With the launch of the Boeing 777X expected to be approved this month by the Boeing Board of Directors, followed by the public launch at the Dubai Air Show next month, the future sales of the in-production 777 will be closely watched by the industry as well as by Boeing itself.
It is conventional wisdom that sales will fall off as entry-into-service nears for the 777-9X, said to be “late this decade” by Boeing but more likely 2020 or even 2021, according to customers.
Sales of the Airbus A320ceo and Boeing 737NG families have, so far, held up surprisingly well despite the launch in 2010 of the A320neo and in 2011 of the 737 MAX families. Most of the neo and MAX orders have been combined with the current generation aircraft. This has been viewed as a way to keep the production lines full in advance of the EIS of the new airplanes.
Further, Airbus and Boeing plan an overlap of production of the two generations of about two years. This contrasts with Boeing’s decision to cease production of the 737-300/400/500 concurrent with the launch of production of the 737NG, a move Boeing today says was an arbitrary choice.
Boeing plans to begin building the MAX on a third line in its primary Renton (WA) factory before phasing out the NG. Airbus hasn’t specified how it plans to integrate the production of the ceo and neo.
What will happen for the current Airbus A330 and Boeing 777 lines as the A350 and 777X come on line?
Airbus has long said it expects to continue production of the A330 into the 2020 decade. Timelines alluded to suggest the early 2020s will see the end of A330 production, and our Market Intelligence suggests production will end around 2022, with a successor airplane to the A330 becoming available rather than it being completely phased out in favor of the A350.
We expect Boeing to have at least a two year period in which the 777-300ER is produced alongside the 777X. We believe the shorter 777-200LR will actually live on longer in the form of a KC-777 aerial tanker that will replace the KC-10. We think 777 sales may well follow the pattern of the 737NG/MAX, with a combination of orders intended to support the production rates.
Sales of the A330 and 777 have softened. The following chart shows the orders since 2004, when the Boeing 787 recorded its first sale, coincidentally 10 years ago. The first order for the A350 (Version 1) was placed in 2005, in response to the 787 program. Data for 2013 is through September.
Sources: Airbus, Boeing
The sales figures are gross orders, and exceed the reported net orders by both companies. All A350 Version 1 orders were replaced with those for the A350 XWB. All programs have cancellations. What is more important than the gross sales figures are the trend lines. Those for the A330 and 777 are the focus.
A330 sales picked up after launch of the 787 and peaked in 2007, just as delays to the 787 program were beginning to emerge. Airbus likes to dismiss the impact of 787 delays as a positive to A330 sales, but there is plenty of evidence to support a partial cause-and-effect. But it is also clear that Airbus’ Performance Improvement Packages (PIPs) and low capital costs helped boost sales. Sales dropped in 2009 following the global financial crisis, but picked up in 2010 and remained fairly steady in 2011 and 2012. Sales have fallen dramatically this year through September.
Boeing’s 777-300ER enjoyed a monopoly for its size until Airbus launched the A350-1000, but the latter is slightly smaller at 350 passengers vs 365 in typically three-class configuration and tinkering with the design created a long gap in orders. Meantime, Boeing capitalized on the Airbus ambiguity, with an explosion of sales in 2011 that was extraordinary. A better-than-average 75 orders were recorded in 2012. Sales have dipped for the 777 through September and are on a pace to end the year with 48 orders. We think it possible some 777-300ER orders could be announced at the Dubai Air Show concurrent with the 777X.
It is too early to draw conclusions if orders for the A330 and 777-300ER are in a low-level trend, but we believe it obvious that orders have peaked for both types. We know from Market Intelligence that Airbus had gaps in its production near-term for the A330, but these have been filled and we expect some good-sized fourth quarter orders announced. The launch of the A330 “Lite” is an effort to broaden the appeal of the airplane for high-demand, short-haul routes (i.e., China in particular) where high gross weight and long range is not needed. The new-build A330 freighter has not been the success hoped for, and the loss of the USAF KC-330 tanker contract to Boeing had a large negative impact on the future of the freighter program.
We see sales of the A330 and current 777 being modest at best going forward.