher per unit margin over the 787-8's smaller deferred cost reductions.

Charting the monthly and YTD booking numbers indicates the long term health for Boeing's commercial division.

The US3 and The World Too

The US3 aka United, American and Delta Airlines are firmly entrenched in a winner takes all battle with other world airlines. The Middle East, or aka: Qatar, Emirates and Etihad Airlines are the usual suspects in this foray of political intrigue, are confronted by the US3. A worthy moniker must be identified for the Middle Eastern concerns, hence the label, ME3. It's a battle between US and ME. Damn the "Open Skies" and full steam ahead. 

"US has a big stake in the invasion coming from ME !", as it filters through the aviation lobby in Washington DC. 

As a passenger, I only look at a competitive features concerning price, location-location-location, and comfort. It almost sounds like a real estate promo. ME is squatting on US real estate as it expands using its oil based wealth when buying Boeing Aircraft. Boeing is a US corporation and it too has a lobby in congress. 

However, ME3 (not too but three), comes all the way to the Everett, Washington's Boeing delivery center celebrating a 747-8F delivery, and dances in the face of the US3, and what's wrong with that? 

The US just took in a half a billion in US dollars coming from ME3 sourced from oil/gasoline sold to the US.  ME3 took delivery of its 747-8F and displayed a 777-300-ER doing test flights while parking its 777-200 next to the 747-8F. 

It was a display of what ME3 can do for US too. ME3 is not the color brown as it is more of a desert sand color slipping through US's fingers.

The US3 must embrace competition and fair trade. It must make clear what its complaint is rather than issuing generalities which no one can get its arms around. Rather than saying the ME3 is squatting on US3 property, it must make a succinct case first before sounding off. 

WE2 (World Entities of Passengers and Airlines) cannot understand what the problem has become and any generalities clouds the issues entirely. The history of US3 fair trade must be made so WE2 can understand what is fair and what is not fair after ME3 lands in Miami, FL. We don't even understand what the often quoted term "Open Sky" treaty actually represents.

Airplane Mini Recession?

Recently, Lufthansa huddled about its long standing 777X order made in 2013. Monarch airlines went out of business holding 30 Boeing Max 737 orders. Is this an airplane mini recession or just the normal churning of aircraft orders in the daily business cycles  of  risk adverse management?

The Emirates wide body order looms large in a holding pattern over the Dubai airshow. Its order intent may lose fuel and come crashing down at this year's show citing a lessening passenger demand while causing some industry re-thinking.

A deeper study from every business goal and intent may reveal a small aviation trend where orders are in a flattening order spin over the last several years. Its getting harder to find mega orders for any class of aircraft.   The buyers swamp has been drained, a little bit. However, an order storm cloud is gathering an ominous view via the intent route. Airlines are ordering (sort of) using MOU's or LOI's. The customer retains a golden LOI parachute when intending a purchase, thus making it a mini airplane recession.

Buying aircraft outright is an indicator of  awesome demand or when negotiating for six months is an indicator financial ducks are not in a row. A mini recession could be measured in how long it takes to confirm an order. The longer the confirmation time taken, the more of an indication of its airplane customer's financial well being.

When would a current mini recession evaporate? Remember the reference to a storm cloud, it too can evaporate with the right cross-winds. The expectation for a returning demand market is controlled by
every conceivable action from the world's social/political environment. It is also affected by the environment itself. Aviation's business models are in the gate awaiting the bell and a gate swaying start. The occasional bankruptcy and the re positioning of billions of dollars are all micro-recessionary influences which can and will pass through as a wisp in the morning fog. The main thing in the current market is the end of year measure by mega aircraft builders. Both Boeing and Airbus each have its own worries but tend to look through mini recessions.

Within a annual cycle these events would lend to a bump in the order road.

• A mini-recession would last no longer than six months
• Its spread would encapsulate a handful divergent airlines
• A possible and immediate change to a demand cycle exists within this period.
• A mini recession is difficult to track.
• Airshows tend to balance the outlook for any recessions and demand
• Airshows tend to point to absolute trends.

The current trend is for a mix of rough air and smooth flying until early 2018. The one off problematic encounters for each of the mega framers will go under cover thus indicating a visible normal cycle creating a market balance until what few mega sales remaining are announced.

