Boeing's 787 accounting tricks

[marmar]

(Bloomberg) Boeing Co. (BA) will give investors the first glimpse into the average profit from each 787 Dreamliner tomorrow, with analysts estimating the company will spread costs initially over 1,100 planes.

That’s the average of 18 estimates compiled by Bloomberg for Boeing’s so-called accounting block for the 787. Boeing uses a practice known as program accounting to determine average profitability rather than posting a loss on early output because of high startup expenses. Setting the initial quantity will show how quickly Chicago- based Boeing expects to widen profit margins on the composite- plastic Dreamliner, the company’s fastest-selling model ever. The analysts’ estimates spanned 900 to 1,300 jets.

.....(snip).....

The 787 “will be profitable on Day One” under program- accounting rules, Chief Executive Officer Jim McNerney said Sept. 26, when the first Dreamliner was turned over to All Nippon Airways Co.

.....(snip).....

Douglas Harned, an analyst with Sanford C. Bernstein & Co. in New York who has a market-perform rating on Boeing stock, said even his “optimistic assumptions” lead to an initial accounting quantity of 1,000 jets with a negative gross margin. .........(more)

The complete piece is at: http://www.bloomberg.com/news/2011-10-25/boeing-may-peg-benchmark-for-787-profitability-to-output-of-1-100-jets.html

[Blue_Tires]

1. They took way too long getting it to market

and clients have squeezed Boeing for discounts on future frames...

What they should do is finally get to work on a proper 737 replacement -- That's where the real market is...

[dtexdem]

2. We'll see when the roll out the 787 Nightmareliner ...

and see what happens in the ensuing period.