Debbie Downer Boeing Stock Report

After sticking my neck out by saying Boeing will go North of 762 frames this year, they do a "Crazy Ivan and go South with a 740-745 prediction number for 2016.

This becomes a story of "The Good, The Bad, and The Ugly". Starting with ugly to get it over with and then moving forward until reaching Good. I will explain my own thoughts on the matter. The Ugly was announced earlier when it was announced the 747-8i reduces production downward to 6 a year. A sign and a symbol the 747 has reached a final death spiral only to be saved by a weakened freight market even if it revives itself for making new orders. The Boeing hope and plan is to maintain 747 production long enough for freight to come back. This is getting ugly for the 747-8 concept.

The bad is found in the weak spot of Boeing's aspirations, it is in transition with two new models.  A production blemish will occur in 2016 and possibly lagging into 2017. Both the 737 Max and 777X family of aircraft are emerging, but the former aircraft, the 737 NG and the 777-300-ER have to keep churning out the door. They can't maintain the pace it has set from the optimal production days of the last five years. Until the 777X swings to delivery mode and the Max goes to market in 18 months, the Boeing production juggernaut is at a production dock for refurbishing. The year 2018 should bring Boeing production numbers back greater than 2015's numbers. No alarm is sounded on the production floor only the sounds of installing, implementing and improving production capability for new aircraft.  

The good well is just very good, the production lag for the transition of going to the best airplane manufacturer of the single aisle, and its large wide-body, the 777X. The Max first flight is for this Friday, January 29, 2016, and it will beckon the single aisle era forward with the best of the show. The "Transition" period slows production, but the 787 will make Boeing's day going forward. The Boeing story in 2016 will be about sales (regard to BBY). It is a constant unknown until the year ends. No prediction can made except by Blogging hopefuls and watchers of the aviation world. We only have production to measure with during the year. But Airbus can't make the production run yet meeting Boeing's diminished prediction of 740-745. Boeing will be the largest Aircraft manufacturer for another year in a row.  

Amazon Is Going For The 767 and It Should Lease 20

Amazon Dot Com maybe leasing 20, 767 as it found with UPS', and FedEx's business models are having the 767 a notion of a sweet deal. This is an Amazon deep-in-the-dealing news note coming from “Tweak Town”:

Amazon looks at leasing 20 Boeing 767s for air cargo duties

That would make the 767's order year very promising, if it is validated after negotiations are completed. All news information regarding potential Boeing purchases will be tracked on this "Winging It" theme of a "BBY". Fondly noted as, "Boeing's Big Year". My own sense tells me Boeing will handsomely book well beyond the 762 birds it delivered in 2015, thus making it a BBY. The FedEx book holds 49, 767's on order even as the UPS aspirations for booking 767’s are looking up towards Boeing's direction for freight equipment in its parcel business. In spite of rumors about the 767's death, they have been greatly exaggerated.

The MAX Week Keeps Kicking The Tires

Zack's say 100 MAX are on the griddle for what's cooking with Boeing's single aisle market. Even though the Max is competing with Airbus A320's, it also competing with Canadian aircraft maker Bombardier C300 model. Both competitors are eager and will be a Boeing challenge for winning the three way competition. Who knows maybe Randy Tinseth will swing the deal as it gains in Boeing's Big Year.

Boeing May Get Order for 100 Jets from Saudi Arabian Airline

"The Boeing Co. (BA - Analyst Report) is looking forward to secure an order from Flynas, Saudi Arabia's low-cost airline. The airline company is considering the purchase or lease of 60 jets over the next five years with an option for an additional 40 units.

The carrier is considering Airbus Group SE’s (EADSY - Snapshot Report) A320 Neo and Bombardier Inc.’s CS300 along with Boeing’s 737 Max. Flynas posted a profit in 2015 for the first time in its history, which was closely followed by this news. The carrier is expecting to take a final decision regarding the order by this year.”

