Tag Archives: 737

Paper planes

Last Christmas I received a funny gift: a fold-a-paper-plane-a-day calendar for 2016. That is a collection of papers with instructions and colored paper to fold a paper plane each day of the year. Doesn’t it sound great? This is just a short post to share a bit of info about it.

The creators of the collection are Kyong Lee and David Mitchell, apparently two experts in the field of origami with plenty of different models designed between the two. The collection in itself hasn’t got 366 different models. In fact, there are 40 models that after mid February repeat themselves once and again with different colors to complete the whole year. As I got some questions about it, I share here a link where the collection can be found.

After this short introduction let’s go to the best part of it, the airplanes themselves. Even if not all models are based on real airplanes (some models are not even inspired on airplanes but based on animals – birds, etc) some are, and when colored they provide a very good look of the original. Below I share some pictures with a general and some weekly overviews of the different planes and some comparison of the most beautiful and real-model-based ones.

Global

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Main models:

Rockwell B-1 Lancer  supersonic variable-sweep wing strategic bomber. Conceived to retire the B-52 (not quite yet) it entered operations in the late 80s and has played a major role in support of operations ever since.

B-1

Boeing 737. Derived from the 707, it first flew in 1967 and still today its newer versions are in production (nearly 9,000 have been delivered to date) and development.

737

Aérospatiale/BAC Concorde  supersonic passenger jet. Supersonic commercial flight was a dream come true from the late 70s to the early 2000s thanks to the Concorde. Only 20 units were built, each one now treasured in museums across the world, since difficult economics and a crash in 2000 ended it its retirement.

Concorde

Eurofighter Typhoon multi-role fighter. Built by a consortium made by  Alenia Aermacchi, Airbus Group and BAE Systems, after its first flew in 1994 it was introduced in operation in 2004, being now the fighter aircraft of the main European air forces.

Eurofighter

McDonnell Douglas F-4 Phantom II. Introduced in the 1960s, with more than 5,000 units built, it played a major role in Vietnam.

F-4

McDonnell Douglas F-15 Eagle. Since its introduction in the late 1970s, with more than 1,000 units built, it plays the air superiority role for the US air force and several others.

F-15

General Dynamics F-16 Falcon. Multi-role fighter introduced in the 1970s, with more than 4,000 built, still in production, now by Lockheed Martin, for export.

F-16

Lockheed P-138 Lightning. Introduced in 1941, with more than 10,000 units built, it was the primary US fighter in WWII until the introduction of the P-51 Mustang.

P-38

Space Shuttle. Introduced in 1981 and retired in 2011. In those 30 years of services it completed 133 successful launches and landings.

Shuttle

Lockheed SR-71 Blackbird. Long range  strategic reconnaissance aircraft that, despite its introduction in the 1960s (now retired) still today keeps several speed and high altitude records.

SR-71

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Boeing list prices increases vs. discounts increases (update for 2014)

In a previous post I updated the estimate of what is the average discount Boeing applies when selling its commercial airplanes using 2014 data of list prices, deliveries and reported revenues. The figure I came up with was a 47% discount. I included the following graphic showing the discount evolution:

Boeing Average Discount Evolution, through 2014.

Boeing Average Discount Evolution, through 2014.

Last year, seeing the increasing trend of average discount together with knowing the fact that Boeing regularly increases list prices triggered the following question: Have Boeing airplane discounted prices increased, decreased or stayed constant in the recent years? I set out to answer this question using the estimated average discount of each year (1) from the graphic above.

The Boeing list prices (LP) (2) can be found here. I have been recording those prices for years and thus have a table with the evolution of list prices for each model year by year. The following step is to apply the average discount estimated for each year to then-year list prices, to get the estimated discounted prices (EDP) (2) per model. Thus, a table can be built for the last 6 years.

You can find below the result for the best-selling aircraft during previous years: 737-800, 737-900ER, 777-300ER and 787-8. Together these 4 models amounted to over 640 deliveries in 2014 or 89% of the total 723 airplanes Boeing delivered in 2014.

Boeing List and discount Prices evolution table, 2008-2014.

Boeing List and discount Prices evolution table, 2008-2014.

