After-thoughts of Qantas 787 cancellation, SPEEA and Boeing

A day after it became public Qantas Airways canceled 35 Boeing 787-9s, it might be worthwhile giving a thought or two.

The Wall Street Journal has a good story (unfortunately, paid-subscription, though it may show up via Google News) looking at the impact. We also received some media calls on the topic.

We’re not nearly as gloomy as the general reaction. In fact, we sort of shrug about it. The cancellation is because of Qantas’ own problems, not because of anything with the 787 program. QF’s issues have been a long-time coming, in much the same way as US legacy carriers.

QF’s cancellation gives Boeing two choices with these slots: resell them to an important, strategic customer or “close up” the production line and reduce some delays to other customers. Either is an acceptable alternative.

Had these been 737 or 777 cancellations, nobody would have blinked an eye. But because it is the troubled 787 program, a lot of hand-wringing  goes on. We think it’s overdone.

Doug Harned at Bernstein had this to say in a note issued today:

Questions about the strength of the 787. The Qantas cancellation should not be taken as any indication that 787 demand is weaker. At planned production rates, it appears that there are few slots available for 787 deliveries until 2019, which makes these earlier slots very valuable. We understand that Boeing has been looking at approaches to raise production rates for the 787, given the strength of demand – not something Boeing would be doing if it saw the production ramp as at risk. Because we believe that Boeing originally priced its 787s too low, we expect that the Qantas slots will be taken by other airlines, potentially at higher prices. There have been comments in the press (e.g. WSJ) that this cancellation is a blow to the 787-9 (as distinct from the 787-8). We do not believe that is the case, as we have found customers more interested in the 787-9 than the 787-8, although its availability comes later in time.

SPEEA and Boeing: charges and counter-claims

As the dates nears for the contract expiration next month between SPEEA and Boeing, the rhetoric heats up. SPEEA recently made the following statement; Boeing’s response follows.


SPEEA charges Boeing with Unfair Labor Practices

SEATTLE – Unfair Labor Practice (ULP) charges were filed against The Boeing Company on Tuesday (Aug. 21) after company officials told employees they are prohibited from saying negative things about their employment. Such discussions by union members are protected by the National Labor Relation Act (NLRA). Employers’ efforts to curb these discussions violate federal law.

The charges were filed by the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001, after representatives from Boeing Ethics made the comments to new employees during the weekly orientation meeting on Friday (Aug.17).

In addition to this obvious violation of labor law, SPEEA has received numerous complaints from employees about managers telling them to remove and not display union material at their personal workstation. Employees also report finding union-related items removed from individual work areas when they arrive at work to start a new work day.

SPEEA is gathering additional information and has asked members to document and report any such conversations with managers or the removal of items from their desks.

SPEEA is presently negotiating new contracts with Boeing for 23,000 engineers and technical workers, primarily in the Puget Sound region. The union presented its full proposal to Boeing on June 15. The company has refused to present its offer to the union. Existing contracts expire Oct. 6.

Boeing, from lead negotiator Mike Delaney:

Our approach to negotiations with SPEEA

I thought I would take the opportunity to share my thoughts regarding the current negotiations with SPEEA.

First, as a member of the Boeing engineering team, my objectives are pretty simple. I want the engineering team in place to complete the 787 family, to invest in the 737 and 777, to continue to provide world class support and services to our customers, and to be able to start the long-lead research and development of the next new airplane. I want my engineers and technical team to be rewarded with market-leading total compensation. And I want my engineering team to be competitive now and ten years from now, so we have the opportunity to capture new work and achieve the long run of product development and production our customers desire. I also believe you expect me to help find the balance between market premium and the future competitiveness of our team.

Contrary to what you may be hearing or reading in the news or through other sources, Boeing has been engaging and will continue to engage in meaningful negotiations with SPEEA. This is a process and I, along with all members of the Boeing negotiating team, take it seriously. A portrayal of the company’s negotiations approach as focused on “takeaways” is misleading. For example, the characterization of where the market movement for engineering or technician compensation is relative to the previous contract as a takeaway is at best “new math.” When Boeing lays its final proposal on the table, the value of the total compensation for our engineering team will continue to be market-leading.

Last week during negotiations with SPEEA, we shared information on the competitive market dynamics for the commercial and defense businesses. Some members of the SPEEA negotiating team said they didn’t care about our views of the market or how we fit in that market — just drop an offer. But we feel it’s critical for them — and you — to understand the reasons behind any proposal. In that regard and despite the union leadership’s objections, we intend to follow our process for providing the data that underpins every proposal. The reason I feel so strongly is that, like me, you are engineers or technicians and will want to “pressure test” the assumptions and data.

