Tag Archives: 737NG

Ray Conner on pricing and Boeing discounts

Reading in Leeham News and Comment aerospace blog about the appearance of Ray Conner, CEO of Boeing Commercial Airplanes, at JP Morgan aerospace conference I picked the following lines:

Joe Nadol (JN) of JP Morgan: Is there pricing pressure?

Ray Conner (RC): I think margin will be OK [for 737NG]. Some initial launch deals for MAX can be a little more aggressive, but we’re seeing that become more stable.

JN: MAX–I thought pressure would be more on late NGs than on the MAX.

RC: We were a little late getting into the marketplace with MAX and there was pricing pressure on NGs. We were about a year late so we were more aggressive than we would have been had we not been late.

For the last years I have been trying to estimate averages for the discounts Boeing applies to its commercial aircraft using as departing information Boeing year-end financial results, list prices, net orders, deliveries and services revenues. You can see the results for 2012, 2011, 2010 and 2009. In each of the posts you can see a detailed explanation of the methodology I followed.

Why do I comment this? Since 2009 I have noticed that the average discount has gone from ~38% (2009), 39% (2010), 41% (2011) to 45% (2012)!!

Find below the explanation I could find for that hike in the discount:

The explanation I can find for that increase shall be linked the built-in penalties for 787 (net orders for 2012 being -12 a/c) and 747 delays (1 single net order) into revenues plus the launch of a new aircraft, 737 MAX (forced by A320neo sales success in 2011).

How does it compare to Conner’s words?


Filed under Aerospace & Defence