The big deal is that this is the second delay of the 787. If you read the article, they have contracts with the airlines on when they will deliver. If they miss again, they will have to pay out big moola to the airlines, thereby hurting their revenue/profit, thereby hurting their stock price and thereby causing layoffs which will impact the economy in the Puget Sound. But hey, we've still got
I think the big deal is that Airbus had nearly two years of delays on their last plane. If you ordered it, and then had to wait so long, you're going to be really unhappy about all the revenue you've lost by not having a plane you thought you would have. This makes you want to buy Boeing as the only alternative. But if Boeing does the same thing, they lose all the goodwill they received from Airbus' issues.
Additionally, the key benefits of the 787 are cost related. The airline industry is struggling right now because of rising costs. But if you could have a 787 that uses 20% less fuel, that's a wonderful thing. However, if you penciled in those savings for 20XX, and it didn't deliver until 20XX+3, you've got some explaining to do to your shareholders. It makes you look around. Today, there are no other viable choices with similar performance to what the 787 promises. But if the plane is delayed too long, it opens the door for Airbus to provide an alternative. And because airplane deliveries are way off in the future, if you're a buyer who is near the end of the list from Boeing, you might be able to get on the front of Airbus' list.
Besides those things, it just looks bad if a billion dollar corporation can't figure out their delivery times.
I read an article somewhere about the 787 that said what they rolled out at their "launch" was basically a shell of the plane, held together with temporary fasteners. it was supposed to be nearly ready to fly. same article said they still don't even have its wiring installed today
these delays are a big deal because once they get rolling, they are supposed to be able to assemble a plane every three days or something like that. they have an ~800 plane backlog - but don't get paid until they deliver. if it takes 5 days instead of 3 days to build one of these suckers - guess what happens to revenues?
also - wikipedia has what seems like a fairly accurate description of the delays
First flight & delivery delays
Boeing premiered the first 787 on July 8, 2007, which matches the aircraft's designation in the US-style month-day-year format (7/08/07).[46] However, at the rollout, many of the airplane's parts were attached with non-aerospace fasteners, requiring it to be partly disassembled to replace them with flight fasteners afterwards. It is also understood that the aircraft's major systems and cockpit had not been installed, and no date for the initial 'power up' had been set.[47]
Boeing originally planned for a first flight on August 27, but on August 10, 2007, Boeing spokeswoman Yvonne Leach said that the date might slip, citing factors including final assembly, avionics integration, and completion of software, hydraulic, electronic and other systems. The first flight also depends on the outcome of structural testing on the second plane on the assembly line.[48]
On September 5, 2007, Boeing announced a three-month delay to the first flight, citing a shortage of fasteners and rivets as well as incomplete software.[49] A further three-month delay to the first flight was announced on October 10, 2007; this is now scheduled for the end of the first quarter of 2008. Boeing also said that the first 787 deliveries would be delayed by six months from May to December 2008. The Company cited problems with its foreign and domestic supply chain in explaining the delay, especially the ongoing fastener shortage, the lack of documentation from overseas suppliers, and continuing delays in the flight guidance software provided by Honeywell.[5][6][50] Less than a week later, the 787 program manager was replaced, although the delivery delays were not cited as a reason for the change.[51]
In spite of the delay to first deliveries, Boeing still intends to produce 109 of the 112 aircraft it originally planned to produce in 2008 and 2009,[52] then increase production in 2010 to 10 aircraft a month.[53] Boeing is known to be talking to its suppliers about the possibility of future increases in production to up to 16 a month.[54]
Yes, you are correct. The big "unveiling" on 7/8/7 was nothing more than a pretty airplane shell. It had no wiring, seats, or pretty much anything inside. They didn't even have the seats on hand. They've been having issues with multiple suppliers delivering the wrong parts, or simply not delivering at all. To the people actually involved in the project, the alleged delivery dates that were stated in the past were merely a joke, as they knew there was no way they would be met.
