The Great Debate UK

from Reuters Investigates:

Boeing’s extreme outsourcing

Today's special report from Kyle Peterson takes an in-depth look at the development of Boeing's 787 Dreamliner. Boeing went further than ever before in outsourcing much of the work on the plane, upsetting its unionized workers in the Seattle area. This graphic shows why.

So what's the result?

A revolutionary, light-weight aircraft that is nearly three years behind its delivery schedule.

With almost 850 orders for the plane -- a record for a Boeing commercial plane at this stage in development -- airline customers have high hopes that the company will meet its new third-quarter delivery target.

Meanwhile, Boeing's labor unions complain of a lack of job opportunity at the company and a loss of the "tribal knowledge" mechanics, engineers and laborers have accumulated in the Puget Sound region, which is where Boeing assembles its commercial planes.

from Breakingviews:

O’Leary treats shareholders like Ryanair’s customers. Quite right.

It would be easy to dismisss Michael O'Leary as a brazen bigmouth were it not for his irritating habit of delivering profits where other airlines struggle to survive. Now he is threatening to switch Ryanair's strategy from growth to cash generation if Boeing fails to cut the price on his next 200 aircraft. The shareholders may moan that they are bing treated as badly as the airline's passengers, but O'Leary's right (in both cases).  The passengers are treated like cattle, subjected to levels of misery inconceiveable to air travellers a couple of decades ago, but Monday's half-time figures showed that they don't care. People love O'Leary's combination of dirt-cheap prices and reliability. Your plane may not come down anywhere near your final destination, but it will do so on time. The result is a 15 percent rise in passenger numbers, to 36.4 million, and oil-fired profits up by 80 percent to 387 million euros despite a 17 percent fall in the average fare. The shareholders might learn from this robust approach. It's always hard to tell whether O'Leary is entirely serious, but his threat to change the business model from growth to cash generation does not sound like a joke. It's a fine tactic to bully Boeing, which needs the order far more than Ryanair does. There will be no shortage of slightly-used planes if he wants them; as he put it: "Many of our competitors are losing money, consolidating or going bust." His threat to "end the relationship" with Boeing sounds entirely plausible. The market disliked the idea of Ryanair distributing profits to shareholders rather than reinvesting, but it makes eminent sense. Both BAA in Britain and its "clueless" counterpart in Ireland, the DAA, have invested billions in extravangant projects at London Heathrow and Dublin, and the airline industry is riddled with examples of vainglorious expansion. O'Leary has built Ryanair by unrelenting focus on costs and prices. His grandstanding about "stupid" tourist taxes in the UK and Ireland on planes (but not trains or ferries) and his earlier suggestions about getting passengers to stand are merely light entertainment; the real proof of the model is 2.5 billion euros in cash on the balance sheet, and a pay freeze rather than pay and job cuts for the company's 7,000 employees. Shareholders in airlines are used to getting wiped out by their management's ambitions. Ryanair is a demonstration that it does not have to be so. 
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