We engaged early with SPEEA leadership and we are, in fact, ahead of where we would normally be in the negotiations process compared to previous negotiations. This early engagement was based on discussions I had with Tom McCarty (SPEEA president) last year where we talked about addressing the most critical issues early. We knew that a change on how we offer retirement benefits for future hires was going to be a hard discussion. Therefore, Boeing teed-up retirement benefits for new hires first in an effort toward complete transparency about the important interests for the company.

You are now seeing individuals characterizing our actions as a “respect issue” reminiscent of the year 2000 timeframe. I couldn’t disagree more. Today, engineering is more valued by our company from top to bottom than at any time in my career. And I will stand behind my own words when I say, “Engineering is the center of all value creation” and “We are an engineering company that builds really cool products.”

In closing, I encourage you to engage in the process. Read all the information provided by SPEEA, from Boeing and from other sources you trust. We have set up a special webpage 2012 SPEEA negotiations where you can find detailed information on the negotiations and proposals. I hope you read it, digest it, analyze it and run the numbers for yourself. I realize there are a lot of nuances in any contract of this complexity. If you have questions or concerns, talk to your manager or Human Resources. In the end, when the time is right, please vote. Don’t let others decide your future. When available, judge the contract proposal based on your self-interest and vote.

82 Comments on “After-thoughts of Qantas 787 cancellation, SPEEA and Boeing

  1. Scott, I absolutely agree with your take on the 787. This has no effect on the program. This says nothing about Boeing or the 787. This is a Quantas issue.

  2. For those who think that the costs associated with the Dreamliner development are behind us there is an interesting paragraph in the Wall Street Journal’s article:

    “Compensation to carriers for delays and cost overruns have already put the profitability of the 787 project under pressure. Boeing currently loses an estimated $100 million for each 787 it sells. Those losses don’t show up now on its bottom line because accounting rules let it spread the manufacturing costs across many planes for many years.”

    The actual manufacturing costs and the compensations for the delays are what is preventing Boeing from moving forward with new projects like the NSA, the 777X and the 787-10. Even if they had the engineering resources to do those projects one after the other, in quick succession, it would drain the financial resources further and make the shareholders very unhappy. In my opinion Boeing will have to sacrifice the short term shareholder’s interests in order to maintain the long term survivability of the company.

    It might be too late now, but as the engineering force was freed from the Dreamliner it should have been reassigned immediately to the NSA and lose no time on the MAX. The latter being only a short term solution. It is a defensive measure to protect their existing market but does nothing to keep Boeing at the avant-garde in terms of competitiveness. Boeing could have initiated the NSA as a preemptive measure to guard Boeing’s long term narrow-body market against futures assaults from the neo’s more robust potential for improvements, the CSeries threatening stretched versions and other interesting programs around the globe.

    If the NSA had been initiated right away it would have been completed in time for the transition to the 777X. The 787-10 is in my opinion the least urgent among the three priorities. The question is does Boeing have the financial resources to satisfy all those urgent priorities? The answer in no, because of the financial drain that the 787 inflicts on the revenues of the company.

    What is becoming increasingly clear to me is that the 777 is now squeezed between the desirability of doing the 787-10 and the necessity of doing the NSA. Since the NSA has been relegated to a distant future, the 777X should now be the top priority because of the mounting pressure from the A350-1000. Even if the 787-10 would allow Boeing to offer a more complete portfolio to its customers, there is nothing really urgent about it. It would do more harm than good.

  3. “The cancellation is because of Qantas’ own problems, not because of anything with the 787 program. ”

    That’s a bold opinion.

    Had Boeing lived up to the delivery dates paid for by it’s 787-9 launch customer, this airline would be in a totaly different position. The ~40 787s in service by now could have been used to start new long services, scale down 747-400 destinations if required, fight of competitors and large amounts of money in fuel costs and maintenance/upgrade programs.

    Not having the 787s severly damaged the planned agility, comfort, efficiency and ambitions of the Qantas international network. The 747-400 now is their smallest real long haul machine fighting off much lower cost 777s and A340s coming from everywhere.

    So did the 4 yrs 787 delays sofar impact the Qantas bottom line in a significant way? I agree with WSJ Jon Ostrower and Qantas CEO on this: a firm Yes.

    Boeing and their supporters will no doubt deny this in every possible way forever, but the writing is on the wall street journal:

    “Part of the problem is that delays in delivering the 787 are causing pain to airlines that is boomeranging back on Boeing.