Boeing's Red Headed "Step Child", The 757 Replacement

Boeing has gotten itself in a fix as Ollie looks at Stanley with disdain for his latest antic. The ever popular and longed for 757 replacement would solve this Boeing fix. Let us first examine the Airbus case before going in on Boeing's fix and a solution. Airbus has a fully extended the A-321 going to places the 737-9 can't quite reach. They have sold many more A-321's then what Boeing anticipated after the 737 Max -9 was announced. Boeing's secret weapon was retired from production, the 757.

Photo Credit:http://www.rowthree.com/wp-content/uploads/2012/03/Laural-and-Hardy-560x373.jpg

The Boeing 737-900 isn't opening new customer doors, hence comes the argument in favor of the 757 replacement. Boeing current 737 line-up has a gap in its family of aircraft. Some may say a super single aisle compliment for the Max. Others may say a corvette class duo aisle for 200+ seats. The Corvette naming convention comes from a class of fighting ship with littoral functions within its surrounding oceans. Airspace isn't much different. Boeing needs a corvette class aircraft that can span moderate sea basins with ease. The 737-9 becomes stretched out for this purpose. The 757 replacement could fly a range of four to five thousand miles solving the problem.

The argument for Boeing that would make any sense is that such an aircraft would lend into selling more "?" aisle aircraft than anticipated, closing the gap the NEO has over the MAX in total sales numbers. A 757 replacement is centered on the Max family of aircraft having a dual aisle alignment going seven across at Maximum, yet it would have more resemblance to the MAX than the 787. 

This concept would not have a 787-8 or -9 girth but a muted 787 like shape at only 15 feet across instead of about 18 feet across. Further body design could go with a slight oval shape at the passenger seating level while adjusting for more comfort than cramming in more seats. Plastic body is another discussion. However plastic wings is a must have for its engines situated further off the ground than the Max. 

The major fear for aircraft framers, is that airline customers will buy the frame that can hold more passengers than designed, or for even what the human anatomy allows.  Having an extra thousand mile range on this "Corvette" must have some standardized rules imposed, based on the single flight duration capability the aircraft can travel for everyone's health. Greed is killing the cabin space and the passengers.

However, a counter to this troublesome condition of "airline passenger cramming", is designing an aircraft holding only so many seats for its space provided, or provide a regulation based on distance an aircraft can fly per passenger space by using its time in the air. Passenger safety issues comes to mind in my former days, an associate of mine from the government of Ontario, Ca. flew to a meeting we were having in Phoenix, AZ. I came from Idaho. The problem occurred on arrival. His five hours in cramped seating on a single aisle, caused his death. He got up from his cramped 31" pitch seat and he got to the motel, and then stroked and died from a blood clot in his leg. The doctors said, "He sat too long in a cramped condition causing his medical event.

The 757 replacement could make aviation industry waves by making it more difficult to squeeze more passengers in beyond the manufacturer's recommendations. I digress, and I apologize, but the point is making a whole new passenger class of flying from the model constraints itself. If you want to fly with 199 passenger squeezed in on a single aisle then go on a Max. If you want to fly with 210 passengers spread out a little then fly on a "Corvette class". 

This duo aisle MoM concept must lead to selling more single aisles derived from commonality factors from its family of aircraft, both the 737 and 787. The Boeing class concept of aircraft starts with the single aisle class of aircraft. The "Corvette Class" is not technically a medium wide body nor a single aisle experience, but it is truly unique for the passengers, and becomes another important tool for making money without any competition in the market place. The SWA airline model is single aisle only, but this could be a SWA breaker operating like a single aisle, but giving the passenger everything it needs in duo aisle fashion for longer trips.

NEO Flew Over The Cuckoo's Nest Today

The Neo took-off and it landed about 35 minutes later with a load of passengers. Check out the cramp-on dimensions passengers enjoyed in the article below.

The 737 has a better than even chance of beating the NEO.

Airways News Brings You: the experience with video and sound.

