Leahy dismisses Boeing economic claims on 737 MAX vs A320neo

We did the following story Nov. 30 for Flight Global’s new Flight Pro subscription service.

Airbus’ new A320neo family will have up to 11% better fuel burn than the Boeing 737 Max family, John Leahy, COO Customers for Airbus, asserted November 30 at the Credit Suisse Aerospace conference.

Leahy challenged Boeing’s claims that the 737-800 Max will have a 7% advantage on a seat-cost basis. Boeing computes its figures on a total cash operating cost basis, which Leahy rejects as being subject to manipulation.

“There are some very aggressive people in marketing and Seattle who are veracity challenged,” Leahy told the Credit Suisse audience.

“I think that best way to look at it when everything else is equal is fuel burn. If you look at something where you can really change the variables too much, [it’s flawed]. If they say ‘I think the Airbus airframe is more expensive to maintain than our airframe,’ I advertise that it is less expensive. I think most airlines would agree with me. The worst I’ve ever seen is that we are equal. Boeing says the Airbus engine is substantially more expensive to maintain. They say Airbus is heavier so they put in a little bit extra charges. By the time you’re done, you probably see all sorts of different things to throw money in. If you can convince the airlines that you are right, I wouldn’t have the dominant market share I have. They would.”

On this basis, Leahy said the neo will defeat the Max in each model. The A319neo will have 6% lower fuel burn vs the 737-7; the A320neo will have 6% lower fuel burn; and the A321neo will have 11% lower burn.

He also said Airbus’ analysis concludes the Max will only achieve a net fuel burn reduction of 8% vs the 10%-12%Boeing claims.

53 Comments on “Leahy dismisses Boeing economic claims on 737 MAX vs A320neo

  1. OK, we all know the MAX will not gain as much as the NEO compared to the basic models.
    I think no one disputes that.
    Still the MAX was the right move, a new design is just too risky at this point.

    What Leahy says concerning comparison of cost is absolutely right: including maintenance and other cost items necessitates many assumptions. Why not just compare basic fuel burn? The aircraft are similar in other respects (such as speed, sufficiently close in size). An approach using cash operating cost makes sense when substantially different aircraft are compared (like A380 versus B787).

    • My guess is the US will push for being allowed to impose sanctions as early as possible.
      With some political projects not going as favorable as planned all damage and entanglement possible is a godsend gift.

  2. Because airlines work with the total cost of operating the airplane, that’s why. `Ol John Boy is scared as the MAX has gotten about 800 orders and committments in less time (about 100 days) than the NEO did, and without the benefit of an air show somewhere.

    He cannot compete with Boeing on a per seat mile cost because (except for the A-321) the B-737-7MAX and B-737-8MAX have more seats than the A-319NEO and A-320NEO.

    John Boy doesn’t know what the final design or either the NEO or MAX will be, nor do we. Both are still a work in progress and far from frozen designs. But from what has been said by the two OEMs so far, we know the B-737-MAX will have a significant weight advantage over the A-32X-NEO. We know the -8MAX and -7MAX can carry more seats than the A-319NEO or A-320NEO. We also know the track record of both CFMI and P&W for engine maintenance costs. We know the NEO will need more wing structure to support the heavier LEAP-1A or GTF engines. We know the wingtips on the NEO will also need more wing structure to support the blended winglets Airbus will install. We also know the basic A-32X is more expensive to maintane than the B-737NG is.

    Leahy really needs some help if he is seeing the NEO with some 11% fuel burn advantage than the MAX. Airbus has said the NEO will reduce fuel consumption by 15% over the basic A-32X. So does that mean the basic (no winglet) A-321 already has a 4% fuel burn advantage over the B-737-9MAX, which will have winglets?

    Come on John. [Edited as violation of our comment rules.]

    • Ummm – sorry for interrupting the rant…

      If the 321 NEO is 15 per cent better than the current 321, and 11 per cent better than the 739Max, it follows that the current 321 is 4 per cent WORSE than the 739Max. No idea if the number is correct, but the math is.

      And BTW – 800 commitments. Zero orders. Not orders and commitments.

      Carry on then.

      • Quite. Austrian, 12 business, 114 Eco in A319, total 126, but six seats left open between the eco seats, so 132 eco seats. 132 Eco in 737.

