Odds and Ends: Qantas cancels 35 787s; 787 program upswings; 777X development slows

Qantas Airways: The troubled airline canceled 35 787-9s. Stories in Google News from all over.

Update:  David Strauss at UBS re-issued his April note analyzing over/under orders for all Airbus-Boeing models. In his cover email, Strauss today referred readers to the 787 section. Excerpts:

At 859 aircraft from 56 customers, 787 accounts for roughly two-thirds of Boeing’s widebody backlog. Assuming Boeing hits its planned 10/month 787 production rate by end of 2013, we estimate Boeing has roughly eight years of production in backlog. By region, Asia accounts for the largest percentage of the 787 backlog at 38%, with the remainder fairly evenly split between North America, Europe and the Middle East. We estimate that roughly 73% of the 787 backlog has been ordered for growth as compared to 27% for replacement.

 Our analysis indicates Boeing’s 787 customers are in a net over-ordered position of roughly 400 aircraft or 29% of their combined widebody backlog. 787 customers that we have identified as being over-ordered include Singapore, Aeroflot, Qatar, Gulf Air, Qantas, Air China, Vietnam and United, while BAIberia, Etihad, China Eastern, Jet, Oman, Uzbekistan and Saudi appear under-ordered. Although our analysis indicates Delta is under-ordered on widebodies, we don’t expect Delta to order more 787s as it has already deferred its existing 787 orders indefinitely.

787 upswings: Aspire Aviation has a long piece on the 787 program.

777X Development: Dominic Gates has this story about the slowing of 777X development. This is very similar to what we’ve been hearing from a variety of sources. Update, 7:25pm PDT: Randy’s Blog (Randy Tinseth) refutes Dominic’s article with a memo from Ray Conner, president of BCA. As we noted in this item, Dominic’s reporting is similar to what we’ve been hearing–including as late as Tuesday of this week. We’ll also observe, for what it’s worth, that this seems to be unfolding in a scenario very similar to the New Small Airplane/737 MAX timeline. If nothing else, the customers seem to have an understanding that appears to be “evolving.”

35 Comments on “Odds and Ends: Qantas cancels 35 787s; 787 program upswings; 777X development slows

  1. The QF 787-8 deliveries were delayed for 5 yrs (2013 iso 2008). From the 115 commitments in 2005 back to 15 firm orders for Jetstar in 2012. The rest is commitments, options, rights, paper.

    Lacking the 30-40 scheduled 787s in the recent years of high fuel prices, network rationalizations and competition, caused severe damage to Qantas International.

    A lesson everyone should learn here IMO is not to put all your eggs in one basked and not join in believing what is desirable but assume what is realistic and have a plan B.

    • AFAIK, the Qantas Group originally placed firm orders for 65 787s and secured rights to buy another 50 aircraft. In June 2009, the number of firm orders was reduced to 50 aircraft, comprising 35 787-9s and 15 787-8s.

      It remains to be seen when Qantas International returns to profitability (Qantas Domestic is operating in the black), if they will stick to the 787, or up-gauge to the larger A350-900 and A350-1000. Qantas has been criticised for the lack of a 777-300ER fleet. However, Qantas had already committed to a different fleet strategy before it was clear that the 77W would essentially match the payload range of the 747-400. When Qantas once again is ready to commit to new orders, I wouldn’t be too surprised if they do choose the A350-1000 as a replacement for the 744 in addition to route expansion.

  2. If the oil price starts to rise and remains at a high level permanently, Qantas may regret the decision. In addition to oil price there is also the aircraft purchase price to take into consideration. We can assume that Qantas benefited, like many others, from an exceptionally low “introductory price” on the 787.

    The range of the aircraft also suits their network very well. Qantas would have been able to benefit more than most airlines from the 787 autonomy. Things must be pretty bad at Qantas to forgo such a great opportunity to remain competitive.

    • Jetstar are going to get 787-8s, and Qantas retain options and purchase rights for another 50 787-9 (with first potential deliveries now moved to begin in 2016). I’m sure these options/rights still have very favourable conditions but require much less up-front payment than actual orders that would have started arriving in the next couple of years.
      It’s a pretty harsh move, but given this plan B (of still being able to add 787-9s 4 years from now), I think it may actually be a smart move. As is, they still have 23 767s as well as 18 A330s – the latter aren’t all that old yet anyway, so it’s not like they don’t have any equipment to fly most of what they would have used the 787-9s for.