Max First Flight Friday (FFF) First Delivery About 18 Months Out (update)

Boeing's Max 737 is about to fly out of the Renton barn over Lake Washington and beyond. Its tentative schedule is down to weather interruption or an incomplete checking it twice check mark. The Max is ready to fly today but the next four days preps the aircraft into a flawless sequence of aerobatic antics.

 

Airways News Photo Credit

Why should you watch? A good question for everybody. It's Boeing's first "Post 787 commercial initial test flight". Even the 777X has not seen a production floor. The KC-46 was watched by aviation nerds with streaming, making a military flight tests of a 767 frame. The Max is a reconfigured 737 NG with Boeings off-the-shelf technology employed in its construction. It is a make or break first test flight of the MAX, Boeing’s answer to single aisle travel, and worthy for all to view.

Just like mad scientists, Boeing has taken pieces of corporate accomplishment and made the MAX out of whole Boeing cloth. The new engine with a 68" opening is considerably more efficient than the NG CFM power plant. Even though with the A321, the NEO has about 10" larger engine inlet. Airbus CFM efficiency comes more from the advantages of a larger diameter than what Boeing has done with the Max. Little nuances for the Max had to make up ground having a 68" diameter CFM engine. The main contributors are internal engine parts configurations, Max body design, and wing placement of the engine.

The wing placement suggest moving the engine forward or back on the wing a few inches for finding optimal efficiency. The Boeing body sculpting and aero design enhancement such as engine cowling and/or air spoilers contribute for making the smaller diameter engine work better. CFM has gone to extended lengths bringing forward new ceramic technology, not found in the NEO's CFM configured engine. Adding all things considered makes this test flight much more important than what current press attention has provided. This first flight is the seminal moment in the competition for single aisle supremacy!

• Did Boeing get it right? 
• Can they catch Airbus in the order book with the Max? 
• Are Airbus customers’ suckers for not waiting for the Boeing Answer?

·      These questions could be answered at the below Boeing Link:

Boeing.com Max FridayFirstFlight

·      Watch for Boeing.com test time changes.

Important Never-mind notice:
"Boeing had said it planned to make the flight in the first quarter of 2016. Like all first flights, the 737 MAX takeoff could be delayed by weather or other conditions, Boeing said."

All are important and valid questions, where Friday First Flight (FFF) starts answering these questions in public. Boeing has the answers in its development program notes, but the public has not seen the proof of concept brought to Life. If FFF "Max" has a streaming web link I'll be there on the link. 

Otherwise, I’ll have to wait for the underwhelmed press giving its blah, blah second hand. I would like to see first flight! The mystery is why is Boeing so low key on this test flight? Is the risk factor raised higher than the 787? More questions that will be answered on Friday, January 29, 2016.

Looking Back Then looking Forward

Farnborough is in the books June 2014 and some spectacular comments lend to further study in 2016.

Winging IT Link 2014

Steve Udvar-Hazy was given his usual welcome to the Boeing chalet...

"He said that Boeing should be able to sell the Dreamliner at peak production rates of 160 to 180 airplanes a year for at least 15 years, assuming a stable global economy, which would mean deliveries could exceed 2,500 aircraft."

Some kind of calculation came off Hazy's magnificent spreadsheet with all the financial tools implement before speaking.

Evidently Steve flew the 787-9 prior to Farnborough 2014, and was duly impressed as he remarked, "it is a magnificent airplane"

This brings Winging It to the topic at hand will the 787 actually take-off as Steve Udvar-Hazy has stated. This is quite a series of comments coming from a Boeing/Airbus customer. He has a vision for 160 to 180 787's a year at peak production during its lifetime cycle. That statement takes us forward as to what the 787 is capable of in the world market place.

Randy Tinseth (VP Boeing Marketing) has his own data flattering the Boeing Stock Holders, but he always has a realistic side to his comments allowing for wiggle room during a down order years as 2015 has just completed. I can trust his vision for the market with relative assurance his ball park numbers are in line with what Boeing will achieve going forward.  His continuous presentation found in the Boeing outlook chapter is for those who are tasked with gauging opportunity for its own business models.

