Odds and Ends: Slowing sales; Airbus in Japan; MRJ delay; Crandall on merger

Slowing Jet Sales: Within a few days, Bloomberg, Reuters and The Seattle Times each had stories about slowing jet sales.

Here is the Bloomberg story, focusing on cargo sales.

Here is the Reuters story.

Here is The Seattle Times story.

The theme of each is worrisome, but with Richard Aboulafia’s comments to The Times, we disagree with his view on American Airlines. American has an ancient fleet of Boeing MD-80s and aging Boeing 757s that have to be replaced, and we believe the Airbus and Boeing orders won’t go away if the merger with US Airways is blocked.

Airbus still trying Japan: Airbus, which has never had a lot of luck penetrating the market in Japan, still appears to have an uphill battle, according to this article. The Reuters piece quotes Airbus’ John Leahy at the Paris Air Show; when we spoke with Leahy by phone from the IATA AGM immediately before the PAS, Leahy wasn’t quite as upbeat as quoted in the Reuters article. Leahy tamped down speculation that he’d have a Japanese order for the A350 at the PAS (and he did not) but neither was he ready to predict any timeline when one might be forthcoming.

Aspire Aviation continues to believe Boeing may place the 777X wing production in Japan as a means to secure 777X orders and block the A350.

Mitsubishi’s delay: Mitsubishi’s latest delay on the MRJ90 program is being blamed on not following FAA process, according to this article.

Poor South Carolina 787 deliveries: All Things 787 reports that Boeing’s Charleston (SC) 787 assembly plant has delivered only four 787s this year.

Crandall on DOJ AA-US lawsuit: Former American Airlines CEO Robert Crandall (who retired in 1998) has a very good analysis of the faults of the Department of Justice lawsuit to block the American-US Airways merger in this Bloomberg TV interview. He’s first up in the 22 minute segment.

Desperation: Kingfisher sued International Aero Engines for $236m over allegedly defective and poorly designed engines on the Airbus A320. This doesn’t pass the laugh test and smacks of desperation. The V2500 has been on the A320 for decades and seems to have been designed just fine and performing well.

Odds and Ends: Boeing worker mentors famed bandit; 787 test flights; restoring the brand

The Barefoot Bandit: In a nice break from all-787-all-the-time, we ran across this heart-warming story of a Boeing worker mentoring the infamous Barefoot Bandit. Colton Harris-Moore, a troubled teenager, spent two years on the run from the law and became famous for a series of burglaries, often barefoot, and thefts, including stealing boats and planes.

We know someone who has a second home on Camano Island and who befriended a young Harris-Moore before the crime sprees began. Our friend described the youth as extremely bright and, as the media has described, in a very troubled home situation. This friend often provided food to Harris-Moore and after crime sprees began, in which homes on Camano were burglarized, our friend’s home was skipped by Harris-Moore.

787 Test Fights: Two are planned this week, according to Reuters. See this story. Separately, The Wall Street Journal has two stories of note. The first is about Boeing’s effort to restore the brand. The second refers to the 787 situation but is a broader piece about fighting fires on airplanes. Both are via Google News so readers should be able to access each without the subscription.

Readers skeptical of detailed Boeing plans to fix the 787 battery issues

Readers aren’t convinced that Boeing has turned the corner on the planned 787 battery fixes detailed last week in two press conferences.

The results come as some surprise to us. Despite some messaging we thought fell short, we felt overall Boeing outlined a pretty strong set of fixes that were done probably in concert with the FAA Seattle office. We published polling Monday; here are the results as of this morning. These are actually worse than our polling a month ago, when readers were evenly split whether they would resume flying the 787 when it returns to service.

Clearly, Boeing and the airlines have a job to do with public perception to restore confidence in the airplane.

These polls admittedly are not scientific.

Does Boeing have good solutions to the 787 battery issues?

Answer Percent
No, Boeing still hasn’t gone far enough 55%
Yes, the press conferences outlined good solutions 28%
I don’t know 17%

Having heard or read the details, will you fly the 787 when it returns to service?

Answer Percent
Yes, I now have confidence in the 787 and the solution 34%
No, I still want to wait 1-2 years for proof 51%
Maybe–I’m not sure 15%

When will the 787 return to revenue service?

Answer Percent
Weeks, like Boeing thinks 7%
May 23%
June 25%
July 16%
August-December 2013 29%

KING 5 News (Seattle, NBC) reported that the 787 test flight planned for yesterday did not happen, but had no explanation. An aerospace engineer we asked said, “I would gather that since this is a “one shot to get it right” flight, BA is being rather overly cautious.  So I imagine it doesn’t take much for them to cancel a flight and wait for optimal conditions.”

Timing seems critical, however, if Boeing is to meet its goal of returning the 787 to service soon.

Reuters had this yesterday:

Boeing last week unveiled a new battery system and predicted the 787 would fly again within weeks rather than months.

Asked whether Boeing was presenting a best-case scenario, Osamu Shinobe, the architect of All Nippon Airways’ strategy to put the fuel-efficient 787 at the centre of the airline’s fleet planning, said, “That’s what we understand it to be.”

