Boeing optimism for 767 fading

[icymist]

http://seattlepi.nwsource.com/business/173138_boeing13.html



Thursday, May 13, 2004

Boeing optimism for 767 fading
Air Force deal or not, Mulally says decision likely due very soon

By JAMES WALLACE
SEATTLE POST-INTELLIGENCER AEROSPACE REPORTER

Its tanker deal with the Air Force stalled and possibly dead, The Boeing Co. is closing in on a decision to end production of its 767 jetliners.

Boeing commercial boss Alan Mulally said that decision could come in the next few months.

"If they want it, we're ready to make it," Mulally said of the 767 tankers for the Air Force. "But if they can't make that decision soon, we'll have to shut the line down. We are getting to the place in the next few months that we're going to have to make a decision."

Boeing's deal to supply 100 767 tankers to the Air Force is on hold pending reviews that were triggered by an ethics scandal. And there are growing signs that the tanker deal will either be postponed into next year or be scrapped altogether.

(more)

[gratuitous]

1. Can't Boeing make it without government welfare?

No offense to any Boeing employees who may be posting here, but I thought the Republicans were such devotees of the magic of the marketplace, and agin all the evils of big gummint. Why shouldn't Boeing produce something that people actually want to buy, instead of being in business solely to service government contracts?

[gulfcoastliberal]

2. Dude, Corporate Welfare is a different thing than Citizen Welfare

The pugs are funded by these corps, hence the shady ass tanker deal. Pubbies are all for corporate welfare and giving away tons of public money to private companies whether it's bailouts or no-bid contracts and bullshit tanker deals. Free marketplace is only when people demand some corporate accountability.

[gratuitous]

3. Oh yearh, I forgof for a moment there

Thank you sibling, for reminding me what "We the People" really means.

[mulethree]

5. hmm civilian tankers? why not?

A long range jet carries as much fuel as it does cargo/passengers. As much as 450,000 pounds of fuel, 62,000 gallons.

If you used a smaller plane, with more cargo/passenger space and less fuel tank space, and refueled it half way there. Then you take numerous tons off the weight of the plane, and more tons off the fuel load and end up using far less fuel that a normal nonstop trip. You could save 40% on fuel but kick back 10% to fly the tanker plane for an overall savings of 30% of fuel.

How expensive does fuel need to be before it's worth doing?

[FlashHarry]

6. Funny. That's just what they're accusing Airbus of.

They claim Airbus gets government "subsidies," when all they get are fair-market rate loans, which they have to pay back.

[mulethree]

7. not quite

If it were a fair market rate loan, then why not get it from the public sector? No need for any government to get involved, issue some corporate bonds or get loans from big banks.

The loans you speak of are at the government's borrowing rate + 0.25%. Thats not the same as fair market rate.

Fair market rate would be determined by credit-rating scores like from Moody or Fitch. Then the investors look at the terms of the deal (the loan or bond) and the risk (rating) and decide how much return they need in order for this deal to be as profitable as deals with similar terms and risks.

Airbus has a pretty crummy bond rating due to concerns that customers (airlines) who have leased and ordered planes are in danger of bankruptcy. The latest ratings I could find are just below a 'B' rating with a downward watch on them. So technically an Airbus bond offering would be a junk bond and cost nearly 3 times as much in financing costs as this government loan. This is why it's a subsidy.

Terror scares and expensive fuel are not good for airlines. At some point it becomes worthwhile to get rid of older planes and get new ones that use less fuel. But there seems to be a real need for numerous airlines to go out of business and bail-outs don't help in that regard. But an airline failure results in numerous used planes on the market which hurts the market for new planes .......

So both Europe and the US have so much invested in Boeing and Airbus that we all subsidize both of them every time an airline is bailed out or given favorable bankruptcy treatment. Keep oil prices high for a year and this could fix itself?

Definitely not a free market.

[Davis_X_Machina]

4. Throw away your 700p." Wealth of Nations..."

...the real Republican economic doctrine is simple.

Privatize the profits, socialize the risks.