Odds and Ends: MAX prices, Albaugh on MAX, BBD on CSeries

737 MAX: Boeing has ann0unced the prices for the MAX and Reuters has this story comparing the competition with NEO:

Airplane Families 2011 $ in Millions Average
737 Family
737-600 59.4
737-700 70.9
737-800 84.4
737-900ER 89.6
737 MAX 7 77.7 (+6.8)
737 MAX 8 95.2 (+10.8)
737 MAX 9 101.7 (+12.1)
747 Family
747-8 332.9
747-8 Freighter 333.5
767 Family
767-200ER 151.5
767-300ER 173.1
767-300 Freighter 175.4
767-400ER 190.2
777 Family
777-200ER 244.7
777-200LR 275.8
777-300ER 298.3
777 Freighter 280.1
787 Family
787-8 193.5
787-9 227.8

What’s interesting of the MAX prices vs NG is the price premium of up to $12m, nearly twice that announced by Airbus for the NEO. Recall, too, that Boeing dissed the Airbus plans to charge a premium for the NEO; Boeing used the NEO premium as a talking point to promote the value proposition of the 737NG.

Boeing: Jim Albaugh, appearing at a Reuters event, says Boeing expects to begin converting the 948 commitments to firm orders very soon. Who are the commitments? Only four are announced out of 13 customers.

We’ve listed most of them before. We now understand that there are five top lessors who have committed (only one has announced). We’ve previously identified GECAS (no surprise here). We knew of another but did not have the name. ILFC, ALC and CIT are obvious candidates but we don’t have definitive information that these are the others.

Announced firm order

  • Southwest Airlines

Announced commitments

  • American
  • Lionair*
  • Aviation Capital Group

Lionair says theirs is more than a commitment while at the same time saying it won’t be “firmed” until January. The announcement was in November and it is not on the Boeing order list yet.

Unannounced but we’re comfortable these have committed:

  • GECAS
  • Three other lessors
  • COPA
  • GOL
  • Norwegian Air Shuttle

That’s 11 of the 13. We have heard the names of the other two but aren’t sure enough of them to publish them.

Bombardier: Pierre Beaudoin, president of the Canadian manufacturer, gave an interview to the Montreal Gazette on the challenges facing the company on the new CSeries. Hints of a six month delay are becoming more frequent.

Southwest Airlines: For those still wondering, it’s now official: Boeing and Southwest agreed to transfer AirTran’s outstanding order for 53 737s to Southwest, according to an SEC filing. Southwest also canceled purchase rights of its own for 20 737s as part of the order for 58 737-800s announced at the same time the MAX order was announced.

Softening Freighter Market: In another worrying sign about the global economy, Cathy Pacific has deferred to Boeing 747-8Fs to 2013 from 2012, according to AirWise. Global cargo demand is often a leading indicator of passenger demand.

Embraer forecasts a “crisis” in the Brazilian economy next year but an increase in commercial aircraft sales nonetheless.

15 Comments on “Odds and Ends: MAX prices, Albaugh on MAX, BBD on CSeries

  1. The higher the list price the better the discounts.
    I think if Southwest hands them 50 million USD a copy for the -8, they came out well.

  2. Embraer:

    IMHO the statement does not properly represent the information from the referenced article.

    Embraer predicts that the (essentialy ongoing) banking crisis will be a more taxing problem in 2012 on a _global_ scale.
    They expect Brazil to come out of this in better shape than (most?) others.

    Thus it is not a specific brazilian crisis.

  3. Well, it seems Boeing has offered list pricing on the MAX some $5M to $7M lower than the NEO. To me that means Airbus will have to offer much deeper discounts to sell the NEO than the (reported) 48% WN got for their MAX order. Will Airbus offer discounts in the 55% to 60% range and still make money? I don’t know, but it seems that may be what they have to do.

    In other words, on pricing alone, Boeing seems to be in the driver’s seat (pilot’s seat?).

    On top of that then comes all the other costs of operating the NEO compared to the MAX, fuel economy, maintenance costs, airport landing/parking fees, crew costs (Cabin crew might be about the same, but who gets paid more at the same airline, the A-32X-NEO pilot, or the B-737MAX pilot?), and overall operating costs per flight hour.

    It seems to me that CFMI and P&W will be the major players for both the MAX and NEO for performance garuntees, as the new engines will provide the bulk of the claimed savings, less so for the airframes.

    • If Airbus can get a premium and Boeing not Boeing is in the drivers seat?
      In a chauffeur driven limousine maybe 😉

      • Good one, my friend. ROTFLMAO.