In the table above I included in black figures what have been Boeing list prices of these models in the past years (as reported in their website) while I marked in blue the figures which are estimated, using as a departure point the calculated averages discounts per year (also included in blue in the table). I included as well the list prices year-on-year change as a % of the previous year list prices, per model.

The average list price increase included at the bottom line is computed with the information of all Boeing models (19 in 2008 and 20 in 2014, though different ones (e.g. last year addition of 777-8X and 777-9X), a total of 26 different models along this period), not only the 4 included in this table.

You may see in the table above that after not increasing prices in 2009, Boeing has steadily increased them in 2010 (6.3%), 2011 (4.7%), 2012 (6.7%), 2013 (1.9%) and 2014 (3.1%). However, if you take a look at the blue figures in the same table you will notice that prices of 2014 are between 2010 and 2011 price levels for all 4 models! That is, the widely announced yearly list prices increase has been yearly offset by a discreet (not-announced) increase in the discounts applied to the sales of airplanes. Thus, the pricing power of Boeing has remained barely constant during the last 5 years. You may see it better in the graphic below:

Boeing List & discount Prices evolution graphic vs. inflation in USA (through 2014).

Boeing List & discount Prices evolution graphic vs. inflation in USA (through 2014).

The graphic shows the price evolution for each of the 4 airplane models selected, taking as a reference their list and estimated discounted prices in 2008 (indicated as 100%) and also the evolution of inflation in the USA (3) in purple, to reflect the evolution of real prices (i.e. accounting for inflation). List prices are shown with straight lines, versus dashed lines used for estimated prices. Each pair of prices for each aircraft is presented in the same color for easier identification. Some comments to the graphic:

  • Through continuous increases, 2014 list prices were between 21% (737 and 777) and 31% (for the 787) higher than in 2008.
  • However, due to increasing discounts from 38% in 2008 to 47% in 2014, the increase in list prices is almost entirely offset (especially for 737 and 777, just 4% above 2008 levels).
  • 2014 discounted prices are below 2011 discounted prices for all models except 787.
  • If compare the evolution of prices vs. the US inflation (general prices in 2014 being 10% higher than in 2008), we see that:
    • Boeing actually lost pricing power in both the 737 and 777, which are cheaper in real (inflation-adjusted) discounted terms in 2014 than they were in 2008 (about 6% cheaper).
    • Only the 787 has been able to keep up the pace of discount escalation and inflation.

(1) There is no way to know the real price and discount that Boeing applies in each sale, as it will depend from customer to customer (American Airlines -AMR- or Fedex) and from model to model (737-800 or 787-8). There where competition is tougher, discounts will be higher. However, the estimates I have made are an average of all Boeing aircraft sold in a given year.

(2) Both list prices (LP) and estimated discounted prices (EDP) are expressed in then-year dollars.

(3) US inflation series since 2008: -0.4% (2009), 1.6% (2010), 3.2% (2011), 2.1% (2012), 1.5% (2013) and 1.6% (2014).

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Aircraft market forecasts accuracy (update 2014)

About two years ago I wrote a post in which I analyzed the accuracy of commercial aircraft market forecasts. In particular, Boeing’s series of yearly Current Market Outlook (CMO). In that comparison, between the CMOs from 1997 and 2012, we could compare the predicted and the actual world fleets at 2011 year-end. Except for the twin-aisle segment and especially the large aircraft sector, the accuracy was remarkable, as the estimated global fleet only exceeded the actuals in 1%.

In this post, I just wanted to provide an update with the figures from the latest CMO (2014), released a few weeks ago, in comparison with 1999’s CMO. In that CMO from 1999 [PDF, 1.5MB], we find the following chart showing Boeing’s forecasted fleet size and distribution for 2003, 2008, 2013 and 2018 year-ends.

1999 Boeing CMO year-end fleet forecasts for 2003, 2008, 2013 & 2018.

1999 Boeing CMO year-end fleet forecasts for 2003, 2008, 2013 & 2018.

In 2014 CMO, Boeing offered figures of 2013 year-end fleet (1).

Fleet at year end 2013 - Boeing 2014 CMO.

Fleet at year-end 2013 – Boeing 2014 CMO.

And now, the comparison is immediate:

Comparison of aircraft fleet at year-end 2013: 1999 forecast vs. actual (sources: Boeing CMO 1999 and 2014).

