Seeking Alpha

GarryGR

GarryGR
Send Message
View as an RSS Feed
View GarryGR's Comments BY TICKER:
Latest  |  Highest rated
  • Boeing's move to boost 737 output is understandable but risky [View news story]
    Reminds me of the old country western song, "That's Good, No That's Bad"! ;-)

    But, I think Boeing's success with the 737 is a little embarrassing for John Leavy; he's worked feverously for over a decade now to win the yearly orders race with Boeing, which Airbus claimed the bulk of the times. But since 2012, Boeing has been delivering more planes than Airbus and it appears that will continue for a number of years. Doesn't say much for those order victories, does it?! ;-) And the pressure Boeing is receiving from customers clamoring for faster deliveries of the 737, doesn't fit well with the Airbus folk's story line, either! ;-)
    Oct 4, 2014. 06:15 PM | Likes Like |Link to Comment
  • Airbus condemns German government over defense exports [View news story]
    Surprise-surprise! ;-)
    Before Saddam was overthrown, the French continued to supply Saddam Hussein, despite the U.N. sanctions, which prohibited the transfer to Iraq of arms and materiel of all types, including military aircraft and spare parts. As documents "liberated" after the IRAQ invasion revealed, the French business motto appeared to be, "Never let ethics get in the way of business". Airbus has sold a lot of planes by doing things that would be illegal for Boeing"! ;-)

    One link on the subject: http://bit.ly/1nOzraS
    Sep 11, 2014. 03:00 PM | Likes Like |Link to Comment
  • Boeing struggles to find buyers for early version Dreamliners [View news story]
    Question is, how many of these early production 787s are left to be sold? Without knowing that, I don't see how one can determine the significance of this story? Does the ~10 787s include the cancellation of 9 787s?
    Aug 29, 2014. 06:04 PM | 1 Like Like |Link to Comment
  • Boeing poised to boost 737 production, analysts grow wary of demand ceiling [View news story]
    The driver for increased production is demand, as well as increased profits. But there's no increase in profits / revenue if you increase production but it winds up in inventory. But, an order for a 737 placed today won't be delivered for a number of years and airlines don't want to wait that long. Unless there's another economic crisis / collapse, there isn't likely to be any over capacity for some years to come.
    Aug 23, 2014. 04:53 AM | Likes Like |Link to Comment
  • Why Things Still Look Optimistic For Airbus [View article]
    Airbus and Boeing are both doing really well. As usual, Airbus has succeeded in hyping airshow order numbers and getting the favorable press they so long for, as illustrated by these statements in this article: "Airbus had an excellent run at the Farnborough air show held last month, which CEO Fabrice Bregier described as "…this is the best Farnborough Airshow in Airbus history and the third biggest [air show] ever if you include the Paris Air Show." Before Farnborough, Airbus had only 290 firm orders, while its U.S. competitor Boeing (NYSE:BA) had 649".

    It should be obvious how Airbus won such a huge victory in orders, at Farnborough when you discover that after the show, Boeing still had a commanding lead in net orders. "net" being rather important key since Airbus has had a record number of cancellations this year, which, by the way, were orders Airbus claimed, in the past, to best Boeing's yearly order totals! ;-) But, in the Airbus / Boeing aircraft business, an order is not a sale, as is often implied, in the conventional sense, because the revenue doesn't occur until the plane is delivered, which can be many years in the future. Consider that 2007 order for 70 A350s cancelled 7 years later. Now, that certainly wasn't a sale, was it?! If Boeing had saved up orders for the Farnborough airshow, like Airbus did, they could obviously have beaten the Airbus numbers, since they have more orders for the year than Airbus. By the way, despite Airbus having a larger order backlog than Boeing, Boeing has been delivering more planes since 2012 and is expected to continue to do that for a number of years. That should shed some light on these order numbers worth, when comparing the two companies. Those order numbers are not independent numbers and are quite easy to rig; deliveries, on the other hand, are a lot more difficult to play with.

    Interesting note at the end of this article: "Editor's Note: This article discusses one or more securities that do not trade on a major exchange". That's something I've commented on before; it's easy to find basic trading info on any equity traded on the NYSE or NASDAQ, but not EADS/Airbus. But, I hadn't thought of the four foreign exchanges as not being "major exchanges"! ;-) So, I'm wondering if Airbus will ever subject themselves to the rigors of being listed on the NYSE?

