Aug. 22, 2016, © Leeham Co.: It’s the kind of leak that drives a company crazy. Aviation Week obtained an internal Boeing sales target list that is well below a book:bill of 1:1 this year. The math shows that Boeing would have a book:bill of just 0.72:1.
Even this may be optimistic.
The sales target data, obtained by Guy Norris, indicates Boeing had a target of 88 777 sales and 88 787 sales this year.
The list does not distinguish between 777 Classics and 777Xs. So far this year, Boeing booked just eight 777 Classic orders.
It’s booked 19 787 orders.
The target list show 14 orders for the 747-8. Four already have been booked.
The order figures above are through August 16. This sales target list is a few months old and may have changed since then.
Boeing’s guidance has been 1:1.
According to the Norris article, Boeing spokesman Doug Alder says there are several sales target lists. Even so, this months-old list illustrates just how difficult this year is likely to be for Boeing.
The dearth of orders for the 777 (particularly the Classic) and 787 suggest the task is even more difficult than the targets.
The only major 777 Classic campaign known to outsiders is the long-running one with Turkish Airlines. The attempted military coup of the government and resignation of the Turkish Airlines CFO, who authorities claimed was a suspect in the coup (which he denies), causes upheaval in any equipment campaign here.
But this deal was for far fewer than the 80 more airplanes that represent the gap between the eight sold this year and the target of 88.
A goal of 88 sales suggests Boeing was hoping for 30-40 777Xs. It had a target for 40-50 Classic sales this year.
The long-awaited wide-body order from Emirates Airlines could be the principal 787 sales target in the AvWeek chart. This campaign, pitting the Airbus A350-900 against the 787-9/10, is for a reported 70 aircraft. It’s supposed to be decided by the end of this year. If Boeing wins this deal, the sales target for the 787 is met. If not, it’s unlikely the target will be met.
Boeing’s target list, according to Norris, is 14 sales this year. This may well have been met. There were already four sales on the books, for AirBridgeCargo. ABC firmed up an agreement for up to 20 747-8Fs, announced at the Farnborough Air Show. Neither Boeing nor ABC detailed how many of these 20 were firm orders or options, but they did say four were already announced. It might be that the other 10 on the target list are those from ABC.
Airbus is challenged on hitting a 1:1 book:bill this year, too.
It’s production/delivery rate is about 100 airplanes fewer than Boeing’s this year, or fewer than 650. But officials already said the goal of meeting this figure is challenging.
Wide-body sales are especially challenging this year. Like Boeing, Airbus hopes to win the Emirates order. This would bolster its 2:1 lead YTD of wide-body sales over Boeing.
With 4 ½ months left in the year, the race for orders is anything but over. Boeing leads Airbus slightly in total net orders YTD, but Airbus announced more orders than Boeing with contracts to be firmed up.
The Emirates order is the big prize this year—if it comes. It originally was supposed to happen last year.
Boeing faces a deferral of 10 787s to Jet Airways.
Not the end of the world but the bubble has burst.
I know the experts don’t call it a bubble, but even if its a blown over crest on a swell, the numbers got to big too soon.
It will settle back to historical norms. That should be expected.
Chinas bubble, Prime Mortgages and oil et al.
Boeings problem is that they have mortgaged the future with the stock buy backs and not investing in new product (737RS) and the now lack of cash cows are coming home to bite them.
Couldn’t they just sell those stocks right back if they choose to?
I suppose that is the easiest way to raise capital if the need arises.
Do they keep the stocks they buy back in a “safe” somewhere or do they get destroyed?
Good question, it was answered a while back and now I am forgetting.
Here is the complex answer, what Boeing is doing is?
I asked it and the reply was no. Once the shares are bought back they cease to exist.
The purpose of the buyback is to cancel the stock , this boosts the earnings per share of those remaining. As for new stock there is new issues all the time mostly for acquisitions and employee share schemes- but they are usually a smaller amount to the buyback.
Even Airbus has share buybacks, its the standard way things are done now to distribute spare cash to increase shareholder wealth
OK, this question might have been answered somewhere as well but I didn’t see it.
Why buy back shares rather than increase the dividend?
I am a deeply cynical person and am very suspicious about what Boeing is up to, but unlike us they have all the facts. They surely would stop the buybacks if things were half as bad as some people here are suggesting.
The link I posted says you can do any one of three things.
