Re: Boeing in the WSJ

From:         <dale.tuttle@ciesin.org>
Organization: CIESIN
Date:         04 Oct 95 22:57:22 
References:   1
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Although I did not see the WSJ article on Boeing, several reasons exist
for Boeing to make more (in real terms) on the 777 than 747.  Initially,
inflation estimates (based on current trends) are projected to be
substantially lower during the next 5-10 years than when the 747 was
launched (late 60s and early 70s).  Assuming that we do not have another
oil shock, inflation should be reasonable (but you never know now do
you!).  Another reason for increased profits on the 777 are related to
production efficiencies.  My guess is that Boeing is more efficient now
than during the 747 start-up period (more competition).

However, increased efficiency does not always translate into increased
profits if competition forces down what you can get for your
products...in this case, airplanes.  But, the profit margin for an
airplane is still quite high due to the high-level of skill involved in
its design and production.  Therefore, efficiencies introduced as a
result of competition can be translated into increased profits.

dlt