Fallout continues from 787 grounding

LOT wants $$, Norwegian Leases A340s: The fall-out gets worse over the 787 grounding. LOT Airlines says it wants compensation by the end of June. TUI is rebooking passengers on Boeing 767s and will refund a price differential for those paying a premium to fly the 787. Norwegian Air is wet-leasing Airbus A340s to fill in for the 787s it was supposed to get.

Aeroturbopower has an interesting analysis of the Norwegian lease cost of the A343 v 788, including some admittedly speculative costs to Boeing.

In other news:

  • Richard Aboulafia, noted aviation consultant for The Teal Group and an occasional consultant to Boeing (last job five years ago), predicts it could be 4-9 months before the 787 is back in revenue service. This is from the start of the grounding, not additional time. The prediction is in this article by Reuters.
  • Aspire Aviation analyses the Australian aviation market.

43 comments on “Fallout continues from 787 grounding

  1. This may put a damper on Boeing’s PR blitz:

    Bloomberg: Boeing 787 Circuits Burned on ANA Planes Last Year, Union Says

    – Of three circuit boards that burned, one that was damaged in April had to be replaced

    – Tsue said he doesn’t know whether there is a link between circuit-board damage and the battery fires and that he has sent a letter to the nation’s transport minister asking that “issues” uncovered in the 787 be reconsidered.

    – “The circuit board case on April 7 was serious and caused damage to the surrounding area,” Tsue said.

    – “We can’t say if there was any connection between the circuit boards and the battery, but there have been lots of problems with the electrical system,” Kazuo Harigai, assistant secretary of the Japanese aviation workers’ union, said

    http://www.bloomberg.com/news/2013-03-06/boeing-787-circuits-burned-on-ana-planes-last-year-union-says.html

      • Every airplane type has a circuit board or two that burn up from time to time. This is not unique to the B-787 and the JTSB and NTSB have not indicated they have expanded their investigation to include every little circuit board on the airplane (there are hundreds if not thousands of these CBs on most airliners).

        If the story in the Trib was true, every newspaper, network news, and cable news outfit would be crowing loudly about it. Every news outlet in the EU and Japan would also be carrying the ‘story’.

        Also, consider the “source” of the informaion, not from ANA, but from the union. Tsue does not represent ANA.

        Think about what he said. Three circuit boards burned, but only ONE was replaced? WTF? Wouldn’t you replace any circuit board that had a failure and burned up?

        What were these circuit boards for? Radios? Flight instuments? Generator control? Coffee maker?

        Why did the CB “burn up”? Short Circuit? Faulty connection/soldering? Spilled coffee?

        To me it is apparent Mr. Tsue is looking for his time in the lime-light, as well as advancing his union’s agenda. This is truely unprofessional. If Tsue has something relevent to add to the investagation, then bring that information to the safety boards, not the news media.

        Uwe :
        How many more “burn notices” will float up from the depth?

        About as many as any A-320, B-737, A-340, A-330, B-777, B-767, B-747, and A-380.

        Come-on guys. You guys are better than this. If it were just the normal bashing that goes on here, that would be one thing. But here we have a (possibly) made up rumor. At the very most, it is just a story about a rather normal or routine maintenance replacement of a part that failed.

        Even the laim stream news media hasn’t run this.

      • For the Dreamliner reality has consistently underperformed in relation to the carefully project expectations.
        Do you think this will suddenly improve ;-?

    • So… at least I know I wasn’t going insane when I seemed to be the only one back in January saying it looked like an electrical system problem, not a battery problem.

    • This is being reported as the power panels in Chicago Tribune (location of in flight fire during flight test). Goes without saying that it doesn’t sound good from a technical perspective. The fact that ANA is releasing the information, after a visit from Mr Conner, really looks bad too.

    • Boeing political lobbying might succeed in making the FAA bend over, but convincing JCAB or EASA may not be so easy.

      Reading the news on circuit boards I get the impression that a cover-up was in full swing long before the battery crisis.

      While we are at it: You may share your view on airplane safety with Boeing
      http://www.surveymonkey.com/s/WDT_03_2013a

      • I don’t see the FAA approving the proposed fix without having secured backing from their Japanese counterparts beforehand. The FAA would otherwise risk a PR nightmare in having to sell their decision to the public when half the worldwide fleet remained grounded in Japan. And if the FAA and JCAB approve the fix, EASA will piggyback their decision.

        Interesting survey. It seems it was offered to subscribers of their newairplane website, which has the potential to skew results heavily in their favor. Stay tuned to next week, when they announce 98.7% of the traveling public fully support their solution and can’t wait to fly the 787.

