A Very Important Deal For Boeing

Regional airplane warfare is a big deal. Having an anchor order in a region is a bigger deal. Boeing is on the cusp of such an order with PAL (look-up PAL like you know something). The Philippine Airlines who have two players on the edge are just where they want its bidders. Either PAL will tilt in favor of Airbus or Boeing for a half dozen WB's ordered. They are pausing in its decision. PAL knows what it is going to do, but a "pause" as a subtitle of this picture uses a defining study excuse, and makes the manufacturers both nervous. Once signed on a manufacturer wins some valuable turf. A Southeast Asia follow-on order situation would follow, and a fleet requiring the commonality of future type orders from the same manufacturer is the PAL game afoot. 

Boeing could be played at this point also giving Airbus fits on pricing schemes it would have to offer PAL. This order is not about wide bodies it's about PAL leverage.

PAL set to sign $1-b deal for 6 long-range planes

“We’ll make the announcement when we sign the purchase agreement,” he said.  Bautista did not identify the aircraft manufacturer, but he earlier said the company was looking at either Airbus 350 or Boeing 787 Dreamliner. 

Bautista said the purchase contract would amount to about $1 billion, consisting of six long-range, twin-engine wide-body jets, aircraft parts and support equipment.  

“It’s an ultra-long-range aircraft that can fly non-stop from Manila to New York. The airplane can be used to other destinations also,” Bautista said. 

As you can see the tease gauntlet has been thrown down to the manufacturer and "the airline knows" the answer. However, it pauses for more airline bling thrown-in, playing one against the other. The pure order line-up of types by Boeing could suggest a win here as the 787-9 is in the middle of the mix, and also having earlier delivery slots confounding Airbus. This could also give Boeing an advantage for a later 777X order, if this order swings Boeing's way. PAL's heady and important thoughts for the future purchases sets this table.

However, it was tipped from an observation about PAL, and through its pondering for a 787 order type mention against the A350-900 order, the purchase for the six WB's is the lever. Pricing by Airbus and a slow startup of its A350 build rate could swing the gate towards a Boeing order. Then comes the commonality anchor for future types coming into the fleet.

PAL Fleet Cross Roads

So here is the story behind the order is the PAL chart above dominated by Airbus Single Aisles. A possible Boeing/PAL fleet set back for Airbus is where an Airbus price may not matter. Boeing needs the 787 as a win for future Max orders, as it has no single aisle active in the PAL fleet. Boeing may drop a "lost leader" price or provide a 787-9 lowball offering for the airline. If PAL "does take" the Boeing offer, expect a PAL fleet renewal within a few years where Boeing gives PAL a deal it can't refuse concerning single aisle MAX aircraft. 

The 777 and 787 become key in this deal making for the next PAL prize for any single aisles Boeing orders by 2020 flying the Southeast asia region. It's not about six WB's, it's about building a modern PAL fleet family, at the lowest cost.

Boeing is Doing A Big Year In 2016

Jack Black did "A Big Year" by spotting so many birds in so many ways, watch it you will enjoy it. Now Boeing is going to do A Big Year in 2016. Much like the movie "Big Year", no one admits they going after the most airplanes in a year. Boeing is going to do its "Big Year" after capturing 762 airplanes delivered in 2015. They will go for more builds in a silent non-admitting way of saying, "Nope I'm not doing it." Owen Wilson was left forlorn seeking his passion in the movie and loses his wife. Steve Martin finds his new mojo and Jack Black gains back his father’s love. It was a Big Year for the Birds. 

Jack Black Goes Big And Wins his Dad's Love

Boeing will go Big in 2016 with more birds than Airbus can even find in all of Europe. Production and sales will keep at a 1+:1 sales/production ratio as it did in 2015. However, there are a few more surprises in store for the fawning of public investors. The cash cow Boeing generates will enhance future development, pleasing the investor. Look to see Boeing crank in some more wide body orders as potential customers who mulled over the $30 a barrel oil market and says it’s time to place the 787 orders in some quantity. The ratio should go north of 1:1 by two hundred more aircraft than found in 2015, making the Boeing 2016 book coming in closer to a thousand orders than 800, and producing closer to 800 than 750.

World's Largest is.... Boeing (Evening Edition Late Nite is in)

Both in number manufactured and dollar value Boeing reigns Supreme. Here is the tale of the Ticker-Tape.

