Following the Farnborough Air Show last month, media and some aerospace analysts once again began asking the question: is the order bubble done?
We retort by saying, “What order bubble?”
We have been hearing since 2008 if the order bubble was about to burst. We’ve been asked this question many, many times. The trouble in answering this question is that nobody truly defines what they mean by “order bubble” when they ask if the bubble is about to burst.
The major OEM’s have published their half time 2014 results and we can make an analysis of their half year results together with orders / deliveries and the state of their product lines. We compare Boeing and Airbus on the high end and in a follow up article Embraer and Bombardier on the low end. To make orders and deliveries comparable we include the month of July as the OEMs collected business to be announced at Farnborough mid July.
Boeing had a strong first half 2014. Boeing Commercial Airplanes (BCA) business is now past the initial problems on the 787 program and delivered 48 units January to June 2014 (8 per month) which is the same numbers as for the 777 program. The 737 is now at rate 40 per month with a first half total of 239 deliveries. The 747-8 is at rate 1 with only 6 deliveries and the 767 has stopped as a commercial program with only 1 delivery during the first half year. The commercial deliveries of 342 aircraft drove a 4% increase in company overall revenue and a 5% increase in earnings compared to first half 2013 (both non-GAAP i.e. the core business performance), this despite a Defense, Space and Security side which was down 5% on revenue and down 15% on earnings.
777-9X, 787-9 and 777-300ER in ANA colors
The troubled unit is Boeing Military Aircraft (BMA) which is struggling with its 767 tanker program (KC46A charged BMA with $187 million and BCA with $238 million due to increased development costs) and it is also fighting to not have its major military airplane program, the F18, stop 3 years from now from lack of orders. The military aircraft order drought contrasts with BCA where first half orders was 783 aircraft, mainly 737 but also 777X, where Emirates and Qatar confirmed their orders for 200 777X. Continue reading →
Airbus A330 regional might get sales after all, Airbus is negotiating a large order with China against local off-sets (assembly or final configuration, the experts are divided) according to Wall Street Journal. We reference Ben Sandilands writeup of the story to avoid the WSJ paywall. As we were told at Farnborough by Airbus the A330 regional is a de-papered A330ceo with an adapted interior. It does not make sense to wait for a neo variant for this aircraft as the fuel costs are a less important factor on sub 5 hour missions. It will be interesting to see if some other market will pick up on this 200 tonne aircraft, to some extent it is back to the roots for the A330-300, it started off as a medium haul complement to the long haul A340-200 and -300 at 206t maximum take-off weight.
IAG has given Airbus a cheer up signal after the bad news around SkyMark. In their second quarter report call IAG CEO Willie Walsh declare their A380 as “fantastic aircraft when you can fill it”, they see 98% load factors on their most popular routes (e.g. LHR-LAX). IAG also announced better results in their Spanish daughter Iberia, consequently it is allowed to order 8 A330-200 (ceos as the neo comes to late) and convert 8 of IAGs A350-900 options to firm orders for their airline. Right now IAG is satisfied with the 12 A380 they have on order for BA according to Walsh.
Bombardier is re-examining its options for the recently created Aerospace divisions according to FlightGlobal; they want to leverage the Aerostructures divisions capabilities more when Boeing and Airbus looks for further partners for their booming supply chains. They also need to guard their bets on Russia as partner to drive sales of Q400 and Cseries, given the mounting political problems between Russia and the west. This results in renewed activity in the China / Comac discussions, initially for cooperation on the after sales side in addition to the present fuselage deliveries, but come a worsened situation with Russia such talks could find new depth we think.
Airbus Group (before EADS) reported 1H 2014 results yesterday against the backdrop of an eye-catching cancellation (Skymark A380). Overall it was a report which showed solid progress in making the former EADS a homogenous, modern industrial group managed by market realities and not involved government’s politics.
Much has been achieved since the same occasion last year when then EADS announced the name change to Airbus Group and the merging of its Defense and Space side into one tighter knit division. These changes reflected market realities; civil aerospace is growing year over year whereas Defense budgets are shrinking. The yesterday announced group numbers shows gains in revenue and profitability (+6% each when EBIT is cleaned from sale of ex. Paris HQ) underlining solid progress in the undertaken structural changes. Continue reading →
Upate, 5:30am PDT: The Wall Street Journal has an article that is more or less on point to the theme of this post.
It doesn’t matter what the competition does, it’s always inferior–until you do it yourself.
The continued, and tiring, war of words between Airbus and Boeing throughout the decades is monotonous and self-serving. If you step back, it’s also amusing.
Boeing constantly dissed the Airbus concept of fly-by-wire–until ultimately adopting FBW in its airplanes.
Airbus dismissed twin-engine ETOPS of the 777 while promoting four-engine safety of its A340–until evolving the A330 into a highly capable ETOPS in its own right.