      • Meant 737-700, and forgot to mention you get better pitch in the A319 business class rows, but that only adds up to 9 inches of extra space across three rows. On Air Berlin the A319 seats 150 compared to 144 in the 737-700.

        In any case, this hardly matters. The hard fight will be between the larger versions, not the smaller ones, and it is clear that the 738 seats more than the A320.

    • “We know …$pro_Boeing_statement”

      I protest your use of “We”.
      You postulate $pro_Boeing_statement and “We” know that this is probably less than half the truth ( if any ).

      That said, carry on 😉

    • All this huffing & puffing & splitting of undefined hairs has become irksome, so thought I would add a “true” fact of the 320 series in that it provides a slightly more cosy flying environment with a quieter & marginally wider fuselage.

      Just thought I would get that off my chest…..

  3. I hope I didn’t go to far with John Leahy. He really is much better than those on a.net.

    • I got a good chuckle out of the irony of you passing judgement on what people post. It’s almost like you don’t even read what you write/have written on A.net and this blog.

      I hope my post doesn’t contravene Leeham’s commenting policy.

    • Clearly you did & Scott took appropriate action, when corresponding best do it from the mind not the heart.

  4. What percentage better is the current CFM56-5B4 versus the CFM56-7B27?

    If the same engines were on an A319 and a 737-700 and they were both loaded with the same full and equal load, would one burn less fuel? The 737-700 should be a more efficient platform by a small percentage, since it is lighter and has a newer wing.

  5. How many firm orders in 100 days did you say?

    KC135TopBoom :…MAX has gotten about 800 orders and committments …
    Come on John. [Edited as violation of our comment rules.]

  6. All: It has become necessary to update our Reader Comments policy as follows:

    “Updated, December 2011: Some Readers have apparently interpreted the “Personal Attacks” rule below as being limited to each other, and generally this has been the case. We are extending this qualification to personal attacks on the executives or other personnel of any company mentioned within these Comments. It is one thing to permissibly dispute the policies and public relations statements set by executives and personnel. It is quite another to attack the individual personally. This is not permitted.”

    Scott Hamilton

  7. Both Boeing and Airbus have their own spin ; the truth on Max vs Neo (fuel burn, total costs et al) is somewhere in between;both will be happy to keep the duopoly, extend the narrow body for another 10 years atleast , without a new plane investment – suits both of them fine. The fan boys meanwhile continue with their views, makes it entertaining.

  8. For a business, at the end of the day, “money talks and b.s. walks”. If Boeing does convert the MOU’s to orders than it seems the carriers are quite confident in the B737MAX’s abilities-regardless of what anyone says.

    Also, for Boeing, its a great way to keep existing customers (as well as possibly getting a few new customers) until they have the NSA to offer.

    Would Boeing liked to have offered the NSA? Sure, but as the AA orders showed, Boeing had a serious problem on its hand and IMHO made the right choice on offering the MAX. Its as if the MAX was dreamed 6 months ago. The Boeing team has been working on it for years.

    Regards.

  9. aeroturbopower :Wrong: the B737-700 is a bit shorter than the A319, so at best they are equal in seat count.

    Andreas :Quite. Austrian, 12 business, 114 Eco in A319, total 126, but six seats left open between the eco seats, so 132 eco seats. 132 Eco in 737.

    Andreas :Meant 737-700, and forgot to mention you get better pitch in the A319 business class rows, but that only adds up to 9 inches of extra space across three rows. On Air Berlin the A319 seats 150 compared to 144 in the 737-700.
    In any case, this hardly matters. The hard fight will be between the larger versions, not the smaller ones, and it is clear that the 738 seats more than the A320.

    In a one class max seating arrangement the B-73G seats 148 (30″ pitch). In the same one class max seating arrangement the A-319 seats 132 (30″ pitch). So it does not matter how AB configuers their aircarft, but what are the sizes and numbers of gallys and lavs aboard the B-73Gs and A-319s. Also the B-73G has slightly more cargo capacity (756 cu ft) compared to the A-319 (745 cu ft).

    • I am sorry, but that is nonsensical. What matters is how airlines configure their planes, nothing else. As you can see here, two airlines that operate both planes have in one case identical seat numbers, and in another the A319 seats more. It should be clear from observing reality that the one-class max seating is not restricted to 132 in the A319.

