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Boeing Stock is Ready for Takeoff
TITLE: Boeing Stock is Ready for Takeoff
TEASER:
My family has a very long history with Boeing (BA). During WWII, my dad got down on his knees and kissed the runway when the B-17 bomber in which he served as tail gunner (two probables) made it back, despite the many holes in the fuselage.
Some 40 years later, I got down on my knees and kissed the runway when a tired and rickety Boeing 707, held together with spit and bailing wire, which was first delivered as Dwight Eisenhower’s Air Force One in 1955, flew me and the rest of Reagan’s White House Press Corp to Tokyo. I even tried to buy my own B-17 in the nineties, but was outbid by Paul Allen on behalf of his new Flying Heritage Collection at Washington’s Paine Field. Note to self: never try to outbid Paul Allen again.
So when I received an invitation from senior management to inspect the plane a week before its formal launch, I carved out the extra time from my Seattle strategy luncheon to make a quick trip to the Everett, Washington production facility. Driving there, you are overwhelmed by the enormous scale of things, with a gigantic hanger lined with spanking new 787’s in various stages of colorfully painted colorful foreign airline logos. If Picasso painted on a grand scale, as Christo did, this is what the masterpiece would look like.
The 787 is such a great leap forward on so many fronts that airlines will be forced to buy the plane in large numbers just to stay competitive with each other, as they did with the 747 some 40 years ago. At least 50% of the airframe is made of carbon fiber, which has 40% of the weight of aluminum with three times the strength. Expect to see carbon fiber automobiles hitting the mass market in a decade, as this is how long it takes for airplane technology to migrate into the auto industry.
Fuel efficiency is 20% better than the best engines currently out there, a major consideration when the next economic recovery takes oil up to $150 a barrel again. The maintenance cost is 30% lower.
All Nippon Airways, one of Boeings largest customers, took delivery of the first 787 this morning after a three-year delay. At $185 million each, (BA) has an order backlog of over 800 planes worth $145 billion. The company expects to reach its maximum production rate of 10 planes a year by 2013. Boeing probably won’t become cash flow positive on the product until it has delivered 200-300 aircraft, probably sometime in 2014. After that, the economies of scale really kick in. The company is believed to have some $17-$23 billion in R & D tied up in the plane.
Boeing has oodles of cash, a 2.9% dividend, and an increasingly scarce A+ rating on its debt. Its immensely profitable defense business still accounts for more than half of revenues. The Dreamliner will no doubt deliver a huge kicker for earnings. Its main competitor, Airbus, does have the minor problem in that its planes keep falling apart fully loaded with passengers. If you can get (BA) under $55, you’d be getting a best of breed Company at a mongrel price.
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Why do they let this asshole post here? All he does is advertise his own garbage. Is he paying Zerohedge for the privilidge of posting?
Why can't we rate this zero? 1 is too high for this guy.
P.S. He's trav's father (but don't tell anyone, he doesn't know)
Great concept, but personally I am not too trusting of materials that have little to no margin between healthy and total fracture being used as structural components. Maybe Boeing has accounted for this and will produce long term cashflow by spec'd replacement cycles for carbon fiber structural components. You have to have a magnigfied X-ray to pick up the microfractures in the carbon fiber if you want to "keep using it".
I'll wait a for a few years of flight time before I choose to fly on one.
"Boeing Stock is Ready for Takeoff"
????
What is this, the MSNBC?
Not quite. The only known 'financial' columnist troll.
I throw around financial very lightly, I might add. His columns are so fucking dumb, the unintentional comedy is fairly funny to read.
10/month
http://www.kake.com/home/headlines/Allbaugh_787_Production_Rate_Could_Climb_115205484.html
Could someone go through the economics of fuel savings? The planes cost 185 million dollars and save 20% on fuel. On average how much does this size airplane spend on fuel a year? So how many years does it take for the fuel savings to justify a purchase?
My own guess is this is like the justification for spending $40,000 to buy a Chevy Volt electric car because of fuel savings: the numbers just don't work out.
I am one of those who see a very poor economic future for airlines, as I see a very poor economic future for the world--and I see the vast majority of air transporation as discretionary and thus one of the first things to be eliminated in hard times.
And to think that 70% of the 787 is built overseas. Expect the 797 to be built in China.
Can't go wrong with Boeing. The Feds bail them out every 15-20 years.
Yep same as Airbus ..ah, what a wonderful (rigged) world
Um er ahhhh....
Man. Am I the dumbest person in the world, or what? Isn't ten planes a year for two years, ah, twenty planes?
I'm serious. Am I missing something huge here, or is the rest of the bizzarro world really that flat-assed dopey?
Please, somebody tell me where I'm wrong.
A typo. It's ten planes a month. This is common knowledge.
Well, then, there you have it.
A typo.
Am I missing something as well. Last I checked, every U.S. based airline is losing money, except Southwest. If the government didn't keep bailing them out, they wouldn't be buying any planes.