    It is quite amazing what Airbus (France/Germany/The UK et. al.) has accomplished with the Airbus business. Something, of course, that flies in the face of US Libertarians, who believe “that Governments can do no good; Governments only make things worse”! Airbus is an inconvenient truth for them.
    Aug 13, 2014. 03:24 PM | Likes Like |Link to Comment
  • Boeing Was Crushed During FIA 2014 [View article]
    Anyone have problems getting their comments “accepted” on Reuters articles? I commented twice on this article: Airbus wins 980 gross orders, 705 net in Jan-July | Reuters (http://reut.rs/1pBhlvx), but the comment never shows up. I get the feeling that if they don’t like the comment because it does not agree with the agenda in their articles, it's not "accepted"?! ;-) And, I definitely didn't agree!

    Here’s what I commented:

    Not only are gross order numbers of little value, net order numbers, though better, are not that useful either. Airbus has accumulated a larger order backlog than Boeing, having beaten Boeing's yearly order totals most of the time for more than a decade now. But, Boeing has been delivering more planes than Airbus since 2012 and likely will continue to do so, for a number of years going forward. Not what you'd expect, based on the order numbers, is it?! ;-) Boeing and Airbus are taking orders for delivery in 2020 (if not even later than that now). Until the plane is delivered, it isn't "sold"; the bulk of the revenue comes when the plane is delivered. So how is it that Boeing, with a smaller backlog than Airbus, is delivering more planes than Airbus?! I think it’s obvious that, on average, Airbus orders are for a later delivery than Boeing’s, since there’s not been any reporting of missed delivery dates for Airbus. The key point is that for Boeing and Airbus, an order is NOT a “sale”, even though you’ll often see it reported that way! ;-)
    Aug 5, 2014. 05:47 PM | Likes Like |Link to Comment
  • Boeing Was Crushed During FIA 2014 [View article]
    Thanks for your kind reply, Dhierin.

    I think, for the foreseeable future, neither Boeing nor Airbus will crush the other! ;-) Actually, I'm thinking that eventually, Asia, namely China, will successfully enter the aircraft business; I can't see them staying out of that business. When that happens, Airbus and Boeing will need to merge. Just as Lockheed and Mcdonnell Douglas found that there wasn't enough of a market for commercial aircraft for three companies, Airbus and Boeing will find the market isn't large enough for three companies, especially if China has success in the Asian markets, which they most likely will.

    But I doubt China will have a big impact before at least another 10 years pass and probably longer; it's such a complex business. I think one of the main reasons Boeing took such a big chance with the major technology advances in the 787 program was to make it more difficult for competitors to enter a competitive aircraft. It was a major slog getting that program settled, but now that it is, there really isn't an "equal" aircraft. Airbus themselves decided not to match the 787's solid composite fuselage sections, the big reduction in hydraulics, etc., even though their customers wanted them to. Although, one could conclude that Airbus had a better handle on the complexities of doing that than Boeing did! ;-) Airbus decided they would be too late with a “competing” product, if they decided to match the 787. So, they hit the major “wants” of their customers, with the A350, namely, lower fuel burn.
    Aug 5, 2014. 05:12 PM | Likes Like |Link to Comment
  • Boeing Was Crushed During FIA 2014 [View article]
    The order numbers have not correlated with the financials but Airbus has had great success in getting the business press to cover it as if they did, often calling them sales and/or citing orders when referring to Airbus as the largest aircraft manufacturer, even though standard measurements for size comparisons, showed the opposite (revenue and market capitalization).

    As others have pointed out, Airbus always works feverishly to beat Boeing at the Farnborough Airshow as well as any of the big airshows. This year, it was particularly obvious that Airbus had been saving order announcements for the Farnborough Airshow, having fallen ridiculously far behind Boeing, in their totals for the year. Even with that much larger tally at Farnborough, Airbus still has fewer orders than Boeing! But, hey, once again, Airbus got the favorable coverage it so covets! ;-)

    In my opinion, putting a value on the orders is not very useful for any EADS or BA investor. How about the value of that 2007 order for 70 A350s that were cancelled this year or the six A350 order switched to the A330neo s? Airbus has had an unusually large number of cancellations this year although some cancellations are normal. Aircraft customers are ordering planes for delivery many years out, so the likely hood of there being cancellations is high.