      • You are correct, Andreas. Not sure where KC is getting his data, but the exit limits on the A319 and 737-700 are 145 and 149, respectively. Configuring at exit limits does not necessarily mean equivalent comfort, but then again, airlines configuring at exit limits have already decided to abandon comfort.

        Both Boeing and Airbus compare these aircraft in dual class as even, or within one seat of each other (I think Boeing shows them at 126 pax each and Airbus shows the A319 at 126 and the 737-700 at 125) Airbus’ new galley config may permit the A319 to go to 129 at the same seat pitch, albeit with fewer galley carts.

        On a related note, there is an option on the A319 to add a second overwing exit, in which case the exit limit is pushed to 160. There’s not really anything preventing Boeing from offering the -800s second overwing exit on the 737-700 as well, except perhaps a touch of humanity.

  10. Boeing has to chose between a rock and a hard place. The miniMAX can’t match the NEO, while an all-new airplane would either be late or would drain resources away from the 787-10 and the 777-9X.
    My bet is on a resurrection of Y1 with an EIS about 2020. Any my bet is that the NEO will stay in the market as a long-term companion to Y1. CFRP and more electrics just don’t cut it on small airplanes, no other ‘game changers’ around for another 15-20 years.

    • KDX125, how do you know the B-737-7MAX cannot match the A-319NEO? All we really have is the OEMs spin, and of course the spin of the cheerleaders.

      Since there is no B-787-10 (and we don’t know if there will be), there are no resourses to drain away from it. We also don’t know what the B-777X will be, but we can assume Boeing will target it directly against the A-350-900/-1000, and may be the replacement for the B-77E, B-773, and B-77W.

      The NSA will be built, it is just a question of when.

    • Hi,
      Yes, I agree with you that Boeing had very little choice and that they did the right call.

      But I not sure about is that they will launch a clean sheet replacement in 2020 after committing to MAX, that will be only 4 years of production, I can only see it on in late 20s and Airbus a few years after.

      JD

  11. Frontier A319 seat 24 stretched @ 36” + 114 @ 31” = 138 seats two class
    EasyJet fits 156 single class seats in their A319 (29” pitch)
    see http://www.seatguru.com/ for more details

    KC135TopBoom :

    aeroturbopower :Wrong: the B737-700 is a bit shorter than the A319, so at best they are equal in seat count.

    Andreas :Quite. Austrian, 12 business, 114 Eco in A319, total 126, but six seats left open between the eco seats, so 132 eco seats. 132 Eco in 737.

    Andreas :Meant 737-700, and forgot to mention you get better pitch in the A319 business class rows, but that only adds up to 9 inches of extra space across three rows. On Air Berlin the A319 seats 150 compared to 144 in the 737-700.
    In any case, this hardly matters. The hard fight will be between the larger versions, not the smaller ones, and it is clear that the 738 seats more than the A320.

    In a one class max seating arrangement the B-73G seats 148 (30″ pitch). In the same one class max seating arrangement the A-319 seats 132 (30″ pitch). So it does not matter how AB configuers their aircarft, but what are the sizes and numbers of gallys and lavs aboard the B-73Gs and A-319s. Also the B-73G has slightly more cargo capacity (756 cu ft) compared to the A-319 (745 cu ft).

  12. “Mine’s better:
    “No mine is better”
    “Is too!”
    “Is not”
    etc etc etc

    Airlines don’t spend 100,’s of millions of $$, pounds or euros or billions of yen based on blog entries, reader comments, press releases, or stories or glossy ads in Flight and Aviation Week. Once each planemaker has a firm configuration and each engine maker has a real engine, they will sit down with each customer and offer a firm price, delivery dates, plus guaranteed payload, weight and performance. Then each customer will make their choice based on their own needs, rules and selection criteria.

    • You are right on every point except currency… all aircraft transactions, whether Boeing, Airbus, Embraer, Mitsubishi, or whatever, are conducted in US dollars. I can’t tell you why, but this rather hurts Airbus when the Euro is strong against the dollar, as they pay for a good percentage of the airplane in Euros but must sell it in dollars.

    • As if this debate doesn’t exist for the frames which are already in service 😉

  13. KC135TopBoom :
    John Boy doesn’t know what the final design or either the NEO or MAX will be, nor do we. Both are still a work in progress and far from frozen designs.

