Boeing 787 news

[DeltaWiskey]

For the last time, accounting block/quantity is NOT break even point, not even close.

I'm not going to try to explain it anymore, from annual report 2010:

Accounting Quantity The accounting quantity is our estimate of the quantity of airplanes that will be produced for delivery under existing and anticipated contracts. The determination of the accounting quantity is limited by the ability to make reasonably dependable estimates of the revenue and cost of existing and anticipated contracts. It is a key determinant of the gross margins we recognize on sales of individual airplanes throughout a program’s life. Estimation of each program’s accounting quantity takes into account several factors that are indicative of the demand for that program, including firm orders, letters of intent from prospective customers and market studies. We review our program accounting quantities quarterly.
Commercial aircraft production costs include a significant amount of infrastructure costs, a portion of which does not vary with production rates. As the amount of time needed to produce the accounting quantity increases, the average cost of the accounting quantity also increases as these infrastructure costs are included in the total cost estimates. This has the effect of decreasing the gross margin and related earnings provided other factors do not change.
The accounting quantity for each program may include units that have been delivered, undelivered units under contract, and units anticipated to be under contract in the reasonable future (anticipated orders). In developing total program estimates, all of these items within the accounting quantity must be considered.

[RoMax]

For the last time, accounting block/quantity is NOT break even point, not even close.

I'm not going to try to explain it anymore, from annual report 2010:

I've read that already a long time ago. Sorry, probably my problem/fault, but I still fail to see what you try to say...
Even after all the things you said and all the things I've read from Boeing about their way to calculate this accounting block, I still conclude that they have to achieve the accounting block (or at least get very close to it, it's an estimation, so you can not be exact of course) to be profitable on the program. What else is the reason of this accounting block?

But ok, probably my problem (altough I have the idea that the worldwide press (including specialised aviation press) is telling exactly the same as I do)... But I propose we end this discussion (or maybe you can try again in a PM to explain me this), as this is not the point of this topic

[DeltaWiskey]

Ok, let's end this discussion, this makes no sense anymore...

I hope it's clear now, B/E ≠ accounting block, as you implied.

[sn26567]

This article in The Seattle Times seems to endorse MR_Boeing's interpretation:

Over the next 10 years, Boeing said Wednesday, it will deliver 1,100 Dreamliners and at least break even on the cost of building them.

The projection doesn't imply that the troubled jet program, plagued by earlier disastrous setbacks, will recover heavy upfront development costs and make money overall. Some analysts believe that may never happen.

And further:

The positive cash flow will gradually pay back the earlier production costs to finally break even on manufacturing the planes roughly 10 years from now, Boeing said.

... that is when 1,100 aircraft will have been built. But then also:

This calculation does not take into account the 787 research-and-development costs nor the costs of acquiring the 787 plants in South Carolina from struggling partners.

Those costs, estimated by The Seattle Times at around $16 billion, will have to paid back for Boeing to see a return on its total investment.

That will likely take at least an additional 700 deliveries beyond the initial 1,100 jets.

Ooch! That will be a heavy tab!

[earthman]

Well they might offset (some of) the initial costs by applying the knowledge/technology to other planes. It's not like this is the last new plane they will ever build, and there was a lot of new technology in it that cost a lot to develop.

Although, of course, a lot of that development took place outside Boeing...

[RoMax]

Well they might offset (some of) the initial costs by applying the knowledge/technology to other planes. It's not like this is the last new plane they will ever build, and there was a lot of new technology in it that cost a lot to develop.

Although, of course, a lot of that development took place outside Boeing...

This is indeed true. A lot of new technologies developed for the 748 and 787 will be used in aircraft like the 737MAX and the future 777-8X/-9X. And not only Boeing will use "their 787 technology", but also GE for exemple. They will use the thechnology they developed for the 748 and 787 engines (GEnx) for the update of the current 77W engine wich is going to power the new -8X and -9X.

But still...it wouldn't be nice for Boeing to end the 787 program with a loss.

[regi]

Well they might offset (some of) the initial costs by applying the knowledge/technology to other planes. It's not like this is the last new plane they will ever build, and there was a lot of new technology in it that cost a lot to develop.