Comparison of aircraft fleet at year-end 2013: 1999 forecast vs. actual (sources: Boeing CMO 1999 and 2014).

Some reflections:

  • The forecasts for all segment except for single-aisle (737-800) predicted higher numbers of aircraft in the fleet than the actuals have shown 15 years later (2).
  • The total fleet figure was missed by 11%, a larger deviation than the 1% from two years ago.
  • The 737 has been the model outselling the forecasts, offsetting partially the lower demand in all other segments. In particular, even if deviations per segment have been higher, the global forecasted figure for passenger aircraft has been missed by only 3%.
  • The forecast is especially off mark the twin-aisle, where there are over 1,700 less aircraft in the current fleet than forecasted (3).

For the next such comparison we will need to wait some years, as from the year 2000 Boeing provided CMOs in a different fashion, offering a view of the forecasted fleet only 20 years from the date in question, instead of a view every 5 years. Therefore, we will have to wait until 2017, when we will be able to compare the 20-year forecast from 1997 CMO with the actuals of 2016 to be provided in 2017 CMO.

(1) In order to see the detailed split per segment differentiated between passenger and freighter aircraft, until the released of the full CMO, it is needed to use the exploring data tool offered in Boeing’s site.

(2) The differences in accuracy between the lower and higher end of the small-aisle segment should not be taken into account, as they are influenced by the different consideration of the cut off number of seats between a CMO and the other.

(3) Possibly a reason why Boeing plays down on the 747-8I and A380 segment.

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Boeing real prices (accounting for inflation) after discount

In a previous post I compared for some Boeing airplanes (737-800, 737-900ER, 777-300ER and 787-8) what had been the evolution from 2008 to 2013 of the published list prices against the estimated discounted prices. In that post, I arrived to the following conclusions:

[…] the pricing power of Boeing had remained barely constant during the last 5 years.

  • Through continuous increases, 2013 list prices were between 18% (737 and 777) and 27% (for the 787) higher than in 2008.
  • However, due to increasing discounts from 38% in 2008 to 47% in 2013, the increase in list prices is almost entirely offset.
  • 2013 discounted prices are below 2010 discounted prices for all models.
  • 2013 discounted prices are almost back at 2008 levels for the 737 and 777, only the 787 seems to have stayed at 2010 levels.

I, then, received one interesting comment from a reader, ikkeman, pointing at the fact that if the estimated discounted prices are expressed in then-year dollars (1), if real prices had not increased since 2010, that meant that they had indeed decreased.

See below the graphic I included in the a previous post updated adding the data of US inflation after 2008. [The series is: -0.4% (2009), 1.6% (2010), 3.2% (2011), 2.1% (2012) and 1.5% (2013)]

Boeing List & discount Prices evolution graphic vs. inflation in USA,

Boeing List & discount Prices evolution graphic vs. inflation in USA.

With the information of the inflation (purple line) the following 2 conclusions apply:

  • 787 real price (accounting for inflation) after discount has simply kept up with inflation rate since 2008.
  • 737 and 777 real prices after discounts, however, have lost ground with respect to inflation since 2008. On average they have lost about 8.5% in total or about 1.6% per year.

(1) That is the case as estimated discounted prices have been estimated year by year from the financial reports and list prices of the year, thus, using then-year US dollars.

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Boeing list prices increases vs. discounts increases…

In a previous post I updated the estimate of what is the average discount Boeing applies when selling its commercial airplanes using 2013 data of list prices, deliveries and reported revenues. The figure I came up with was a 47% discount. I included the following graphic showing the discount evolution:

Boeing Average Discount Evolution, 2013.

Boeing Average Discount Evolution, 2013.

Seeing the increasing trend of average discount together with knowing the fact that Boeing regularly increases list prices triggered the following question: Have Boeing airplane real prices increased, decreased or stayed constant in the recent years? I set out to answer this question using the estimated average discount of each year (1) from the graphic above.

The Boeing list prices (LP) can be found here. I have been recording those prices for years and thus have a table with the evolution of list prices for each model year by year. The following step is to apply the average discount estimated for each year to then-year list prices, to get the estimated discounted prices (EDP) per model. Thus, a table can be built for the last 5 years.

