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Thursday, January 26, 2017

Boeing And The Razor's Edge

It has been known in Hollywood and now it is realized in the aviation world. Three "bombs" and you're out. Three bad movies in a row and an actor can't get a gig. They are relegated to the golden parachute of obscurity in some mansion estate in their favorite local. Boeing, every day walks that razor's edge from being relegated to obscurity. The same is true for Airbus. Walk the line without doing somersaults on the way. Do not fall, do not fail is the motto hanging in executive's minds. 

Now comes the critics as they seek some superior knowledge about everything smart and insightful. The Boeing Corporation did a somersault on the razor's edge with its 787; then jumping to the Max without losing its balance and onto the 777X without sticking its landing as of today. Anyone of these projects would relegate the company to a "B" movie status and off the aviation's "A" list. "Two Bombs" would irreparably sink the company backwards to some back lot in Canada or Brazil. A third "idea mishap" would send the Boeing execs to their favorite real estate compound somewhere around Puget Sound.

However, every paragraph should start with "However, therefore, or in addition, types of words. The blog has settled on however, However…

Therefore, Boeing has mastered the beast of new technology where Airbus follows with vigor and the A350. It follows the 747 with its three -late-zero double decks. It reaches after the 777X counting on executing its own A(nother)- three, Cinco, zero dash 1 times 000's. Does these antics resemble a somersault or a jump on the razor's edge? They are timid bold moves in Europe while back on the farm in America, Boeing is seen as a frontier's man using a knife, hatchet, and musket for its tools (plus a few beaver traps).

The traps come with an ever changing strategy for which Airbus must adjust using a series of timid bold moves every time Boeing succeeds with an idea. "If Boeing Does It", then Airbus knocks off the shelf a reasonable facsimile using customer pleasing renditions of the same. Don't confuse biggest with bestest because pigs don't fly for very long. Boeing may be five inches narrower with a 231 inch wide 787 cabin compared with 236 Airbus A350 inches, but as a ratio it breaks down as a 2% difference or the length of a writing pen's worth of space. Or in this example a finger's width difference in the seat spacing making the A-350 XWB up. Do you have a wide body then fly Airbus?

The musket is GE's engines while the knife and hatchet tend to sculpt superior wings. Make it wider is the Airbus response for those XWB's whom are standing in line.

Image result for 787 size matters

The gate should have two lines. One for wide bodies and one for typical passengers. Sarcasm is a useful writing tool.

Will 5 inches more tip Airbus off the Razor's edge? That remains to be seen. If fuel prices meet the laws of supply and demand and fuel is a finite source, then the ever increasing demand of passengers will drive prices up over time. Yes, fuel efficiency matters using the jetway’s pricing at the gate.

Back to the razor's edge and retirement issues. Boeing has demonstrated nerve and calculated means for escaping its chance to fall. Airbus is using a trampoline and ladder for its routine. The three “bombing” bounce is likely for Airbus, as Boeing should fly higher making its somersaults on the razor's edge a common place occurrence.    


Wednesday, January 25, 2017

Wide Body Demands Comes From Cheap Tickets Not Fuel

Currently, the bent on buying a wide body is high fuel prices, thus suggesting the wide body market is saturated and will derive fewer sales going forward. However the secret is not low fuel prices but hauling more passenger through the incentive of lower seat prices. Several European carriers have stocked up with 787-9's, such as Norwegian Air offering incredible deals for the traveler.

Cheap fuel only goes so far on an old frame or airplane type such as the 767 or A330, as most airline customers are considering during this low fuel price siege. Norwegian lists on its website a Paris to JFK flight for only a $199. Quite astounding for going transoceanic from a major point to point.


Economy cabin
All fares per person in EUR
Premium cabin
All fares per person in EUR
Departure
Arrival
LowFare
LowFare+
Flex
Premium
PremiumFlex
02:05 PM
08:30 PM
Paris-Orly
New York-John F Kennedy
Premium on parts of route
Premium on parts of route

The example is a low fuel price buster using the wide body aircraft instead of old equipment. In order to be competitive the price of fuel does not have to rise. Qantas is currently re-configuring its fleet with long range 787-9's going all the way from Australia to London because it can! 

The second note is the old inventory has a narrow shelf-life and the airlines inventory will need replacing within the next few years where placing a wide-body order in 2017 is advantages no matter where the fuel price goes. If fuel does rise up there will panic driven orders for the 737Max, 787 and 777X types churning a ripple effect in the seat pricing. Either way the low fuel price status quo will no longer drive how airline buy its inventory. Competition is the key driver at this point in time. 

The US pipeline from Canada was approved by President Trump and it will suppress fuel prices a little while longer even if the Trans Continental Pipeline had not been approved by the President.

This is not a game changer for buying new generation wide bodied aircraft vs buying in the surplus market. The older bodied option is drawing nigh as those fleets will age faster than an Airline can write it off the books.



Boeing Chart on Its Cash Engine

It was just delivered, The Boeing Financial Report for 2017. In that report are the delivery numbers floated among all the billions reported. Below is a quick and dirty yet incomplete of financial sources from product delivered. These are big ticket items suggesting how Boeing may build and deliver 760 aircraft from its commercial division during 2017.


Furthermore, it gives us a sense of the proportionality from its military division. Keep in mind, Boeing is actively seeking added F/A 18 orders and its 2017 introduction of the KC-46 at military bases near you. The goal is for 18 KC-46 tankers from the 767 frame-works starting in 2017. 




The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
  
Deliveries
 
Twelve months ended December 31
 
Three months ended December 31
 
Commercial Airplanes
 
2016

 
2015

 
2016

 
2015

 
737
 
490

 
495

 
122

 
120

 
747
 
9

(3)
18

(3)
1

 
5

(2)
767
 
13

 
16

 
3

 
2

 
777
 
99

 
98

 
26

 
21

 
787
 
137

 
135

 
33

 
34

 
Total
 
748

 
762

 
185

 
182

 
Note: Deliveries under operating lease are identified by parentheses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 
 
 
 
 
 
 
 
 
AH-64 Apache (New)
 
31

 
23

 
6

 
5

 
AH-64 Apache (Remanufactured)
 
34

 
38

 
7

 
5

 
C-17 Globemaster III
 
4

 
5

 


 


 
CH-47 Chinook (New)
 
25

 
41

 
8

 
6

 
CH-47 Chinook (Renewed)
 
25

 
16

 
2

 
10

 
F-15 Models
 
15

 
12

 
4

 
4

 
F/A-18 Models
 
25

 
35

 
5

 
7

 
P-8 Models
 
18

 
14

 
5

 
4

 
 
 
 
 
 
 
 
 
 
 
Global Services & Support
 
 
 
 
 
 
 
 
 
AEW&C
 
 
 
1

 


 
1

 
C-40A
 
1

 
1

 
1

 


 
 
 
 
 
 
 
 
 
 
 
Network & Space Systems
 
 
 
 
 
 
 
 
 
Commercial and Civil Satellites
 
5

 
3

 
2

 
2

 
Military Satellites
 
2

 
1

 

 

 










Boeing prosperity is projecting a dozen more aircraft in total for its cash flow over its 2016 results.