Although, of course, a lot of that development took place outside Boeing...

This is indeed true. A lot of new technologies developed for the 748 and 787 will be used in aircraft like the 737MAX and the future 777-8X/-9X.

That is an easy excuse. Remember that the 787 incorporated a lot of the development of the unborn Sonic Cruiser.
You don't devellop a product guessing that you will lose money on it but that you could win something back within 15-20 years when you build - maybe - a follow up.
This is something that shareholders don't like to hear. They simply call it excrement of male bovines.

[RoMax]

That is an easy excuse. Remember that the 787 incorporated a lot of the development of the unborn Sonic Cruiser.
You don't devellop a product guessing that you will lose money on it but that you could win something back within 15-20 years when you build - maybe - a follow up.
This is something that shareholders don't like to hear. They simply call it excrement of male bovines.

I didn't said this is a good excuse, did I? I just said it is true that the 787 technology will be used in the 737MAX and the 777-8X and -9X (and this is not going to be a project for within 15-20 years, more within 10-15 years). And this results in a much lower development cost for these programs (of course also because these are not new designs).
And yes the 787 used technology wich was developed for the Sonic Cruiser. But the development was not so advanced as it is now with the 787 and 748. The development is far more advanced and they now have way more experience with these new things. Something they absolutly didn't have when they started with the 787. A lot of the technology for the Sonic Cruiser only existed on paper (or on the computer...), this is totally different with the 787.

But then, I still said this is not a reason to end such a programm with a loss!!

[earthman]

The sonic cruiser never made it past the drawing board, now did it? I would really like to downplay the amount of 'technology' that was 'developed' for it. All that happened was that a lot of design ideas made it into the 787.

But there is a rather large gap between having a bright idea on how to do something, and then actually figuring out how to build a working plane out of it. Which Boeing learned the hard way. What they did for the sonic cruiser was the easy part. Now they learned some of the hard parts, and perhaps that knowledge will be of use to them in other projects.

[regi]

What they did for the sonic cruiser was the easy part. Now they learned some of the hard parts, and perhaps that knowledge will be of use to them in other projects.

But what does that mean? That you first have to make an airplane to find out that you cannot reach break even?
Great news for the investors.
How happy were the investors when the Sonic Cruiser was aborted because of lack of interest? "Sorry people, we invested X-million dollar in it but the market says "no". But no worries, we will use the technology in Plan B."
Today: "Sorry investors, plan B doesn't work out fine. No worries, we will use the technology in plan C and plan D"

Where is the credibility for the share holders?
I give a hint to the financial director to save his job for at least a year:
"The decreasing order book for the 787 is great news because we will loose less money on that program"

[earthman]

What I mean is that for the Sonic Cruiser they came up with a bunch of nice ideas, and for the 787 they figured out which practical problems you come across when you actually try to implement those ideas, and how to overcome those problems.

Note that the R&D costs seem to be considered 'sunk costs' and thus irrelevant, oops we spent it and we're never going to get that back, our bad. Thus when the R&D gets reused elsewhere, it's "free".

All that matters now is how much it costs from now on to build each 787, and how much the revenue on each is. This is where the accounting block comes in, because some costs are not dependent on the number built. So they say 'we expect to build/deliver/get paid for X planes until date Y, for which we get sum A, and the costs of doing that will be B (which includes C fixed and D per unit), so the profit at that point will be B-A.' So the break-even point will be somewhere at less than X planes, but only assuming that they actually sell X planes in the end.

And the decreasing order book is good news because in some cases it means certain clients will get their plane with less delay than previously thought, which means that there will be less compensation to pay. And oh don't worry, were SURE that at some point we will again start getting more orders than cancellations, so we will certainly reach X planes by date Y. Really, we promise!

[sn26567]

Cargolux began operating a Boeing 747-8F on its 5X-weekly freighter service to Budapest Airport.

Today ANA's Boeing 787 flies its first scheduled flight (the previous flights were charters).