Boeing is in the Market For growing 2,000 more wide bodies by 2034 than current 2014 inventory of about 1620 and expanding to 3,800 by 2034. This does not take into account inventory churning when replacing older equipment, it only represents the Boeing view on airline growth of medium sized wide bodies needed for keeping up with passenger growth. During the twenty year span there will be many retired medium wide bodies like the 767 or older 777-200 for replacement which is not included in the 3,800 number. The 3,800 is the size of the medium wide body market by 2034, not the number of medium sized wide bodies to be built by 2034 from 2014. The number of medium wide bodies from 2014 to 2034 for the market is a far greater number than the net change of going from 1620 to 3800. There should be an estimation of about 3,000 or more new wide bodies sold between the years 2014-2034 exceeding the net change number for its growth. 

Steve Udvar-Hazy view is very plausible and conservative when he says between 160 to 180 787's a year will be needed during future periods. Boeing is tasked with upping or lowering production with little interruption for its capability to produce the 787. Even with the Max/NG 737 production, Boeing's intent designs its production floors with the Just-in-time philosophy as the ebb and flow of ordering is smoothed on the production floor. 

The Boeing future focus does not rely on an Airbus like backlog of greater numbers of single aisle aircraft awaiting delivery. It is more a symbiotic relationship of Production and market. Boeing intends on selling the Max at a greater volume once it flies. Right now Boeing is at 3,000 Max awaiting delivery and Airbus has gone beyond 4,000 NEOs. A forty-sixty split in the market is the Airbus lead. Boeing will become the tortoise in this race and not make any missteps in order to regain parity.

If, When, or But code Confounds F-35

In computer science 101 class you learn about firmware, software and the likes. Firmware drives the device and software drives the program. The F-35 is driven by pilots, "sort of". However, the US Air Force and Lockheed have entered into the age of Block III F-35, subtitled, "software glitches". The pilot gives a command or input, the software gives a command and the device firmware gives a command as the F-35 responds accordingly in a milliseconds. Read your Computer Science 101 text book it's all in there on page 225 chapter 8.

The pilot is interviewed after the ejection seat (a device) is loaded on a truck from deep in the desert test range. Other devices are unrecognizable in the desert rubble, the mystery solving phase is conducted back in the shop in some subcontractor's ivory tower. Having no device when the Pilot isn't talking code, and because analysis is in the software data stored in the computer lab, it becomes the story for the F-35, I'm sticking with it! 

The command language logic code isn't logical in some instances. During Computer Science Class 315, (101,201 is a prerequisite) and as a junior student who is tasked with deciphering software code as a homework assignment, we all say good luck over coffee at the campus study spots. In the Lockheed Conundrum Halls of Technology, they have real PhD’s computer types thinking about what went wrong with its software computer code. The difference between freshman year and the PhD level work is comparing one line of code as a freshman exercise compared with millions of lines of code at the PhD level. This is where the "if", "when", or "but" code commands come into play for the F-35. The code may be read in machine language from the command language as, "If" condition A exists go to line 1325, otherwise go to line 75. "But" or "when" condition B is valid, adjust flap control to 45 degrees." The pilot is looking at the horizon intently when in a millisecond, the software gets its "if" "and" or its "buts" in a knot leaving the "when" floating free from the program dichotomy.

At this time, the pilot has lights, buzzers and horns going off in is helmet. "But" He looks at the ejection sequence stickered to the cockpit hull and ejects. "When" the ejection seat is loaded onto a truck from the desert basin, the F-35 block III will be ready. "If" and "When" the Software Glitching Team of PhD’s, finds the miscoded lines before block IV starts, some say the F-35 Advanced Strike Fighter will be ready, "When" pigs fly.

Related Article:

DoD Weapons Tester Concerned about F-35 Software Development

The Capital Heavy A380 Stalls Orders Under Its Own Weight (Extra Included)

The A380 double decker is a "Heavy's-Heavy" in Airline parlance. Orders are stuck at three in the last year. BA looks for used A380's out of its affordability factor. They can't afford a new A380 for its business model. Return on Capital investment is a high risk. Singapore Airlines is interested in trimming its fleet of A380's through selling some inventory, others are not far behind. New purchasing schemes are for used A380 purchases, and not for new A380's. Leasing used equipment from a lessor is the new mechanism for airline profitability.

