Airbus A330-800 and -900neo, first analysis, part 3: performance

In our first two parts of the analysis of the Airbus A330neo launch at the Farnborough Air Show, we have gone through the information provided by Airbus and Rolls Royce and provided comments on what these really mean from a practical point of view.

Areas we wanted to verify with our independent model have been how the A330neo would perform versus the A330ceo, especially on shorter ranges, than the Airbus example of 4,000nm and how it would stack up against the Boeing 787.

We give the first answer to these questions with data from our proprietary, independent model. This is first-cut data and we bring it forward in time as there is some confusion on what Airbus has said about the shorter range performance of the A330neo. Continue reading

Farnborough Air Show, July 17: Orders summary, reflections of the show

Orders continued to trickle in as the Farnborough Air Show winds down (there could be others not listed here).

  • Airbus: Transaero, LOI for 12 A330neos and eight A330ceos; Hong Kong Aviation Capital firms up an order for 40 A320neo and 30 A321neo aircraft, announced at the Paris Air Show last year. Here is the Airbus wrap up press release.
  • Boeing: Summarizes its performance at FAS with this press release; 201 orders and commitments.

Items of interest:

Overall reflections:

Continue reading

Farnborough Air Show, July 15: VLA program analysis: A380, B747-8I, 777-9, [and the wishful thought of an A350-1100]

Fabrice Bregier, CEO of Airbus Commercial, threw cold water on the prospects of an A380neo and an A350-1100, the latter to compete with the Boeing 777-9.

Bregier’s position on the A350-1100 leaves Boeing with a monopoly at the 400-seat marker. Boeing doesn’t view the 777-9, which nominally seats 407 passengers, as part of the Very Large Aircraft sector which begins at 400 seats. Rather, Boeing lumps the -9 into the medium-twin aisle sector (300-400 seats).

While Airbus continues to struggle with sales for the A380, Boeing doesn’t much talk about the 747-8I anymore, focusing primarily on the future potential of the 747-8F. Boeing bravely talks about the prospect of four or five customer sales for the 747-8I this year, including a strong wishful-thinking of an order from Emirates Airlines (president Tim Clark says he’s not interested).

Continue reading

Boeing sees 4% increase in aircraft demand in next 20 years

Boeing forecasts a demand for 36,770 new airplanes during the next 20 years, an increase of 4.2%, in its Current Market Outlook. The value of this demand, which covers the entire commercial aviation line from regional jets and up, is $5.2 trillion.

The company released its annual forecast today, for the period ending 2033.

As with previous forecasts, the single-aisle demand constitutes the vast majority, with a requirement for 25,680 airplanes to cover retirement and growth, the latter being driven by the proliferation of the low cost carriers worldwide. The “heart of the market” for the single aisles has moved up to 160 seats, says Randy Tinseth, VP Marketing. This is the 737-800/8 and A320ceo/neo-sized airplane. The Comac C919 and Irkut MC-21 will join this sector when they enter service later this decade.

Continue reading

Airbus Innovation Days, Part 2: No order bubble and a lot more

Airbus lifted the embargo on John Leahy’s presentation, allowing immediate publication.

There is no aircraft order bubble, says John Leahy, COO-Customers of Airbus. Emerging markets and passenger traffic doubling every 15 years, bolstered by GDP growth, means orders will hold up, he said, leading off the Airbus Innovation Days Tuesday.

Highlights of Leahy’s address:

