Airbus, Boeing face pricing pressure

Airbus and Boeing face pricing squeezes that are the result of their continuing price wars and two products that need price cuts to maintain sales.

The fierce single-aisle battle between Airbus and Boeing, and to a much lesser extent, between Airbus and Bombardier, puts pricing pressure on the A320ceo and to some degree the A320neo.

Airbus and Boeing each blame the other for a price war that has put pressure on margins for the in-production airplanes, but market share battles are only part of the issue. There is the need to keep the production lines humming for these airplanes in advance of the transition to the re-engined A320neo and 737 MAX, particularly as the Big Two up production rates over the next few years.

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The deeper, longer term implications of IAM’s Boeing contract vote January 3

There are deeper, longer term implications for the January 3 vote by IAM 751 members on the revised contract proposal from Boeing than have been discussed in the public domain.

  • Contract extension to 2024 brings “labor peace,” but also significantly weakens the union in the future.
  • The replacement for the Boeing 757 lurks in the background.
  • So does the replacement for the 737 MAX.

The near-term implications have been discussed ad nausea: for employees, vote for a contract that includes concessions, notably on pensions, or risk losing the assembly site for the 777X. For the states, Washington could be a winner, or a big loser. The state that’s awarded the assembly site would be a big winner. Suppliers will supply Boeing regardless of where the 777X is assembled.

Another near-term implication we’ve talked about: the fall-out on the IAM, both at the International level and the District 751 level. No matter how the vote turns out, there is a civil war within 751 members who are royally upset with their leadership and others who believe in it. The civil war between 751 and IAM International HQ will continue well beyond the vote, with the prospect that International could simply depose all the 751 leaders and place 751 under a trustee “for the good of the union.”

But there are much longer term implications of the vote.

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Irkut makes 10% fuel advantage claim over NEO, MAX for MC-21

Russia’s Irkurt claims its MC-21 mainline jet, a direct competitor to the Airbus A320/321neo and Boeing 737-8/9 MAX, will be some 10% more economical. Irkut claims the MC-21 will be up to 23% more efficient than the current engine-powered Airbus and Boeing products.

Thanks to a reader who is at the MAKS air show, we received this photo from a slide presentation. Although others may have seen this information before, this is the first time we have.

MS21_FuelBurn

Other MAKS news:

  • Sukhoi inked orders for some more Superjet 100s.
  • Still no announcements from Airbus, Boeing or Embraer.
  • Ilyushin Finance Corp and Bombardier announced that the first Russian operator of the CSeries CS300 will Vim Airlines. IFC ordered 32 with 10 more options at the Paris Air Show.

In other news, Boeing and Canada’s WestJet announced a letter of intent for 65 737 MAXes: 25 MAX 7s and 40 MAX 8s. This will enable WestJet to expand and replace its 737 NG fleet. Delivery begins in September 2017, making WestJet one of the first operators.

Odds and Ends: Hawaiian commits to A321neo; Emirates A380; JAL 787

Hawaiian commits to A321neo: Hawaiian Airlines has committed to the Airbus A321neo, contingent on new employees contracts setting rates for staffing the aircraft. The A321neos will be used on Hawaii-mainland services. This validates Airbus’ design of the 321neo to give it better range than the 321ceo for just such service. Bloomberg has this story. Since this order is contingent, we wonder if it will be included in the final Airbus tally for orders, to be announced January 17.

Emirates could use 30 more A380s: It’s not especially new news but here’s a story about Emirates Airlines saying it could use 30 more A380s. Airbus’ John Leahy said there was a significant order for A380s pending. We wonder if this is it, to be announced January 17.

Japan Air Lines 787: A JAL 787 parked at Boston Logan Airport has an smoke/fire related incident today. The plane had completed a flight from Tokyo and had disembarked all passengers. Here is a detailed story.