mjoelnir
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Post by mjoelnir on Feb 2, 2020 17:23:27 GMT 1
Not exactly.... Unless you are telling me Boeing has been booked 18.7B revenue from 787, the program is not break even yet ..... Revenue is much higher, there are almost 950 deliveries. So the revenue is far above 100B. If calculate a profit frame of 30mill $, there is profit of 30B. This profit is the difference between average selling price and the calculated cost per frame taken for program accounting. For break even this number needs than higher than deferred cost block and the development cost. The first 400 to 500 of the 787 produced the well over 30 billion deferred production cost, by costing more to be produced than sold for. Somewhere between frame 400 and 500 the cost came enough down to break even on single frames. So Boeing has seen a profit on hardly more than 500 of the produced frames and the deferred cost still stand at 21 billion USD. That leaves uncounted the more than 25 billion development cost and the less than 5 billion write off on the two unsalable early frames. It would be a wonder, if Boeing has seen any ROI on the 787 up to now.
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sciing
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Post by sciing on Feb 2, 2020 19:08:13 GMT 1
Revenue is much higher, there are almost 950 deliveries. So the revenue is far above 100B. If calculate a profit frame of 30mill $, there is profit of 30B. This profit is the difference between average selling price and the calculated cost per frame taken for program accounting. For break even this number needs than higher than deferred cost block and the development cost. The first 400 to 500 of the 787 produced the well over 30 billion deferred production cost, by costing more to be produced than sold for. You must not create your own definitions. They cost more than the average COST over the accounting block. Deferred cost has nothing to do with selling price! So you are just wrong, because you forget exactly that profit I was writing about? You can expect a margin between the average cost and the selling price. Usual cross margins are at least 30-40%. So the 30B profit are likely at the lower end.
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Post by kevin5345179 on Feb 2, 2020 20:29:33 GMT 1
The first 400 to 500 of the 787 produced the well over 30 billion deferred production cost, by costing more to be produced than sold for. You must not create your own definitions. They cost more than the average COST over the accounting block. Deferred cost has nothing to do with selling price! So you are just wrong, because you forget exactly that profit I was writing about? You can expect a margin between the average cost and the selling price. Usual cross margins are at least 30-40%. So the 30B profit are likely at the lower end. You forgot to consider the learning curve of production cost. Based on the analysis out there, learning curve is ~ 80%. Back in early 2018, production cost was estimated by Leeham to be 80~90M per frame and avg sales price 125M. At the end of 2017, Boeing delivered 636 frames and if we added another 2 month of production (~12/month at the time IIRC) that'll give us 660 frames ish. # Frame Built | Estimate Production Cost | 660 | 85M | 330 | 106.3M | 165 | 132.8M | 83 | 166M |
Current delivery stands at 939 and just rough estimate that from 660-939 we earn 11B. Frame 330 to 660 we earn 6.2B. Frame 165 to 330 we lost 1.3B. Frame 83 to 165 we lost 3.4B. --> Earning 11+6.2-1.3-3.4 = 12.5B and the deferred production cost is still 18B. Just from the rough estimation here, I don't think we reach break-even yet .... Not even mentioned the estimation for first 83 frames will cost even more and launch customers will get very steep discount that may be at least on par with what Hawaiian was getting back in 2018 (Leeham estimate less than 115M or even less than 100M per frame).
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mjoelnir
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Post by mjoelnir on Feb 3, 2020 0:54:55 GMT 1
The first 400 to 500 of the 787 produced the well over 30 billion deferred production cost, by costing more to be produced than sold for. You must not create your own definitions. They cost more than the average COST over the accounting block. Deferred cost has nothing to do with selling price! So you are just wrong, because you forget exactly that profit I was writing about? You can expect a margin between the average cost and the selling price. Usual cross margins are at least 30-40%. So the 30B profit are likely at the lower end. 30 billion deferred cost offer 450 frames are on average 66 million loss per frame deferred. There is never in this world a gross margin of 40%. Perhaps between 10 and 15%. 40 to 50% are the discounts from the list prices. If you calculate margins from reported profits, than you have to think about, that profits have been that high because big parts of the cost had been deferred. The current accumulated deferred cost are over reported profits, and we should not look at the 787 only, because other programs have also deferred cost.