  • There are 42 mega cities accounting for 99% of the long-haul traffic. Aircraft size is moving up and in 15 years, Leahy says RPKs will double, requiring aircraft like the A380.
  • Leahy predicted the A320neo will maintain a greater market share than the Boeing 737 MAX of about 60%-40%.
  • He claims the A320neo is 1.6 tons lighter than the 737 MAX.
  • Leahy said the A320neo and A321neo now seat 189 and 240 seats respectively (in maximum capacity configuration). The former matches the 737 MAX and the latter has 25 more seats than the 737-9.
  • He predicts China will become a competitor in 25 years.
  • The competitor to the 787-10 is the A350-900 at 331 pax vs 315 pax with more range and cargo capability or derating the A359 gives a lighter aircraft at the same range.
  • The 35 more seats of the 777X means the larger airplane than the A350-1000 is 35t heavier than the latter aircraft.
  • The A380 hasn’t been fully optimized by many airlines; it could easily take 50 more seats.
  • The A330neo is an interesting idea; we have to look at the money we have to spend and cannibalizing our A350 program. It will be the same size as the 787-9, which will have 1,000 mi more range. We could cover 92% of the routes with a wider seat and much lower capital cost. We have to look at the resources. It may not happen by Farnborough.
  • No A350 slots are available until 2019-2020. Effectively sold out through 2019 though could move some positions around.
  • In a walking press “scrum,” we asked Leahy, “if there is a potential market for 1,100-1,200 A330neos, why wouldn’t you do the airplane?” Leahy replied that the answer may be self-evident but once more noted that cost and resources will be important considerations. Talks with the engine makers, Rolls-Royce and GE, continue to determine the potential cost split between Airbus and them.

War of Words between Airbus and Boeing over A330neo, 787

By Leeham Co EU

We’ve seen it for decades: the War of Words between Airbus and Boeing around their competing aircraft. It hasn’t taken long for the WOW to emerge over the prospective A330neo. Only a few months ago, Boeing was muted in its assessment about the NEO and its response. No longer.

.
For the 200- to 300-seat segment the WOW warning was raised Sunday at Doha, Qatar, in advance of the IATA Annual General Meeting, and no doubt it will stay aloft until this year’s Farnborough Air Show, where the formal launch of the A330neo is expected (as if anyone is doubting after Sunday).

.
The start
As Aviation Week reports from the eve of the IATA AGM, John Leahy, Airbus’ chief operating office-customers, threw down the gauntlet by claiming an A330neo economics would be “unbeatable” and its “cash operating cost would equal 787-9.” Boeings counterpart John Wojick countered “at no price can it compete with the 787-10”.

.
Of course, that’s not what Leahy claimed. Comparisons have been between the A330-300 and 787-9, not the 787-10.

.

What it is all about
After our New Year’s analysis showed that there was a real case for an A330neo (A330neo prospect gains traction) we spent a further four months on the case, digging deeper and deeper. The result was put in our report The Business Case about the A330neo, a 60-page study which took a deep dive into the economics of the A330neo vs the A330 Classic and the Boeing 787-8/9. We did not examine the neo vs the 787-10 because these are different category airplanes, as Boeing’s Wojick should know full well.

.
In an apples-to-apples comparison, we found the A330neo significantly narrows, but does not entirely close, the operating cost gap between the A330 Classic and Boeing’s new airplane. Airbus can close the gap and achieve an advantage, however, if it lowers the price of the A330neo to a level the 787 can‘t give. This is central to Leahy’s argument, which is used for the A330 Classic but achieved only with the most favorable assumptions for the Airbus airplane

To summarize:

Continue reading

Logical conclusions: Airbus wide-body decisions

A330 programme. The long range programme presents no new challenges. However, managing the order book beyond 2016 becomes more challenging due to competition from A350 XWB and Boeing 787.

—From the Airbus Group 2013 Annual Report

We have written previously that Airbus faced a production gap, a major drop in backlog orders from 2016, with no orders at all from 2020 (excluding the 27 orders placed in March by China, for which we don’t currently have delivery data yet).  Back on December 29, we noted that the prospect of the A330neo was gaining traction–and it’s even more so today.

Market Intelligence from multiple sources indicate that Airbus will announce at the Farnborough Air Show that it will proceed with re-engining the A330 into a new engine option configuration, including sharklets similar to that on the A320 family.

This will give a needed boost to the A330 line. There have been a dearth of orders, in part, no doubt, to the industry waiting to see whether Airbus will proceed with the A330neo. Recall that there had been a drop in A320 family orders in the run-up to the launch of the A320neo.

