Odds and Ends: Air India’s cost of 787s

Air India: FlightGlobal has this article that details the cost of Boeing’s 787s to Air India.

British Airways: Two pilots on a flight from London Heathrow nearly passed out

Kansas: Gov. Sam Brownback unveiled incentives today (Jan. 9) for Bombardier to bring jobs to Wichita, which politicians will view as very positive in the wake of Boeing’s decision to close its defense operations there. Considering Brownback’s stance on Boeing and the air force tanker competition, he continues to diversify Kansas from just Boeing. Wichita is the self-proclaimed “Air Capital of the World,” with presence from Bombardier, Hawker Beechcraft and Airbus. Boeing, of course, was the anchor, having been in Kansas 80 years.

More on tankers: Flightglobal has an interesting piece that 10 years ago, Embraer was prepared to join Airbus Military in the development of the A400M.

 

 

22 Comments on “Odds and Ends: Air India’s cost of 787s

  1. The BA A-321 incident could have had a very different outcome. Since they were only going through FL-200, the only conclusion is the airplane was not pressurizing. That could be a MX issue with the airplane, or it could be the crew did not turn on the pressurization system.

    It is also a good thing Portugal did not join EADS on the A-400M doonboggle program. They will be much better off with Embraer and the KC-390.

    • “the only conclusion is the airplane was not pressurizing”

      Unlikely. The pilots were in the same pressure area as all other crew / passenegrs. No reports on any other crew member / passenger having the same symptoms.

      Could also be coincidence or having had bad food together before the flight, something burning in the cockpit (window heaters/wipers?) giving nasty fumes, who knows, investigation will show.

      Airbus / Embraer have had good relations for a long time, they’re not competitors and have been exploring possible cooperation for yrs. The C390 & A400M hardly compete. The latter is twice as big.

      http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=comm&id=news/aw070207p3.xml
      http://www.flightglobal.com/blogs/flight-international/2011/06/caption-this-photo-airbus-give.html

      • Well, according to BA, they didn’t find a problem with the A-321. It may have been the pilots were the first people effected by hypoxia (reduced O2 in the blood). The story is not clear if any passengers had hypoxia too. But when the pilots got O2 from the FAs (why didn’t they put on their quick-don O2 masks?) they seemed to have recovered. If you have hypoxia and then get oxygen, it only takes a few seconds to a minute to fully recover.

        The airplane was put back into service the next day, so there will be no more looking at it, unless they same thing happens on the same airplane again.

        That is why I think the airplane was never pressurized.

      • I have to go with KC on this one. This sounds like a pressurization problem. More then likely a blown or crimped seal allowing a slow loss of cabin pressure (similar to the Payne Stewart incident). The reason the pilots noticed is that they are likely the only ones on broad that had the Physiological training to recognize the symptoms at an early stage.

        As someone who has experienced mild hypoxia hundreds of times, It is not something that an ordinary person recognize as such without training.

        In the military, air crews (and Military free fall personnel) are required to maintain currency in physiological training (riding the altitude chamber) every few years. The courses are very similar, but tailored to the specific mission. In KC’s case, he would have attended the TTB training (Tanker, Transport, Bomber).

        Another thing that people fail to understand is that there is a major difference between a rapid /explosive decompression and and slow one that may have occurred in this case. The difference is just a few seconds of useful consciousness vs. several minutes that one has to react.

  2. I think you are misreading on the Embraer/A400 story.
    Its not about Embraer, its about Portuguese Industry (OGMA)

    The Story is really about Portuguese company OGMA which had that choice 10 years ago. Embraer only bought a stake in that company quite a fewe years after that decision.

    But some interesting historical parallels here… Fokker could have had a share in Airbus 20-25 years ago.. but decided to go it allone.. ended up with a German partnership and the rest is (pretty bad) history..

    • Fokker:
      similar to Dornier no perspective and judicious missmanagement by Jürgen Schrempp with guidance from Berger and McKinsey Consulting. IMHO the “throes” culminated with
      the management hickup at Airbus and the merger and later dissolution of Chrysler / Daimler.

      Quite a drag for Europe.