Or just let me tell you, what all this means? In spite of what Airbus sells, they can't shove them out the door as fast as Boeing is capable of doing. All the selling without increased production will quagmire Airbus customers into a bigger pit of the desperate wait.  Boeing is arriving into the five year happy place for its customers. Airbus will either have to give the sales team a near term furlough or build more capacity which will take another few years to do so.

The five year happy place is the customer's five years plans for fleet expansion and renewal. What if all those Airbus orders puts its customers “Seven Years Out Waiting ”, while they are experiencing a climatic wait-hold period, and an airline's fortunes take a dip when having a huge Airbus backlog. Those my friends, are called cancellations on the Airbus order book. Recession cycles run about every seven years. Since 2008, the world is due another recession.

Not to worry, Airbus single aisle division claims a 60 per month pacing by the end of 2016 for its A320 family. However, as eager as Airbus is about its A350 program it will be another three years of production before it may reach a capacity of ten a month. 

Boeing is already at 12-787's a month production and will soon go to 14. Boeing can stay ahead of Airbus as the World's largest manufacturer until 2019. However, Boeing is not standing on its current production laurels as it will increase its own capacity at all production sites, it currently operates. Both the Everett and Charleston has room for growth without Boeing hesitation.

                        Boeing                                                                Airbus                                                                    

Let's opine on the above head to head charts for Boeing and Airbus. Winging It, used the standard price listings from a reputable source whose business is to report and advise on such price listings to the aviation industry.  Sources can be disclosed upon request, 

Aircraft Compare

But it is consistent that price listings come from the same source so no argument can exist for slanting data in Boeing's favor. If indeed these list prices do not meet your understanding, such as using a Wiki source, then you must concur these prices are consistently approximate from the same neutral source.

• Boeing collected monies to the tune of $111.5 billion dollars for its 762 aircraft delivered.

• Airbus collected monies to the tune of $85.760 billion dollars for its 635 aircraft delivered.

Boeing beat Airbus by 127 Aircraft and then collected about $25.816 billion more dollars than what Airbus could do. Look at wide body and single aisle analysis for a better understanding who's doing what to whom.

Flight ANA Goes Fishing And Catches A Fare with Vietnam Airlines?

The significance of ANA buying into Vietnam Airlines (VA) incredibly enhances Boeing's chance of selling more Dreamliners. Since Vietnam Airlines already has a strong order book for wide body assortment of aircraft, it buys both Airbus and Boeing in a hefty supply for a smaller carrier, Vietnam Airlines may tilt further in Boeing's direction. Currently, Vietnam shows eight 787-9 Booked, but has more optioned, greater than the sum of the Airbus A350's on the order list.

Vietnam Airlines looks to sellshares to foreign investor soon

Vietnam Airlines will gain ANA spinoff expertise in managing its fleet from the ground up, as it now has just introduced the 787-9 to its fleet. The ANA share power going into Vietnam will certainly influence the future of VA's decision-making. This move strengthens VA's footprint in Southeast Asia.

Least We Not Forget The 777X

I didn't forget about the 777X, its folding wing and plastic to boot. The winter is long, but not that long. I can hardly wait to pull the wrapper off the 777X during 2016. First things first is the wing fold. They (military) did it every day for almost for seventy-five years. It's nothing new and it has never been tried before in commercial aviation. Why, nobody knows they (Boeing) havn't tried it? Its time has finally come and it’s about time. A simple fold will add twenty-four feet to a magnificent albatross like 777X wings that people will actually pay money to see while in flight. Did I mention I can't wait already? Yeah well you know about excitement the people had who flew in World War II from the then miniscule flat tops.

The design is Patented (Boeing), and added to the World's Largest twin engine passenger Jet at Boeing, the 777X.

 

If Boeing has the wing, they need a plant for which to build the "all plastic wing", so the concept won't come unhinged. Therefore, they built the huge plant for building the plastic folding wing.

In 2016 Boeing will start the 777X building process in a series of rather large steps. Boeing has mapped the steps from autoclaves, buildings, and 787 like advanced technology. Even though the 777X won't emulate the 787 in all aspects, it will borrow deeply from the paid for (well almost paid for $30 Billion pit) 787 technology for appropriate application on the 777X. A drop-off from the 787 designs to the 777X techno design occurs by not including an all-electric system core Boeing had exploited earlier with the 787, but will incorporate 787 like windows and tinting. Rumor has it that the window shade people are close to perfecting a total blackout window which some flying customers insist on having. These could and should show up on the 777X.

