Why Boeing wants out of the Commerial aircraft business

[Florida_Geek]

Two 290 Million Dollar Planes



Now if you used to be a high womp womp with McDonalld Douglas and you were now CEO of Boeing which "type" plane would you like to make and which has bigger PROFITS.



Today's Tampa Tribune did a good (surprise surprise) write up on it

http://tech.tbo.com/tech/MGBL99YVH3E.html


A Cure For Cabin Fever

[amjucsc]

1. No Boeing wants out...

Because it's been getting it's ass handed to it by Airbus over the past few years-- A380 trumps expanded 747, the near supersonic airplane didn't fly, etc.

Living off US govt pork barrell is easier.

[northzax]

7. well, to be fair

Boeing can't really compete against Airbus for the same reason, the French, UK and German goverments subsidize Airbus' R&D for commercial aircraft. It makes those planes cheaper than Boeings. And the decline of the Dollar is making Boeings really cheap internationally.

but defense is still where Boeing is headed, after all the suspensions get lifted.

And the margians of the commercial planes are higher than the military ones, the difference is the military contracts are more guaranteed.

edited for spelling.

[amjucsc]

13. Yeah, you would think...

the declining dollar would give them an edge over Airbus.

But regardless, as an investor I prefer to see regular earnings growth, so I can't blame them for transitioning out of an industry with an unpredictable revenue stream.

[Squatch]

14. See reply 10...defense contracting is even more risky...

I'm in the business.

[KlatooBNikto]

21. You can look at Boeing's military aviation business as the subsidy

that keeps its commercial business profitable. Because the military business is a "Cost Plus" contract, like Halliburton's, Boeing dumps all its overhead costs on the government business, makes a guaranteed profit and then goes on to make a killing in the commercial aviation business with all its fixed costs covered by the U.S.government. It also makes it possible for Boeing to shed crocodile tears over how Airbus receives subsidies from the EU countries. It is a wonder Cheney didn't slip into the CEO chair at Boeing.

[Kellanved]

22. Actually Boeing is not small in subsidies either

Boeing receives at least as many subsidies as Airbus - be it in direct aid from the American, Japanese and South African Governments, help to build planes, loans, no bid military contracts, no-bid space contracts ... the list goes on. And: most EU subsidies are loans, the Boeing aid is in grants.

Airbus offered to cancel the old agreement allowing help by the EU under the condition that Boeing does the same - I wonder why they didn't take the offer :eyes: .

[Fovea]

2. Commercial air at this scale is going away.

The market will continue to shrink, as the fuel savings and greater
comfort of land transport win out. The only reason that it still exists the way it does, is the deliberate defunding of Amtrak.

But if the conservative capitalists are right, rail should be rocking these days... more passengers should mean more routes and services, right? Then why is Amtrak being starved?

The answer is, of course, that no commercial transportaton system
is actually profitable, it is just that commercial aviation mangages to hide its true costs better than rail.

[Jack_DeLeon]

4. I wish rail service would take off...

heh I guess thats a pun of sorts.

[Florida_Geek]

18. I took a sleeper train from Orlando to New Orleans

and then tranferred to the "City of New Orleans" to go to Jackson Ms, for my contract in Monroe LA.

I liked it. But it isn't for everybody. Not up to Eurpean standards.

[Jack_DeLeon]

3. I thought it had something to do with the fact that...

the airline industry is going into the crapper and any airlines that do survive wont need nearly as many planes as they used to.

[Florida_Geek]

5. a lot of the initial orders are

like the 10 from UPS. For the freighter version. The passenger versions is selling well too.

[Squatch]

6. Would be a BAAAAAD business decision...

http://www.usatoday.com/news/washington/2004-12-30-pentagon_x.htm

[Florida_Geek]

8. Oh please explain to me this baaaaaad business decision

"It already has invested about $40 billion in research, development and early production"

Somebody has made $40 Billion so far without the first combat ready set of planes.

Sounds like a sweet deal to me.

[Squatch]

9. If it invested 40billion dollars and the pentagon cancels the project...

they didn't "make" anything, now, did they?