I know all of this through one of those "friend of a friend" type of things, where the original source (2 degrees from me) is actually on the 787 development team. I haven't heard a recent update on how they're feeling about the project lately (in the last few months). From my personal experience in the manufacturing world, I can confirm that the way these things (new product releases) tend to work is that management / marketing sets the completion dates with little to no input from engineering (you know, the people actually designing the dang thing). As the unrealistic deadline approaches, the project can go one of two directions:
Timeline A
1) Product is released (Revision A) at the marketing-selected date, even though it's half-baked.
2) Anywhere from a few dozen to a few hundred are sold.
3) Customers experience problems, issues get escalated.
4) Eventually it falls back on engineering, who is maybe finally given adequate time to actually complete the project.
5) Revision B is released months to years after the Rev. A release. Rev. B has the features and reliability that Rev. A should have had.
Timeline B
1) Delay
2) Delay
3) Delay
...
#) Finally release when the project is actually done and vetted.
Due to the safety-critical nature of what Boeing does, it looks like things over there follow Timeline B. The problem of course, is that they've cooked all of their books based on the pie-in-the-sky timelines that Marketing and Management dreamed up, without bothering to consult the people that actually do the work to get things done.
Yeah, Tim, you're right about that. When I was a development lead on a 20 person team a few years ago, I would get the estimates from my team on how long it would take to develop a certain product. I'd go back to management and let them how long it would take. They would always just set their own dates, so it got to the point where whenever they would ask me how long it would take, I would just cut out the BS and ask management to give me a date. I didn't even bother giving them estimates anymore, it wasn't worth fighting. Then scenario B would play out, delay, delay, delay, deliver about 6 months to a year late. All because somebody in marketing thought that a project with a year worth of work should take a month. My favorite was when they kept adding team members thinking that it would reduce the amount of time. :-)
The joys of outsourcing not only production, but also design and testing. The 787 program should have an interesting "lessons learned" document when they finish.
As for the tanker, seems there's a lot of information pointing to the AF changing the rules as they went, which lends credence to Boeing winning the protest. Of course it's possible that Boeing will win the protest and the GAO will recommend a split order or something to that effect, which doesn't really benefit anyone (certainly not the taxpayers).
If Boeing wins the protest, don't be surprised to see another new competition. When the original Boeing contract was contested, that's what happened, so it's not like there is no precedent (on this contract even).
If Boeing wins the protest, don't be surprised to see another new competition. When the original Boeing contract was contested, that's what happened, so it's not like there is no precedent (on this contract even).
Those were pretty extraordinary circumstances.
I'm not sure, but I believe the GAO's only tool is to cancel the entire contract. So yes, that would mean a new competition. But there's no reason for the AF to spend 2 years on it.
But there's no reason for the AF to spend 2 years on it.
Military contracts do not work like civilian ones. Dream up the worlds simplest contract: one where only one company in the world has the means to accomplish it, it provides an essential capability, and it's actually cheap.
That contract would still take at least 9 months for bidding (even with just one potential contractor in the world). It would then take at least 6 months of negotiation regarding the actual capability. Let's assume 1 day of development time (like I said, this is easy). Now, the military is ready to purchase units, but they need to spread it out over 2 years for budget reasons (only two years because it's so cheap and essential).
Start to finish, it takes probably 3 years minimum. This tanker deal is not a simple program. I don't know the details, but if the contract were awarded today, it would probably be 4 years before the first plane is delivered, and 12 years before the last one is delivered. At least, if it were done on an accelerated time line.
At some point, this is going to pop out but I don't know why we aren't talking about some of the possible OTHER reasons why Boeing didn't get this contract.
Boeing was involved in a major national ethics scandal in regards to securing government contracts, right?
They promised to clean up their act and hired a new guy. Didn't the new guy get caught having a consensual affair with one of his subordinates? If I remember, he tried to shield her from publicity but she eventually resigned as well.
I would bet $5.00 that somebody on the committee voted to rank Boeing's ethical infractions high on the list of reasons to chose their competitor.
