I think Boeing has lost it

[Spiffor]

Originally posted by gopher
Stumble, perhaps, but the US has made it clear it considers Boeing a national security industry for Space/Aerospace/Military, and protected by government

This is obvious. Not only it is unlikely that Boeing doesn't die because of Airbus by itself, (such a strong industrial base doesn't disappear like that), but I don't see the US accept to lose its ability to produce its own planes. It sounds simply absurd.

[Colonâ„¢]

Originally posted by TCO Nor is market research in existing markets always a good guide. But when you say it is impossible to do it and it is a routine part of any new large R/D initiative, I have to correct you. And I'll bet some serious Euros that it was done for the superjumbo...

I'm not claiming the superjumbo is a bold jump into the unknown. Market demand actually seems pretty certain considering the growth of cargo transport, even though it may not show up the next few years.
Airbus never the less is taking a big bet considering the huge capital outlays the superjumbo requires. And it strikes me how ironic it is Boeing was giving 'wise advice' to Airbus not to develop it, considering Boeing's own past.

Take the deal that prompted me to post this thread. On one side you have Airbus with a new aircraft design, on the other side you have Boeing offering refurbished airplanes and goodies to British industry, aimed at politicians concerns for employment. That's chicken**** stuff.

I don’t believe visionary management means that you try to put castles in the skies, but I do think it implies you ambition certain achievements, and pursue them even regardless of what market research tells you. I rather view such research as an implementation tool, nothing less, nothing more.

FYI: I think you are wise to realize that strategic planning does not cause certainty and that sometimes people get lulled into thinking that their guesses have more certainty to them than they really do, just based on all the work they did. Still, this does not mean that you get better answers by never studying the business problems logically and attempting to do analysis to support your decisions.

Yes I realise that, but I also believe that sticking to known facts and conventional wisdom only gets you so far.

[Colonâ„¢]

Originally posted by DanS
One thing to note is that there might not be much advantage to being first to market. Looked at one way, Boeing is relying on Airbus to prove the market on the superjumbo. Once and if the market for superjumbos is proven, they can put out a superjumbo of their own.

Again I refer to McDonnel Douglas. First they said there wasn't a market for civilian jets. When Boeing developed one, they used a wait-and-see approach. The 707 was a smashing succes and McDonnel-Douglas sticked to their wait-and-see approach. And when they finally did develop one of their own Boeing had already brought out the 727.

Wait-and-see pretty much sounds like a good recipe to lose market leadership. Never mind obtaining it.

[Colonâ„¢]

Originally posted by TCO


I don't understand your first question. What is it in refernce to? I would have to make this investment decision even if the company were private. I'm asking if you think the project is positive NPV.

On the second, absolutely. No argument.

It's in reference to the stock market's short-term views and their utter incapability to think out of the box.

[Joseph]

Boeing contribution to the USA and the World.