        Somehow I doubt neither OEM is making a killing on the current first (combined) 2500 orders (NEO close to 1500 and MAX closing in on 1000) of reengined NBs.

      • I doubt neither – do you mean you think both are making a killing or just one?

        in all seriousness – who cares about a list price difference of ~4% in a business where 30% discounts are the rule rather than the exception. IF A’s offering is more expensive at the gate, it will be compensated by lower operational costs or higher residual value… or else the more expensive one will not sell another bird. (you can do a lot of type training and ground equipment changes for ~5 million per plane…)
        So I guess the market will show us if either Ab’s or Bo’s claims hold any water.

  4. English is not my first language, so maybe I don’t understand what was written:
    “Cathy Pacific has deferred to Boeing 747-8Fs to 2013 from 2012”

    How many airplanes were deferred?

      • Other than the 3 B-747-87UFs that 5Y canceled earlier this year, have there been any other B-747-8F/Is canceled? The CX deferral doesn’t seem like a really big deal, as they still plan on taking 4 B-747-867Fs in 2012. The deferral for the two is only 6-12 months.

  5. KC135TopBoom :
    Somehow I doubt neither OEM is making a killing on the current first (combined) 2500 orders (NEO close to 1500 and MAX closing in on 1000) of reengined NBs.

    True. Looks like a buyers market.
    But.
    The NEO offering really introduced the Boeing Bound Airlines to the ginger fig 😉

  6. Bombardier:

    We are being psychologically prepared for a delay, obviously. It is indeed a serious possibility, despite BBD’s repeated denials to that effect.

    But I don’t think the Bombardier people really know themselves. I mean they don’t know exactly what will cause the delay and how long it will be. There has been divergent informations released in the last twelve months by various BBD executives.

    Today Pierre Beaudoin speaks of the FBW system as a potential issue. Recently we had Guy Hachey talking about five or six areas of concern, including the wings and fuselage. And before that we had Rob Dewar mentioning the avionics as a potential roadblock.

    It’s a bit like when you drive on the highway. Sometime a particular lane appears to go faster that the one you are on. So you move over, but only to find out that it slows down and the previously slower lane is now speeding up. That’s the image I have when I read the various CSeries progress reports.

    They keep saying that the CSeries is on track. That would be more appropriate to say for the Bombardier rail division. 😉 Seriously, they admit that the buffer is completely gone. There is no margin left. But are they now past that buffer zone? And if so, can they still catch up and regain the lost ground? Maybe that’s what they are hoping for and therefore don’t want to announce a premature delay. Even if everyone is expecting one and has been “prepared” for it by Bombardier.

    • Maybe an explanation:
      If you have (little?) _unconnnected_ holdups in various areas of the process it may be open which of these holdups will finally push the timeline out of shape. ( CSeries, A350 )

      Compare to having to achieve one set of objectives to have a chance to expose other issues
      further on in the process. ( A380, 787 )

  7. I wonder wath the real value of the prices presented is.

    “Southwest Chief Operating Officer Mike Van de Ven, who negotiated the deal with Boeing, said the new order adds to 142 firm orders for 737s already on Southwest’s books, for a total 350. The airline will pay $13.2 billion for the lot over an 11-year period through 2022, he said.

    Even allowing for relatively small prepayments already made on the previous 142 orders, that still works out at less than $40 million per airplane.”

    http://seattletimes.nwsource.com/html/businesstechnology/2017003166_boeing14.html

    Either Boeing gave unprecedented discounts at their only real 2011 order, Southwest is lying to their stockholdres or the real prices aks are significantly lower then presented here.

    Probably Boeing just wants to look stronger then they really are in this segment.

  8. Thx to all for a great blogging year, and Merry Christmas and Happy New Year! Given the contentiousness of some of our disagreements, I thought the following blog post from Flightblogger might be of interest:

    “rick
    “I have been watching all the dialog. Most of the folks don’t truly don’t understand how many different trades go into the decision to launch any new airplane program (or derivative). The costs are astounding. Whatever you think the costs will be they will be more. The number of decisions and genuine aw-s%$Wts are phenomenal. If you want to shorten your life span – be the chief program engineer on a new A/P. Or for that matter the launch customer procurement guy. Or almost is bad that the guy in charge of pilot training or logistics. It’s really easy to be critical. It is a lot harder to actually be in the trenches doing the job.”

    http://www.flightglobal.com/blogs/flightblogger/2011/12/with-minimum-change-for-max-so.html#comments

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