Happened to Sikorsky early last year with Comanche.

[Florida_Geek]

11. Excuse me the US FUCKING GOVERNMENT has

PAID 40 billion for the developement of that plane. Assuming a 20% profit margin, that is 8 Billion in profit.

Not bad work if you can get it.

[Squatch]

12. Calm down...no need to get all pissed at me.

You wanna show me where you got the 20% PM figure?

[Squatch]

15. Here, I'll do it for you:

http://www.npr.org/templates/story/story.php?storyId=1559574

Here's KBR's (Halliburton's) Iraq contract, for example:

"According to KBR's latest quarterly report, the profit margin on military services is 3.8 percent. (Typical defense contracts yield profit margins of 7 percent.)..."

[Florida_Geek]

19. If you believe KBR only made 3.8 percent I have a

bridge to sell you.

[Squatch]

20. Sigh...

"Typical defense contracts yield profit margins of 7 percent"

Just a tad less than your 20% assumption.

[Squatch]

10. Pure defense contracting is extremely risky...

http://www.nhregister.com/site/news.cfm?newsid=13662688&BRD=1281&PAG=461&dept_id=517515&rfi=6

Once bitten, twice shy and all that.

[OneTwentyoNine]

24. With Repukes running the WH and Congress?? Bawhahahaha...

None of the Military Complex will suffer much under this regime. Sure,a few small cutbacks here and there and then huge contracts in other places. I live in Wichita,I've seen this first hand for decades.

Raytheon has tried to sell off the non-military part of Beech for years now. Of course they want to keep all the military contracts...missles,JPATS trainers etc...

Boeing wants to dump the commercial division which has been in Wichita for EIGHT decades but hey...they want to keep the military part which is across the street here in Wichita.

Military contracts are FAT CASH COWS and are used and abused by all contractors. Hell,Boeing paid a $10 million fine several years back for gouging taxpayers on military contracts. Of course (cough,hack)by simply paying the money back to the Government they claimed they had done nothing wrong and wanted to clear things up. NO ONE pays back that kind of cash just to "clear things up".

[American Renaissance]

16. Boeing is losing it on their own,

Boeing is losing the battle because their sales force is utterly incompetant.

I have seen bids submitted by Boeing that didn't reflect the airline tender in the slightest.

Boeing also suffers from severe arrogance, you can get away with that when you are the commanding industry leader, but NOT when you are rapidly becomming the underdog.

Boeing has managed to lose to Airbus in competitions where the customer wasn't even considering Airbus in the first place.

JetBlue never even considered buying anything other than the 737, but... when JetBlue paid a visit to Boeing looking to buy forty 737's Boeing wouldn't deal with them. It wasn't until they already had a ton of Airbus A320's that Boeing expressed an interest in their business. And by then it was a little too late.

Frontier had decided to upgrade their fleet with new 737's to replace their old 737's. The decision was made, they were going to buy the 737NG. Again... Boeing didn't seem interested in their business and they went to Airbus.

Boeing is used to full spectrum dominance, but today they face a competitor that either matches or obliterates every member of their product line. But they still behave like their running the show.

God willing, Gordon Bethune who is retiring from Continental will get bored of his grandkids and head back to Boeing. At present, the only qualification required to be a Boeing executive be that you are not currently under criminal investigation.

[Florida_Geek]

17. In this Geek's Humble Opinion Boeing = IBM of the 80s

Everybody knew you were going to buy from Big Blue.........

[buycottJoe]

23. Military planes are safe from being boycotted

unless other countries decide not to buy from the U.S. With civilian planes, people have choices and today people are looking carefully where they spend their money. Boeing is one of the biggest weapons manufactures and I wouldn't want to fly on one of their planes if I had a choice.

[OneTwentyoNine]

25. Boeing wants out because of one ass--Stonecipher

Boeing commercial here in Wichita has always had its ups and downs but has always managed to make boat loads of money. One man and one reason for dumping Boeing Wichita,to make shit loads of cash for him and a few others at the top.

He isn't that far away from retirement age,he could care less about the 12,000 jobs he's screwing with here in Wichita.