Aviation is entering into the Jurassic Period for These Two Dinosaurs 

 

It is not so dismal as it sounds, but it makes the case. Airbus made a corporate mistake building the A380 program. It brought the 747 program to its finality, but its freight program lives on! The A380 canceled its freight version, as it was engineered for carrying mass number of passengers, and is not an efficient freight hauler for its heavy empty weight or high price. The 747-8F does an optimal job for its frame configuration that an A380 can't provide.

A dismal outlook for the A380 purchasing is coming into view. The heady days of those initial first A380 orders have passed. In fact the backlog sits at about 179 A380's out of 317 ordered. The handwriting is on the Boeing wall as the 747-8 has dropped to six aircraft per year from a build rate of about 12, 747's built during last year. 

Without orders soon the A380 will also go the way of the 747-8. Freight orders will keep the 747 on life support. The A380 has no freight answers. Airlines have enough A380's in service, which is now creating a used market, as airlines shape its fleet size for actual operational efficiency and need. Thus, a used A380 market emerges from these fleet trimmings, as airlines seek a used but new to its fleet expansion program. 

The A380 is too expensive for most operations when considering a new order for Airbus. The 179 yet to be delivered A380's creates a market glut when the real market has matured, and a used A380's market emerges coming from fleet adjustments as it provides the supply side, and other top tier airlines provide the demand like the late arriving BA A380 need. The Heavy's-Heavy is sorting out its market on passenger traffic alone.

The news this week is about the 747 losing ground on production output as its backlog shrinks to a worrisome level. The passenger niche for the 747 is too small, and its freight version has filled the world’s leading freight purveyors with the 747-8F. Boeing would like to keep the program building until the next 747-8F round of orders can be amassed. Albeit, in a small niche, it is very profitable for Boeing nursing its 747-8F program along. 

However, Airbus will never recoup its capital investment with the A380 program.

The fate of both the 747 and A380 points towards doom. The shelf-life for Airbus will be a lot shorter than Boeing's 747 build period. Boeing has built the 747 since 1971, a forty-five year period. The A380 will be lucky to make twenty years for building its A380 until it will shut it down by 2028. Airbus is only a five years away from a Boeing like production rate for its heaviest of heavies, by making only an even dozen a year.

Extra: Comments to "Randy's Journal" from Winging It, as posted:

"Randy, the freight market is bracketed by various aircraft types all seeking efficiency that will make freight operations profits. There are several defaults with the market that has emerged. The 767 for the parcel industry. The 777 for a broader range of product addressing both parcel and pallet handling with a bulk capability. The 747-8F however, stands alone. As you alluded to it there is not a competition.

It covers the spectrum from parcel, pallet and large bulk transporting. The convertibility for freight shipments is off the charts for the Boeing 747-8F. There is no match. The used market will exhaust the inventory in the next four years. The Russian, European and older US made freight products become less available to the industry. Boeing has positioned itself to capitalize on the freight industry superbly. Your readers should buy stock on the 747-8F family function as it will become a great compliment to the "serious" air freight airlines, having the 767,777 and 747 inventory for its freight business.

Congratulations on having a great family of long-haul Freight aircraft. It will make our world a better place. The 747-8 has a very much needed place going forward."

Air War Heats Up with "Who are Those Guys?" (Breaking News/Updated)

Boeing announced simultaneously as Airbus touts its Bahrain order at the latest Gulf Air Show.

Rueters: "The loss-making state carrier placed an order for 17 Airbus A321neo and two Airbus A320neo aircraft, building on an existing order of 10 A320neos planes, worth a combined $3.4 billion."