  2. Aeroturbopower’s analysis is interesting, well worth the read.

    Conclusion: it is cheaper to lease an old A340-300 for OSL-JFK than lease a brand new B787… even when the fuel burn of the A340 is miles higher… so Norweigan, the airline in the analysis, actually can save money on the grounding… (for a while, until maintenance starts increasing on the older airframe).

    Also, the intersting point about compensations to lessors is brought up.

    This could be expensive for Boeing… more so than the earlier delays, as there are now planes in service and airlines that have started getting rid of older capacity…

    • The PlaneTalking blog had an amusing entry, Crippled Dreamliner program keeps Qantas in black. 787 compensation payments made the difference between profit and loss in its last reporting period. As Ben Sandlilands says, Qantas deserves some recognition for being the world’s most profitable user of Dreamliners even without having ever taken delivery of one.

    • Do you think that a million a month lease rates will survive in this atmosphere?
      They were based on the same carefull pimping of futures that all Boeing product seem to get.

      This has turned into a real hands on “Reality Show”.
      Blowback in the form of reassessments for future values could turn out to endanger this ecology.

      • Lease rates are about 0.8%-1% of list price, so $1m for a new B787 is a realistic number I would say. List price now stands at $206.8m, but these early aircraft were sold at a very low price. Lease prices should go up over time and prices for the -9 should be considerably higher as these were sold at higher prices.

      • This assumes that people would actually buy a Dreamliner for $200m.
        What would you pay for a plane that is either grounded or needing 3 backups to enable good dispatch rates ;-?

        I#d guess a -9 would have progressed out of the never buy a Mk1 niche.

  3. The cost analysis does not seem right, why would anyone buy/lease a new airplane at those cost differentials?

    First, if they can fill the A340 to 90 per cent, they can fill the 787 to 100 per cent, right? So pegging both at 90 per cent makes the math more attractive, but doesn’t seem very realistic.

    Second, it is all based on an assumption of lease cost, and there’s a preumsption it’s low because the planes are old. But in reality this will be driven by demand, and at present I would presume there aren’t many A340s around for delivery to lessor client in 3-4 weeks on a short-term wetlease? So the price may well be higher. It would be more convincing to have another cost comparison at e.g. 75 per cent of the upper value (i.e. 400 million), and see what that does to the cost comparison.

    Thirdly, what if the minimum term of the lease is 6 months or 12 months? If the 787 returns to fly beforehand, Norwegian might end up with two planes. And that’s, even if the above two points didn’t apply, where they would start hemorraghing money.

    • In your logic every aircraft smaller than an A380 would fly with 200% load factor. In reality the load factor is determined by the quality of your reservation/booking system. That’s – mainly -why airlines achieve better load factors then say 10 years ago.
      Lease rates for A340’s went down significantly after production ceased. I would not expect that they go up significantly now. A330 lease rates will rise though.

      • Well no, don’t use strawmen please.

        Here we are talking about a very specific case of planes that are very close in size. In any case, forget 90%. What if Norwegians reservation/booking system for long-haul isn’t so great, and they can only achieve 80% on the A340. Would you still assume they could only do 80% on the 787?

        Your expectation is interesting, but I would still argue that supply and demand play a role. How many A340s are available for a new lease today?

      • And now it turns out that the Hi-Fly A340s have FEWER seats than the 787 in the Norwegian configuration. 291 (787) vs. 265 (Hi-Fly A343). I guess we can forget about the claim that Norwegian will not lose money.

        Want to do that analysis again?

  4. Uwe :
    Airbus offers for sale or lease:
    8 x A340-300
    2 x A340-500
    6 x A340-600
    see: http://www.airbus.com/aircraftfamilies/asset/aircraft-available/

    Actually available now or by April (for sale or long-term lease) are 6×343 and 4×346. But i) those are long-term, and ii) you could presumably only dry-lease them? So they wouldn’t answer Norwegian’s need.

    Let me specify the question then – how many A340s are available for short-term (less than 12 months) wet leases at this moment?

    • Since the ones for Norwegian are being supplied by Boeing (boy do I love that irony), one must only ask how many Boeing took from Singapore and how many of them are presently being leased.

  5. Maybe some good news for Boeing in a perverse sort of way with the circuit board news.
    It should surely be easier to pinpoint a malfunction in one of these than in a sealed battery, assuming of course that this is in fact the smoking gun.

    • Looks more like a continuing run of issues. ( what went wrong on the Quatari and Indian 787s? )
      What eludes me is the reasoning behind myopic focus on the batteries when
      other components seem to also have high mortality.
      Further, Boeing has been very active in cloaking any issues arising from in service problems in an heretofore unknown intensity.
      Also one should note that this cloaking was rather succesfull for nearly a year and a half.
      Without the Boston Burning Battery and the Smoker in Japan this would have continued.