We have now completed a comprehensive study about the business case for the A330neo and how competitive it would be vs. the Boeing 787-8 and -9, and what price Airbus has to offer to help make the airplane competitive. This proprietary study is based on our proprietary economic modeling which, along with our own Market analysis, concludes that there is a business case to proceed with the A330neo. We concurrently believe Airbus will discontinue offering the A350-800, although this announcement may not come for some time. Among the reasons: Hawaiian Airlines wants the A350-800 as offering the passenger capacity and the range it desires. The A350-900 is too big, officials currently believe. But an A330-300neo won’t offer the range Hawaiian wants (it will fall about 1,500nm short, according to our estimates). If Airbus discontinues the A350-800, Hawaiian may well re-issue its Request for Proposals that will give Boeing a shot at getting the 787-9 into Hawaiian. Given the planned production boost to the 787 line (12/mo in 2016, 14/m0 in 2018 or 2019), Boeing now has delivery slots to offer to match that of the A350-800 schedule.

But we don’t think Airbus is done once it launches the A330neo. We believe Airbus continues to look at the prospect of re-engining the A380, c.2020, given additional impetus from the large customer for the A380, Tim Clark of Emirates Airlines. This article in The Wall Street Journal is the latest on this topic.

Continue reading

Vote for the Top Commercial Aviation stories of 2013

This is self-explanatory. We’ll publish the results December 31.

Feel free to nominate other stories in Reader Comments.

Does 777X assembly site matter to airlines? Yes, up to a point; and a retrospective to 2009

As Boeing awaits responses to its Requests for Proposals from 15 sites around the US and possibly Japan, Washington State officials, company employees and other stakeholders fret that Boeing will choose someplace other than Everett (WA).

Everett has all the logical advantages: the 777 Classic is assembled here. There are vast, mature facilities here. There is an experienced workforce here. As we note in our previous post today, there are a lot of points to ponder when it comes to choosing a site.

But what about the airlines? Do they care where the airplane is assembled?

This isn’t entirely clear. Emirates Airlines and Qatar Airways said at the Dubai Air Show they want the airplane built at one location, in the US, not outsourced to a bunch of countries and industrial partners in the fashion of the Boeing 787–an industrial model that proved disastrous for Boeing and the customers.

But do they care whether the 777X is built at Everett, Boeing South Carolina or some other site? Emirates and Qatar didn’t say, at least publicly. Etihad Airlines, another launch customer for the 777X, hasn’t said anything publicly. The first customer for the X told us that what’s important to it is an accessible location for inspections–in other words, a location with good air service, which could be one-stop connecting service.

This would rule in any of the cities that have been mentioned publicly in Boeing’s RFP search. It would rule out a city like Moses Lake (WA), which has ambitions of becoming an aerospace cluster but which has no airline service. The closest major airport is Spokane (WA), a 90 minute drive. Sea-Tac International Airport is a three hour drive. Lufthansa seems unconcerned whether Everett or another site is the choice.

Lufthansa is also not a 787 customer, but officials are well aware of the issues and delays involved in the program. It seriously considered ordering the 787-10 but for route system operational requirements chose instead the Airbus A350-900. But for some 787 customers, assembly location does matter. We understand from our sources that some customers want their Dreamliners assembled in Everett, not Boeing South Carolina, where by most accounts slow production rates and quality control issues remain a challenge.

Retrospective to 2009

As we sort through the events surrounding the IAM 751, Boeing and the 777X, we went back and re-read some of the coverage from 2009 when Boeing put 787 Line 2 in Charleston. There are some similarities–notably Sen. Patty Murray’s involvement then and now–and a lot of differences. Here are links to our posts; be sure to click through to the links of newspaper coverage contained within our posts. Reading the stories linked have amazing relevance to recent events.

Boeing talks a sham: This story, in The Everett Herald, paints a much different picture than:

How South Carolina won the deal. Also: The click-through to The Everett Herald story from this link has a familiar ring to our “loyalty” post of November 21.

