We’re back from what we had planned as a holiday hiatus. This was interrupted by the IAM-Boeing 777X contract issue, of which we felt compelled to initiate some special posts.
This leads off our 2013 Year in Review.
IAM-Boeing 777X Contract
Although it was not voted by Readers as the most important story of 2013, nor did it even make the Top Three, its importance can’t be understated. The relationship between the IAM 751 District, which represents Boeing “touch labor” workers in Puget Sound (and in limited numbers, in Oregon and elsewhere), is to put the best face on it, dysfunctional. Relations hit a lot point in 2008, with a 57 day strike, and 2009, when Boeing elected to put 787 line 2 in Charleston. We thought, as did many others, that 751 and Boeing entered a new era in 2011 when an agreement was reached extending the 2012 contract to 2016 in exchange for locating the 737 MAX construction in Renton. As it turns out, this guarantee had less promise to it than was thought; Boeing is using this assembly as a stick (or a carrot) in the current 777X contract proposal.
If the 777X is not assembled in Washington, this will likely mark the beginning of a serious migration of Boeing from Washington. What’s been happening up to down, with 787 Line 2 and a series of jobs relocations, is peanuts compared with what will happen as airplane programs wind down and Boeing has clean-sheet designs in the next decade.
Failure of 751 and Boeing to come to some accord (not necessarily one based on the January 3 contract vote) has grave implications for IAM jobs and aerospace in Washington.
Top Story of the Year
Readers voted and we agree that the top commercial aviation story of the year was the three month ground of the 787. Except for the Concorde, a special and highly limited case, there hadn’t been a grounding of a commercial jet since 1979 with the McDonnell Douglas DC-10. With only 50 787s in service at the time of the grounding, global disruption was limited but the number of 787s scheduled for delivery during this time magnified the global implications. Japan Air Lines and its rival All Nippon Airways, with more 787s in service than any other carrier, were disproportionately affected. The grounding may have helped influence JAL to break the Boeing monopoly and buy Airbus with the A350-900 order.
ANA is still considering a major order and having lost JAL to Airbus, Boeing can be counted on being motivated to cut virtually any deal on any terms and conditions to avoid losing ANA.
A350 and 777X
A mere handful of votes separated the first flight and flight testing of the A350XWB with the launch of the 777X. The A350XWB barely topped the 777X as the second most important story of 2013.
Flight testing by all accounts is going well. Airbus officials are so far sticking with an entry-into-service for next year, but when is a moving target. Officials initially said mid-year, then September then November or December. Based on customer comments, we moved EIS to 1Q2015 in our estimates months ago, perhaps January.
In mid-December, the new American Airlines did what we had expected: it dropped the US Airways order for the A350-800, swapping it into the A350-900. The days of the -800 are numbered, and we think this subtype will follow the 787-3 into oblivion as early as 2014.
Boeing finally launched the 777X in November at the Dubai Air Show. The launch was really anti-climatic: Lufthansa Airlines had already become the first customers in advance of the air show, but Dubai provided the well-expected, high-profile order of 150 from Emirates Airlines and more orders from Qatar Airways and Etihad Airlines. On December 20, Cathay Pacific Airways ordered 21 777-9s, giving Boeing some 280 orders and commitments for the airplane. How many of the commitments will actually be firmed up by the end of 2013 is something we’ll all know in early January.
CSeries First Flight and Flight Testing
Bombardier came in at a distant fourth in the Reader tally with the first flight of the CSeries. This is BBD’s attempt to leap into the Big Leagues, challenging Airbus and Boeing directly at the small end of the mainline jet market. First flight was delayed three times and the flight test program has been slow off the mark. Flight Test Vehicle 2 is behind schedule entering the program and, we believe, so is FTV 3.
Bombardier long said that EIS would be 12 months after first flight. Following the September 16 launch of FTV 1, BBD stuck with this plan publicly. This meant EIS would be September 2014.
Not a chance.
We already had moved EIS to 1Q2015 by the time BBD CEO Pierre Beaudoin told the Toronto Globe and Mail in November that EIS was still a “good year” away.
We now have EIS in 2Q or 3Q2015 in our estimates. BBD’s year-end earnings call is February 11. We expect an EIS update from the company at that time.
All other nominees for 2013’s Top Stories were also-rans to Bombardier. Here are the results at December 29.
Vote for the Top Aviation Stories of 2013
|Airbus A350 XWB has first flight and enters testing
|Airbus A380 gets big order boost from Emirates
|American Airlines and US Airways merge
|Boeing 777X is launched
|Boeing 777X Site Selection competition
|Boeing 787 is grounded
|Boeing 787-10 is launched
|Bombardier CSeries has first flight and enters testing
|Embraer launches E-Jet E2
|IAM 751 rejects 777X Contract Nov. 13
|IAM International Forces Vote on Second 777X contract offer