I am not so sure this thesis by MHFT is any better than buying TBT at $40 a few months ago. LOL.
"The maintenance cost is 30% lower."
....And the Iraq War is only going to cost $84 Billion and will be funded with Iraqi oil.
"Its immensely profitable defense business still accounts for more than half of revenues."
Thought this was a particularly humorous oversight in light of the high degree of uncertainty around defense cuts.
Boeing is toast ....it is a quasi public-private partnership ...all companies without exception that enter into the 'death clutch' of regular partnership with Govt has its enterprise (lifeblood) sucked out of it and profit margins go pear-shaped (bloated as the loss of commercial discipline goes down the pan)
this is why truly great companies like Caterpillar and JCB keep the stink of Govt at arms length and never ingratiate themselves with public contracts ..once you join Govt you're the walking dead (a Zombie Corp). Boeings insolvent history is already littered with the red flags and flashing neon warnings this company is a flying zombie
with the haircuts in air-travel about to begin and major limb surgery starting on the bloated Govt Frankenstein Boeing is going to look like a flying pig without aerodynamic credibility that no amount of lipstick can fix or keep flying
Mr Summers memorable and romantic investment advise does not fly ..this pig is stuck in the mud
good fluff...Boeing has been giving away 757 and 737, to keep contracted 787 owners happy, and many believe, thrown the bady out with the dishwater...
"giving away 757"
Pretty hard to give away an airplane that has been out of production for about 7 years!
Also, I don't know the exact numbers (as no one outside the company does) but they are making a good margin on the 737.
Someone wants to unload their > $90 BA from 2007. LOL
It'll be a steal at $40, not $64.
No shit. Do not throw this loser any lifelines.
ever seen carbon fiber shatter on impact? it's not aluminum, so it does not bend nearly as much. when it cracks - it's game over.
after the history of failures durign tests, i won't fly 787 until they're at least a decade in mass use and are proven tobe reliable.
CarbonFIber is tiny carbon fibers embedded in expoxy. The epoxy will oxydize slowly over time, so the newer the plane the better. Not too different from metal fatigue, though.
As far as formula one is concerned:
#mce_temp_url#
I was reluctant to show that because of the two fatalities in motorsport this week, but the driver, Robert Kubica, gets through this crash with a minor concussion. These cars are structurally 100% carbon fiber, no aluminum. The car is designed to disintegrate like that to dispate energy so the driver doesn't have to. The driver is in a survival cell, which is built not to disintegrate.
The will be made of multidirectional fibers so it won't come apart like that. It will shatter, but only at force levels in excess of what aluminum can tolerate. Aluminum bends at first, but then tears. Carbon Fiber burns but don't kid yourself, Aluminum burns too, just at a higher temperature.
The reduced weight will make the plane more airworthy, preventing crashes in the first place. Its a trade off, but a good one. Modern technology is sometimes counter-intuitive so just guessing is a poor way to make a judgement about its saftey. Aerospace technology leads the automive industry, but race car technology leads aerospace. I've seen an F1 car sitting next to an F-18, and ther is NO COMPARISON, the F1 car is generations ahead in contruction and design.
It's probably worth noting that race cars are almost never reenforced with aluminum. They went from tubular steel frames straight to carbon fiber, so what does that tell you about aluminum in a crash? Race cars crash, airplanes aren't supposed to.
Yes, I watch Formula 1 and although those cars exhibit unbelievable performance, it doesn't take a lot of force to shatter carbon fiber if stressed in the wrong direction. I agree, this aircraft could require exptensive inspections to make sure there are no cracks in the frames.
Call level at $10 please.
BA huh?
Wed, 03/30/2011 - 12:54 | Mr Lennon HendrixGood article except for this,
Peak oil MHFT. Read about it.
I think the best play is BA. No reason to own an airline when their books look like a dog chewed at the edges. BA is like owning a gold miner. They produce what you want.
Airline Stocks Could Be Ready for Take Off:http://www.zerohedge.com/article/airline-stocks-could-be-ready-take
While MHFT is correct about all the wonderful things on the 787, the bird is years behind schedule and overweight
until the get the weight down, BAC will pay billions in performance penalties.
worse, the Airbus 350 will hit 90% of the goals of the 787 and be online real soon.
worst, Boeing gave 80% of the plane away to mitsubishi, china, LTV, etc... Very little money will flow into BAC.
It's a beutiful bird, but it will probably hurt BAC more then benefit them.
The 350 will have a 3% higher carbon fiber content than the 787. I dont know if it has the revolutionary design, but its here in 2013, and at the current rate Boeing will only have 30 planes delivered. Another huge issue is the war on the unions in Seatle, Boeing is trying to move production to South Carolina. Good luck with that.