So the question is, you buy stock back and sell more?
Does that make any sense?
@grubbie, if you buy back the shares, the shareholders benefit in terms of capital gains rather than dividends — and that often has favourable tax implications for the shareholders.
I am not opposed to returning money to shareholders, but that should be only after sufficient investment in the company’s future.
Sad to see Boeing losing market share in every segment
Seems that management [going back a few generations of CEOs] have no clue or are too much in love with their own PR
The 787 delays fiasco, lost Boeing a 4 year lead
Without a 757 Max, the 321 has no Boeing competitor and has allowed Airbus to dominate the sector [and, once airlines buy the 321, they also go for the 320, hence the huge lead by Airbus]
Not sure why the 777X is being built from metal instead of the much lighter carbon fibre (like the 787 and 350). The 350 is stealing so much of the 777X market.
Boeing risks being eclipsed
Several factors play a role, low oil prices making airlines delay replacements, the ME 3 being indirectly hit by oil incomes, international uncertainties.
However it would be unrealistic to ignore another factor clearly influencing 787, 777 sales; competing with the XWB’s instead of the M11 / A340s. Looking at the A350-900, -1000 customer base, most are long term 777 operators not replacing their current 777’s with new 777s.
The 787-10, 777-8 and 773ER directly competing with A350-900 versions and A350-1000 seems a weak spot in terms of payload-range, price, EIS and empty weights. As confirmed by airline executives, sales figures and bare specifications. And it won’t go away.
Pointing out low -1000 orders might be comforting but not that useful. The XWB’s are locked with large 777 operators and switch provisions included in the contracts.
Airbus and Boeing don’t have to match each other in every small niche. 300-350 Seats + Cargo from Asia is a rather huge niche though.
I expect Boeing (after a few years of denial / dismissal /lost orders research) to come back to reclaim market share, probably with a few beefed up 787 NG types.
Re. “787 NG”: The 777-9 and 10 (should it come to be) will do well enough and mostly own their sector. The 777-8 is a niche aircraft and the 350-1000 can do most of its mission with a lot less weight.
It seems to me that a 787-10 (maybe a further stretch; call it an 11) with a bigger wing (admittedly not a small thing to do) could be a better ultra long range aircraft than the 777-8 in terms of weight/fuel burn vs. payload/range.
It is true that it is a (too?) tight 9 abreast aircraft but could offer a lot of (or all?) really nice 8 abreast premium economy seating for the very long segments where comfort is most valuable.
RR advance engines should be available by the time it could be ready to fly and would provide a fuel burn reduction.
P&W Advanced engines are ready to come off the drawing boards now, all they need is an order.
Funny that RR has not made their 787 engine perform up to what they said it would yet (next rev ie Trent-10 supposed to)
GE did not either but its miss was not as bad as the fuel efficient maintenance intensive RR 3 spool!
GE also has a new one coming out for the -10 but not listed as such. More thrust though.
P&W advanced engines…all they need is an order.
I think its more complicated than that. All the engine OEMs and their major subcontractors have advanced technologies they are working on. Some of this tech will go into existing engines others will be kept for the next big thing first and then smaller engines later.
The only big new order around the corner is a possible 757/767 replacement. It could be announced this year or in 5 years ?
Both GE and RR missed the fuel burn spec set by Boeing for the 787-8. And RR is quite loud about its engine being the better of the two intially for fuel efficiency and reliability.
Yes I know P&W is not ready to build the engine, but you can bet your bottom dollar they have the basic design in hand and ready to launch.
As for RR, I don’t recall seeing anything, I do know they tout that their engine is more efficient, but GE is closer to its target with current (reliability is unknown to me, I have not see a breakdown)
RR is also more complex mechanically so there is some offset in maint and repair.
I believe P&W does have a design ready to go, there was work on it early due to someone asking for it (A330NEO maybe) . A lot further ahead than RR or GE and could do it a lot sooner.
No hardware built or tested.
RR was behind on the fuel numbers and stayed there.
I have not seen reliability comparison.
Havent you seen the problems for the GEnx
“Boeing Co. urged operators of 787 Dreamliners and the newest 747 models that are powered by General Electric Co. engines to avoid high-altitude thunderstorms, which can cause engine malfunctions.”
That was in 2013
“Jetstar is understood to be working on repairs to a number of General Electric-made engines in its 787 Dreamliner fleet in order to resolve the problem, which could lead to a loss of oil pressure.