Airbus put-down the 777X, saying the only way Boeing could make it economical was by adding seats…which Airbus has now done for the A330-900 to help its economics.
Boeing ridiculed the idea of a re-engined A320, but then had to follow with a re-engined 737 MAX due to the runaway success of the A320neo.
Boeing ridicules the A330neo as an old, 1980s airplane–neatly ignoring the fact that the 737 and 747 are 1960s airplanes.
Airbus still calls the 777/777X/787 a “dog’s breakfast,” though we know some dogs who eat pretty well.
And so it goes.
The fact of the matter is, however, that minor and major makeovers of existing airplanes have long been a fact of life, maximizing investment and keeping research and development costs under control. The Douglas DC-1 was the prototype for the DC-2, which begot the DC-3. The DC-4 (C-54) begot the DC-6, DC-6B and DC-7 series. The Lockheed Contellation was reworked from the original L-049 through the 647/749/1049 (in various versions) and finally the 1649.
Then came the jet age, with vastly more expense, and model upgrades became the norm. The sniping today between Airbus and Boeing goes unabated in an era of historical model improvements.
Airbus cleared the air about the A330neo, which we concluded was a must last December, and made the 2014 Farnborough Airshow go off to an exciting start. A lot has been speculated about the A330neo, and in the end it did come out bit stronger than what most had anticipated. Some of that is marketing but a lot is real, and here we give a first assessment of what was launched.
Let’s start with the specifics as given by Airbus and Rolls-Royce today in presentations and discussions. Here are the A330-800neo and -900neo’s main features: Continue reading →
It was pretty much the worse-kept secret in advance of the Farnborough Air Show this year: Airbus launched the re-engining of the A330, designating the new engine option the A330-800 (the A330-200 successor) and the A330-900 (the A330-300).
Rolls-Royce, as had been widely reported, becomes the sole-source engine provider of the Trent T7000. Airbus also gave it new A350 style winglets and have made enhancements to the cabin with improved seating, IFE and mood lighting, In total Airbus claims to have improved the fuel consumption with 14% per seat. Deliveries will start in Q4 2017.Rebranding the A330, dropping the -200 and -300 names, and adopting the more modern -800/-900 speaks to the significant upgrade of the airplane. Parenthetically, this also follows the pattern set by Boeing decades ago when it went from the 737-200 to the 300/400/500, then the 700/800/900 and now the 7/8/9. It speaks to adopting new technology and is consistent with the sub-type branding of the A350.
On the eve of the Farnborough Air Show, the aviation industry is watching to see whether Airbus will launch the A330neo program. Officials recently tried to tamp down expectations that a program launch will occur at the FAS, but we would not be surprised if an Authority to Offer is announced.
The industry will also be watching Boeing to see if some 200 commitments for the 777X announced at the Dubai Air Show will be firmed up at the FAS. We certainly expect this to be the case. (We also would not be surprised if there is a significant order for the Boeing 787-10.)
Questions will almost certainly arise once again about the production gaps for the Boeing 777 Classic and the A330ceo. Boeing faces a sharp drop in the backlog after 2016 and Airbus faces an even sharper fall-off after next year.
Near-term availability is an important element in Boeing’s plan to bridge the period between the in-production 777 and the entry-into-service of the 777X, says Randy Tinseth.
There are no AirbusA350 delivery slots of consequence available until 2019 and the 777 has plenty of slots starting in 2017, three years before the 777X EIS is planned.
But Airbus can make the same claim for the A330 vs the 787.
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.
The Airbus A330neo program has come a long way since our 29th of December article “A330neo prospect gains traction.” With the Farnborough Air Show days away, we understand there are now Airbus internal job postings for engineers to join the program. The speculation then reduces to “when” the program will be announced, not “if.” Another would be what improvements are foreseen for the Boeing 787-derived engines that may power the neo.
Rolls Royce reportedly gains exclusivity
Reuters recently reported that Rolls Royce might get an exclusive engine deal for the A330neo. There are many reasons Airbus might give Rolls Royce or General Electric exclusivity on an engine for the A330neo, especially if Airbus sees the likely sales of the updated aircraft to stay below 500 units. The reasons can range from how much of the $2B estimated program cost the engine manufacturer would pay to what efficiency improvements they would undertake on top of what is already on the way for their 787 engines. There is every reason to believe the GEnx-1B can match the fuel consumption performance of a further developed Trent T1000-TEN. We understand Rolls Royce will leverage developments from the A350 TXWB engines but GE can just as easily leverage developments from the LEAP program.
The picture shows the Rolls Royce Trent 1000 carbon fibre fan demonstrator engine from the companies ALPS (Advanced Low Pressure System) program. Is this also the looks of the Rolls Royce A330neo engine?