Welcome Aboard (1969)
Boeing-produced film to promote the new 747
http://youtu.be/QqsAc2PizAc
Boeing-produced film to promote the new 747
http://youtu.be/QqsAc2PizAc
In April of 2013, Boeing Co. (NYSE: BA) cut production of its 747-8 jumbo jet from two planes a month to 1.75 planes per month. Later that year, the company cut production to 1.5 planes per year. On Tuesday, the company said it would cut production to 1.3 planes per month, or just under 16 per year.
Boeing reported just 26 unfilled orders for the passenger version of the planes and 13 orders for the freighter version at the end of November. Since the first delivery in 1970, Boeing has delivered 1,498 of the various models of the 747.
The four-engine 747-8 carries up to 467 passengers, far fewer than the 555 that can squeeze into the A380 from Airbus. Two-engine planes like the 787 and the A350 are more economical on many of the routes that the 747 was originally designed to fly, and the A380 is more economical than the 747 on the longest routes.
Boeing had tried to sell the freighter version of the plane, the 747-8F, and still believes that it can build a market for the freighter. Airbus has taken orders for a total of 318 A380s and delivered 147, leaving 171 on its order book. Airbus delivered three A380s in November, out of 25 total deliveries for the year. Boeing has delivered 16 747s through November this year, a rate of about 1.5 per month.
In its most recent market outlook published in July of this year, Boeing showed an Airbus slide indicating that there are 42 so-called mega-cities that handle more than 10,000 long-haul passengers per day. Boeing put this heading on the slide: “There is nothing to this story. They’ve (Airbus) been telling it for 15 years and still … nothing.”
If there is nothing there for Airbus, it is equally true that there is nothing there for Boeing.
NEW YORK — As Boeing reported its first quarterly loss in nearly seven years on Wednesday, the company said it might quit producing the 747.
The iconic 747. The double-deck jet — known as the Queen of the Skies — revolutionized air travel by making it more affordable for the masses. The giant jet once stood alone, with more seats than any other jet and a range of 6,000 miles, longer than any other plane.
But its four engines and massive size are now seen as negatives — it burns too much fuel and airlines struggle to fill flights with 400 or more passengers. Slowing freight traffic has meant few orders for the cargo version of the plane.
"If we are unable to obtain sufficient orders and/or market, production and other risks cannot be mitigated, we could record additional losses that may be material, and it is reasonably possible that we could decide to end production of the 747," Boeing said in the filing Wednesday.
No timetable was set, but Boeing needs to keep the manufacturing line open for the next few years in order to fulfill orders, including for two replacement jets for Air Force One, the presidential plane.
Boeing builds the 747 at its Everett plant. That huge factory was built in 1967 to build the jumbo jet.
Boeing reported on Wednesday that revenue rose 1 percent to $24.8 billion, and company shares rose steadily before the opening bell Wednesday.
Charges totaling $3 billion before taxes, led to Boeing's first down quarter since the third quarter of 2009, when it lost $1.6 billion.
On Wednesday, Boeing also lowered its full-year earnings to the range of $6.10 and $6.30 per share, from $8.15 and $8.35. The revenue outlook remains the same at $93 billion to $95 billion.
Despite the rough quarter, analysts believe that Boeing showed underlying strength and shares gained $1.11 to close at $135.96.
The report of a quarterly loss comes days after one of Boeing's key suppliers, Rockwell Collins, publicly called out the company for being behind on $30 million to $40 million in bills for various electronic and cockpit equipment.
"Boeing is delinquent and Boeing has contributed to some of our underperformance here this quarter in cash flow, which is disappointing, but we're working that with them," Rockwell Collins CEO Kelly Ortberg said Monday when the company posted earnings.
Boeing executives said Wednesday during a conference call that they were trying to meet industry standards and moving to a more orderly cycle.
The Boeing Co. reported losses of $234 million. The adjusted per-share loss was 44 cents. Analysts surveyed by Zacks Investment Research had projected an adjusted loss of 88 cents per share. Boeing had already warned analysts of the heavy charges for the quarter, giving them time to adjust their estimates.
The charges this quarter include a $1.2 billion write-down, before taxes, on its 747-8. Boeing attributed the loss to weakness in the air cargo market, saying that the overall number of freighter jets produced will be lower than originally estimated. The company will continue to manufacture one of the giant jets every two months but no longer has plans to double the production rate to one per month in 2019.
Boeing also decided against spending money to refurbish and sell its two remaining 787 Dreamliner test aircraft. The jets were built in 2009 and both have spent more than 6,700 hours in flight and ground testing. That charge reached $1.2 billion before taxes.
Finally, Boeing took another write-off on the Air Force's KC-46 Pegasus Tanker, a midair refueling plane Boeing is building off its commercial 767 jet frame. Problems were found during recent test flights and Boeing is working to fix them. The Air Force was supposed to take delivery of 18 tankers by August 2017 but the new schedule now targets January 2018. The delay and changes will cost Boeing $354 million before taxes, on top of more than $1 billion in charges already taken on the tanker.