“The problem is we don’t know how long the Federal Aviation Administration (FAA) will take to finish its checks (on the new battery system),” he said in an interview.

For Boeing to meet its target, Shinobe explained the plane maker needs to complete certification testing this week, and gain quick FAA approval followed by an airworthiness directive soon after. It would then have to transport all the parts and equipment to 787s parked around the world to begin installing the new batteries. Boeing has said that could take a week per plane.

A side note: Weather conditions this week in the Seattle area are forecast to be pretty abysmal, with sometimes heavy rains and high winds. Whether this will be a factor for the test flight is unknown.

Bloomberg has this today:

Norwegian Air is among airlines affected by the idling of the global Dreamliner fleet on Jan. 16 in the wake of incidents with lithium-ion batteries. While Boeing has proposed a fix, it hasn’t given new delivery dates for planes the Oslo-based company should get from April, Kjos said in an interview.

.
“There’ll be a delay that hits us on the first two aircraft,” Kjos said. Norwegian Air has leased two Airbus SAS A340s to provide cover, one for two months, the other for three, during which time the 787s should arrive, he said.

This suggests NAS doesn’t expect its 787s until June or July at the earliest.

Odds and Ends: NTSB issues 787 report today; FAA readies OK; A350-800 future debated

NTSB Report Comes Today: The National Transportation Safety Board issues its preliminary report on the Boeing 787 JAL fire today, around 11am ET.  Here is the NTSB 787 page that has been updated throughout the process. We’re traveling and may not be able to pick up the report as it comes out, so Readers, please do so and post in Comments; we’ll upgrade to a fresh post when able.

FAA readies OK for 787 plan: The FAA is expected to give Boeing the green light to begin implementing its proposed plans to fix the 787 battery issues. We expect this approval to be Friday or next week. Extensive testing will be required, but the length remains unclear. The NTSB report may or may not have implications.

Ray LaHood, secretary of the Department of Transportation (the FAA is part of DOT), still has questions. See this Wall Street Journal article via Google News, so it should be readable to all. A key paragraph:

[P]ushback against a quick final decision from Mr. LaHood—who oversees the FAA and must sign off on any package of fixes—and from regulators in Japan threatens to delay the more important resumption of Dreamliner commercial flights for months, according to industry and government officials. (Emphasis added.)

And:

A team of FAA technical experts is urging preliminary approval of Boeing’s plan, and FAA chief Michael Huerta appears likely to agree within a week or so, the officials said. That would establish a framework that could allow Boeing to begin test flights as soon as the third week in March. Results from those flights would have to be analyzed by agency officials and reviewed by Secretary LaHood and his staff before Boeing could seek permission to retrofit aircraft and seek new certification. Routine certification tests for batteries take four or five weeks, according to industry officials.

A350-800 future debated: Qatar Airways’ vociferous CEO, Akbar Al-Baker says Airbus is dropping the A350-800. Airbus says it’s not. (Also here.) Aeroturbopower has this interesting post on the subject.

Bombardier Reveals CSeries today: Bombardier will have its “reveal” of the CSeries today in a ceremony that isn’t quite a roll-out in the party-like fashion usually accompanying a new aircraft type. Rather, invited guests will visit the assembly line to see the completed aircraft. BBD isn’t taking the airplane off the production line so it doesn’t lose production time. The Wall Street Journal has this description via Google News.

Fallout continues from 787 grounding

LOT wants $$, Norwegian Leases A340s: The fall-out gets worse over the 787 grounding. LOT Airlines says it wants compensation by the end of June. TUI is rebooking passengers on Boeing 767s and will refund a price differential for those paying a premium to fly the 787. Norwegian Air is wet-leasing Airbus A340s to fill in for the 787s it was supposed to get.

Aeroturbopower has an interesting analysis of the Norwegian lease cost of the A343 v 788, including some admittedly speculative costs to Boeing.

In other news:

  • Richard Aboulafia, noted aviation consultant for The Teal Group and an occasional consultant to Boeing (last job five years ago), predicts it could be 4-9 months before the 787 is back in revenue service. This is from the start of the grounding, not additional time. The prediction is in this article by Reuters.
  • Aspire Aviation analyses the Australian aviation market.

Clues emerge on 787 service from FAA meeting

Clues emerged from a variety of news reports following the meeting Friday between Boeing and the Federal Aviation Administration that point to when the 787 will be able to reenter service.

The most tantalizing: Boeing will need up to eight weeks from the FAA green light before the 787 will return to service.

Since we don’t expect the FAA to approve proposed remedies any time soon (a relative term, to be sure), we think it could easily be May or June before the 787 returns to service. The preliminary report from the National Transportation Safety Board isn’t likely until the first half of March. We believe the FAA will want to see and digest this report before drawing is own conclusions. It’s anybody’s guess how long it will take the FAA to review the NTSB findings and  Boeing’s proposal.

Assuming the FAA concurs with the Boeing recommendations–which may or may not be a safe assumption–what kind of testing will the FAA require, both in the lab and in the air, and how long will this take? Only after all this would the FAA green light the fixes and the “up to eight weeks” timeline kick in.