  3. If the 777x gets launched, it is a change in thinking that CFRP is not enough of a step change over AL-Li in the fuselage to get a payback. Did Airbus and Boeing make the wrong choice of fuselage material with the A350 and 787? Maybe Airbus should have stuck to the original version of the A350. Either that or Boeing is making a poor choice with the 777x and instead should go with a clean sheet CFRP ten abreast fuselage, or a double deck twin.

    • TCook :
      If the 777x gets launched, it is a change in thinking that CFRP is not enough of a step change over AL-Li in the fuselage to get a payback.

      While I agree that composites aren’t all that they were cracked up to be in the initial Boeing 7E7 PR blitz, I also think that the conclusion you draw from a potential 777X launch may be overstating it a bit.
      Engineering resources, development costs and time as well as other factors also play a role when deciding on whether to revamp and reengine an existing airplane versus creating one from scratch. See the 737MAX.

  4. “Either that or Boeing is making a poor choice with the 777x and instead should go with a clean sheet CFRP ten abreast fuselage,”

    That’s what I’ve been saying for some time now.

    “or a double deck twin.”

    One and a half deck like the 747 – all composite, cockpit position like the A380.

    • OV-099 :
      “Either that or Boeing is making a poor choice with the 777x and instead should go with a clean sheet CFRP ten abreast fuselage,”
      That’s what I’ve been saying for some time now.
      “or a double deck twin.”
      One and a half deck like the 747 – all composite, cockpit position like the A380.

      That would be the worst freighter ever! The 747 arrangement is brilliant IMO, freighter is an area where Airbus lacks a decent competitor. Why cripple a good design?!

      • The nose design of a modern airliner is driven by drag minimization, pilots visibility, fuselage width and cabin acoustic considerations. Also, in a modern nose design, you would want to move the avionics bay as far forward as possible in order to maximise the volume of the forward cargo hold, hence the design of the nose sections of the A380, 787 and A350 are geared toward these parameters.

        The 747 has a higher airflow velocity over the cockpit than that of the A380 and has thus more noise in the cockpit. In order to avoid shock waves appearing over the cockpit, smooth surfaces should be employed as far as the design constraints allow for. The forward fuselage of the 747 is of a double-bubble design. The area where the double bubble part blends gradually into the circular (single bubble) is clearly of a design heritage of the ’60s, where the relative lack of smoothness was deemed acceptable. Additionally, the forward fuselage of the 747 is a very complicated piece of structure.


        The distinctive double-deck fuselage presented its own unique aerodynamic challenges, not least because no-one had ever to attempted to develop such a wide, blunt-nosed and ovoid cross-section of this scale before. “One of the design objectives was to maximise the width of the cabin, but minimise any ‘bad’ flow over the fuselage. There was a lot of work done in terms of optimising the flow around the doors and windows, and we have done well,” says Ogilvie, who adds: “There is virtually no supersonic flow over speeds up to Mach 0.89, and no shockwaves, which is really important.

        “Some of our customers want to belt along at M0.89, so we’ve deliberately gone out to make sure we’re shock free. We ended up playing tricks with the ovoid cross-section to get the flow to ‘go bad’ at M0.93. You have more ‘fatness’ up and down than you do in width, and the acceleration of the air from the nose is dependent on the curvature of the front fuselage. So we had to tailor the distribution of the curvature of the fuselage to maintain this acceleration,” he says. “We tried to make sure the velocity near the doors is as low as possible because the door areas can be susceptible to leaking and noise.”

        The nose shape was critical to not only helping achieve the correct aerodynamic flow lines, but also to helping obtain increased nose-up pitching moment. “After the mid-deck [cockpit location] was finalised in January 1998, we ended up with a shape that was flattened in planform with a more rounded look and less sharp curvature on the profile,” Ogilvie says. The mid-position also gave greater flexibility for the widest first-class cabin.

        I’m not sure if you would want to compromise a one and a half deck design with a 747-style cockpit location believing that you’d automatically copy the long-term success of the Jumbo Jet.

        The times they are a-changin’, and future freighter operators may be required to demonstrate some green credentials by ordering custom made aircraft. 😉


  5. Regarding the article by Dominic Gates; it looks as if the beancounters once again may be in control at Boeing. 😉

  6. Mr. Tsangs article appears to be a incredibly finely detailed … fluff piece.
    it ignores the lagging deliveries, the rather low Boeing keennes to go for a -10 derivative
    and the unknown metrics that stand behind those “better than expected” fuel/cost numbers.

    The Qantas cancellation sets a further counterpoint.

    What is missing is some more information on the GENX shaft failure and timeliness of the -9 derivative. ( which may well be what everyone expected from the original Dreamliner, never buy a Mk1 ;- )

    Dominic Gates tends to be an informative read that presents facts and correlation without
    invasive use of highly emotional formulations.

