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Boeing will not profit from the 787, says report

A recently published report says that Boeing will never make a profit from the 787 Dreamliner.

The report published by the International Institute for Strategic Leadership (IISL) says competing products such as the Airbus A330, A330 NEO and A350 XWB will, “keep downward pricing pressure on the 787 for decades.”

Boeing 787 Dreamliner.

Boeing 787 Dreamliner.

The report mimicks sentiments expressed by analysts in recent times. Though the 787 Dreamliner is a technological marvel, Boeing spent too much money developing it and correcting mistakes.

The 787 has attracted large orders, but most of the sales were obtained by offering airlines massive discounts on new planes.

According to IISL, Boeing needs to sell about 4,000 Dreamliners to begin making a profit on the 787. The total market for 787s is currently estimated at 3,000 aircraft over 25 years of production.

When the entire 787 programme is analyzed, the picture is not so good. Boeing will need to sell 13,000 Dreamliners for the programme to reach break-even point. That’s a hundred years of production at a rate of 12 per month.

IISL says the findings were predicted over a decade ago through, “extensive, rigorous, systematic research based out of leading research universities: MIT, Oxford & the London School of Economics.”

The research data is validated by Boeing’s announcement that accumulated production losses on the 787 exceeded $25 billion by the third quarter of 2014.

Interestingly, FlightGlobal magazine had an article back in 2010 about the profitability of the 787 programme. The article suggests that Boeing won huge orders for the 787 by offering steep discounts, especially in the years 2004 – 2006.

“I think we gave away some of the value of this airplane to a lot of our customers,” a senior Boeing executive is quoted saying.

To read the full report by IISL, please click here.

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