    Until we know how many of the orders on the books are to be delivered this year, next year, etc., i.e. how many planes Airbus and Boeing are going to deliver each year going forward (when they receive payment for those orders), these order numbers are not very meaningful. Unfortunately, that's not likely to happen. It will be a long time before the Airbus A350 production rate will match the 787 rate. Consider that Airbus has beaten Boeing's yearly order totals most of the time for more than a decade now. But Boeing has been delivering more planes since 2012 and is likely to continue that, for a number of years going forward. If aircraft orders were as relevant as in other businesses, that would not be the case. In the past, the business press has commonly referred to Airbus as the largest aircraft producer, based on the order numbers, even though the normal “size” measurements, did not support that. But, that's why Airbus loves these airshows and the order numbers so much. ;-)

    By the way, I don't want to leave the impression that I "hate" Airbus; I think they've done really well and build great planes, as does Boeing. But their success in portraying themselves as much more successful than Boeing via their hype surrounding their order numbers, does annoy me! ;-) You might have guessed that! ;-)

    By the way, in an article in the Seattle Times (Airbus logs more Air Show deals; Boeing still leads in orders ...), the net order totals are: Boeing 783 net firm orders for the year and Airbus has 648. Another interesting number is the discounts given to aircraft customers: "Airbus announced 496 total orders and commitments, worth $75 billion at list prices, or about $33 billion after standard discounts, using Avitas estimates. Boeing announced 201 total orders and commitments, worth $40 billion at list prices, or about $20". Interesting because occasionally an Airbus partisan will claim that the only way Boeing can compete with Airbus is by selling their planes at a higher discount than Airbus, but these estimates show a 56% discount on the Airbus orders and a 50% discount for the Boeing orders. Obviously, the list prices aren't that meaningful! ;-) But, there’s a really big difference in the average price of a plane. Using these estimates,: Airbus: $66.5 million ; Boeing: $99.5 million!
    Aug 4, 2014. 06:34 PM | 6 Likes Like |Link to Comment
  • Boeing -2.5% on costs related to new Air Force tanker plane [View news story]
    Thomas posted pretty much the same "info" on a ZACKS Article, "Boeing Shares Suffer with Cantor's Surprise Loss", (http://bit.ly/1o7mxDa).
    So, I'll pull a Thomas and copy my one of my replies from that running battle: ;-)

    Thomas, you asked, "How many years has Airbus been the number one commercial aircraft builder !" Boeing has been building more planes (delivery) than Airbus since 2012 and likely will continue that for a number of years, going forward, certainly this year; so currently, it's Boeing. You've fallen for the Airbus hype surrounding the yearly order totals. Airbus reports their order numbers and Boeing reports theirs; they are not independent numbers. You mention the Farnborough Airshow Order Tally: Airbus, $33 Billion; Boeing, $13.5, but, of course, what you left out are the more meaningful numbers: the net order totals for the year are: Boeing 783 net firm orders for the year and Airbus has 648. Even with that big "victory", Airbus is still behind. Airbus obviously saved up a bunch or orders for the airshow to impress folks, such as yourself. There are some more interesting numbers from the airshow, like the discounts given to aircraft customers: "Airbus announced 496 total orders and commitments, worth $75 billion at list prices, or about $33 billion after standard discounts, using Avitas estimates. Boeing announced 201 total orders and commitments, worth $40 billion at list prices, or about $20 billion, using Avitas estimates". That's interesting because occasionally an Airbus partisan, not to mention anyone by name ;-), will claim that the only way Boeing can compete with Airbus is by selling their planes at a higher discount that Airbus, but these estimates show a 56% discount on the Airbus orders and a 50% discount for the Boeing orders. Obviously, the list prices don't count for much! ;-) Also, note the big difference in the average price of a plane: Airbus: $66.5 million ; Boeing: $99.5 million. But, the two standard measures of a company's size, that you'll find in such size lists, are revenue and market capitalization. They are much more relevant than orders and in fact show that the order numbers have been misleading. Airbus has won the orders race the majority of the times for over a decade now, building up a larger order backlog than Boeing. But since 2012, Airbus has delivered fewer planes than Boeing. Deliveries are a much more important number, for each year, than orders, obviously, since that when the bulk of the money for an order is received.