You can find below the result for the best-selling aircraft during previous years: 737-800, 737-900ER, 777-300ER and 787-8. Together these 4 models amounted 560 deliveries in 2013 or over 86% of the total 648 airplanes Boeing delivered in 2013.

Boeing List and discount Prices evolution table, 2008-2013.

Boeing List and discount Prices evolution table, 2008-2013.

In the table above I included in black figures what have been Boeing list prices of these models in the past years (as reported in their website) while I marked in blue the figures which are estimated, using as a departure point the calculated averages discounts per year (also included in blue in the table). I included as well the list prices year-on-year change as a % of the previous year list prices, per model.

The average list price increase included at the bottom line is computed with the information of all Boeing models (19 in 2008 and 18 in 2013, though different ones, a total of 24 different models along this period), not only the 4 included in this table.

You may see in the table above that after not increasing prices in 2009, Boeing has steadily increased them in 2010 (6.3%), 2011 (4.7%), 2012 (6.7%) and 2013 (1.9%). However, if you take a look at the blue figures in the same table you will notice that prices of 2013 are between 2008 and 2010 price levels for all 4 models! That is, the widely announced yearly list prices increase has been yearly offset by a discreet (not-announced) increase in the discounts applied to sales of airplanes. Thus, the pricing power of Boeing has remained barely constant during the last 5 years. You may see it better in the graphic below:

Boeing List and discount Prices evolution graphic, 2008-2013.

Boeing List and discount Prices evolution graphic, 2008-2013.

The graphic shows the price evolution for each of the 4 airplane models selected, taking as a reference their list and estimated discounted prices in 2008 (indicated as 100%) . List prices are shown with straight lines, versus dashed lines used for estimated prices. Each pair of prices for each aircraft is presented in the same color for easier identification. Some comments to the graphic:

  • Through continuous increases, 2013 list prices were between 18% (737 and 777) and 27% (for the 787) higher than in 2008.
  • However, due to increasing discounts from 38% in 2008 to 47% in 2013, the increase in list prices is almost entirely offset.
  • 2013 discounted prices are below 2010 discounted prices for all models.
  • 2013 discounted prices are almost back at 2008 levels for the 737 and 777, only the 787 seems to have stayed at 2010 levels.

(1) There is no way to know the real price and discount that Boeing applies in each sale, as it will depend from customer to customer (American Airlines -AMR- or Fedex) and from model to model (737-800 or 787-8). There where competition is tougher, discounts will be higher. However, the estimates I have made are an average of all Boeing aircraft sold in a given year.

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The Museum of Flight (Seattle)

The Museum of Flight, in Seattle, is yet another great aerospace museum. It reminded me very much to the National Air and Space Museum in DC both because of the wealth of aircraft and artifacts in display and the variety of explanations provided (videos, sounds, readings, gadgets to play with…).

The museum is divided in the following areas:

  • Boeing Model 1.

    Boeing Model 1.

    T. A. Wilson Great Gallery (named after Boeing CEO from 1969-1986): this is the first gallery you face when you enter the museum. It hosts:

    • a replica of Boeing Model 1 (first Boeing airplane),
    • a Lockheed SR-71 Blackbird plus a cockpit for visitors to enter in it,
    • a 737 converted into a theater with movies being played inside,
    • an exhibition of the bush pilots of Alaska and the development of air mail,
    • some flight simulators,
    • a DC-3, a Bell “Huey” UH-1H Iroquois, etc.
  • Bill & Moya Lear Gallery (Space Exhibit, named after the founder of Lear Jet Corporation): located at the side of the Great Gallery it has a diorama of the Apollo 17 landing site, with rover included, a replica of the International Space Station Destiny Research Laboratory, etc.
  • The Tower: with direct view over the runway.
  • William E. Boeing Red Barn (named after Boeing founder): in my point of view this is “the” highlight of the museum (allow yourself over an hour for this part alone). It explains both:
    • the birth of aviation: with models and panels explaining the contributions of many of the aviation pioneers (see this blog post in which I went through some of them), and,
    • the history of Boeing: from the moment in which the timber businessman, Bill Boeing founds the company, the first Boeing Model 1 (see replica in the picture above), the tools, materials and processes used at the time, how did the factory look, the great aircraft programmes which meant different breakthroughs for the company and the great engineers behind them…
  • Charles Simonyi Space Gallery (named after the Microsoft executive who became in 2007 the 5th space tourist and who in 2009 travelled to the International Space Station): which highlight is the Space Shuttle Trainer used to train Space Shuttle astronauts at Johnson Space Center in Houston.
  • Airpark: with the Boeing 747 “City of Everett” (first ever 747, first ever wide-body aircraft), a Boeing 707 Air Force One, a Concorde, a Lockheed Constellation…
  • J. Elroy McCaw WWI and WWII galleries (named after a broadcasting magnate): unfortunately I did not have time to properly visit these galleries before the closing of the museum… a reason to come back again.