    The 787 is designed to be 20% more fuel efficient and have 30% lower maintenance costs than the Boeing 767, which Qantas had hoped to retire earlier. Airlines like Qantas haven’t been able to get their hands on the 787 to reduce their fuel bills.

    When it first placed its order for up to 115 Dreamliners in 2005, Qantas hoped to have 28 in service by the end of 2011. To date, Boeing has only delivered a total of 17 Dreamliners to all airlines since September 2011.

    “If it had been delivered on time it would have been great for Qantas,” said Mr. Harbison of CAPA Center for Aviation. “It would have fixed almost all the problems in their international business.”

    The international business is Qantas weak-point at this moment and fuel costs exploded during the last 4 yrs.

    • This opinion is in itself rather bold.

      Qantas’ problems are multifaceted. All airlines face higher fuel cost that could be mitigated to a degree by relatively more fuel efficient aircraft. Airlines also have labor expense usually higher than fuel. Qantas’ relative labor expense is among the highest in the western world.

      Qantas, in a bold more, should have kept the aircraft orders and filed for bankruptcy. Could that allow them to renegotiate labor costs down to Emirates, or closer, Jetstar Pacific or Valueair levels?

      Then, Qantas could not have predicted how much the global economic downturn affects their business. This downturn, exacerbated by their geographic location plus labor expense, have a significant effect.

      A full fleet of the most fuel efficient aircraft might not save Qantas from their downward spiral.

      • Australian bankruptcy laws may not be as lenient as US Chapter 11. I don’t know this for a fact, though, but certainly each country has different legislation.

    • All the new wide-body programs have stagnated these 3 ultimate years !
      The A380 is still in the 250-270 !
      The B787 is hopping between 850-875 !
      And the A350 hasn’t reached the 600 A/C ! (Thanks AF-RR !)
      Orders and cancellations seem in the same pace for nearly 3 years !

      • I understand your point that there seems to be as many cancellations as new orders.

        But with 600 orders before first flight the A350 is not exactly a failure. And we cannot expect airlines to rush their orders for the 787 when the already slow production rate is tied up until almost 2020! As to the A380 we cannot say that the production is going at the speed of light either. And when we take into consideration the huge capital immobilization involved and the uncertain economic environment, there is little surprise in the fact that new orders are not pouring in.

        It seems that the neo has set a new benchmark for orders and any project that is unable to garner as many orders as quickly is automatically declared unsuccessful.

        As a matter of fact the CSeries is often compared to the neo and is therefore sanctioned as a failure when it has not even made its first flight yet! The neo benchmark is only good to measure the success of the MAX. Period.

        By the way, the slowdown might not be limited to the wide-body aircraft. It looks like it will soon be generalized throughout the industry. I am afraid the party’s over.

      • You forgot to mention the 747-8. That in itself says everything about this program. We keep ignoring it, probably unconsciously. I think Boeing would prefer if we at least bad-mouthed it. It would give it much-needed publicity. It is certainly not a glorious exit for this mythical airplane. 🙁

    • This is not about the 787, this is about Qantas having problems, you seem to read too much into everything.

      Why the constant flame bating from you?

      • You think circumstances expose people as the idiots they are ?

        Joyce was an idiot to believe in Boeings timeline and performance promises on the 787.
        But then this shows that you won’t get Boeing and its Dreamliner out of the equation.

        You haven’t thought this through to its end.

  4. Airbus strategy and future programs evp Christian Scherer says the timeline for availability of prefered new technologies for the NSA is a reason for not hurrying, while taking advantage now of available engines as a stepping stone. If that is true, it also must apply to Boeing – which evidently agrees about re-engining current- or.earlier-generation designs.

    • The Airbus logic cannot be applied to the venerable 737. The A320 is a more recent design and has more potential left in it than the much older 737. As the A320neo is further refined it will eventually make the 737 MAX obsolete. But there is an additional factor to take into consideration: Bombardier CSeries.

      The CS300 is already eroding sales of the A319 and 737-600. Try to imagine what will happen when the 737 will become squeezed between the A320 super neo and the CS500/700/900. The existing duopoly will gradually become a triumvirate in favour of Airbus which will assume a dominant position in the narrow-body market to the detriment of Boeing.

      In that context the best Boeing can hope for is to retain a 30% share of the pie. Airbus will get at least 60% and the rest will go to others, mainly Bombardier.

      • Will the NEO be “refined” into a “super neo?” When?

        And, how much “older” is the, “much older 737,” when then NG came out around the late 90’s verses the late 80’s for the A320?

        As for the C-Series, we’ll have to wait and see.

