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Revival Of Passenger Boeing 767 Ruled Out

Mar. 06, 2018 12:21 AM ETThe Boeing Company (BA)DAL, UAL18 Comments


  • Confidence and positive feedback on a Boeing 797 make Boeing 767 passenger variant relaunch redundant.
  • Boeing 767 could have made sense for a small set of customers and would merely be there for Boeing to fill gaps in production where needed.
  • Opening passenger variant production would be too much of a hassle with limited benefits, effort can better be put in attracting customers for the freighter and tanker variants.

With Boeing (NYSE:BA) exploring opportunities for a new passenger jet that would replace the Boeing 767, there has been a renewed focus on the middle of the commercial aircraft market, a market space between the single aisle aircraft that Boeing and Airbus offer and the wide body aircraft. Unsurprising, the development of all-new aircraft is costly and not totally risk-free. That is one of the reasons why alternatives to an all-new design have been considered as well.

Afbeeldingsresultaat voor 767 roll out

Source: Airline Reporter

In Febuary, AeroAnalysis released its assessment on the Boeing 797, the aircraft that should serve as a Boeing 757/767 replacement, and alternative developments including MAX’ed variants of existing aircraft and the Boeing 767 itself. The findings have been compiled in 82-page report stretching from sales potential to cost efficiency and development costs. Seeking Alpha readers are given a discount code (25OFF) to obtain the report, which is somewhat out of the scope of what I think should be on the regular platform. Alternatively, you can join the AeroAnalysis Marketplace service to obtain the report at no costs!

In this article, I want to have a look at some of the most important reasons the Boeing 767 has been ruled out.

Low capital costs not sufficient

Afbeeldingsresultaat voor 767

Source: Icelandair

Basically what would make the case for a production revival would be the fact that a Boeing 767-300ER would have a low price tag which could result in beneficial overall costs. In aircraft operations there are 2 major cost components, each having smaller components. The first big component is the acquisition or lease rate and the second cost component is the costs of actually operating the aircraft. In the aerospace industry, we’re often looking for aircraft with high fuel efficiency but it is very important to understand that a very fuel efficient aircraft with a high price tag

This article was written by

Dhierin Bechai profile picture

Dhierin-Perkash Bechai is an aerospace, defense and airline analyst.

Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.

Analyst’s Disclosure: I am/we are long BA, DAL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (18)

MontanaOsprey profile picture
WSJ 11/05/17: “United Considers Buying New Boeing 767 Passenger Jets”. This article specifically mentions United’s consideration of replacing 51 then “in fleet” 767s.
Dhierin Bechai profile picture
They are talking about replacing, not about ordering new jets... in the case of the 767 is a big difference.
MontanaOsprey profile picture
Well, apparently it’s currently a “dead issue”. But they were, at least for a time, considering cranking out 50 to 60 additional, new build 76s. These could due 12 to 15 years airline service, and then go to Amazon Prime Air, UPS, Atlas, etc. for the last 15!
MontanaOsprey profile picture
It’s very disappointing to me this isn’t coming about! First off, what was all the “noise” last November about bringing back workers, and a putative, pending order in the 50 to 60 units’ range? Second, 7 years minimum is a LONG time to wait for a 797. (Also, what if there are “complications”, and related time delays?) A mini767X, with Genx2s, would really fill a serious current hole that BA has! Time to rethink?
Dhierin Bechai profile picture
Not sure where 50-60 orders came from. It's a figure I never heard. I fully understand the decision.
AutoTech profile picture
Delta's already replacing its 767s with 330s - cheaper to buy, fly plus more seats. For most airlines, it's very difficult making a business case for the 767 these days. Small rationale remains for freighters (UPS, Fedex), but that's sliding too.

As for a follow-on, Boeing hasn't completely figured out mid market, 797 yet -- BA thinks this market is for 4000 aircraft -- if you work out the routes, mix, etc it looks quite a bit smaller, plus the "efficiency" (e.g. fuel burn) options (fuselage, wing design, engines, etc) are getting smaller by the minute.
The big issue with reviving the 767 passenger plane is the very wide spread perception that it would be a low cost option. That simply is not true. During the early 787 program as 767 sales were cratering, Boeing did a huge factory reconfiguration in Everett. Part of that was to reduce the 767 program's factory footprint. It was expensive, but 787 paid for about half of the reconfiguration cost. The program lost is final assembly bay in the process. The structures tooling was reduced by about 50% and the built a set of big doors on the back of the building in the structures area. That left them with a single final assembly spot, which severely limits program capacity, and the program has been running at capacity ever since. Also, as a part of that reconfiguration, they lost the ability to assemble the -400, which was the preferred passenger model at the time, because it has a longer and significantly upgraded wing. A plane with that wing won't fit between the buildings when being towed from the back of the assembly building, around the end so it can get to the bridge over to Paine Field. Boeing site services estimates that they need about 18 months and a pot full of money to make the modifications to the site required to allow building another -400. Because they are at capacity with the tankers and the freighters, the only way to realistically build more passenger planes is to do another even larger factory reconfiguration project, which would involve moving a lot of 747 tooling. Neither 767 nor 747 has the money to pay for that. Now, if a customer would give them an order for 40 or more planes, then sure they could do that reconfiguration. But short of that, it just doesn't pencil out.
Dhierin Bechai profile picture
Excellent comment ;)
HiloHawaiian profile picture
That is the key question. Who will design/build the first “small” wide body with sufficient economies to compete with the A321Neo and the Neo 2? Passengers desire wide bodies. Can they be made to perform as efficiently as flying test-tubes? We all hated flying the 757, but airlines loved them...
Dhierin Bechai profile picture
I'd think that is something that Boeing will want to address with an NSA.
HiloHawaiian profile picture
Agreed. It appears Boeing’s consensus is that there is a need for a 200-270-seat aircraft with a range of 5,000 nm, with a sixth-generation composite wing, and high-bypass-ratio engines. Is an elliptical fuselage cross section part of that plan? Can that be optimized to provide twin-aisle capacity with single-aisle economics?
The key questions...
Boeing has not made a passenger version on the 767 in over 5 years but the 767-300 freighter is very popular with Fed Ex & UPS. When combined with the KC46 tanker version they are staying busy.

Going to be interesting to see for the 797 if Boeing chooses to stretch the 737 airframe with a new wing, landing gear and engine or if they shrink the 787 with a smaller wing & engine. There has been some reports they might go small wide body on this project.
Leyton House Aces profile picture
The 797 is absolutely not going to be a stretch of the 737!
gsvermaak profile picture
Strange that you say doing a #NEO on the #B767 is not viable, given that they have been doing for the last 50 years with the #B737 and #B747, as well as the #B777? They even have an off-the-shelf proven engine in the #GEnx 2b.

The B797 needs to be a complete clean sheet aircraft incorporating the latest technologies to not only replace the B757 and B767, but more importantly the old workhorse and top seller, the B737. Rushing the B797 could see Boeing repeat the mistakes and delays that plagued the B787 programme.
Dhierin Bechai profile picture
I am not going to deep into that NEO/MAX part (if you want to read the details on that, I have a very nice report available) but a clean sheet design will generally speaking be more efficient.
A very wise decision on part of Boeing. Revival of 767 would end up with delay in the 797 program itself. However Boeing might to be compelled to keep the cargo area of 797 comparable to that of 767, in order to retain the market. Also Boeing will come up with 797 very soon.
The passenger series of 767 never went out of production yet, so there is nothing for Boeing to revive.
Um, yes the passenger version of the 767 is most definitely out of production. Perhaps you are confusing the freighter and military variant production (which although they can carry some passengers does not make them passenger airline variants).
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