See some of the pictures I took at the museum:

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I definitely recommend to visit this museum if you happen to be in Seattle. It is located in the South of Seattle at Boeing Field / King County airport. I would suggest to take no less than 5 hours to visit the museum and to arrive before noon, otherwise there will be some parts that you will not be able to visit properly (as it happened to me with the WWI and WWII galleries).

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Bombardier CSeries program vs. A320/737 duopoly? Closed by 2017.

In a few days (March 7th) Bombardier will provide a CSeries program update. I do not normally follow very closely this program, but I was reminded of it twice during the last month.

The first time was when a colleague shared the following article: “Bombardier CSeries: How will Boeing/Airbus Duopoly Respond?“.

The article is interesting as long as it tries to make a strategic analysis of the possible moves that Airbus would arguably have to make because of the entry into market of a new entrant (taking Boeing 737 strategy as similar to Airbus’). That theoretical exercise is… an exercise.

I found some arguments difficult to sustain:

  • “Assuming that Bombardier effectively executes its 50% market-revenue capture“.
  • Bombardier CSeries aircraft is positioned as value advantaged in the commercial airplane manufacturing market space.  Since the CSeries offerings deliver superior value to customers relative to competitors at lower list prices, Bombardier’s go-to-market pricing strategy is consistent with a penetration pricing methodology.  Bombardier’s aggressive entry tactics for the CSeries aircraft offers a credible threat to existing Boeing and Airbus revenue.”
  • “With over 382 commitments for CSeries aircraft“.

I must say that I am no expert in commercial aviation market, but from my point of view, here are some rebuttals:

  • To start with, I would take as commitments only firm orders, of which the CSeries hasn’t got 382 to date, but 180 a/c (less than half).
  • I would say that an aircraft is positioned or perceived as “value advantagedwhen the market actually responds to that statement. See in the graphic below the market response to A320, 737 and CSeries since the launch of the CSeries program:
CSeries, 737 & A320 net orders and market shares.

CSeries, 737 & A320 net orders and market shares.

In the table and graphic you can see that since the CSeries launch it started piling orders in 2009. If we compare its net orders to Airbus and Boeing ones in these years, the CSeries has captured a 3.2% of the market share, in contrast to 50.5% of Airbus A320 family and Boeing 737 46.4%. I would not derive from these figures that the CSeries is perceived as value advanted product.

It is curious to note how 737 and A320 families have been alternating market share lead year by year in the recent years.

“Price will go up also when delivery dates are confirmed, and we’re flying the aircraft. Whether we like it or not there is a Boeing discount. We’re being told [by our customers]: “We want 100 [aircraft], but because you won’t be on time, we want a discount.” I say, “Listen, we will be on time. We will be performing as promised. So, if you want to wait, wait.”

If I take that statement as truthful, and having myself estimated for years Boeing Commercial discounts, I would not describe Bombardier as “aggressive”.

As I said to my friend, rather than doing this strategic analysis about CSeries versus A320, I would have done it in the past about A320neo and 737, and now about A350 vs. 777 (where there must be really going this kind of analysis), take bold assumptions and check in a few years how the strategy of each company has evolved.

The second time was after this tweet from the aerospace analyst Scott Hamilton:

My impression, despite of Bombardier’s earnings webcast information, is that:

  • if now firm orders stand at 180 a/c,
  • if the plan to deliver 20-30 a/c in the 1st year and 120 a/c after 3.5 years
  • if the customer interest, in comparison to A320neo or 737MAX, stays as it has been in previous years…

… the programme is closed by 2017 (1).

****

(1) A bold statement for my forecasting career, this one to be checked with some colleagues down the road.

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