    Then I guess that you should have stopped your comment right there :o)

    Everyone is making assumptions. The general (some could argue there) consensus is that the benefit of going NEO/MAX will be on Airbus side. Meaning that the NEO will have an advantage of the MAX. (Advantage or reduced gap depending from what are the initial figures)

    The rest is pure speculation.

  14. The engines / fans are the difference. Physics don’t lie.

    The inclusions by Randy of additional variables to produce a favourable percentage for PR IMO is part of a “if you can’t convince them, confuse them strategy”.

    Nonetheless I think Boeing didn’t have much choice doing the MAX. As an interim damage containment project IMO. I guess the NSA is still scheduled for early 2020’s.

  15. Of course we all here could argue performance numbers, fuel costs, maintenance costs, operating costs and any such other figures we don’t have) until the cows come home.

    For me the significant numbers are those for firm orders, as opposed to “firm” commitments. Thats about as firm as wet mud. I don’t care how much some people want to excuse, explain or justify it.

    My question for the Boeing supporters is this, “Which will come first for Boeing, a firm configuration or a firm order?”. My suspicion is these shall be almost simultaneous events. In other words, when they finally convince somebody to put (semi serious) money down on their configuration.

    The way I see it, until those commitments start turning into “real” orders, this is a sales blowout.

    • Awkward when we cant retract comments at times, isn’t it?

      The truth is large companies have deeply institutionalized processes, which are often rigid. For Boeing, they call it their “Gated Development Process”. It has 11 developmental gates, each of which represents an refinement in product definition, performance data fidelity and (for 3 of the earliest stages) authorizations at the corporate level for proceeding with the business of showing aircraft to customers, pricing the product, guaranteeing performance and offering them for sale. The timeline you are claiming is evidence of some kind of reluctance on the part of airlines to place “firm” orders for the airplane is simply Boeing working within a very structured internal process.

  16. By the way, Boeing, like Airbus back in 2006, didnt have much choice here.

    The Max is the best, and only, option they had at this point in time. Despite the way things look with only having commitments now, it will also do well, if not maybe quite as well (sales) as the NEO line.

  17. TC :What percentage better is the current CFM56-5B4 versus the CFM56-7B27?
    If the same engines were on an A319 and a 737-700 and they were both loaded with the same full and equal load, would one burn less fuel? The 737-700 should be a more efficient platform by a small percentage, since it is lighter and has a newer wing.

    One would think, but actually the B737NG’s wing never matched that of the A320 in terms of aerodynamic performance. Boeing likes to build light wings. Guess why the NG got winglets more or less as standard since several years now.

    However, the B737-700 was a major model, possibly equally important as the B737-800 (at least in the mid 1990ies). The -900 was fall-out. The A320 series concentrated more on the higher weight variants, which gives the A319 a slight disadvantage in empty weight. Additionally, the B737 can cruise higher.

    Based on the performance I would pick the B737-700 over the A319.

  18. Aero Ninja :Well I got my answer pretty quickly, didn’t I!?

    I think you did. The MAX now has (at least) 150 firm orders and 150 options from WN (along with another 58 NGs ordered today). That brings the B-737MAX order book to at least 948 firm orders and committments, and at least 150 options. Up to 1100 aircraft in less than 4 months (if all the committments become firm orders and the WN options are converted to firm orders). That is a better rate of orders/committments/options than the NEO did in its first 4 months of being offered.

    But, both OEMs have had a great year with the Airbus NEO having a great year, and the Boeing MAX having an outstanding 4 months.

    I believe the current count is the NEO has some 1450 orders/committments/options, and the MAX is about 350 airplanes behind that with their 1100.

    I may have missed it, but has AA firmed up their order for the MAX and NEOs, yet?

    • Maybe it’s my memory playing tricks on me, but weren’t you one of those people who accused Airbus/Leahy of counting commitments along with firm orders, just to boost the numbers as it fit them (which by the way they have demonstrably not been doing for at least the last 6 years)? And are you now doing exactly what you’re accusing them of?

      • Oh – to answer your question regarding AA: No firmed up orders for MAX or NEO yet. Non-NEO A320 (130 – all booked as A321) and Non-MAX 737 (100 – all booked as 737-800) are firm, though.