    You say, "Boeing has their own Boeing Capital and Boeing Shared Services Group, that should finance Boeing aircraft not the taxpayer with US export bank". Interesting that you're concerned about the US taxpayer, what about the EU taxpayers? Do you dispute that the foreign EX/IM banks used by Airbus customers will never be "defunded"? That's not going happen, is it?!

    Oh, feel free to short BA stock; since you very confident that the stock price will crater, you can obviously make a lot of money shorting the stock. And, since all the analysts following Boeing disagree with you, you'll look like a genius! But, you'll have to pardon me; I'm not going with your financial advice.
    Jul 28, 2014. 04:52 PM | Likes Like |Link to Comment
  • The Boeing's (BA) CEO Jim McNerney on Q2 2014 Results - Earnings Call Transcript [View article]
    By the way, in an article in the Seattle Times (Airbus logs more Air Show deals; Boeing still leads in orders ...), the net order totals are: Boeing 783 net firm orders for the year and Airbus has 648. Another interesting number is the discounts given to aircraft customers: "Airbus announced 496 total orders and commitments, worth $75 billion at list prices, or about $33 billion after standard discounts, using Avitas estimates. Boeing announced 201 total orders and commitments, worth $40 billion at list prices, or about $20". Interesting because occasionally an Airbus partisan will claim that the only way Boeing can compete with Airbus is by selling their planes at a higher discount that Airbus, but these estimates show a 56% discount on the Airbus orders and a 50% discount for the Boeing orders. Obviously, the list prices don't count for much! ;-) Also, note the big difference in the average price of a plane: Airbus: $66.5 million ; Boeing: $99.5 million.

    http://bit.ly/1jWlxH3)
    Jul 23, 2014. 09:27 PM | Likes Like |Link to Comment
  • The Boeing's (BA) CEO Jim McNerney on Q2 2014 Results - Earnings Call Transcript [View article]
    Airbus always works feverishly to beat Boeing at the Farnborough Airshow as well as any of the big airshows. This year it was particularly obvious --- well, to the objective non-partisan folks, that is ;-) --- that Airbus had been saving order announcements for the Farnborough Airshow, having fallen far behind Boeing in their yearly order totals. Even with a much larger tally at Farnborough, Airbus still has fewer orders than Boeing, for the year! But, never mind that, Airbus got the favorable and, as usual, very shallow coverage it so covets! ;-) Works for some people, not so much for investors, however.

    Putting a value on the orders is not very useful, if not just naïve, for any EADS or BA investor. How about the value of that 2007 order for 70 A350s that were cancelled this year or the six A350 order just switched to the A330neo s? Airbus has had an unusually large number of cancellations this year although some cancellations are normal. Aircraft customers are ordering planes for delivery many years out, so the likely hood of there being cancellations is high.

    Until we know how many of the orders on the books are to be delivered this year, next year, etc., i.e. how many planes Airbus and Boeing are going to deliver each year going forward, these order numbers are not very meaningful. But, that's not likely to happen, unfortunately. Consider that Airbus has beaten Boeing's order totals for most of the years for more than a decade now, but Boeing has been delivering more planes since 2012, which is likely to continue for at least a number of years. If aircraft orders were the same as in other businesses, that would not be the case. In the past, the business press commonly referred to Airbus as the largest aircraft producer, based on the order numbers, even though the normal measurements, did not support that. But, you see, that's why Airbus loves these airshows and the order numbers so much.

    By the way, I don't want to leave the impression that I "hate" Airbus; I think they've done really well and build great planes, as does Boeing. But their success in portraying themselves as much more successful than Boeing via their hype surrounding their order numbers, does annoy me! ;-)
    Jul 23, 2014. 07:59 PM | 1 Like Like |Link to Comment
  • Boeing -2.5% on costs related to new Air Force tanker plane [View news story]
    Boeing and Airbus seem to be both doing really well, this year but you wouldn't guess that from their stock performance. Boeing is now down over 7% for the year while EADS (OTCMKTS:EADSF) is down over 21%. Seems like the market is looking for excuses to drive their stock price down!