Boeing/Thomas-Morse MB-3A Army Fighter. 1923 to 1928
Boeing PW-9 and FB-1/2/3/4/5, Army and Navy Fighter, 1925 to 1927
Boeing XP-4 Army Fighter, production cancel
Boeing XP-7 Army Fighter, production cancel
Boeing XP-8 and F2B, Army and Navy Fighter, Army version cancel, but Naval version used for several years
Boeing F3B Navy Fighter, The Navy order 73 units, few for several years
Boeing F4B and P-12 Navy and Army Fighter. Last Biplane built by Boeing. 1928 to 1933
Boeing XP-15 and XF5B-1 Army and Navy Fighter, both version were cancel
Boeing XP-9 Army Fighter, production cancel
Boeing P-26 Peashooter, also sold to other Nation. Flew against Japanese bomber and shot down some during the early Chinese war with Japan.
Boeing XF6B-1 (XBFB-1) Navy Fighter, production cancel
Boeing XF7B-1, YP-29, SP-940, XP-32 Navy and several Army Fighter, production cancel
Boeing XF8B-1 Navy Fighter and Boeing last fighter. First flight 11/27/1944, The jets kill it. Production cancel
Boeing Y1B-9A, Boeing first bomber. This plane was to fast for the fighter of the day, 1931
Boeing XB-15 Army Bomber. 1938, used as a cargo plane during W.W.II (XC-105).
Boeing B-17, W.W.II Bomber, first flight 7-28-1935 and stay in service until the 50s\
Boeing XB-20. This plane was never built, however it show the way to the B-29.
Boeing B-29, First Nuclear Bomber, W.W.II
Boeing XB-39 A B-29 with Allison V-3420-11 engines
Boeing XB-44 A B-29 with PW R-4360-33 Wasp Majors of 3,000 HP
Boeing B-47, First Jet Bomber for Boeing.
Boeing B-50
Boeing B-52 It is still here and Bombing
Boeing B-54A, another version of a B-50
Boeing XB-55 A turboprop version with sweep wings. So this is were the Soviet got their idea for the Tu-95.
Boeing XB-56, a B-47 with new engines.
Boeing XB-59, a new plane. Never built
Boeing/Rockwell B-1, Boeing is now the owner of McDonnell Douglas and Rockwell International (North American).
Boeing/McDonnell Douglas C-9A/VC-9C nightingale (DC-9)
Boeing/McDonnell Douglas KC-10A Extender, Air refuels (DC-10)
Boeing C-15, production was canceled by Jimmy Carter
Boeing C-17 Globemaster III Still building
Boeing C-22B/C (727)
Boeing VC-25A (747-200)
Boeing C-32A (757-200)
Boeing C-135/KC-135/EC-135 and NKC-135 Still flying
Boeing OC-135/RC-135/TC-135 and WC-135 Still flying
Boeing C-137/EC-137/VC-137/EC-18 and TC-18 (737)
Boeing E-3B/C Sentry
Boeing E-4B
Boeing T-43/CT-43A (737-200)
Boeing/McDonnell Douglas F-4 Phantom II
Boeing/McDonnell Douglas F-15
Boeing/Northrop Grumman E-8C Joint STARS, TE-8A
Boeing 707
Boeing 727
Boeing 737
Boeing 747
Boeing 757
Boeing 767.
They are not out of business yet.

[CharlesBHoff]

Originally posted by yavoon


like I said the loans are often forgiven and/or rolled over.

and for further point as to why the "EU wouldn't dare break a treaty." treaties are broken constantly. US breaks them, EU breaks them, china pisses on them.

hell wasn't there a balanced budget amendmant in the EU that france and germany couldn't wait to piss on before the ink was dry?

There is no just thing as than balance government budget as you cannot accurate prefit what your revenue will be or what your expenses will be. Let say the West Coast is hit by than massive earthquake which cause 100 billion dollar worth of damage that the US government will help the west coast even it if mean unbalanceing budget for the current year and the next couple year.

Even President Ike who want than balance budget every year in office has than hard time doing so, some year there where afew billion dollar surplus and some year a 1 to 2 billion dollars in red ink.

[yavoon]

Originally posted by CharlesBHoff


There is no just thing as than balance government budget as you cannot accurate prefit what your revenue will be or what your expenses will be. Let say the West Coast is hit by than massive earthquake which cause 100 billion dollar worth of damage that the US government will help the west coast even it if mean unbalanceing budget for the current year and the next couple year.

Even President Ike who want than balance budget every year in office has than hard time doing so, some year there where afew billion dollar surplus and some year a 1 to 2 billion dollars in red ink.

I dont see the point at all. are u saying germany and france are in severe economic strife and have no choice but to break a treaty they JUST MADE?

I didnt read about any earthquakes in either country.

[TCO]

Colon, do you think the project is positive NPV?

[DanS]

Sorry to nitpick, but I have to disagree. In the area of Aerospace, this is not really true. The R/D, design time, and time for retooling the plants is increadably long.

Yes, I agree with TCO that this is a good point. On the other hand, Airbus is in the same boat, even if they have a head start. The payback period is rather long as projects go. It is easy for Airbus to misjudge the market (in either direction) and not make any money, even if they have a lock on this particular segment.

Airbus never the less is taking a big bet considering the huge capital outlays the superjumbo requires. And it strikes me how ironic it is Boeing was giving 'wise advice' to Airbus not to develop it, considering Boeing's own past.