The increased revenue mostly came from faster production of Boeing's commercial planes. The commercial division accounts for about two thirds of the company's revenue, with its defense and space divisions making up the rest.
Boeing takes a deposit when a jet order is made but doesn't collect the bulk of the cash until a jet is delivered. The company delivered 199 commercial jets during the quarter, up from 197 during the same period last year and 181 two years ago.
Boeing shares have fallen almost 7 percent since the beginning of the year, while the Standard & Poor's 500 index has increased 6 percent.
lastdingo said:No such story must ignore Airbus.
To keep 747 in production means to squeeze Airbus in its 330/340/380 market segments. Without the 747 the only competitor from Boeing would be the 777, and this would allow Airbus to charge monopoly premiums.
This in turn would give Airbus the extra profits and cash to squeeze Boeing harder in other segments, depressing Boeing's profitability there.
747 or not isn't only about profits from the 747 program; it's about competition strategy.
I suppose it would be sensible to add another aircraft type into the production line at Everett, so 747 production can be maintained.
Alternatively, the 777 may get an enlarged 4-engine sibling variant to replace the 747.
Airbus’s decision to slash production of its A380 “superjumbo” raises questions over when UK taxpayers will get back the £530m they handed to the plane-maker to help launch the jet.
Britain gave the money to Airbus in 2000 to help develop the giant jet under a scheme known as repayable launch investment (RLI).
The Business Department confirmed the loan but said its terms were commercially sensitive, though Airbus is understood to pay a royalty each time it delivers one of the giant jets.
But waning demand for the A380 led Airbus to announce at last week’s Farnborough airshow that it was cutting production of the jet from the current rate of 27 a year to just 12 in three years’ time. Some believe that the slowdown could be the first step to killing the project after poor sales.
Fabrice Bregier, boss of Airbus, admitted the lower production rate could mean that A380 will go into the red, though the company says the programme is breaking even at the current rate.
Critics claim that unless the jet is profitable, Airbus is not obliged to pay back RLI, and the lower production rate means the jet will never recoup its costs. The terms of the deal are shrouded in secrecy, they were based on the business case for A380 when it was being developed.
When the A380 first flew in 2005 at the Paris airshow, an Airbus presentation predicted sales of 751 of the aircraft by 2021. So far just 319 of the double-deck jets have been sold, with 193 delivered.
A spokesman for Airbus said: “Repayment of RLI does not depend on the success of a project. It is repayable regardless of how successful the programme is.”
Despite the disappointing sales of the A380, Airbus has held early stage talks about winning further RLI to develop a upgraded version of the jet in the hope it will attract more buyers. Upgrades include more efficient engines and the possibility of “stretching” the fuselage to increase capacity has also been floated.
Although the terms of RLI deals vary between different programmes, taxpayers have lost out before with hundreds of millions pumped into developing the A340 airliner written off after failed to win the sales that were hoped for. However, the huge success of the single-aisle A320 jet means Britain has received back more than it invested in jet.
One industry source said: “Overall, RLI has been a very good deal for the UK Exchequer, which has received twice as much from Airbus as has invested.”
RLI is the centre of a complex and long-running World Trade Organisation legal battle between the Airbus and Boeing. The US plane-maker claims that RLI is illegal under global rules, and that the Airbus unlawfully been handed $18bn through the loans, allegations which Airbus refutes.
Boeing faces similar claims from Airbus, which says the US company gets unlawful tax credits to build aircraft in the US, effectively subsidising its jets.
lastdingo said:To keep 747 in production means to squeeze Airbus in its 330/340/380 market segments. Without the 747 the only competitor from Boeing would be the 777, and this would allow Airbus to charge monopoly premiums.
This in turn would give Airbus the extra profits and cash to squeeze Boeing harder in other segments, depressing Boeing's profitability there.
lastdingo said:I suppose it would be sensible to add another aircraft type into the production line at Everett, so 747 production can be maintained.
Alternatively, the 777 may get an enlarged 4-engine sibling variant to replace the 747.
carsinamerica said:lastdingo said:To keep 747 in production means to squeeze Airbus in its 330/340/380 market segments. Without the 747 the only competitor from Boeing would be the 777, and this would allow Airbus to charge monopoly premiums.
This in turn would give Airbus the extra profits and cash to squeeze Boeing harder in other segments, depressing Boeing's profitability there.
First of all, the Airbus A340 has been out of production since 2011, another victim of the shift from quadjets to big twins.
As for the A330, the 777-8 has a higher passenger capacity than even the 900neo, and the 777-9 will carry still more (and to greater ranges, too). So, Boeing has the A330 well-bracketed between the 777X and the larger 787 variants.
Regarding Airbus being able to charge monopoly premiums on the A380, that would be true if there were substantial demand for the aircraft, but there isn't. One can safely assume that nobody is paying close to sticker on the A380 at this point. Theoretically, the loss of the 747-8 as a competitor might exert a slight upward pressure on A380 prices, but the effect will be minimal. That's because the passenger model (the only one that competes with the A380) is a dismal seller. Not counting an order for Arik Air that appears to be dead in the water, and an order from Transaero (which went bankrupt), there have been 36 orders for the -8I from just three airlines (Lufthansa, Korean Air, and Air China). All but three of the 36 have been delivered. Two of those airlines operate A380s anyway. So, the 747-8 isn't stealing enough business to affect A380 pricing much.