At some point, this is going to pop out but I don't know why we aren't talking about some of the possible OTHER reasons why Boeing didn't get this contract.
Boeing was involved in a major national ethics scandal in regards to securing government contracts, right?
They promised to clean up their act and hired a new guy. Didn't the new guy get caught having a consensual affair with one of his subordinates? If I remember, he tried to shield her from publicity but she eventually resigned as well.
I would bet $5.00 that somebody on the committee voted to rank Boeing's ethical infractions high on the list of reasons to chose their competitor.
The main ethical infraction was the original no-bid Tanker contract, which resulted in a couple Boeing people in jail and the contract being rebid on. The AF is insisting the contract was awarded solely on the merits of the plane relative to the cost, but if that was the case the contract would have been awarded to Boeing a year ago.
There is obviously a lot more going on than just picking the right plane.
Okay, but the contract / compensation problems are short term problems, right?
I may regret it, but as a long term Boeing stock owner (approx +400% since '91 at todays price) I am not going to bale out on Boeing now.
On a dividend and split-adjusted basis, BA is up 469% since Jan 2, 1991 (16.75 to 78.60) , the Vanguard 500 VFINX fund is up 575% (21.68 to 124.75). You'd be doing better in the index fund. If you timed it right and bought BA in 1993 or 1999/2000 or 2003 when it was relatively out of favor you'd be doing better. But with the 300% runup out of the 2003 lows (assuming you timed the perfect bottom) compared to the VFINX runup of 100%, I'd say the stock is due to fall out of favor again (Airbus may actually figure out how to compete and the market may contract due to fuel costs, implosion of airlines and their inventory being sold, and travel may contract due to rising ticket prices driven by fuel costs -- lots of downside risk).
So apparently this is the best they can come up with for journalist open house day with the 787, this far into the project:Seriously? And when are they claiming they're going to deliver this thing? Yikes.
And check out the 787's handy cockpit. Holster for your favorite choice of protection, reclining seats for those long trips when you want a snooze, a wet bar to quench your thirst, and a dance floor to shake your jiggy! Golly, is this why airfare is taking a hike? Soon they will be offering seats to "fly with the captain'!
Comments
a) fill in blank
b) fill in blank
c) fill in blank
I may regret it, but as a long term Boeing stock owner (approx +400% since '91 at todays price) I am not going to bale out on Boeing now.
Additionally, the key benefits of the 787 are cost related. The airline industry is struggling right now because of rising costs. But if you could have a 787 that uses 20% less fuel, that's a wonderful thing. However, if you penciled in those savings for 20XX, and it didn't deliver until 20XX+3, you've got some explaining to do to your shareholders. It makes you look around. Today, there are no other viable choices with similar performance to what the 787 promises. But if the plane is delayed too long, it opens the door for Airbus to provide an alternative. And because airplane deliveries are way off in the future, if you're a buyer who is near the end of the list from Boeing, you might be able to get on the front of Airbus' list.
Besides those things, it just looks bad if a billion dollar corporation can't figure out their delivery times.
these delays are a big deal because once they get rolling, they are supposed to be able to assemble a plane every three days or something like that. they have an ~800 plane backlog - but don't get paid until they deliver. if it takes 5 days instead of 3 days to build one of these suckers - guess what happens to revenues?
I think this was the article
http://seattletimes.nwsource.com/html/b ... ing10.html
also - wikipedia has what seems like a fairly accurate description of the delays
I know all of this through one of those "friend of a friend" type of things, where the original source (2 degrees from me) is actually on the 787 development team. I haven't heard a recent update on how they're feeling about the project lately (in the last few months). From my personal experience in the manufacturing world, I can confirm that the way these things (new product releases) tend to work is that management / marketing sets the completion dates with little to no input from engineering (you know, the people actually designing the dang thing). As the unrealistic deadline approaches, the project can go one of two directions:
Timeline A
1) Product is released (Revision A) at the marketing-selected date, even though it's half-baked.
2) Anywhere from a few dozen to a few hundred are sold.