      Lastly Boeing appears to have been unable to improve on these issues.
      Whoever would have thought that United felt the need to ready 3 frames ( and a potential 4th frame ) for the inaugural flight. Imagine the derission if LH had done the same with their A380s.
      Looking at all that preparatory and preventive care exclusively spent to bolster Boeings public image I feel increasingly certain that Boeing has at least an idea on what the cause is but even admiting this would reduce the certification into a smoldering heap, a return to service a multiyear struggle.

      Seeing this as “just teething problems” becomes more difficult with every day gone by.

      • I think you are being a bit harsh Uwe. Airbus also had quite a few various issues with their earlier A380s and did all they could to keep it out of the press.

        It is hard to know just what exactly is communicated between airline and OEM, and at what different levels.

      • too harsh? OK, I’ll give you that.

        But compare the initial utilisation : nearly 3 times higher on the A380 (13…13.5h/day) than on the 787 ( 4..4.5h/day )
        And also compare what type of issues made it into the wild
        in the first 20 month for the A380:
        mostly stopped up loos, lots of computer generated false positives, dry showers and for something of “value” a fuel system problem. And the aviation paparazzi were really after
        anything from the A380.
        No comparison to the lax attitudes towards the Dreamliner. Whatever item covered in the first sentence the remainder invariably was some overly fawning copy from Boeing PR.

  6. Andreas :
    Well no, don’t use strawmen please.
    Here we are talking about a very specific case of planes that are very close in size. In any case, forget 90%. What if Norwegians reservation/booking system for long-haul isn’t so great, and they can only achieve 80% on the A340. Would you still assume they could only do 80% on the 787?
    Your expectation is interesting, but I would still argue that supply and demand play a role. How many A340s are available for a new lease today?

    Revenue management for airlines is a science. Hundreds of people work on it daily at the big airlines. In the current network alliances you can get 100% load factors, just overbook 20% and dump the prices.

    Connecting passengers from everywhere to everywhere, network waves, frequencies, booking classes, code shares, price hikes, corporate contracts, comfort levels/ seatpitches, focus markets, competitors, slots availability, night restrictions, crew rotations, cargo opportunities, travel agents, all are in the mix/ models.

    The airlines with the best models (& managers knowledgeable enough to violate them) win.

  7. The road has a few bumps ahead

    From WSJ

    By ANDY PASZTOR, MONICA LANGLEY and JON OSTROWER

    Transportation Secretary Ray LaHood needs more information to be convinced that Boeing Co.’s BA +0.53% proposed fixes to batteries on its 787 Dreamliner are adequate to enable the jet to resume commercial flights.

    “I have made it very clear that I want a thorough review” of the Boeing plan, Mr. LaHood told The Wall Street Journal Wednesday. “I am going to ask a lot of questions” before a final decision is made.

    Mr. LaHood’s comments are the latest sign that Boeing faces regulatory headwinds in getting quick approval for a package of fixes to the Dreamliner’s battery system that it hopes will end the world-wide grounding of its flagship jetliner that started in mid-January.

    …. goes on

  8. and from Reuters

    (Reuters) – U.S. safety regulators are poised to approve within days a plan to allow Boeing Co (NYSE: BA – news) to begin flight tests of the 787 Dreamliner with a fix for its volatile batteries, a critical step towards returning the grounded aircraft to service, two sources familiar with the matter said on Wednesday.
    The Federal Aviation Administration (FAA) is expected to sign off on a “certification plan” allowing Boeing to carry out the flight tests to determine if authorities can lift a flight ban that sent shockwaves around the airline industry seven weeks ago.
    “You could see the ‘cert plan’ approved in the next few days,” one of the sources said. Both spoke on condition of anonymity as the discussions are confidential.
    The FAA said it would announce the plan when approved, and U.S. Transport Secretary Ray LaHood told the Wall Street Journal he wanted a “thorough review” before a final decision on resuming commercial flights for the passenger jet.
    Boeing declined to comment on the FAA’s timetable for flight tests. But spokesman Marc Birtel said: “The FAA has indicated they are evaluating our proposal for a permanent fix to address the 787 battery issue and we are encouraged by the progress being made toward resolving the issue and returning the 787 to flight.”

    goes on

    • two different items/objectives, isn’t it?
      1) details of a fudamental fix
      2) concept for testflights
      second item needs some clarification
      are the testflights for finding cause or flying around a fancy bomb calorimeter?
      Hmm, second paragraph would indicate there is no further interest in finding cause from Boeings side ?

  9. Maybe the EASA needs too make an independent review, using input from Boeing, the FAA and NTSB. They have their own responsibility towards its citizens.

  10. KC135TopBoom :
    Every airplane type has a circuit board or two that burn up from time to time. This is not unique to the B-787 and the JTSB and NTSB have not indicated they have expanded their investigation to include every little circuit board on the airplane (there are hundreds if not thousands of these CBs on most airliners).