  3. Scott,

    I believe, if my memory of history is accurate, that the AI planes were sold at a time when Boeing believed the cost per plane would work out to 113 million a plane for the first accounting block. Effectively the AI planes were loss leaders to get the 787 program moving. And like any retailer, that may be a good gambit. And if the program is only 35 billion dollars over budget, it translates into another 32 million dollars a plane, to a cost of 145 million dollars each. The question is, how many other planes were sold as loss leaders? If there are hundreds of loss leaders out there, Boeing is in deep trouble. If there are only 100, or so, loss leaders, Boeing probably will ultimately make money on the 787. Will it take near-bankruptcies from other airlines to give us the information, or do we just watch this play out over 20 years?

    • First 400 frames at an average of $76m + _engines_ ( got this right this time 😉
      this is what flightblogger researched some time ago.

  4. I think you have mis-read the article on the A400M. Portuguese government bowed out of the A400M in 2003. Embraer and EADS’ JV, Airholding, didn’t come on the scene until 2 years later in 2005. I don’t think Embraer ever was asked to participate in the A400M, if they were it’s not referenced in the article you linked.

    • No idea about an Embraer coop with Airbus/EADS.

      The common theme is a coop offers for _portuguese Industrial company OGMA_:
      First EADS ( declined )
      Now Embraer ( open )

  5. KC135TopBoom :
    The airplane was put back into service the next day, so there will be no more looking at it, unless they same thing happens on the same airplane again.
    That is why I think the airplane was never pressurized.

    The retrieved ( sure they did ) FDR Data should provide pertinent information.

  6. Observer :The list price in August 2005 was in $125-135m range.

    I am aware of that, but we don’t know what the price was then, since the US$95m (exlc. engines but including BFE) is inclusive of six years of escalation charges, according to the article. If these really did include commodity escalation charges, they may have been quite substantial, given the commodities rally which commenced in 2004 and has not really abated. So the happy statement that the price seems alright can not be based on much other than a wild guess, and a validation is only possible against current list price.

  7. Observer :The list price in August 2005 was in $125-135m range.

    Just doing the math. If over six years the escalator is set at 4% per annum, you get from US$75m to US95m (price without engines). There is of course a question of whether the airline should pay escalator pricing for years of delays caused by the manufacturer (although it might be easier contractually to resolve this through damages). If the escalator only worked for half the time (to scheduled delivery in 2008), the discount would have been 32-37% against the range of prices in 2005. While this sounds okay, one has to keep in mind that the price tag applied to the 787 in those days was extremely low, as the current price tag indicates. The inflation-adjusted (CPI) price for 2005 (based on a 2011 price of US$195m) should have been US$168m. That’s a 25% difference. Compared to this nominal 2005 price, and assuming a 4% escalator for three years, the discount would still be 50%.

    I realise there are a lot of made-up numbers here, but I struggle to see how you can make up plausible numbers that lead you to conclude that the price sounds ‘just about right’.

  8. Andreas :

    Observer :The list price in August 2005 was in $125-135m range.

    Just doing the math. If over six years the escalator is set at 4% per annum,

    I’m afraid the math isn’t that simple. The following link has the Escalation adjustment formula that Boeing used in this 2005 P&S Agreement (example). The formula is located a little more then 2/3’s of the way down the document. (It may take a little time to load)

    ** One interesting thing at the end of the Notes section of this formula. Quote:

    “vi. The Airframe Price Adjustment will not be made if it will result in a decrease in the Aircraft Basic Price.”

    Indicating, that it is possible to Not have an Escalation if there are declining labor and or materials costs in that period.

    http://agreements.realdealdocs.com/Purchase-and-Sale-Agreement/Purchase-Agreement-Relating-to-Boeing-Mo-854666/#Article3_PriceOfAircraft__035228

    And if you intend on Doing the Math? You may need the following link, as it has the employment cost Index for the years in question. The Aircraft manufacturing section of the document is located on the bottom of page 83 & the top of page 84.

    http://www.bls.gov/web/eci/ecconstnaics.pdf

    And the last link here is a “How to Use the Employment Cost Index for Escalation” example.

    http://www.bls.gov/ncs/ect/escalator.htm

    As far as the material costs are concerned? You are on your own… I done enough 😉

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