3) Customers experience problems, issues get escalated.
4) Eventually it falls back on engineering, who is maybe finally given adequate time to actually complete the project.
5) Revision B is released months to years after the Rev. A release. Rev. B has the features and reliability that Rev. A should have had.
Timeline B
1) Delay
2) Delay
3) Delay
...
#) Finally release when the project is actually done and vetted.
Due to the safety-critical nature of what Boeing does, it looks like things over there follow Timeline B. The problem of course, is that they've cooked all of their books based on the pie-in-the-sky timelines that Marketing and Management dreamed up, without bothering to consult the people that actually do the work to get things done.
Ah yes, the "nine women can make a baby in one month" approach. Works every time!
(oh, and I am one the the marketing/management types always pressing for earlier dates
http://seattletimes.nwsource.com/html/b ... ng787.html
http://seattletimes.nwsource.com/html/b ... ing12.html
The joys of outsourcing not only production, but also design and testing. The 787 program should have an interesting "lessons learned" document when they finish.
As for the tanker, seems there's a lot of information pointing to the AF changing the rules as they went, which lends credence to Boeing winning the protest. Of course it's possible that Boeing will win the protest and the GAO will recommend a split order or something to that effect, which doesn't really benefit anyone (certainly not the taxpayers).
Those were pretty extraordinary circumstances.
I'm not sure, but I believe the GAO's only tool is to cancel the entire contract. So yes, that would mean a new competition. But there's no reason for the AF to spend 2 years on it.
Military contracts do not work like civilian ones. Dream up the worlds simplest contract: one where only one company in the world has the means to accomplish it, it provides an essential capability, and it's actually cheap.
That contract would still take at least 9 months for bidding (even with just one potential contractor in the world). It would then take at least 6 months of negotiation regarding the actual capability. Let's assume 1 day of development time (like I said, this is easy). Now, the military is ready to purchase units, but they need to spread it out over 2 years for budget reasons (only two years because it's so cheap and essential).
Start to finish, it takes probably 3 years minimum. This tanker deal is not a simple program. I don't know the details, but if the contract were awarded today, it would probably be 4 years before the first plane is delivered, and 12 years before the last one is delivered. At least, if it were done on an accelerated time line.
Boeing was involved in a major national ethics scandal in regards to securing government contracts, right?
They promised to clean up their act and hired a new guy. Didn't the new guy get caught having a consensual affair with one of his subordinates? If I remember, he tried to shield her from publicity but she eventually resigned as well.
I would bet $5.00 that somebody on the committee voted to rank Boeing's ethical infractions high on the list of reasons to chose their competitor.
The main ethical infraction was the original no-bid Tanker contract, which resulted in a couple Boeing people in jail and the contract being rebid on. The AF is insisting the contract was awarded solely on the merits of the plane relative to the cost, but if that was the case the contract would have been awarded to Boeing a year ago.
There is obviously a lot more going on than just picking the right plane.
http://seattletimes.nwsource.com/html/b ... elays.html
On a dividend and split-adjusted basis, BA is up 469% since Jan 2, 1991 (16.75 to 78.60) , the Vanguard 500 VFINX fund is up 575% (21.68 to 124.75). You'd be doing better in the index fund. If you timed it right and bought BA in 1993 or 1999/2000 or 2003 when it was relatively out of favor you'd be doing better. But with the 300% runup out of the 2003 lows (assuming you timed the perfect bottom) compared to the VFINX runup of 100%, I'd say the stock is due to fall out of favor again (Airbus may actually figure out how to compete and the market may contract due to fuel costs, implosion of airlines and their inventory being sold, and travel may contract due to rising ticket prices driven by fuel costs -- lots of downside risk).
My source on the numbers is just:
http://ichart.finance.yahoo.com/table.c ... gnore=.csv
http://ichart.finance.yahoo.com/table.c ... gnore=.csv
Use the last column which is Adj Close.
2) Lost Tanker contract
3) Lost BAMS contract
Isn't there ANY good news somewhere?