Take the deal that prompted me to post this thread. On one side you have Airbus with a new aircraft design, on the other side you have Boeing offering refurbished airplanes and goodies to British industry, aimed at politicians concerns for employment. That's chicken**** stuff.

Yes, I agree that this is chicke**** stuff, although I really don't know what's wrong with the refurbished stuff. The context here was an encouragement by the US gov't in the mid 90s during the Clinton administration (it was a bipartisan effort) for the defense/aerospace industry to consolidate. The defense budget was shrinking after the Cold War...

So you have a lot of people still running the show who were brought in to consolidate. From what I could tell as an observer, this impacted Lockheed-Martin much more than it did Boeing, however. Post merger, Lockheed-Martin became devoid of any leadership whatsoever.

This is obvious. Not only it is unlikely that Boeing doesn't die because of Airbus by itself, (such a strong industrial base doesn't disappear like that), but I don't see the US accept to lose its ability to produce its own planes. It sounds simply absurd.

I don't think it's obvious, as such actions are now rather gauche in the US. When was the last time that we had a real government bailout (French style) in the US? Rather, the government would just encourage an existing defense firm to pick up the strategic military assets of Boeing.

[monkspider]

It's funny to hear Spiffor talk about Wichitans.

[TCO]

If I am a shareholder and have a choice, I want positive NPV. Level of chicken**** means nothing. It may be braver to take on a tank with a horseman then the reverse, but I go for the odds. (Note this does not mean I am anti-risk. Just that the NPV containst the probability weighted returns.)

[Colonâ„¢]

TCO, regarding your PM:

TCO wrote on 24-01-2004 15:31:
I don't think building a superjumbo is thinking outside the box. It may have high risk. But it is not "outside the box".

So, do you think the project is positive NPV?

I knew you'd come back to this.

No, the superjumbo is treading trodden roads. I already said I don't consider Airbus as a example of a audacious company. I presume their greater willingness to take risks is mostly due their desire to beat Boeing.

The outside-of-the-box thinking does apply with projects Boeing has undertaken in the past, and possibly the Sonic Cruiser as well hadn't it been a mere publicity stunt in reaction to the superjumbo.

I didn't reply to your NPV question, firstly, because I'm viewing Boeing in broader sense, beyond their strictly legal function to provide a decent return to their shareholders. I'm also considering it as an institution who's purpose has been to advance aviation.
Secondly, I find the question a bit narrow in scope. Should I be for a project with a positive NPV? Yes of course, but how can I know for sure until it's actually carried out?
If I'm a dispassionate fund manager I'd probably say "no", because I want earnings to be as reliable as possible. If I got that big stake because I'm a co-founder or something else that creates a personal bond I'd say "sure, go ahead, and if it doesn't work out well, try again".

[TCO]

A project can be positive NPV and still have very high risk. You could have a very low risk project (print money, put under mattress) and it will be negative NPV. Similarly, you could show your balls by investing all the money in a futures bet. Huge upside. Shows balls. But not positive NPV either (unless you are smarter than the market...in which case you should be a trader not a aircraft maker.)

You could also have a low risk project that is positive NPV (changing FIFO/LIFO for instance). Or you could have a high risk proejct that is pisitive NPV (any time a pharma company bets on a new drug, they take that risk. And more than half of major drugs (costing close to a billion dollars to develop) do not make profits.

I agree that it is hard to know what is positive NPV. I am NOT arguing for conservatism as a result of value-based thinking. I am just asking if you think the project is positive NPV. I'm not asking for certainty. That is a logical error. I'm asking if you would take the bet as a betting man. Assume you are diversified, etc. but that you get no dick-size credit or ego-boost. Just taking a risk with the money. Does what you know say positive NPV or negative?

[Colonâ„¢]

Positive.

[TCO]

Originally posted by Colon
Positive.

Then as a dispassionate funds manager, you should be for the project. As a funds manager, you are diversifed. All you car about is NPV. If anything, you might need to push management to do the project and overcoming their conservatism. (since they are not diversified...this is the whole 'options rationale').