      • Airbus could invest in a new CFRP wing for the A321 and larger versions. The wider fuselage and fly by wire make more sense than Boeing doing the same with the 737. Any optimization in this size would grow into a code D wingspan catagory. Personally I think a twin aisle is still a better solution.

      • The whole “super-neo vs. super-max” argument is largely irrelevant. I honestly don’t think there will ever be a “super-neo”, and certainly not a “super-max”. Boeing is going to go ahead with the NSA at some point, most likely not until the 777x and 787-10 are on their way, but eventually they will do it. If the doom-and-gloomers are right and the neo significantly outpaces the max, they will do it sooner rather than later. That will eventually kill off the A320neo (I’m talking about 10-15 years from now) and force Airbus to follow suit with their own NSA.Frankly, both narrowbody designsare reaching their limits, not because they’re bad designs, but simply because they’re old, and the manufacurers will want to adapt their products more towards current demand than 20-year-old designs will allow.

        The CS300 may cramp the max7 and 319neo, but it will not stand up to either A or B’s NSAs, and even in the short-term, Bombardier still has to prove itself to even try pushing into the bigger 150-200 seat market.

      • complete nonsense in many respect. . . my advice: don’t quit your day job!

        • Thanks for your advice habo. Please explain in what respect it is complete nonsense.

  5. Regarding the comments of Mr Delaney re Negotiations with SPEEA, and the SPEEA release of their explanation of ‘ cuts ‘.

    First, I should make it clear that as a long time Retiree, I have no dog in this fight.
    However, I have long had an avocation regarding Boeing pension benefits, and for 4 years ( 2001-2004) I submitted and had published a shareholder proposal regarding the Boeing Cash balance (PVP) plans and the traditional plan BCERP. Those proposals received 8 to 12 percent of Shareholder votes. (30 to 50 milion votes- approx equal to employee shares in Boeing 401k plan )

    I agree with Mr Delaney that SPEEA seems to be using ” new math ” in their PR releases on the changes in Standard Benefits.
    I disagree that Boeing has properly or fairly treated its Engineers who often use the Alternate Benefit . The simplified reason has to do with the item called ‘ Covered Compensation ‘ which is a function of the SS retirement Age and the capped rate of earnings subject to SS taxes.

    The effects are and have been subtle- and essentially cause 2 to 6 months of NO change in pension benefits for those retiring in the first half of every calendar year.

    This zero rate change would be illegal under ERISA but for the knowing acceptance by SPEEA since about 1992.

    With the impending expectation of a significant increase in Covered Compensation, those who may retire under the alternate benefit in the next few years will take even longer to ‘ catch up ‘.

    My proposed change would be to simply state the ‘ minimum rate of pension increase will never be less than the standard benefit rate per year or month .

    What follow is a simplified explanation based on current data.

    From the Boeing Plan – which has not changed for decades ..

    Final Average Benefit
    Final Average Benefit, effective January 1, 1993, is equal to (1) plus (2):
    (1) The Core Benefit, a monthly amount equal to the product of 1.025% multiplied by the Participant’s Final Average Monthly Earnings and
    Credited Service.
    (2) The Excess Benefit, a monthly amount based on the excess, if any, of the Participant’s Final Average Monthly Earnings over his or her Covered Compensation divided by 12. The monthly amount is equal to the product of this excess multiplied by .450% and the Participant’s Credited Service
    The Final Average Benefit computed as the sum of (1) and (2) above as of a given date will not be less than the Final Average Benefit computed as the sum of (1) and (2) above as of an earlier date, as a result of a change in Covered Compensation.

    January 1,2008
    001 BOEW4A.doc


    Emphasis on the statement

    The Final Average Benefit computed as the sum of (1) and (2) above as of a given date will not be less than the Final Average Benefit computed as the sum of (1) and (2) above as of an earlier date, as a result of a change in Covered Compensation.

    To keep this post short, my follow up in a while will present a table of pension calculations for a typical year – July to July based on the above, simplified to show what has been happening since 1992-93 for an hypothetical employee(s)who retires with 30 years as of each month.

    I would hope Mr Delaney and the Boeing management would step up and do the right thing for the first time in decades.

    • Don, Why did SPEEA accept the “zero rate change” since 1992 when it otherwise would have been prohibited.

      Stepping up and “doing the right thing” is what negotiations are all about. The question is always whose right things have priority.

      This is all too detailed for most of us but important to both parties. I assume by the tone of the letter, these are being carefully examined and all facets considered.