    I still think it's generally unwarranted - time will tell; I'm not selling at this point. I don't own any EADS - just not comfortable with them not being on the NYSE and I do believe that Boeing has and will have the upper hand, for a number of years going forward.
    Jul 23, 2014. 03:42 PM | Likes Like |Link to Comment
  • Boeing: A Few Thoughts On The Company's Upcoming Earnings [View article]
    OMG, I own BA and the Sky If Falling!!! ;-)
    Jul 22, 2014. 11:07 PM | Likes Like |Link to Comment
  • Boeing: A Few Thoughts On The Company's Upcoming Earnings [View article]
    Heather, you noted that, "Although Airbus (OTCPK:EADSY) out-dueled Boeing in terms of total orders at this year's Farnborough Airshow (Airbus: 496 aircraft valued at$75 billion vs. Boeing: 201 aircraft valued at $40.2 billion)". Airbus obviously saved up these orders for this airshow; they were far behind Boeing going into the show and are still behind, for the year.

    The order numbers are a very shallow metric for comparing Boeing and Airbus, unlike most other businesses. Airbus has put great importance on winning the yearly orders race for over a decade now, and has won the majority of those races. But, Boeing has been delivering more planes than Airbus since 2012 and that will probably continue to be the case for a number of years going forward. In this business, an order is not a sale, although you wouldn't know that from some of the shallow reporting by some "Business" reporters, present company excluded, or course! ;-) But, consider the 2007 order for 70 A350s, which were cancelled this year (Airbus has had a huge number of cancellations this year). That certainly wasn't a sale although many reported it as a sale. Aircraft orders are nothing more than potential future sales - the sale doesn't "happen" until the plane is actually delivered. Customers make a very small down payment to hold their position in the production schedule and only pay the bulk of the cost when the plane is delivered.
    Jul 22, 2014. 03:31 PM | 1 Like Like |Link to Comment
  • Airbus outdoes Boeing at Farnborough [View news story]
    To some, Airbus's stock price decline in the last 5 days, doesn't make sense, based on the results of the orders taken in at this airshow. Airbus loves the orders hype, particularly at these really big airshows. Airbus was far behind Boeing in orders, going into this airshow and finished still behind Boeing, for the years totals. It's well known, by anyone familiar with the Boeing Airbus aircraft business, that Airbus delays announcing orders until there's a big airshow, when possible, so they can get the great press coverage they get when the beat Boeing's airshow numbers. Another success for Airbus at this airshow. However . . .

    The order numbers are a very shallow metric for comparing Boeing and Airbus. Airbus has put great importance on winning the yearly orders race for over a decade now, and has won the majority of those races. But, in this business, an order is not a sale, although much of the shallow "business" reporting would lead you to believe they're equal. Consider the 2007 order for 70 A350s, which were cancelled this year. That certainly wasn't a sale. Customers make a very small down payment to hold their position in the production schedule and only pay the bulk of the cost when the plane is delivered. Investors know this and therefore discount the hype surrounding the orders game played by Airbus. Having beaten Boeing the majority of the times for more than a decade now, the casual observer would probably be quite surprised to find out that Boeing has delivered more planes than Airbus since 2012 and will probably continue to do so for a number of years to come.

    How could it be more obvious that an order is not a sale?! In the past 5 days, with all the hype surrounding Airbus orders at this airshow, Airbus stock has declined over 5%. Boeing's' is also down, but less than 1%. So you can see that despite the Airbus order hype, the market is unimpressed. Those are the folks who put their money where their mouth is and they didn't buy into the hype. ;-)

    As to subsidies, Thomas forgot to mention that the WTO found that the subsidies to Airbus were much larger than Boeing's. And, the strange thing is that Airbus has complained about the subsidies Boeing gets from the US states competing for their business but then Airbus has a similar competition for their A320 manufacturing site in the US. They were all too happy to accept whatever "subsidy" they could get from a US state! But, i guess that's different! ;-)
    Jul 18, 2014. 06:36 PM | 2 Likes Like |Link to Comment
COMMENTS STATS
225 Comments
147 Likes