    • Qantas cancellations are more about Qantas losing money hand over fist, than anything to do with the -9 or -10, once again, you don’t know jack.

  7. The article in TST is really excellent. For those who did not take the time to read it, follow some exerts from Dominic Gates’s article.

    “Despite a competitive threat from rival Airbus, Boeing’s management in Chicago is unwilling to commit the money because of the risk attached to doing several major new jet programs at once.”

    “As Boeing weighs what to do and when to move, its board and corporate management must pay attention to the concerns of large shareholders.

    After a period when Boeing overspent by billions of dollars on the much-troubled 787 Dreamliner program, Wall Street analysts say those shareholders naturally want to see spending reined in for the years just ahead, allowing some time to harvest profits from the previous investments.

    Launching 777X would not only require hefty research and development funds but would also depress the pricing on existing 777 models, which are cash cows in the current airplane market.”

    “Aerospace analyst Richard Aboulafia, of the Teal Group, said in a letter to clients this week that Boeing’s reluctance to move ahead is reminiscent of the six years before the 2004 launch of the 787 when company management slashed research and development spending, hoarded its cash and repeatedly declined to commit to new airplanes.

    A parsimonious, risk-averse (and by some estimations greedy) management culture made launching a new jet a near-impossibility,” Aboulafia wrote.”

    “The other Middle Eastern airline executive said he has seen “a slowing down in 777X.” He believes it’s a matter of engineering and material resources as well as Boeing’s cash limits.”

    “I don’t think Boeing right now can cope with another major program like 777X,” he said.

    First we had the NSA postponed indefinitely. Then we herd the 787-10 was shelved for a few years. Now we ear that there is no rush to do the 777X. Those are telltale signs that Boeing might be running out of cash. But if it continues like that they might also run out of time.

    • Normand,

      With respect, it would be better to let people read the full article. You omit something and then add your conclusion at the end, which includes this: “We herd the 787-10 was shelved for a few years.”

      But as my story states, despite the recent news article you refer to that quoted Mike Sinnett on 787-10, I believe that airplane will be formally approved by the Boeing board (i.e. given “authority to offer”) by year-end or certainly by early next year.

      Again, read the whole story.

      • Boeing will get the -10 out the door as soon as possible. Even if a -10 sale simply replaces as -9 sale, the premium Boeing can charge for the aircraft with extra volume will far outweigh the cost to produce a -10 over a -9.

      • I apologize if I messed up your story. I am really sorry because it is indeed a very fine piece of journalism. 🙁

        I was conscious when I made the comment that it contradicted an element you had reported on. But only now do I realize that I should have included that statement along with the others and made clear that I thought differently. With something like this for example: “Despite what DG reports there are still good reasons to believe that the 787-10 might be shelved for a few more years”. Or something to that effect.

        I knew that many readers would not take the time to read the article; so because of the value of what I found in the article I felt the need to share with them what I considered key points. But you make me understand that if it is not done properly it can lead people to misinterpret the article and the message its author is trying to convey.

        I understand your reaction and I hope you will forgive me.

        Best Regards, Normand

  8. Boeing is a publicly traded stock, if the board feels that they want to ease on spending, so be it. We live in a greedy shortsighted world, Boeing cant go to the taxpayers like Airbus can. McDonnel is haunting Boeing again.

  9. I sincerely hope that the Qantas 787 cancellation for all their remaining 787s
    on order, is not setting a trend for others like it, because of the now known
    newer and better a/ps being developed and soon available in that category,
    such as the 787-9/10 and the three A350 models!
    Tragically, Boeing will be building all 787s still on order, without making a penny
    profit on any of them and “787 customers that we have identified as being over-
    ordered include Singapore, Aeroflot, Qatar, Gulf Air, (Qantas), Air China, Vietnam
    and United,” as the above analysis reports, as well as the slowing down of world-
    wide economies, explains and justifies the Boeing decision NOT to embark on
    any major projects at this time.

  10. OV-099 :
    The nose design of a modern airliner is driven by drag minimization, pilots visibility, fuselage width and cabin acoustic considerations.

    The 747’s upper deck cockpit ( and lounge) was an efficient solution for a lot of pax seating in a limited fuselage length in its time.
    The current certification framework requires each and every pax seat to have egress in both (forward and aft) directions. That means you cannot use the bow section ( or the tail at that ) for passenger seating. This directly leads to two decks of same length and between deck access at the rear and front. Next step is finding the optimum shape for bow and tail and the perfect height for the cockpit.