[RoMax]

http://www.flightglobal.com/blogs/fligh ... .html#more

Interesting to read how "reall passengers" (he is an aviation journalist, so you can hardly call him an average passenger, but you know what I mean) feel about the improved passengers experience on the 787.
I think the most noticable changes are the reduced noise and the bigger windows. Also the LED lighting is something to notice (mainly when the cabin is dark because the big windows allow so much sunlight to enter the cabin that the LED lighting is not always so bright) and when you are able to fly the 787 shortly before or after a flight on an "older" aircraft you should also clearly notice the "fresher" air (not so dry as normally in an airplane) in the cabin.

[RoMax]

If there are no new issues found the delivery should take place somewhere in the comming week, possibly around 8-9 November.

A delay until 14 November was requested due to unkown reasons.

[Passenger]

There is a first for everything :

"ANA B788 at Okayama on Nov 6th 2011: unsafe gear"

http://avherald.com/h?article=445bcd8a&opt=0

[earthman]

And it's still better to do such extensive rework than to just scrap/recycle what can be recycled and just build new airframes?

[RoMax]

And it's still better to do such extensive rework than to just scrap/recycle what can be recycled and just build new airframes?

Yes, that's even more work and costs even more money. The biggest problem is for the oldest 787's, let's say L/N7 until L/N 12, these need so much rework that this takes a lot of time (but it's not worth to just recycle them, they are not that useless...) . While newer aircraft like L/N 31 and L/N 41 (the two that are planned to be delivered next) can be made ready much faster. The latest 787 to enter final assembly was L/N 51, and Boeing expects that as from L/N 60 the 787's will not need more work after FAL than any other aircraft. So that should happen in early 2012.

[diminbru]

Any more news on the delivery of the 2 (or more) 787's to be delivered in December?
How about AI 787's?

[RoMax]

Any more news on the delivery of the 2 (or more) 787's to be delivered in December?
How about AI 787's?

L/N31 made it's first flight 5 December, it will be the first 787 to be delivered with the improved Package B Trent 1000 engines. This one will be delivered in the comming weeks. Also L/N41 should be delivered this month and is being prepared for first flight. Both are for ANA.

The first AI 787 will be for early 2012 as these are powered by GE engines. Boeing hoped to finish all F&R and ETOPS testing with ZA006 or ZA005, but the FAA requires a part of these tests to be performed with a production aircraft (like a 787 for ANA performed ETOPS testing for the RR engines). But there is still no production aircraft ready for this. L/N 35, a 787 for Air India is being prepared for first flight and ETOPS/F&R testing. This one should fly around the middle of December. Because of this delayed GE certification, the first GE powered 787 will be delivered in January 2012.
ZA006 and ZA005 have finished most of their testing tasks and ZA006 is being prepared (test equipment is being removed) for San Antonio for refurbishment into a customer aircraft. ZA006 will be delivered to a VIP customer. But this can take quite some time, the other 787's that underwent refurbishment in San Antonio took many months more than expected.

[RoMax]

...It becomes predictable, everytime I post something in this topic it is often already outdated...

ANA has confirmed that the 3rd delivery for a 787 is delayed to later this month (it was supposed to be delivered somewhere in November). The reason is the wiring...A routine FAA inspection of the next 3 787 to delivered found wiring that was installed incorrectly. According to Boeing the problem is "well understood" at this moment and is not "spread out throughout the aircraft". They call the wiring problems: "minor".

Another problem...3 failing APU's. The next few aircraft to be delivered are at this moment fitted with working APU's. But there were 3 aircraft that had APU's that refused to start up for the first time. These are not fully Boeing's responsibility and they are working out the problems with Hamilton Sundstrand which is the manufacterer of the APU's.

Sources familiar with this problem said the APU's are often used on the 787's on the flight line to run some systems like cabin air compressors. This is because there isn't enough power to run all the necessary tests on the flightline for all these aircraft (watch the pictures and you see what the problem is...). This isn't really a problem as they use the APU's normally...bad luck some are failing...delaying some of the testings... But this is not the direct reason for the delay of the next few deliveries as these have all working APU's, the wiring is the problem there.

You wonder if this ever going to end... And looking at the production problems Airbus is still facing with the A380 after all these years, I think we've not seen the last of this 787-disaster...