However, the "not so fast my friend", response comes bubbling forth from "The Street":

"United said Thursday it will buy 40 new Boeing 737-700 aircraft, which will replace a portion of the capacity operated by its regional partners. Deliveries will begin in mid-2017. "

Breaking News 33 SWA 737-800  Inked

"Separately, Southwest Airlines says it has finalized terms on a purchase of 33 slightly larger Boeing 737-800 aircraft -- a deal first struck in December, but only made public last week. Reporting earnings on Thursday, Southwest noted that it's "accelerating" the retirement of its older Boeing 737-300 and 737-500 aircraft. The additional 737-800s will help to keep Southwest's all-Boeing air fleet at full strength." 

BTW: it’s about a $9.8 Billion list price book order change for Boeing at Bahrain, combing the United Airline order for the forty 737-700 Max (rumored at half that price), and now the 33 737 SWA NG's, using a list price calculation . However, using Airbus fuzzy math, I could go further with this side by side examples and say 16, 787-9's plus 40, 737-700 NG's (equaling a cool $6.9 Billion List)and the 33 ($2.9 Billion list) SWA's are all booked-in at about $9.8 billion using list price calculations, just as an Reuters/Airbus article would infer with its own obvious accounting for 17 A321Neo and 12 A320's. There is no way a "net" 19 Single aisle A-320-321 order are valued at $ 3.2 billion per Reuters. Unless it is calculated the Airbus way... Fuzzy

My counter to Airbus' claim becomes fuzzy too, add another thirty-three SWA 737-800's, list pricing for $2.9 Billion to the above mention $6.9 billion comes to an almost $10 billion sales week for Boeing. Using my "Winging It" Approved Price Cyphering and Methodology (APCM), it's going to be a Boeing Big Year (BBY) with sales. Boeing just finalized 73 single aisle 737 NG's this week and upgraded an order for 16 787's. As fuzzy as ACPM math becomes, it keeps up with the Airbus model for bragging about its sales engine. Seventy-three single aisles ordered is seventy-three booked, sixteen 787's upgraded is sixteen 787-9's sold with Airbus accounting schemes, and that's a big month, also that's "Billions BBY".

Airbus friendly report:

Boeing is often skewed by the Airbus sponsored math 

Back to Bahrain: "It also converted a previous 16-Dreamliner aircraft order from the U.S. manufacturer, Boeing, upcharging to 16 wide-body 787-9s from the previous 16 787-8s ordered. 

Gulf Air said, "it anticipates delivery to start from the second quarter of 2018." 

There is an unknown upcharge at this time for the Boeing 787-9 book change. It complicates the net change valuation going from the 16, 787-8's (a prior earlier order price) coming from Gulf Air's January 18, 2008 order, and then flipping it to 787-9's during 2016. 

The net difference becomes a mysterious special price for Gulf Air's 16 787's up charged to 787-9 values eight years later. My estimation becomes a 3.6 billion sales book change total for Boeing coming from both deals mentioned. These calculations are derived from Boeing's list prices and an unknown premium emerges from upcharging 787-8 to the 787-9 price. Winging It uses list price valuations for its estimations. So a tenuous conclusion is a part of the $3.6 billion in Boeing's order playbook.  

Billions shifted and Boeing tops the charts. Boeing wins the battle with victory number 1 at the start of BBY/2016. Even though Airbus owns the European press, all Airbus milestones become slippery and fuzzy as reported.

What this means is Boeing has not gone away for Airbus, as Boeing wins the early 2016 battle of the "Who Are Those Guys" Trophy. The catch phrase comes from the relentless pursuit of bad guys, as the Boeing posse comes storming back after the "many" bad guy/Airbus tricks. The bad guys continuously play the "obfuscation card" attempting to lose the Boeing Posse. The leader of the Airbus Gang exclaims, "Who are those guys?", out of frustration from the Boeing Marketing team selling aircraft on its heels! I do hope, I made this fuzzy for people stressed at work.

Remember for all those who Wing It, 2016 is going to be a "Big Year" (shhh). Boeing is being nonchalant and it claims it’s not going for a big year. However,It's going to spot more than 762 birds past delivery.