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sciing
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Post by sciing on Feb 3, 2020 8:44:47 GMT 1
At least you both accept there was a profit margin and as I wrote this profit has to be compared to residual deferred cost block and development cost for program breakeven. Th height is unknown, but as every in industry brutto margin (price vs direct production cost) of 40% is nothing unusual. I did not say that Boeing is now at break even, but it will be long before deferred cost block is zero.
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mjoelnir
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Post by mjoelnir on Feb 3, 2020 10:13:49 GMT 1
At least you both accept there was a profit margin and as I wrote this profit has to be compared to residual deferred cost block and development cost for program breakeven. Th height is unknown, but as every in industry brutto margin (price vs direct production cost) of 40% is nothing unusual. I did not say that Boeing is now at break even, but it will be long before deferred cost block is zero. A profit margin is a real margin when you use normal accounting practices. If you keep to IFRS you get very secure numbers. At Boeing, with their playing on the program for cost accounting, you never know if there is a real margin. If you just defer cost when production is to expensive and still claim to have a margin, how much can you trust this margin? As long as there is deferred cost at Boeing, there are losses they do not have realized. Or you can talk about accumulated profits, that still have to be made in reality. What does that do to the concept of margins. What I do not accept is, that Boeing has earned as much as a dime on the whole 787 program up to now. To my opinion they have not had a ROI and the program is a long way from turning to a profit. I do have to accept though, that the cash flow from the program is positive today. Boeing earns more on currently delivered frames than they cost, but there we talk about single frames.
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mjoelnir
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Post by mjoelnir on Feb 3, 2020 12:18:43 GMT 1
A321XLR to have optional anti-condensation system By David Kaminski-Morrow3 February 2020 www.flightglobal.com/news/a321xlr-to-have-optional-anti-condensation-system/136495.articleAirbus is to offer a Swedish-built anti-condensation product as an optional line-fit for its single-aisle family, aimed at the long-range A321XLR. The anti-condensation equipment, manufactured by CTT Systems, will be part of a broader optional moisture-control system. It will be aimed at the newly-launched A321XLR, the longest-range variant of the A321neo twinjet. ...The selection confirms CTT as a first-tier supplier to Airbus, and will lift the humidity-control specialist after Boeing’s decision to drop a moisture-control system as basic equipment on the 787 line. CTT chief Torbjorn Johansson says the Airbus agreement is a “breakthrough” for the company’s moisture-control technology in the single-aisle sector. Read more: a380.boards.net/thread/2414/a321xlr?page=22#ixzz6Ct9qzKevThis information is interesting in regards to the 787. The much advertised humidity control on the 787 has been dropped from the basic equipment. So the higher humidity (you need the humidity control to keep certain areas dry) on the 787 is just an option like on other frames and you can not expect higher humidity, just because you are booked on a 787.
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Post by kevin5345179 on Feb 3, 2020 18:10:33 GMT 1
At least you both accept there was a profit margin and as I wrote this profit has to be compared to residual deferred cost block and development cost for program breakeven. Th height is unknown, but as every in industry brutto margin (price vs direct production cost) of 40% is nothing unusual. I did not say that Boeing is now at break even, but it will be long before deferred cost block is zero. with program accounting, you can always book profit from the first frame if you wish ....
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sciing
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Post by sciing on Feb 3, 2020 18:43:00 GMT 1
At least you both accept there was a profit margin and as I wrote this profit has to be compared to residual deferred cost block and development cost for program breakeven. Th height is unknown, but as every in industry brutto margin (price vs direct production cost) of 40% is nothing unusual. I did not say that Boeing is now at break even, but it will be long before deferred cost block is zero. with program accounting, you can always book profit from the first frame if you wish .... *. Sorry what is your point related to what I wrote?
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Post by kevin5345179 on Feb 3, 2020 18:51:19 GMT 1
with program accounting, you can always book profit from the first frame if you wish .... bla, bla. Sorry what is your point related to what I wrote? I'm saying quoting having unit margin is not meaningful as you can engr the accounting to get that without trying hard .....
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