It might be a slightly different matter for private customers (twelve -8s were sold to individuals or governments, ten delivered, with the VC-25Bs remaining), versus one for the A380, but that market is so small as to not matter.
lastdingo said:I suppose it would be sensible to add another aircraft type into the production line at Everett, so 747 production can be maintained.
Alternatively, the 777 may get an enlarged 4-engine sibling variant to replace the 747.
Quadjets are dead. Efficiency, range, and dispatch rates are better for twins. In another 15-20 years, a growing population may produce enough demand for a larger jet, but it's likely to be a big twin (Boeing submitted patent drawings for a VLA double-decker twin a year or two ago). If it needs more thrust than that, perhaps they'd consider a trijet, particularly if it's a BWB configuration, but I really think we're done with four-holers for anything subsonic.
JFC Fuller said:The tiny order volumes for the 747-8 (thats why it would be taken out of production) would have little positive impact on Airbus, and if that company attempted to raise margins on the A380 they would sell even less of them than they are now.
Basically big-twins are the future; Boeing was right all along and probably shouldn't have bothered with the 747-8.
BDF said:No, they'll be replaced with 777-8/9. Almost identical capacity and much better operating economics.
JFC Fuller said:BDF said:No, they'll be replaced with 777-8/9. Almost identical capacity and much better operating economics.
Basically I just quoted this out of agreement.
Airplane said:About one half of the 747s built are still flying! Perhaps the market is only stagnant until more planes start wearing out and need to be retired. In which case it would be good to keep the line going at some minimum rate.
flanker said:His 4 billion figure is not true as far as i know (3 or so is the correct number i believe?) and it is important to consider the tweet and statement made by him was not random or unprompted. Just before the tweet, this was up...
http://www.chicagotribune.com/business/columnists/ct-boeing-china-trump-robert-reed-1206-biz-20161205-column.html
lastdingo said:Wow, he's really dumb enough to believe that there wasn't much of that money spent already, impossible to be recovered.
A competent businessman understands sunk costs, but businessmen who go bankrupt and stiff contractors as a business model don't necessarily so.
marauder2048 said:lastdingo said:Wow, he's really dumb enough to believe that there wasn't much of that money spent already, impossible to be recovered.
A competent businessman understands sunk costs, but businessmen who go bankrupt and stiff contractors as a business model don't necessarily so.
Meh. Given Trump's vastly superior visibilty into the program, I'm inclined to give him the benefit of the doubt.
lastdingo said:Wow, he's really dumb enough to believe that there wasn't much of that money spent already, impossible to be recovered.
A competent businessman understands sunk costs, but businessmen who go bankrupt and stiff contractors as a business model don't necessarily so.
TomS said:lastdingo said:Wow, he's really dumb enough to believe that there wasn't much of that money spent already, impossible to be recovered.
A competent businessman understands sunk costs, but businessmen who go bankrupt and stiff contractors as a business model don't necessarily so.
Actually, very little of the Presidential Aircraft Replacement budget has been spent, since they only awarded the initial development contract earlier this year. But there's also not much room to cut, without eliminating fundamental capabilities like nuclear command and control. Maybe he'll cut the leather seats?
TomS said:lastdingo said:Wow, he's really dumb enough to believe that there wasn't much of that money spent already, impossible to be recovered.
A competent businessman understands sunk costs, but businessmen who go bankrupt and stiff contractors as a business model don't necessarily so.
Actually, very little of the Presidential Aircraft Replacement budget has been spent, since they only awarded the initial development contract earlier this year. But there's also not much room to cut, without eliminating fundamental capabilities like nuclear command and control. Maybe he'll cut the leather seats?
NeilChapman said:Boeing has stated that they "don't make any money" on the AF1 program (-200 jets). Don't know if I believe that. At the very least I'm sure they meticulously 'ensure' that they lose no money on the program.
_Del_ said:Can't speak for Boeing, but once upon a time we did work for the VC-25 fleet at a net loss just to be able to say we were the ones that did it. So it's possible they aren't raking in the dough.
Having said that, I'm not sure that the development cost for a fleet of 2 or 3 planes should be anywhere near the quoted figures. All the internal goodies could be scavanged from the existing fleet. Most of that stuff is still being produced in part or whole for the TACAMO (or whatever we're calling it now) and the existing VC-25's.
This reeks of the same mismanagement that led to overruns and delays on the KC-46 even though a KC-767 version already existed. This shouldn't be reinventing the wheel. You already have a 747-200 series developed and in service. How many billion do you need to adapt the -800 series for the same mission? What new cutting edge technology are we developing for this project? What am I missing?
_Del_ said:Sure, there has been inflation. But what is costing billions of dollars for development? The airframe is proven and developed. The systems are proven and developed.