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No matter how profitable building good planes is, building slightly worse planes that are bought in equal numbers is more profitable. The profit maximizing move
by Certhas 3y ago
No matter how profitable building good planes is, building slightly worse planes that are bought in equal numbers is more profitable. The profit maximizing move is to lower quality until sales suffer more than profitability is increased. And if you have a strong reputation, and feedback cycles on product quality are long, lower quality might take a long time to actually be noticeable in sales.
Boeing profits and sales had been on a steady upwards trajectory for 20 years until 2019:
https://www.helgilibrary.com/charts/boeing-profits-sales-quarterly https://www.helgilibrary.com/charts/boeing-profits-sales-qua...
- toast0 3y agoThe trick is building worse planes may result in future costs to fix the problems. It's much less costly to bolt the door plug in before it falls out.
- jacquesm 3y agoThey got so lucky with that one.
- jacquesm 3y agoAt least they get to blame it on COVID. The real benchmark is relative to Airbus.