The 777X importance is found during 2016, since design freeze has happened and the wing plant is huge. The sum of all Boeing's accomplishment is packed into the 777X. I am excited.

Boeing Once Again World's Largest Airplane Manufacturor

The grand Total is 762 Airplanes "delivered", making them once again world's largest producer of aircraft. So it begins:

Aircap-Recap 2015

Let's do this by type delivered.

 Type               # Delivered

737's/BBJ all types: 495

747's all types:         18

767's all types:         16

777-300ER:              79

777-300F:                19

787-800:                 71

787-900:                 64

----------------------------           

Total:                     762


Book Price recap: does not include actual price Boeing has received during a sale. Since, Boeing's price is often discounted on bulk sales, or price increased during a customization of any aircraft, hence changing the actual sale price. Therefore the book price is used as a guidance number only until final accounting numbers are reported.

Boeing's Gross 2015: Sales

The Boeing Recaps

787 Family-2015 Gross Orders

737 Max

737 NG

747-F

767-F

777-300ER and 777X

777-300-F

Note:

There are 10 orders not listed in the above subsets as Boeing announces 878 total orders where Winging found only 869 orders from Boeing Charts. I have accounted for 8 unidentified 737's not included in the above charts. Two others are unaccounted for making up my 10 missing orders.

2015 Grand Total Gross Units Sold: 878 of all types before adjustments.

The Net effect comes from cancellations or prior orders having book changes from one model to another, therefore making a -110 adjustment during 2015. This is applied to the Boeing book account netting 768 aircraft total slotted for production, and entering the Boeing Backlog.

Accounting exponentially smooths 787 Ride To Profitability

Math majors and coffee cup geeks seek a smoother answer for 787 profitability, if you develop an extremely risky product like the 787. Boeing kept pouring $Billions at it before delivery and $Billions more after delivery, until it becomes a successful product from the design and development aspect. 

However, there is the financial stream remaining which is equally daunting, as it shadows the project. The 787 program expects a $33 Billion hole before accounting can get its arms around the 787 where it becomes pleasing for investors. In essence, Boeing has a real profit for the program when its $33 Billion money pit is filled.

Accountants like straight lines on graphs, as a lumpy program cost from start-up graphing is to be avoided. The lines must look uniform and organized. The 787 expenditures for its research and development during the 787 program had no known limits, other than it had a ceiling under some company breaking point. Did the 787 program break Boeing's financial back? The answer is "no" for that question. However combined with other successful Boeing programs it was saved with a Boeing holistic profitability margin. The sum of all its parts came to the rescue for the 787 program. Enough time and resources were available to get the 787 financial pig going in a straight line. When Boeing builds about 1,300 787's, it makes money from the start of the program to this point. Additionally, during this time, the 787 reaches beyond a pure breakeven point without footnotes and sunk cost set-aside on current accounting. It will be paid for straight -up!

Motley Fool has come forward with this 787 Financial Assessment

Quoting them is better definition for those who drink copious amounts of coffee in the morning, and for those who like neat and tidy lines on graphs smoothing out personal problems of a messy slope. Mathematically, the 787 $33 Billion money pit is filled in by the 1,300th 787 delivered.

"Boeing initially set the 787 accounting block at 1,100 units when it began deliveries in 2011. It increased the accounting block to 1,300 in late 2013. Essentially, this means that after 787 production becomes cash positive later this year, Boeing expects to recoup the $33 billion in deferred costs over the rest of the 1,300 unit 787 accounting block. That will be roughly 850 planes."

For a cogent look at Boeing's financial accounting dynamics summarized, I would rely on Motley Fool's assessment as a snapshot in time using Boeing's variables driving the Fool's outlook. In other words it’s a point in time looking forward with all things considered.

"Thus, Boeing expects an average cash profit of nearly $40 million on the last 850 Dreamliners in the accounting block. And since production costs will be declining steadily, the last few hundred could be even more profitable, bringing in perhaps $50 million each."

The best conclusion anyone draws from this, is that Boeing has retired enough risk on the 787 program. The accountants now have free reign for formulating straight lines on the graphs through exponential smoothing, while painting over the lumpy curves of cost on said graph. By a 787 unit #1,300, it becomes midnight and all is well in building 40-24, and a straight line is painted in Chicago. 

Boeing has delivered 363 787's. Boeing has already Booked 1,143 787. They will need selling 157 more 787's before reaching its accounting block of 1,300 booked. At the rate of 135 787's a year delivered, Boeing has  about six years for accomplishing selling 157 more 787’s or 1,300 787's booked. Reaching seven years out allows Boeing to deliver them build and pay back the money pit in total.

