Boeing breakeven analysis

From those numbers, I made the assumption forward and backward that on average Boeing raises its list prices about 2.

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Search: Boeing Co. This backlog covers the production until somewhere in , in order to keep the production line with a steady production rate, I assumed Boeing will sell the necessary aircraft to allow a steady state production of aircraft per year until the end of the exercise in It may take Boeing more than a decade of continuous production at the fastest rate in widebody history for the to achieve profitability. By then production rate would have had to slow down to about aircraft per month as the backlog would have been already consumed, thus a new cost structure per unit produced could even make the mentioned date to be deferred even later. For this exercise, I took into account the net orders in the year of order. The Dreamliner has made dozens of new nonstop routes possible with a unique combination of long range and low trip costs. Side note: Let me now come back to the price discounts. However, there is plenty of room for additional improvement. Boeing said there is a total market for a Dreamliner-size airplane of about 5, jets. Most of the non-recurring cost NRC have already been incurred, thus, there is little room for manoeuvre in there. A recent article from Flight Global confirmed the order of magnitude for the case of the A The is likely to be Boeing's most profitable Dreamliner model. We know that at Seattle FAL there are now serial numbers 46 to be completed according to press to 50 just arrived, according to Jon Ostrower. From then on, the ramp I used tries to replicate what the media is reporting. Workers in Everett are putting together Dreamliner No.

Costs These are the main inputs needed for the whole analysis. That will likely take at least an additional deliveries beyond the initial 1, jets.

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As its name points out, this is a mere accounting issue. The approach I followed was different. In addition, a higher production rate will push costs down by allowing Boeing to spread its fixed costs over more units.

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Lower costs and higher revenue Two other factors aside from the improving production mix will drive quarterly Dreamliner profits higher. Boeing reduced the expected number of Dreamliner deliveries this year to between five and seven. Fortunately, Boeing has been building s at a profit since Solid trends already Under the rules of program accounting, Boeing has been booking a small profit on each quarter's production, based on the program's expected average profitability over the long run.

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You may see in the following graphic the cash profile used up to now: Boeing costs through profile. Typically the discount rate used to evaluate different projects is the cost of capital of the company.

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It may take Boeing more than a decade of continuous production at the fastest rate in widebody history for the to achieve profitability. AirTeamImages In an industry that expects to produce one new clean-sheet aircraft design once every years, no company can survive such timescales for return on investment for long. Image source: Boeing. Both went to launch airline All Nippon Airways of Japan, which late Tuesday Seattle time flew the first passenger flight, just over four hours from Tokyo to Hong Kong. Lower costs and higher revenue Two other factors aside from the improving production mix will drive quarterly Dreamliner profits higher. Boeing will not break even before The first graphic that is shown is what I believe will be the real scenario for the it will not break even in the first 30 years of the programme, discounting cash flows. For Boeing stock to hold on to its lofty gains, the company will need to capitalize on its opportunity to dramatically improve the program's cash profits in the next few years. Since between and this rate has to increase from 2. First is that demand for commercial aircraft will continue its long-term upward trajectory, allowing suppliers to trade lower costs for additional volumes. In addition, it said in a regulatory filing that the delivery of the second model of the Dreamliner, the , will be pushed back from late to early I take the last conference call as an implicit confirmation from Boeing of the discounts it applies to its s. From those numbers, I made the assumption forward and backward that on average Boeing raises its list prices about 2. The is likely to be Boeing's most profitable Dreamliner model.

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