Boeing's WB Pole Position Laps Competition

The gathering lines of customers are eager to have a photo op at the winner's circle. Boeing's had the pole position when it first announced its WB 787 offering back in the 2002-2003 period. Its been fifteen years since the Idea was unveiled. How has it changed the world?

Below is the paper shuffle for new 787-9' intents MOU's or agreements. These all need an order placement for a booked order.

Information from All Things 787 for Egypt Air transaction.

It is also important to note these sales (papers) represent an active and ongoing market viability beyond the 78 net ordered. It is also significant that the Dubai airshow next month could give Boeing another shot at its order book arm, even though Emirates has backed off from its pre show announcing of new orders, there remains an opportunity for more Boeing/Dubai WB announcements.

2017 order synergy ='s a backlog becoming manageable, pricing is very competitive and the 787 business plan is working extremely well for all its customers.

Boeing could book 200 WB's in 2017 counting 787's and 777X's.

Cul-De-Sac The Book Chapter One: It's The Water

The highest priced property should be found in a Cul-de -sac. It is an island within a sea of people. Having never living in one before this year, I found out about the little nuances of  Cul-de-sac: With a front window position for viewing in an arena setting; Watching  the semi circle of things going on in everyone's life; you are changed. The lack of traffic going through as its flow is exclusive to only those who live in the semi circle, makes the magic happen. The vision of the cul-de-sac is similar to a tribal village on the river of life. Neighbor's canoes put-in on its drive ways where expressions on neighbors faces tell the whole story of the day. One neighbor drives fast coming in, spinning around the circle and backing into its driveway. The other (new) neighbor doesn't know the rules of trash yet and puts out a huge TV box for which the city disposal won't pick-up.

After pealing back of layers of the Cul-de-sac culture reveals a trash day for yard leaves in November. I got this tip from my other neighbor on my starboard side. He wanted to know who did my re-roofing. Then went on to explain how he wanted me and himself to get on the irrigation board for the sixteen homes in the  two adjoining cul-de-sacs. The system is for  pressurized lawn watering coming from one well making this "water district". Somehow, I felt important by this subliminal offer for a neighborhood power play. 

My other neighbor didn't even live in the Cul-de-sac. He was from Vancouver, Wa and bought the house for his daughter, who just moved in with her three children. She just went through a nasty divorce as her ex went to live with his boy-friend. Oh-my, unplug the cable TV. I don't need it, its all happening out the front window. She's the one who whips her car around and backs-in her drive-way several times a day. She is rattled and it shows. Another neighbor in the circle is a single guy about age 31 is having trash issues on garbage day. His neighbor on his other side within the semi circle is a single women in her mid twenty's. She is never home during  the year I've lived at the crown of the circle for almost a year. Her dad owns the house and she is never home.

So far I've got this going for this analysis. One neighbor bought his house back in 2005 without even walking through it before buying. The Vancouver Guy drove-in one day and bought his house for daughter because he liked the feel of the Cul de sac. The next "neighbor" a 31 year old, had looked months at countless homes and found this one at an affordable price and bought the day he saw it.

Twelve months ago we turned the corner into the circle when looking at homes and before we got out of the car "we mentally bought the house". The Cul de sac had cast a spell on us within 30 seconds and once walking through the home my son made an offer on the spot for the home. Here we are and it is like living on an Island surrounded by other far flung neighborhoods, only they have continuous flow through traffic and noise.

The must be something going on here that is missed. Maybe it's the water and the water board guy was on to something.  Five homes on the semi circle and five buys with the same story. The houses were sold the day the buyer turned the corner into the cul de sac. No matter the condition or size the house was sold and the tribe began to grow around the circle. Within a year's time we have become a community whether or not it was intended from the start. Being a reclusive soul. I have talked more and gotten to know more in one year of time than ever before in my life. In fact a strange thing happened. The estimated value of our home has increased price by $66,000 in ten months the other homes around us have increased in value with only a nominal increase over the same period of time. The strange part is all we did was just mow the lawn, that's it!

There is magic in the air and now I am considering being a member of the two person water committee within the sixteen homes near us. People have a story to tell but they need to sit in a semi circle to tell it and that is what a cul de sac does. It makes neighbors be neighbors, then friends and finally they have your back (or at least your back fence).