"At $185 million each, (BA) has an order backlog of over 800 planes worth $145 billion. The company expects to reach its maximum production rate of 10 planes a year by 2013. Boeing probably won’t become cash flow positive on the product until it has delivered 200-300 aircraft, probably sometime in 2014. After that, the economies of scale really kick in. The company is believed to have some $17-$23 billion in R & D tied up in the plane."
If Boeing intends to deliver 200-300 aircraft by 2014, the max production rate is 100 planes a year. At the present, I think it is around 24. They will also have to tie up more $$ in R&D to solve the weight issues that limits the range of the early production models.
Personally, given the choice of flying the Boeing 787 or Airbus A380 long haul, I would go for the much bigger and more comforable Airbus.
I too know for a fact that the 787's picture is not as rosey as it was portryed in the article. Delays, cancellations, production problems, Airbus 350 etc etc.
What I don't understand is why the larger plane is the more comfortable. I flew on a 380 with Lufthansa over the summer. Their in-flight magazine clealry states that in order to be effective the 380 must be full. Otherwise, the numbers do not work. So, the main issue is how many seats the airlines cram into a certain space. Trust me when I tell you, it was neither spacious nor comfortable. It was a tiny, skinny seat and when the lady in front of me reclined her seat the screen was so close to me that I could not watch the movie on my screen.
The 380 is noticeably (not significantly) but noticeably quiter than older planes
I regularly fly with Singapore Airlines, and I really notice the difference in comfort and "stability" of their A380 aircraft as a passenger. It reminds me of the first time I flew on a 747 when I was a child (Before various airlines started cramming all the seats closer together) - spacious, quiet, and I hardly noticed the takeoff and landings. The London to Singapore route can be quite gruelling, but without wishing to sound like an advert for the aircraft or airline, I can vouch for the comfort of the A380.
Is it my imagination or have pilots become less adept at smooth landings? Landing onboard a 747 these days is like crashing in a giant vibrator. I swear 747 pilots were a lot more smoother when I was a kid.
I flew a ton of long haul over a 20 year period. Most times the transition from flight to land or vice versa was barly perceptable. The smaller planes it was rare not to hit hard.
Well, unless one is betting on a mad max scenario TEOTWAWKI, a company with this big a backlog should do well in a rational and sane economy. Pity we don't have the latter.
Funny how with the Federal Reserve undermining capital, along with the federal agencies undermining profitability through a myriad of regulation, nobody can make an honest buck serving customers.
Didn't China just increase their orders. LOL
Boeing has always been a dog...theres been a 'glimmer of hope for stock lift-off' for decades.
dog, did you get in one of the last slots mft had open in his millionaires club....?
Greece, Portugal, Ireland, Spain, Italy, France, the UK, Belgium and many other nations are lined up, ready and waiting to order Boeing's latest offerings.
But they and their insolvent private sector banks are going to need to be bailed out by some generous sugar daddy, to the tune of some factor of trillions of euros, before their credit scores will be good enough to qualify for airplane financing.
MadHedgeFundTrader is preparing his conviction buy list for tomorrow, which will include Barnes & Noble, Xerox and Rite Aid.
Lots of mistakes in this 'article'. Max production rate of 10 planes a year by 2013? Cash flow positive by 2014 after selling 200-300 aircraft? Boeing wants a production rate of at least 31 aircraft a month and the whispered word is cash flow positive after delivering at least 800 aircraft.
Since you can actually count, I'm sorry to inform that you will not be admited into the MHFundTrader's Millionaries Sauna Club.
+1 HaHaHa-hah-ah-ha...
Good one...
10 planes a year means quite some time to build 800 planes.
Airbus still doesn't understand the failure modes of composites, which are much different than that of aluminum. I don't remember a pilot being able to rip the vertical stabilizer off a Boeing plane by stepping on the rudder.
composites have been used for decades on military aircraft and you're mixing up airbus with boeing.
Airbus has been using composites in production transport jets for some time, and has had failures of major structural components. I think wings should be metsl.
That being said, I own a composite airplane, but I don't fly it through high turbulence and don't make 5 take-offs and landings a day.
it is a joke, i am sure
"Because a co-pilot hit the wrong button, an All Nippon Airways (ANA) aircraft, carrying 117 passengers and crew, momentarily lost control and spun while dropping over the Pacific Ocean.
The aircraft bound for Tokyo flipped almost 140 degrees to the left after the co-pilot confused command switches while trying to unlock the cockpit cabin door for the captain who was returning from the lavatory...The mishap took place during a domestic Boeing 737-700"
Simply buy Airbus, will be safe even with pilots with fat fingers :)
Uhhh, Airbus airplanes have a long record of CFIT( controlled flight into terrain) crashes.
And there are a number of disappearances of over water routes in the past few years.
co pilot committed Hari Kari upon landing
Where's the part where if I call right now, you'll make one payment for me?
Tyler, why do you allow this garbage?
"Tyler, why do you allow this garbage?"
McHegeFund must have nude pictures of Marla...