    Well actually there have been many indications that these problems exist (even before the battery incidents), and it’s not “just” circuit boards, it’s been high-power control boards. Also, the JTSB *DID* indicate there were “wiring issues” to be investigated several weeks ago already.

    If the story in the Trib was true, every newspaper, network news, and cable news outfit would be crowing loudly about it. Every news outlet in the EU and Japan would also be carrying the ‘story’.

    The fact that it’s taken two months for these facts to finally bubble up to the main stories probably says more about journalists following the “accepted wisdom” that the batteries were to blame and then having to dig around a bit for new details later when nothing happens for a few weeks.

    Think about what he said. Three circuit boards burned, but only ONE was replaced? WTF? Wouldn’t you replace any circuit board that had a failure and burned up?

    If a capacitor or whatever goes pop, but there is little other damage other than a couple of components to replace and some goo to clean up, why would you replace the whole unit?

    What were these circuit boards for? Radios? Flight instuments? Generator control? Coffee maker?

    It reads like it’s the same kind of high-power units as the Laredo incident. I could be wrong.

    Why did the CB “burn up”? Short Circuit? Faulty connection/soldering? Spilled coffee?

    Well now… *THAT* is the question that JTSB is probably looking at – and I suspect it’s the very question at the heart of the whole debacle.

    Come-on guys. You guys are better than this. If it were just the normal bashing that goes on here, that would be one thing. But here we have a (possibly) made up rumor. At the very most, it is just a story about a rather normal or routine maintenance replacement of a part that failed.

    I really don’t know why you take issue with what is simply the latest in a string of small reports on electrical issues on the 787. Why resort to dismissing it out of hand when there’s no reason to think people are making it up?

  11. KC135TopBoom :Every airplane type has a circuit board or two that burn up from time to time. This is not unique to the B-787 and the JTSB and NTSB have not indicated they have expanded their investigation to include every little circuit board on the airplane (there are hundreds if not thousands of these CBs on most airliners.

    If this is such a commonplace non-issue, why did Boeing need to redesign theirs after the in-flight fire during flight testing?
    May I paraphrase the nice lady in charge of the NTSB, “Fire on aircraft should not happen”.

    • Yes, I agree, fire on aircraft should not happen, but unfortunately it does. It has nothing to do with the age of the aircraft as the B-787 fire in BOS proved (that aircraft had been in service for only about 3 weeks, or so).

      “Think about what he said. Three circuit boards burned, but only ONE was replaced? WTF? Wouldn’t you replace any circuit board that had a failure and burned up?

      If a capacitor or whatever goes pop, but there is little other damage other than a couple of components to replace and some goo to clean up, why would you replace the whole unit?”

      Almost all circuit boards on an aircraft are pull out and plug in style replace units. It usually is not practical to replace individual capacitors, resisters, chips, etc. in the field when it is easier to just pull the CB out and stick in a replacement. These CBs are usually repaired in an electoric/avionic shop where proper bench testing can help diagnose what is damaged and later assure the repair is complete.

      “What were these circuit boards for? Radios? Flight instuments? Generator control? Coffee maker?

      It reads like it’s the same kind of high-power units as the Laredo incident. I could be wrong.”

      Yes, the story does read like that. But if it were a power distrubution panel, like the one at Laredo, or another high power panel unit, you would get the same actual fire and smoke and fumes indication, as well as an evacuation like Boeing had at Laredo. There is no story I can think of with that kind of information prior to the NH aircraft emergency in Japan, after the BOS event. These power panels handle extremly high voltage and amperage.

      BTW, IIRC the Laredo event was traced to FOD, not a design of the unit itself.

      • KC135TopBoom :
        Almost all circuit boards on an aircraft are pull out and plug in style replace units.

        If it was indeed the power distribution panels, then that’s a pretty sturdy piece of kit. It didn’t say they were repaired in-situ, so they could have replaced the (slightly) damaged units on the aircraft before refurbishing them in the shop.

        BTW, IIRC the Laredo event was traced to FOD, not a design of the unit itself.

        In fact that is not true. It’s a convenient myth, but nothing was ever actually “traced” – merely assumed.

      • I am not certain how much authourity mechanics have at airlines to replace indivudual components on circuit boards. Personally I hope it is very little.

        YOu have a point, any such fires for the circuit boards must have been pretty small and yet it is interesting (significant) to hear of such “fire” events months after the events have occurred.

        Did this ANA union make this statement about the circuit boards on their own or was this with the tacit approval of ANA management?

      • @Aero Ninja – it says “ANA repaired” the boards and “one that was damaged in April had to be replaced”, but that could mean ANA personnel swapped out three boards, one of which was trashed and the other two were fixed – by the supplier if ANA themselves were not qualified.

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