    • As you indicated, on the upper-deck of the A380-800, passengers seated ahead of doors U1L and U1R have egress forward capability only by the front stairway down to the main deck. A one-and-a-half-deck configuration with an A380-type cockpit placement would have a similar forward egress capability. However, on the planned stretch versions of the A380, U1L and U1R would be re-located forward to the front stairway. For example, a 75 to 80 meter long one-and-a-half-deck aircraft could have U1L and U1R (doors 6L and 6R) at the front stairway, and U2L and U2R located aft of M2L and M2R (similar to the A380 door configuration), with a 748I-type staircase between M2L/M2R and U2L/U2R.


      • The A380-900 U-H Edition would be a great looking aircraft. The A380-800 looks somewhat stubby in comparison.

  11. Refutes? Conner’s statement doesn’t contradict the Seattle Times story in any of its details. Boeing is characterizing the note as a clarification.

    I stand by the story and see no contradiction of fact in what Ray wrote today, only a different way of looking at the same facts.

    • “The front page headline in today’s Seattle Times had some people scratching their heads. The story’s premise is that we’ve slowed down the development process for our 777X. The fact is— our timing on a 777X decision hasn’t changed one bit.”

      “While the Seattle Times reported this morning that we have slowed down the development process for the 777X, our timing on a decision to offer that airplane has not changed.”

      Indeed Boeing does not refute anything specific in the article, which makes me believe that it is the expression “slows the pace” in the title that they want to refute; and there is a reason for that.

      The title that Clark (Emirates’s chief) would like to see is “Boeing accelerates the development of the 777X”. Therefore I can only imagine the kind of tension that the actual title generated in Chicago!

      A more benign title would have made a big difference. But the media need catchy titles to attract the attention of their readers. But among those readers one can also find Ray Conners and Tim Clark.

  12. What is the projected investment in the 777x and how many aircraft will need to be produced to pay that off? In addition to going against the A350, it will have to face the CASM of an 11 abreast A380 at similar comfort standards.

  13. It seems to me Boeing might be to internally focused again. How much resources do we have, what do we think,what will the 777-300ER do, should we go for the 787-10 first or something new. Do we need a new wing, what does GE think. Assuming everything else is stable.

    The last sentences of Dominics article are:

    As Boeing ponders its move, the market is not static.
    At Farnborough, Boeing suffered a defection when big 777 customer Cathay Pacific placed an order for 26 Airbus A350-1000s.
    So how far out might Boeing executives push the 777X?
    “I don’t think they know. It depends how many Cathay Pacifics there are,” said Aboulafia. “The decision may be made for them.”

    IMO Boeing (Pilarski/Tinseth) has recently build a reputation of seeing the market as they would like it to be and believing it. I hope we won’t see Boeing doing an Albaugh-NSA-AA on this (watch BA, UA, ANA).

    • Insecurity. Boeing management has a path they would like to go but are frightened by
      their customers straying left and right.
      The Vanguard is there to forge ahead and not for looking back if the Train follows.
      If you are unsure about the Train following you have taken the wrong path anyway.

  14. Randy’s Blog, Boeing commitments..

    just went through Randy²s archive.
    You can find ~10 posts over a couple of years that tell of imminent first flight and unbounded commitment to the Dreamliner.
    Also dire warnings on not listening to the grapevine or tasting from other B.forbidden fruit.
    Thus Randy finding the time to respond is more indicative of truth in reporting than the reverse.

  15. Boeing needs to slow the market progress of the A350-1000 to extend its window for launching 777X development. It also needs to ensure income from the profitable 777 program to fund developments (strategy of ‘buy-time, maintain 777 orders’). So Boeing absolutely has to present a public face of commitment to the future of the 777 as well as a credible competitor to the A350-1000.

    This remains the case no matter what they discuss in their internal company meetings, regarding their finite resources and development prioritization tradeoffs.

    Putting myself in Boeing’s shoes, it would seem quite valuable to already have the 787 team assembled and working through the -9. Therefore, an industrial logic of maintaining the momentum of this team would lead to prioritizing the launch of the -10 over the 777X.

    It may also be that shareholders are concerned that the 787-8 will become a slow seller (based on the quite high number of switches to the -9), leaving the 787 program on a weakened footing unless the -10 is launched. So there many be a ‘return on our last investment’ logic at work too.

    It is not a surprise to see many airlines pushing for a better 777 since most are already committed to this type and need to plan future fleets against the spectre of the A350-1000. They could order the -1000, but would be in a weak negotiating position since slots are scarce, and Boeing is not actually offering a competitor.

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