section_path: Development/Market and costs
section_name: Market and costs
paragraph_text: Market and costs
  
  The 787 Dreamliner program has reportedly cost Boeing $32 billion. In 2013, the 787 program was expected to be profitable after 1,100 aircraft have been sold. At the end of 2013, the cost of producing a 787 exceeded the purchase price. Boeing's accounting method books sales immediately and distributes estimated production costs over ten years for the 1,300 aircraft it expects to deliver during that time. JPMorgan Chase analyst Joseph Nadol estimated the program's cash loss to be $45 million per airplane, decreasing as the program moves forward. The actual cash flow reflects Boeing collecting most of the purchase price upon delivery; Boeing expects deferred costs to total $25 billion before the company begins to break even on production; the comparable number for the Boeing 777, adjusted for inflation, is $3.7 billion.
  
  Boeing lost $30 million per 787 delivered in the first quarter of 2015, although Boeing planned to break even by the end of the year. The accumulated losses for the 787 totaled almost $27 billion (~$ 33.9 billion in 2023) by May 2015. The cost of producing the fuselage may increase because of a tentative deal reached with Spirit Aerosystems of Wichita, Kansas, wherein severe price cuts demanded by Boeing would be eased, in return for a comprehensive agreement that lowers the cost of fuselages for other jetliners that Spirit helps Boeing manufacture.
  
  In the second quarter of 2015, Boeing lost $25 million (~$ 31.4 million in 2023) on each 787 delivered but was planning to break even per plane before the year-end. After that Boeing hoped to build 900 Dreamliners over six years at an average profit of more than $35 million each. But with deferred costs peaking in 2016 at $33 billion, (~$ 41.1 billion in 2023) Leeham analyst Bjorn Fehrm believes Boeing cannot make an overall profit on the program. Ted Piepenbrock, an academic affiliated with MIT and the University of Oxford, projects losses decreasing through the first 700 airliners and forecasts the cumulative deferred costs to peak beyond $34 billion. The model most favorable to Boeing projects a program loss of $5 billion after delivering 2,000 Dreamliners. Boeing's original development investment, estimated at least at a further $20 billion, is not included in these costs.
  
  To recoup the deferred costs and earn its goal of a "low single-digit" overall profit margin, Boeing has to make an average profit of more than $50 million on the final 205 airplanes of the accounting block to be delivered from 2020: a profit margin of more than 30% while the mature Boeing 737 and 777 programs have 20% to 25% margins. Boeing is reaching it through a larger proportion of the 20% to 40% higher price −9/10s, costing only 5% to 10% more than the −8 with lower production costs from reliability and producibility investments and the expected experience curve. Former Douglas Aircraft chief economist Adam Pilarski notes that two assembly sites slow the experience curve. Boeing assumed a faster improvement than on previous programs which had not happened. Competition with the Airbus A350 and the launch of the A330neo put strong pressure on the 787 pricing.
  
  On July 21, 2016, Boeing reported charges of $847 million against two flight-test 787s built in 2009. Boeing had planned to refurbish and sell them but instead wrote them off as research and development expense. In 2017, Boeing's Jim Albaugh said that the requested return on net assets (RONA) led to outsourcing systems reducing investment, but improving RONA had to be balanced against the risk of loss of control. From 2019, Boeing was to build 14 787s per month (168 per year), helping to offset the $28 billion in deferred production costs accumulated through 2015 and would add 100 aircraft to the current accounting block of 1,300 at the end of 2017 third quarter. In 2019, the list price for a 787-8 was US$248.3M, $292.5M for a 787-9, and $338.4M for a 787-10.
  
  The valuation for a new 787-9 is $145 million in 2018, up from $135 million in 2014, but it may have been sold for $110–115 million to prevent A330neo sales while an A330-900 is worth $115 million. In February 2018, Boeing priced six 787-9s for less than $100–115m each to Hawaiian Airlines, close to their production cost of $80–90m, to overcome its A330-800 order. By late 2018, deferred production costs were reduced from a peak of $27.6 billion in early 2016 to $23.5 billion as assembly efficiency improved and the 800th production started.