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Dutchy
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Re: Financial effect of the 737MAX grounding

Fri May 24, 2019 8:09 pm

afgeneral wrote:
Dutchy wrote:
BravoOne wrote:
Some internal unauthorized talking heads are putting this at 15 Billion. BTW, Boeing is pretty much a self insured model.


15 bn?! Hopefully not......

That would be the most extreme case, but even then.


That's not the most extreme case, maybe a slightly pessimistic case assuming the MAX resumes flying later this year.

The most extreme case would be they have to scrap undelivered aircraft, buy back all MAXs already delivered and scrap them as well, cancel the order book and be left with the NG to compete with the NEO for 5-8 years so they can design a new narrowbody.


So how much would the tally be than in the most extreme case? 30bn for the a/c, 5bn invested in the program, and 10million for the next 5.500 a/c on order to convert them to NG, so another 30bn? Plus 5bn in other expenses. So 70bn in all. You are right, that is way more expensive, unthinkable even.

I thought 1 bn a month was quite a lot, but that tally is creeping up I guess, if Boeing people starting to talk about 15bn, if true of course, which is hard to varify.
Many happy landings, greetings from The Netherlands!
 
mwhcvt
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Re: Financial effect of the 737MAX grounding

Fri May 24, 2019 8:15 pm

Remember here we are talking about Michael O’Leary here there man has very little class, this is the same man that famously raped Boeing in its post 9/11 coming along and placing a order at fire sale prices when no other airline was all that interested in big orders or orders period, and supposedly got such an amazing price that once the airframe reached its first heavy check he was able to sell it on at a profit over the purchase price because the market had recovered by that stage (I don’t deny that was a very screwed business move on his part, and went a long way to making the airline what it is today)

But seriously how many MAX has FR taken thus far, its only a couple at the most from memory if that, and how many should they have by now, I find it very hard to believe it’s cost the airline hundreds of millions in profit in a one quarter, FR is a very profitable airline but not that profitable even if deliveries were going as planned the max would barely make up 0.5% of the total FR fleet
Must think up a new one soon, slow moving brain trying to get into gear ;)
 
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ACCS300
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Re: Financial effect of the 737MAX grounding

Fri May 24, 2019 10:08 pm

Dutchy wrote:
ACCS300 wrote:
I'd be VERY surprised if AC is seeking major compensation, they are, by % of narrowbody fleet, likely the most affected airline. Their 24 MAXs accounted for almost 1/4 of their narrowbodies. Since the MAX groundings, AC has had to employ the services of Qatar Airways YUL-BCN and some YUL-CDG and Omni Air for YVR- Hawaii as well as suspend some TATL routes like YHZ-LHR and other maritimes-Europe routes during the peak summer period.

Major impact IMO, hope AC is playing hardball with Boeing.



I guess you are saying you would be VERY surprised if AC isn't seeking major compensation, am I right to assert this?


Haha, apologies, yes, thanks for the clarification :)
 
DenverTed
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Re: Financial effect of the 737MAX grounding

Fri May 24, 2019 10:31 pm

If the grounding is a prudent act of safety and an overcautious act by the FAA, how much of that responsibility falls on Boeing, and how much on the FAA? The airlines can get compensation from Boeing, but the FAA is held harmless for their actions. What if the FAA takes longer than is needed or any other agency? Why does Boeing eat that cost? Maybe the airlines eat some of that.

One could argue that the US pilots should have the skill to shut off MCAS 1.0, and the entire cost is on the FAA erring on the safe side and the airlines bear the burden of the cost of safety.
 
BREECH
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Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 3:30 am

sassiciai wrote:
Boeing can still build the NG, it is still certified and good to go!

Not for long, it seems:
https://www.wsj.com/articles/maxs-retur ... 1558728091

The Classic-NG-MAX saga sure is coming back to bite Boeing in the tail cone. They are staring down the barrel of 6,500 NGs being grounded. And FAA/EASA haven't even touched the manual trim wheel loads on NGs. Yet. And while Boeing spokesman has rushed to say that NG's safety is not in question, I actually believe that's the only thing that is.

They can still make the Classic, though. :-D
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
RickNRoll
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Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 3:43 am

DenverTed wrote:
Cash flow might be tight. 60 aircraft a month at 50M is 3B per month missing cash flow, not that it won't come back when they do get delivered. That's another 100M to 200M in finance costs to replace that cash flow.
1B to the crash victims, 1B to the airlines, 1B for new software, training and finance costs. I would estimate 3B to 5B total cost for the MCAS design oversight.
Boeing is essentially a cash flow business. The magical accounting figures were largely irrelevant as they had the cash pouring in from the 737 and 787. They are going to have people looking at their share price very closely if this drags on for too long.
 
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Dutchy
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Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 7:12 am

BREECH wrote:
sassiciai wrote:
Boeing can still build the NG, it is still certified and good to go!

Not for long, it seems:
https://www.wsj.com/articles/maxs-retur ... 1558728091

The Classic-NG-MAX saga sure is coming back to bite Boeing in the tail cone. They are staring down the barrel of 6,500 NGs being grounded. And FAA/EASA haven't even touched the manual trim wheel loads on NGs. Yet. And while Boeing spokesman has rushed to say that NG's safety is not in question, I actually believe that's the only thing that is.

They can still make the Classic, though. :-D


If the FAA would to ground the NG, then Boeing will be in jeopardy, that is too big. Hopefully, it doesn't come to that and is this potential issue resolved with pilot training.
Many happy landings, greetings from The Netherlands!
 
