It will take a while to absorb all the information that’s been released on the massive AA deal with Airbus and Boeing, and to learn data yet to come, but here are some initial thoughts:
Running comments from the American Airlines press conference:
- Today is a transformational day for American.
- American’s order presentation, 19 page PDF: AMR Aircraft
- With this plan we are jumping to the front of the line and will be ahead of our peers.
- We will have the youngest fleet of our peers.
- We will lower our costs with this modern fleet.
American Airlines this morning announced its blockbusting order that has been the subject of international intrigue since the Paris Air Show. The order is comprised of:
- 260 A320 family airplanes from Airbus plus 365, with conversions rights within the family;
- 100 737NGs and 100 737REs from Boeing and 100 options; and
- Engines from CFM for the 737RE; the press release is silent on the engine selection for the NEO; Airbus tells us the engine is to be determined.
Dominic Gates of The Seattle Times has this story about the last-minute flurry of activity by Boeing to save the day.
There are a couple of interesting references in the Gates article:
- We had reported Monday that Boeing’s timeline for the New Small Airplane was moving to the right to the 2020-2025 decade, being closer to 2020. On Tuesday we reported that this date is 2021. Gates reports 2022 and that this is just a “placeholder” date, which could move to the right.
- The 737RE was characterized as a ‘paper’ airplane. Indeed, we have learned that Boeing is still massaging design details. It remains to be decided if Boeing will go with a 70-inch fan that will require more work statement for the airframe, including changes to the nose gear, or if it will go with a 66-inch fan that will eliminate the need for nose gear modifications, reduce the R&D costs but will trade off fuel efficiency slightly and be noisier than the 70-inch fan.
- Note: It’s impossible to keep up with the changing and leaking information. Just do a Google News search for the latest.
The situation today remains fluid and often contradictory. News stories, and our own information, agree that a split order is coming from American with Airbus and Boeing but contradictory information is flying about as to which company comes out with the majority of the orders.
But here’s the outcome, as we see it:
Flightblogger confirms American will announce a big single-aisle order Wednesday.
We understand it will be a split between Airbus and Boeing. We think we have a basic understanding of the broad details but not yet solid enough to go into print. We’re working on it.
Wednesday is also American’s 2Q earnings call. The announcement is expected before the call, so expect lots of conversation on the call. The webcast information is here.
In the rapidly changing situation at Boeing over the future of the 737 class of aircraft, it appears almost certain that Boeing will move forward with a re-engine of the 737 and follow it with the New Small Airplane a short time later, under the current thinking.
We reported the possibility Boeing may do both June 15, becoming the first outlet to do so. This posting explains the rationale. Boeing recognizes that the 737 must be replaced, regardless of the re-engining.
Whereas the prospective EIS of the NSA was 2019-2020, we now have learned 2021 would be the new target date. We reported yesterday the NSA had moved from 2019-2020 to the 2020-2025 period but “closer” to 2020.
The 737RE EIS is now targeted for 2017. Fuel burn target is the A320neo minus a couple of percentage points. As we reported this week in another post today, Boeing figures the all-in cash cost gives the 737RE an 8% advantage over the A320neo.
Things are moving very rapidly in the American Airlines competition, with the situation changing since Friday. Updates since the article below was published yesterday in Commercial Aviation Online:
- It appears Boeing will clarify (and this time, really) the preferences for the 737 re-engine over a new airplane as early as the July 27 earnings call.
- According to this Wall Street Journal article, Boeing is offering the 737RE to American. As recently as last Friday, we were told the 737RE was not being offered.
|Source:||Commercial Aviation Online|
Re-engining the 737 is gaining momentum at Boeing in recent months and is now at a point where it is likely the manufacturer will choose to go this route, according to sources with direct knowledge of the OEM’s thinking.
The sources remain unidentified because they are not authorised to speak about the programme.
A Boeing spokesperson would only say, “The Next-Generation 737 is the better product, is currently being delivered and is making money for customers. We continue to look at our options until we’ve decided what decision is best for our customers.”
A recommendation from Boeing Commercial Airplanes to the board of directors currently is anticipated for the August meeting, although the situation is fluid and timing could change. But sources say Boeing could reveal the “direction” in plans within six to eight weeks from today, after the board meeting.
Bloomberg has this story about the competition.
Wall Street Journal has this story.
Here is a story we did for Commercial Aviation Online on the American Airlines aircraft order situation.
|Source:||Commercial Aviation Online|
Boeing has a major dilemma facing it in the hot competition with Airbus for a major order from American Airlines.
The deal could be decided as early as this week, and as of Friday, neither company was confident of the outcome. American wants to replace its fleet of more than 200 ageing Boeing MD80s and the large fleet of Boeing 757s. An order for between 200-250 aircraft is widely expected.
Boeing is likely to deliver only a handful of 787s this year instead of the 12-20 forecast on the year-end and first quarter earnings calls, say sources with direct knowledge of the situation.
Deliveries could be as few as three and perhaps five, according to these sources. Boeing’s internal forecast is 8-9, and this appears to be the guidance Boeing is preparing to discuss on next week’s earnings calls, but the consensus of those we’ve talked to say three to five.
Wall Street aerospace analysts have listed a range of anticipated deliveries from 7-16, and all expectations are high. Rework for non-conforming issues and results from flight tests are the reasons for the lower delivery number, whatever it turns out to be.
Boeing guidance on 747-8 deliveries for the year is expected to be about 14, within the 12-20 range previously expressed. Sources are saying deliveries could be as few as five.