The difference between Boeing and Airbus is that with Boeing it’s at the end with the Dumbojet whereas Airbus is only at the beginning with the Superjumbo.

Here’s another Harry Callahan quote: A man’s got to know his limitations.

I didn’t say they should’ve pushed the system. I said that if they did push for a 2009 first flight, they would have seen and even bigger loss. I think Boeing did the right thing in the circumstances. Where we differ is that I believe the bulk of the delay and write-down loss of $640M was fundamentally caused by a lack of engineering resources. It just so happens that the market conditions meant the delay is palatable and BCA didn’t therefore feel they needed to spend more money to avoid it.

I agree with you on how bad 2010 and even 2011 looks for deliveries, and Boeing does too, which is why they took the $360M hit to pay for lower production rates of the 748. If they are going to spend $360M, I hope they are smart enough to get it right and correctly match the airframe production rate to what their customers can absorb into their fleets, assuming economic recovery continues.

The market is bad, really-really bad. The YTD FTK is down by 18% (eighteen percent). when people were expecting a 6% increase only one year ago. Cargo yield is crap. Cargo operators are suffering. They simply don’t need more capacity.

Passenger RPK is down by 6% (six percent), when people are expecting a growth of 5%.

There is another issue above the market conditions. It’s the financing. It’s still quite difficult to fund aircraft purchase and lessors are still under pressure.
http://verovenia.wordpress.com/2009/03/26/super-massive-black-hole/

But, I can understand Mr Yahyavi’s optimism. 747 orders will come back when the traffic will recover. But in the next eight months, they need to slow down the production. They need to push the 747-8 entry into service by another six months (on top of the latest delay of three months) if they don’t want to end up with parked aircraft.

I would not be surprised if the 747-8 entry into service will be delayed by another three to six months. It would be a good thing.
Indeed, production of all types of aircraft must decline in 2010.
http://verovenia.wordpress.com/2009/05/08/jet-lag/

“Ah Vero, so close yet so far…”

Just to clarify Vero, I meant that our own personal theories were close yet far from eachother’s, nothing more disparaging than that.

Let’s hope so - if nothing else than to prove the art of good engineering isn’t completely dead!

14. Vero Venia | October 12th, 2009 at 21:37

Ah Vero, so close yet so far…

Sorry, I just don’t 100% agree with your theory on this, maybe 85%.

Yes, the smaller $360M writedown is market and schedule driven (lower production rates due to lower demand). However the $640M writedown sounds much more engineering-related (reworking parts, production issues, etc); the $640M is down to not enough engineering resources being dedicated to the program. And I don’t mean recently or between now and the new year - I mean at the design stages for the past two years, ever since the 787 started slipping and consuming more and more of BCA’s finite resources. The 748 program simply took second place.

And sorry, but I don’t buy the “financial/accounting trick” as anything more than a way to make a bad situation slightly less bad by lumping it all into 2009 to save on near-term taxes and improve 2010’s performance. (If you are implying it to be anything more than that.)

Now as for the schedule slip - the fact that the 748 has suffered this late delay means that BCA chose not to spend EVEN MORE money and precious resources on getting through the remaining final production rework issues to make an end of year first flight possible. It’s simply not worth the money. The market situation simply provided a reason not to spend too much money and effort trying to overcome the delay since (as you point out) the near-term demand is low.

So $360M was market driven; the $640M was resource driven; and the schedule slip was resource-caused, but with market reasons to not fix it.

I just get the impression you think this all is mostly down to market forces (and accounting), but I think the market is the minor player here, and even if we were in boom times right now, we would still have seen either the same first flight delay or the $640M would have grown to account for more resources spent on overcoming that delay.

You need to separate the two issues. First financial/accounting trick and second the extra delay.

The accounting trick is clearly to save cash, instead of burning it as tax payment.

The extra delay is clearly due to flight test resource availability issue and other manufacturing/engineering issues. They have decided to delay the flight in order to relieve the pressure. The market is really crappy anyway.
The delay could have taken place without the charge. They could have taken a charge without having the extra delay.

Why do you want to put extra resource and extra pressure to fly the aircraft when the market does not want the aircraft immediately?
Remember the case of the MSN047 and MSN050 from the A380 program. That’s a huge amount of money sitting on the tarmac.
http://plane.spottingworld.com/A380_production_list

Your article said that not all of the weight issues will be resolved before aircraft 20.

What kind of performance hit (range/payload/fuel burn) is expected on the initial aircraft? The 748I will meet performance guarantees, will the F?

NH,

Despite the increased weight on the 747-8F (prior to airplane #20), those airplanes will meet/may slightly surpass their performance guarantees.

My take on the situation is that the $1B writedown appears to have been driven by two separate problems - engineering resources and the market. Sadly the engineering-related charge was the biggest chunk ($640M), and the one that hits BCA the hardest reputation-wise when they are already reeling from the 787 delays; ultimately, Boeing dropped the ball on that one. The other $360M related to slower production rates is what it is; ultimately a product of market forces beyond Boeing’s control.

I agree with Paulo M, the 787 is the reason the 748 is here today - and it is the reason the 748 is getting a bumpy ride today, both engineering-wise (resources) and PR-wise (Boeing credibility). To borrow a quote from The Simpsons: “The 787! The cause of, and solution to, all if the 748’s problems!” (though it might be more applicable if “cause of” and “solution to” were reversed in order).
The 787 can ultimatley afford the program difficulties because it’s market is so big, it’s essentially an unconditional profit maker. The 748 doesn’t have that luxury.

And a question for Saj: your article said that not all of the weight issues will be resolved before aircraft 20. What kind of performance hit (range/payload/fuel burn) is expected on the initial aircraft? The 748I will meet performance guarantees, will the F?

The last 747-400ER was delivered on 30-Jul-2003 to Qantas.
The last passenger version of the 747 was delivered in 2005.
The next pax 747 delivery will be a 747-8i.