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Jouhou
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Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 8:47 am

SRQKEF wrote:
aemoreira1981 wrote:
There are two airlines in particular who would be hit hard as they have the MAX but no NG: Air Canada and Icelandair. Has either filed for compensation?


I can’t answer for AC but in the case of FI discussions are ongoing according to the management of the airline.


Please plant the idea of the a220-300 into local discussions. Put on BOS route. I want as many a220 options as possible from boston!
 
kalvado
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Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 10:03 am

Dutchy wrote:
BREECH wrote:
sassiciai wrote:
Boeing can still build the NG, it is still certified and good to go!

Not for long, it seems:
https://www.wsj.com/articles/maxs-retur ... 1558728091

The Classic-NG-MAX saga sure is coming back to bite Boeing in the tail cone. They are staring down the barrel of 6,500 NGs being grounded. And FAA/EASA haven't even touched the manual trim wheel loads on NGs. Yet. And while Boeing spokesman has rushed to say that NG's safety is not in question, I actually believe that's the only thing that is.

They can still make the Classic, though. :-D


If the FAA would to ground the NG, then Boeing will be in jeopardy, that is too big. Hopefully, it doesn't come to that and is this potential issue resolved with pilot training.

Grounding is definitely not justified based on NG historic record. Some ADs, though, are possible. I would say worst case scenario for NG is a serious modification of jackscrew, if any of older accidents can be traced down to trim blowback.
 
NYCVIE
Posts: 126
Joined: Mon Jul 04, 2016 11:01 pm

Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 4:24 pm

DenverTed wrote:
If the grounding is a prudent act of safety and an overcautious act by the FAA, how much of that responsibility falls on Boeing, and how much on the FAA? The airlines can get compensation from Boeing, but the FAA is held harmless for their actions. What if the FAA takes longer than is needed or any other agency? Why does Boeing eat that cost? Maybe the airlines eat some of that.

One could argue that the US pilots should have the skill to shut off MCAS 1.0, and the entire cost is on the FAA erring on the safe side and the airlines bear the burden of the cost of safety.


I get your point but let me rephrase this so you can see how absurd it actually is.

"Boeing has a feature in an aircraft that can cause it to nosedive in a critical phase of flight, but since 'US pilots have the skill' to 'shut it off,' there isn't a real reason for a grounding other than the FAA 'erring on the safe side' so the airlines which bought the faulty product in which the fault was never adequately publicized should pay for it and not Boeing which manufactured the faulty aircraft."

:shakehead: :shakehead: :shakehead:
 
DenverTed
Posts: 153
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Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 5:07 pm

NYCVIE wrote:
DenverTed wrote:
If the grounding is a prudent act of safety and an overcautious act by the FAA, how much of that responsibility falls on Boeing, and how much on the FAA? The airlines can get compensation from Boeing, but the FAA is held harmless for their actions. What if the FAA takes longer than is needed or any other agency? Why does Boeing eat that cost? Maybe the airlines eat some of that.

One could argue that the US pilots should have the skill to shut off MCAS 1.0, and the entire cost is on the FAA erring on the safe side and the airlines bear the burden of the cost of safety.


I get your point but let me rephrase this so you can see how absurd it actually is.

"Boeing has a feature in an aircraft that can cause it to nosedive in a critical phase of flight, but since 'US pilots have the skill' to 'shut it off,' there isn't a real reason for a grounding other than the FAA 'erring on the safe side' so the airlines which bought the faulty product in which the fault was never adequately publicized should pay for it and not Boeing which manufactured the faulty aircraft."

Well, I do find it odd that Boeing will pay a huge cost due to an abundance of care for safety, yet ET and LionAir aren't grounded as well.
 
NYCVIE
Posts: 126
Joined: Mon Jul 04, 2016 11:01 pm

Re: Financial effect of the 737MAX grounding

Sat May 25, 2019 6:02 pm

DenverTed wrote:
NYCVIE wrote:
DenverTed wrote:
If the grounding is a prudent act of safety and an overcautious act by the FAA, how much of that responsibility falls on Boeing, and how much on the FAA? The airlines can get compensation from Boeing, but the FAA is held harmless for their actions. What if the FAA takes longer than is needed or any other agency? Why does Boeing eat that cost? Maybe the airlines eat some of that.

One could argue that the US pilots should have the skill to shut off MCAS 1.0, and the entire cost is on the FAA erring on the safe side and the airlines bear the burden of the cost of safety.


I get your point but let me rephrase this so you can see how absurd it actually is.

"Boeing has a feature in an aircraft that can cause it to nosedive in a critical phase of flight, but since 'US pilots have the skill' to 'shut it off,' there isn't a real reason for a grounding other than the FAA 'erring on the safe side' so the airlines which bought the faulty product in which the fault was never adequately publicized should pay for it and not Boeing which manufactured the faulty aircraft."

Well, I do find it odd that Boeing will pay a huge cost due to an abundance of care for safety, yet ET and LionAir aren't grounded as well.


I'm not sure how its odd. ET and LionAir crashes are both linked to MCAS which Boeing is still working on a software fix for because the system is faulty. Are airlines supposed to just fly planes with potentially life threatening flaws and just "train their pilots to the level of 'US pilots?'" Of course not, so Boeing has to fix the messed up system it created and of course it will have to pay since airlines aren't able to fly the plane (because at the end of the day they, not ET or Lionair, are at fault for the faulty system).

On another note these are also Boeing customers who they'll hope to get future orders from and its in Boeing's best interest that they pay the compensation and keep it moving.

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