Evening Addition: Boeing repose

Every day comes a new chapter with the Boeing /Airbus fight. Rather than ruminating on the two giants, it is better that one sits back in a repose and ponder the greater issues of what is best for the passenger. The real danger lies before the passenger is riding in equipment not ready for prime time rather than buying the next best thing. Fortunately both giant manufacturers, and of a bevy of other single aisle makers are constrained by a due process of vetting new aircraft safely.

No recently made aircraft introduced in this decade has crashed, such as the 787 or A350 to be certain. Many things go wrong during daily operations for any aircraft type. Air India is supported by a robust press who likes to dedicate its full page for 787 reporting when a Dreamliner experiences another maintenance code for replacing a part. Those instances of flagging maintenances issues were announced to those seated in seats as an bull over the PA system, "stating the maintenance is changing out a flap actuator or the computer has identified a fault which will take 45 minutes to resolve". However this goes to press in India too often.

Evidently those days are gone and everything 787 is a news flash in India's skies. A two hour delay is the headline. A twenty hour delay waiting for a part and an installation by qualified 787 techs is the world wide news. What has happened to air travel where the complexity of every aircraft currently built takes an overhaul of said system before departing? The things that are saving customers are now the things that make us impatient when traveling.

This is a warning, travel will always remain a risk and will always encounter an uncertain nature when continuation on a journey starts. The 787 is no different than any other classic airplane flying before it, and it is not news any longer having a 787 on stand-by until it meets a flyable status. The high tech of 787 governance found internally is terrific, as it is monitoring millions of parts, and potential 787 issues during operation. If a line of code detects the 787 needs attention somewhere, it becomes a headline in India. They should report more on its economy than routine issues found on the 787.

Since there are only about 300 787's flying at any moment, it is a small portion of aircraft in the air compared with all others types in service. I have been delayed in Tucson to Seattle, and switched to another airplane type entirely, without even a nary mention from any news source for what problem had occured after having passengers switching out from a scheduled flight. Not so for the 787, since it is front and center for everything glitching. Airplane faults makes the papers every time. Thus making the passengers always more edgy. 

The millions of lines of code, makes the aircraft download data each day during a monitoring cycle has made the 787 just plain safe, and has not the travel nemesis the all India news dwells on and on concerning the 787. The airplane has carried hundreds of millions of passengers and Billions and Billions of miles. Is it clear to everyone that knowing everything about everything 787, is the reason that is keeping it out of harm's way in a big way? The 787 maybe the first airplane to never experience a hull loss due to its own mishaps or failures. 

PS: The Vietnam Airlines A350 has been grounded in Paris for two days because something went glitchy. You find it in the headlines!

ANA is Moving To Buy A380

Japan is high density as any part of the world's mega population. It stands reason an airline who has courted Boeing for so many years would dabble with the A380 as a stop gap-loosening for its high density routes within ANA's reach.

The purported pending order is for three giant A380s. Airport congestion is in play for ANA. One A380 airport slot can eliminate having several airport slots for moving traffic. However, where will the A380's land. The US, Europe and Southeast Asia are the obvious destinations. The 747 is fading and the A380 is the newest design sinking over the 747-8i. The Boeing 747 aircraft just doesn't move enough people in and out of Haneda using only one airport slot. The 777-9X isn't ready nor does it have an immediate production slot for ANA's purchasing timing for having a quantity people mover other than heir apparent A380.

Not saying that A380 is a superior aircraft over the Boeing suite of aircraft, but it is an option for meeting current needs and growth plans for ANA. Ordering three A380's solves several issues in a one type buy where current Boeing types could cover those ANA issues. As mentioned at the top, ANA needs a congestion buster even as the A380 is also a congestion maker on the ground. ANA is keeping an airport slot while moving 550 passengers in and out using its current available Haneda positions makes some sense. Even though the A380 will congest the airport landing 550 people at one gate, where it then becomes an airport problem not a ANA problem.

Grasping at straws is a strategy. The Airbus A380 ANA grasp goes only so far in a fleet family. I would be concerned for Boeing if they ordered as many as Qantas did before they discovered another way, and started buying 787-9's as part of its flexible move in the market. The operational inflexibility of the A380 is a stop gap measure for relieving only one part of ANA's airline's problems when moving passengers.