Back to today:

Stan Sorscher of SPEEA, the Boeing engineers’ union, has a guest column in The Huffington Post, taking Boeing to task (not a particular surprise) over the current site search and efforts to cut benefits with the IAM 751 “because they can.”

Danny Westneat, a columnist for The Seattle Times, wrote Sunday that perhaps Washington State should look beyond Boeing for aerospace. This isn’t new. We advocated this in October 2009 (just days before Boeing announced it would put the 787 Line 2 assembly in Charleston) at the Governor’s Aerospace Summit conference in Spokane (WA). Be sure to click on the link to the PPT presentation, too.

Odds and Ends: 777X site; A380 reconfiguration; 777 flashback; PNAA’s 13th annual conference; A350; MC-21

Build 777X “where it makes the most sense:” A Boeing executive, in a CNBC interview, said the 777X would be built “where it makes the most sense.”

CNBC writes that Shephard Hill, president of Boeing International, said, “Honestly, we’re looking within the United States at this point because of the large infrastructure we have there. But again, with the mandate to do it on time, to do it in a quality way, that will drive the decision.”

Meanwhile, Alabama officials revealed they talked with Boeing about locating “some [777X] work” at Boeing’s Huntsville operation. Stories are here and here.

A380 reconfiguration: After our post concerning the secondary market of the Airbus A380 and a figure cited by a lessor that it could cost as much as $20m to reconfigure the airplane (assuming all bells and whistles), we received two emails from readers giving a different perspective.

One wrote that Airbus took the Emirates Airlines specification, which is not as customized as perceived, and outlined three scenarios for reconfiguration.

  • Simply change the cabin colors: $600,000 from Airbus and $500,000 for Buyer Furnished Equipment (BFE).
  • Change three class to two class, with only the upper deck changing: $3.6m in Airbus costs, $1.6m for BFE.
  • High-density, all Y-class, both decks: $4.3m for Airbus costs, $3.5m for BFE.

Another reader wrote that the $20m figure is correct if all existing cabin stuff is tossed and the reconfiguration starts from scratch, but seats and other equipment could be sold to reduce the cost. Going one class, this reader wrote, had a price of between $8m-$10m (slightly higher than that reported by the first reader) and a two class configuration would cost about $5m, roughly the same as noted above.

Flashback on 777 successor: Jon Ostrower, when he was with Flight Global, Tweeted out a flashback down memory lane when we did a podcast with him six years ago, talking about a Boeing 777 successor. We looked pretty smart back then, as it turns out.

PNAA’s 13th Annual Conference: The Pacific Northwest Aerospace Alliance has released the agenda for its 13th Annual Conference held Feb. 4-6, 2014, in Lynnwood (WA), north of Seattle and south of Everett. Crafted well before the Boeing 777X events of last week, the conference is entitled “What’s Driving Change in the Aerospace Industry”.

Boeing says it will decide within three months where it will build the 777X, or in December or January, the latter just before the conference. Whatever this decision, this specific action will clearly come up at the conference, though it is not specifically a topic on the agenda.

We’re presenting on the State of the Airline Industry on the first day and share a panel on the third day with analysts Michel Merluzeau of G2 Solutions and Richard Aboulafia of The Teal Group. We’ve done this panel each year for several years now, and it’s a free-wheeling discussion of what we’ve heard throughout the conference and events generally.

This conference has now become the largest of its kind on the US West Coast, with nearly 450 attendees this past February. The Big Four airframe OEMs, the Big Three engine OEMs and a host of suppliers and lessors present.

MC-21 program update: ATO.ru, a Russian publication, has this update on the Irkut MC-21 program.

A350-1000: Akbar Al-Baker, CEO of Qatar Airways, is known for his about-faces at a whim, so much so that he has the nickname U-Turn Al. Once a vocal critic of the Airbus A350-1000, he now says it is a great airplane, according to this interview in Gulf Business. He urges Airbus to consider a larger version of the plane.