The engine problem could trigger a mid-flight engine shutdown, such as the one that forced one of Jetstar’s Dreamliners to divert to the Pacific island on Guam during a flight from Japan to the Gold Coast last week.” news.com.au
That was days ago
“The company[GE] recommended Dreamliner operators modify a “dampened radial gearshaft” to prevent “induced resonance failures that have caused approximately eight in-flight engine shutdowns and oil loss events across the world”
As for efficiency both GE and RR have rolled out PIPs as both were behind their numbers.
Strangely GE on its nx web page doesnt go any further than saying its engine is the ‘fastest selling’ while RR says their is 3% ‘ better fuel burn’ and ‘most reliable on 787’
Of course both manufacturers have produced great engines. Its debatable that the 3 shaft these days is that much more complex. After all even 2 shaft designs have a ‘booster compressor’ behind the fan much like a 3 shaft IP compressor and the 3 shaft only has a single stage IP turbine extra.
eg GEnx Compressors 1/4/10 turbines 2/7
RR ” 1/8/6 turbines 1/1/6
I didn’t know about the booster, need better pictures!
Will look at RR, my understanding is they never got to the mark they set, GE did not either but by a smaller percentage.
Both get there with the -10 offerings, GE may increase its lead and do better, will see. It does have more thrust, use it or put it in the bank for fuel savings.
I think the 787-10 is about right sized for the segment, but lags the required payload range the e.g. 772ER and A359 offer.
Further developments have taken place by GE & RR on bigger engines. New materials and technology’s are maturing that were at in infancy stages 10 years.
For the 787 a larger or enlarged wing to handle higher wing loading and store more fuel would enable Boeing to handle the payload-range gap not filled efficiently by the 787-10 and 777-8.
It would be very similar to the 767 and 777-200/-300 to 200ER/300ER upgrades Boeing did in the past.
Market developments could again have Boeing bite the bullet earlier than they hope/ expect.
There’s just not a lot of WB sales period. It’s not really fair to say it’s either company’s product strategy/pricing/position.
Terrorism, war, violence, and fear of it are taking a toll across the globe (well, except for China, really). No matter how many times Keesje posits on various websites his theory that the A35K is a category killer (nevermind that it’s sold to two customers in 8 years or whatever now), that’s not what the Boeing board is reacting to, I believe.
The resurgent boom cycle will come, but I’d guess it’s closer to 24-36 months away than 6.
“nevermind that it’s sold to two customers in 8 years or whatever now”
– Please tell me you were being disingenuous there.
“nevermind that it’s sold to two customers in 8 years or whatever now”
It’s all about 1) inconvenient truth and 2) convenient un-truths.
This one seems category 2. Since 2010 we saw A350-1000 orders from United Airlines, Cathay Pacific, British Airways, Japan Airlines, ALC, Virgin. All 777 customers btw.
11 A350-1000 Customers so far. Add 1 or 2 dozen A350 customers with -1000 conversion rights. And that’s category 1.
“All 777 customers btw”
– not Virgin Atlantic.
We can discuss various orders/commitments, ownerships, -1000 orders or options/ rights. But it doesn’t change the writing on the wall. And I think / hope Boeing knows at to well. Although I’ve seen amazing close your eyes / stick to the party line examples in the past. http://www.boeingblogs.com/randy/archives/2010/08/sharks_and_jets.html
Pardon but it’s not a mass defection or a coup for the A35K from the 777. With or without conversion rights, the A35K, along with ALL widebody aircraft from both OEM’S, are not selling. It’s a soft market. Airlines are in no rush to buy new metal when older aircraft can do close to the same job minus the acquisition costs. When the “true” 77W replacement cycle begins, then we’ll see. I’d give it another 5 or so years.
I agree and maybe thats why the A330neo is doing well-it costs 100,000 less than the A35K! As for the Emirates order,have no fear,Clark will order Boeing,he just uses Airbus as a lever!
Scott, how old is the Aviation Week estimate? It seems that they are projecting 223 firm WB orders this year, which is considerably more aggressive than B’s own target.
The article was published this week. The Boeing forecast was from May. I don’t know when the AvWeek forecast was actually made.
Sorry, I misread that! The “more aggressive” numbers are a DELIVERY forecast, not a sales forecast. In which case it is perfectly credible. My apologies for the confusion.