      • Yes, and yes. BTW, Airbus is still counting committments and MOUs. Nearly 1/3 of the (about) 1400 NEOs are MOUs and committments.

  19. There are always 3 sides to a story involving two competing products. There is side “A” saying “My stuff is better than your stuff”. Then there is side “B” saying “No way! My stuff is much better than yours”. Then there is the truth – which will not be fully known until the two products are physically created. 🙂

    • NYC Dude, even after the NEO and MAX are in airline service, there will still be debate over which is better. Even today there are debates over which is better, faster, more range, cargo capacity, etc. The A-380 vs. the B-747-8, the A-330 vs. the B-767 and B-787. The A-345/6 vs. the B-777, and of course the A-32X vs. the B-737NG.

      • Well, there is no debate at all about the a330 vs 767. Anyone who orders it nowadays is either a freighter company for specific payload-range requirements or 787 related customers who got a juicy compensation as 767s.

  20. leehamnet :
    Closer to 200 rather than one-third. 1200+ are firm orders.

    Conservatively in Airbus’ side, 1200/1400, 85% are firm orders, making 1-.85, 15% of those commitments. That cannot be said about Boeing’s, 750/900, 84% commitments, making the 16% of the rest, firm orders.

    Anyway, congratulations to SW for scooping a fantastic (almost half-price) discount on the maxes by leveraging their knowledge on 737s as a launch operation, together with volume discount.

    • hardwaremister :

      leehamnet :
      Closer to 200 rather than one-third. 1200+ are firm orders.

      Anyway, congratulations to SW for scooping a fantastic (almost half-price) discount on the maxes by leveraging their knowledge on 737s as a launch operation, together with volume discount.

      And on top of that, I think SW will more or less dictate specifications for the 737Max, which is why they placed an order while everyone else is placing commitments. SW has always been the customer who has pushed hardest for a new engine only upgrade.

      And in terms of the volume of orders: there is here the same issue as with the NEO. Everyone was holding off till “the next big thing” was announced. You then see a flood of orders and then life goes back to normal. The NEO life is back to normal, and the 737Max life will soon go back to normal too.

      • “SW has always been the customer who has pushed hardest for a new engine only upgrade.”

        Adoption 😉 Something Boeing regularly needed to achieve a successfull product. the initial “City Jet” was an LH creation.

        “Sales density”

        the NEO spring lull was probably due to potential customers waiting for Boeing matching up with a reengine offer.
        Then we have the rush on first mover phase for the NEO.
        .. helped by Boeing being adamant that nobody wanted a reengine for its NB product.
        As it is with spin over time it spins in every direction and we now have two future MAX subtypes meeting high demand
        as expected 😉

  21. CM :Awkward when we cant retract comments at times, isn’t it?
    blockquote>

    What’s to retract?

    Yes, Boeing finally has a firm order. I asked when that would be. Now I know.
    With this firm order, they finally have150 of them. I keep hearing people throwing out the number of orders and commitments. Based on the ratios, such people should at least try to keep it honest and say commitments and orders.

    As for Boeing’s structured process, could you please tell me when they revised this holy process to start taking orders for aircraft (from American Airlines, Oh, bur those weren’t orders, only commitments), before there is an official approval by the board for the program? Did I neglect to mention that the engine size had not been established yet, nor the changes to the fuselage.

    But this was all part of the established Boeing process for startgin a new program?!

    Yeahhhhh, righhhhhht!!!

    Maybe you should consider your comments first.

    • The details of a contract in such a case can be interesting. There is nothing in the process preventing a “commitment” between Boeing and an airline, which hinges on the prospect of future offerability for a product. There is also nothing which prevents offering an existing product with substitution rights into a future product which Boeing may offer. It is all moot now, but your lack of knowledge on the subject keeps getting exposed with each new piece of news. Perhaps it is time to quit pretending you know what is going on behind closed doors.

      • I never claimed to know what was going on behind closed doors, which you seem to imply to do.

        I merely read the news and form my opinions from that. Multiple sources, before you ask.

  22. The fuel-per-seat debate is valid with assumption that the route always has all seats booked and paid when it flies. In that way one can claim that despite having a higher fuel consumption, we have a better ratio of fuel consumed per passenger. Normally a jetliner wont fly always with its all seats sold out

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