Is that nearly enough money to do what they intend?
Edit: To be clear — I find the prospect of affordable supersonic flight super exciting. But, knowing 0 about the aviation industry, what's the secret sauce that makes this believable (e.g. budget at least one order of magnitude lower than competing products)?
$100m is the sticker price for one Boeing 737, an evolutionary design with research and manufacturing costs amortised over an order book of thousands
This is money to keep Boom afloat to the next raise, but that's not exactly unusual in SV startups which are a lot less capital intensive than aerospace
How a company begins to how it gets to sell products for $100m is fascinating. Boeing built their first plane soley because they had bought another plane, subsequently crashed it and then posited that it would be faster to build a brand new plane instead of waiting for parts. They sold a couple to the navy who then said "Yeah we'll take 50".
Obviously Boom is doing something orders of magnitude more technically complex than a simple bi-plane but maybe, if they're scrappy enough, they can pull it off.
Aviation has moved on a bit since Boeing was founded over 100 years ago, and their client base is looking for any potential vendor to be the precise opposite of "scrappy". To put things into perspective, nearly all airlines outside Russia and China find proven, modern, thoroughly-tested and performant airframes from state-funded Russian and Chinese conglomerates with very attractive pricing and financing a bit too "scrappy" in terms of the available ongoing support for operations to even consider. A new entrant is going to need to spend $20bn+ to get a single aircraft ready, and they they're going to need to sell a couple of hundred to get close to breaking even. A brilliant outcome would be a gulf state liking the novelty of the concept enough to say "we'll take 50" and even that didn't translate to many further sales for the A380
There's certainly both technical & market risk, because an LOI != cash in the bank. But that's why investors are willing to invest. If Boom delivers on its technical promises to spec, that $15.2B in revenue lined up before the first prototype flies.
It's not $15B lined up before the first prototype flies, it's $15B that might happen, eventually, after Boom has delivered on its technical promises by flying and certifying the airframe, if the airlines at that stage decide the finished article fits with their operations at that time, they're happy with the operational risk and they can raise the capital to finance the aircraft acquisitions on adequate terms.
JAL putting in $10m of seed investment is showing a bit of faith, but the rest is just pieces of paper.
Concorde had firmer commitments for 74 aircraft back in the day, but only ever made 20, most of which were sold off at a subsidised price and spent most of their time on the ground.
On the other hand, next time you find yourself in a regional jet in the US, odds are pretty high it was built by a scrappy manufacturer of Brazilian bush taxis, namely Embraer. So it's not impossible to break the Boeing/Airbus duopoly if you have a suitable niche (regional jets, hypersonic aircraft) just very hard.
They sold a couple to the navy who then said "Yeah we'll take 50"
I wonder if Boom could get a boost by convincing it that the Boom jet can be useful. Certainly not for troop transport, but maybe it can be used to move field commanders around quickly in times of crisis.
No? Not directly comparable but perhaps useful as an indicator of general magnitude, the Boeing 787 had a development cost of $16 billion. Assuming it costs 1/10th as much, that's still over $1 billion.
An industry analyst estimated that it costs about $400M to develop a subsonic light business jet. A supersonic aircraft would cost more due to greater technical risk.
I totally disagree. It's plenty to demonstrate and build most of the technology. It will take much more money to bring it to market, but that's primarily regulations and validation of umpteen edge cases/fatigue life, and proving that you've done so to the FAA.
Source/disclaimer: Aerospace engineer that builds rocket engines for a startup.
As for the market... As a simple person, I probably won't ever pay that for any flight. Businesses may think it is worth it.
As for comments to the effect, "physics hasn't changed since the concorde failed," no, but materials and manufacturing really have. Turbine engines have evolved a lot since then. That companies like Boeing do not build such aircraft doesn't tell you anything, any more than studying the success of Apple in embedded systems tells you whether or not there is a market for them. Perhaps a poor example since embedded systems are not a disruption, but my point is that entrenched incumbents may not pivot simply because they are doing well where they are, and all the more so in a more heavily regulated market.
In short, I think it will be interesting to see how it turns out. For any aerospace startup, the hardest part is raising enough money to stay afloat and focus on their work. $100M starts to build enough momentum that they have a real shot. The question now is what they do with that shot.
> As for comments to the effect, "physics hasn't changed since the concorde failed," no, but materials and manufacturing really have. Turbine engines have evolved a lot since then. That companies like Boeing do not build such aircraft doesn't tell you anything, any more than studying the success of Apple in embedded systems tells you whether or not there is a market for them. Perhaps a poor example since embedded systems are not a disruption, but my point is that entrenched incumbents may not pivot simply because they are doing well where they are, and all the more so in a more heavily regulated market.
This. So much this. The specious argument about physics really irks me.
- Time between the first commercial air travel (1914) and when Concorde began development (1962): 48 years
- Time between when Concorde began development and today: 57 years
Translation: Concorde's tech is OLD. Think of how much aviation technology advanced in the 48 years between the first commercial passenger flight and Concorde beginning development. Now think about how much it inevitably has advanced in the 57 years since Concorde's technology was developed.
The founders of Boom have openly stated that they intend to build a more fuel-efficient aircraft, leveraging technological advances to provide exponential increases in efficiency. If they can't do that, the economics don't work out - plain and simple. But they're making a pretty good case that they can to date, and this funding will help them further demonstrate that their plans have promise. As an aviation geek, I personally hope they succeed.
Edit: To be clear — I find the prospect of affordable supersonic flight super exciting. But, knowing 0 about the aviation industry, what's the secret sauce that makes this believable (e.g. budget at least one order of magnitude lower than competing products)?