Here are the key news articles and some key excerpts:

Continue reading

Odds and Ends: 787 likely grounded to May; More Batteries; Boeing’s 10K

787 Battery short-term fix: The Seattle Times has this story which recounts Boeing’s effort to design a short-term fix to get the 787 fleet flying again. The scenario outlined in the article suggests the 787 will be grounded at least until May. The story also paints a picture that if the grounding lasts nine months, production would have to slow and financial impacts will start to hurt Boeing.

More on Batteries:

The A350: Reuters has this story on Airbus’ switch from lithium-ion to current technology batteries.

The New York Times has this story about the different directions Airbus and Boeing are taking.

The Puget Sound Business Journal has a good story about the evolving technology of lithium ion batteries and even though the 787 is currently the world’s most advanced airplane, battery technology has advanced beyond the 787. PSBJ787Batteries

On Other Stuff

Boeing issued its annual 10K report on February 11. We were already engaged in the PNAA conference Feb. 12-14 and didn’t have a chance to read it until after the conference. The following excepts are from the 10K.

747 Program: The accounting quantity for the 747 program increased by 25 units in 2012, reflecting the normal process of estimating planned production under existing and anticipated contracts. We continue to incorporate changes identified during flight testing into previously completed airplanes. First delivery of the 747-8 Intercontinental occurred in February 2012.

The production rate increased from 1.5 to 2 airplanes per month in May 2012. Ongoing weakness in the air cargo market and lower-than-expected demand for large commercial passenger aircraft have resulted in pricing pressures and fewer orders than anticipated in 2012. We have a number of unsold Freighter and Intercontinental production positions beyond 2013. If we are unable to obtain orders for multiple Freighter aircraft in 2013 consistent with our near-term production plans, we may be required to take actions including reducing the number of airplanes produced and/or building airplanes for which we have not received firm orders. We also remain focused on reducing out-of-sequence work, improving supply chain efficiency and implementing cost-reduction efforts. If market and production risks cannot be mitigated, the program could face an additional reach-forward loss that may be material.

[787 Information]

[787 test airplanes]: During the fourth quarter of 2012 we finalized an order for one of the three remaining flight test aircraft. We continue to believe that the other two 787 flight-test aircraft are commercially saleable and we continue to include costs related to those airplanes in program inventory at December 31, 2012. If we determine that either of the remaining aircraft cannot be sold, we may incur additional charges.

[787 grounding]: We are unable to reasonably estimate a loss or a range of loss at this time because such estimates are dependent on the ultimate finding as to cause and the timing and conditions surrounding a resolution and return to flight. Any such resolution could have a material effect on our financial position, results of operations or cash flows.

New battle breaks out between Airbus and Boeing–in advertising

A new battle has broken out between Airbus and Boeing, this time with a sharp (and perhaps unprecedented) advertisement by Airbus accusing Boeing of outright lying.

(Click to enlarge.)

We don’t remember ever seeing this direct assault by one of the Big Two OEMs on the other. We certainly recall advertisements in the debate over two engines (Boeing 777) vs four (A340)–but to call the competitor a liar like this? It’s new territory, at least in print.

Airbus has been calling Boeing a liar in conferences for its representations for years.

As regular readers of this column know, we’ve been especially skeptical of Boeing claims, based on conversations we’ve had with airlines that have analyzed the aircraft involved, and in some cases those which operate both fleet types. The neutral arbiters–these customers–universally tell us Boeing claims are exaggerated and that the costs between the two OEM’s narrow-body aircraft are about equal. The costs between the Boeing 747-8I and the A380 are also exaggerated by Boeing, these companies tell us.

Furthermore, we’ve cast doubt on Boeing’s reliance of US DOT Form 41 data (which in itself is distorted and unreliable) and a study in Europe that looks at data from 2006-2009, data that is clearly out of date.

At the same time, we’ve taken Airbus to task over its parameters in concluding the A330-300 is a better airplane economically than the forthcoming 787-9.

At ISTAT Europe in September, an official from Virgin Atlantic publicly challenged Boeing’s Randy Tinseth over economic data Tinseth presented comparing Boeing and Airbus aircraft. Tinseth, according to those present, merely responded that he stood by the numbers.

Bloomberg has this story on the controversy. Reuters has this story.

In a way, the entire fight is silly. No airline or lessor will buy Airbus or Boeing aircraft based on these sort of claims. The airlines run their own economic analysis and the lessors are more concerned about lease rates and residual values. The entire conference and advertising effort is for consumption by uninformed journalists, financiers and aviation geeks. Those who actually understand the nuances tend to dismiss the claims of either manufacturer (as we do) and run our own analysis or rely on the airlines and lessors for impartial information.

The market has spoken. Airbus currently has sold about 1,400-1,500 A320neos to Boeing’s 1,000 737 MAXes. Airbus also, in recent years, has sold more current-generation A320s than Boeing has sold 737NGs. For the Very Large Aircraft, Airbus has an 86% market share of passenger airplanes.

These statistics tell more than anything Airbus or Boeing manipulate.