      • Why did SPEEA accept that zero rate ? sad to say its because while SPEEA had access to competent help- they simply refused to ask the right questions, and the negotiations at that time were under the control of the executive director who had his own best interests in mind. Or in simple terms – incompetence

        For example – ( link may no longer work )

        Retirement Saw-tooth – “Covered Compensation” & “1996 Lump Sum Bonus”
        In the first few months of 2001, two changes will occur which may affect retirement benefits
        for employees retiring under theAlternate Benefit formula. These changes will not apply to the
        Standard benefit calculation. . .

        ….In October 2000, we discussed these two items with Boeing Benefits representatives. We
        understood that a review wasunderway which might result in lower benefits when covered
        compensation increased. Past practice regarding lump sum payments has varied. We
        received a large (10%) bonus in December 1989. Five years later,
        retireeswould have received reduced retirement benefits for several months
        starting January 1995, but Boeing chose to apply theDecember 1994 benefit
        level, until the saw-tooth effect was overcome. After other bonuses, no
        adjustment was made.
        Binding language in the Summary Plan Document clearly states that a retiree’s benefit
        “will not be reduced” due to increasingcovered compensation, and Federal law also discourages
        cut-backs in benefits already accrued. A few days after our meetings,we were notified that the
        review had been completed, and that Boeing had decided to pay retirees in February 2001
        theJanuary or February benefit level, whichever is higher. As a result, neither the bonus effect
        nor the increase in covered compensation will reduce the Alternate Benefit calculation for
        February retirees. We’d like to thank the Company for doing the right thing in this situation.
        The above was essentially a restatement of the same issue mentioned in a 1995 SPEEA publication.
        I had checked in 1997-98 with an legal expert litagator on that issue of rate. He checked with another legal type, and the two were willing to bring a class action for those NON union types who had retired less than three years before. Union members were not eligible simply because the union had agreed. No such non- union retirees were willing to step up . . . .

        Meanwhile- back to the computation

    • For purpose of illustration, the following values are fixed. Credited service = 30.0 years on July 1, 2013. Ed Engineer gets a 3 % raise each year in July. His FAE is $ 93000 as of July 1, 2013

      Covered Compensation is based on birth year in which age 60 is reached per IRS rounded values.

      CC changes from $ 81,000 on dec 31, 2014 To $87,000 on Jan 1, 2015.

      Basic benefit changes from $87/month/year to $89/month/year on same date.

      Credited Service is based on 45 hours/week up to a maximum of 2000 hours in a CALENDAR YEAR
      Therefore each month until NOV 1 gets 1.1 months credited service. NO Credited service DEC and JAN
      Retirement date is 1st of Month. Covered Comp effective on Jan 1 each year.
      Basic benefit is based on 2011 IAM /Boeing proposed changes in $$/month/year of credited service.
      Boeing must pay the highest value computed between Basic and Alternate. And per plan documents , the
      Final Average ( pension ) value will not be less than an earlier date due to Covered Comp change.
      SPEEA has NEVER corrected the effects of Covered Comp issue, thus NEVER raising the benefits for a significant portion of its members who are among the highest paid.


      The table is in two parts to reduce confusion- I agree a graph would be better- but at the moment I am not prone to publish it on my site.

      In July 2014, the credited service starts at 32.0, and FAE is 98,664 after his annual 3 percent raise.

      ++++ Ed Engineer gets raise in July

      YEAR MONTH $ MONTH BASIC FAE ON JUL 1 $ Month Alternate
      2014 Jul-14 2,784 98,664 2,909
      2014 Aug-14 2,793 98,664 2,918
      2014 Sep-14 2,801 98,664 2,927
      2014 Oct-14 2,810 98,664 2,936
      2014 Nov-14 2,819 98,664 2,945
      2014 Dec-14 2,819 98,664 2,945
      2015 Jan-15 2,884 98,664 2,945
      2015 Feb-15 2,893 98,664 2,945
      2015 Mar-15 2,901 98,664 2,945
      2015 Apr-15 2,910 98,664 2,945
      2015 May-15 2,919 98,664 2,945
      2015 Jun-15 2,928 98,664 2,945
      2015 Jul-15 2,937 101,624 3,045


      2014 Jul-14 32
      2014 Aug-14 32.1
      2014 Sep-14 32.2
      2014 Oct-14 32.3
      2014 Nov-14 32.4
      2014 Dec-14 32.4
      2015 Jan-15 32.4
      2015 Feb-15 32.5
      2015 Mar-15 32.6
      2015 Apr-15 32.7
      2015 May-15 32.8
      2015 Jun-15 32.9
      2015 Jul-15 33


      Hopefully this table will come thru

      I will consider posting my spread sheet and graph if there is any interest

      But MY point is- there IS and has been NO excuse for either Boeing OR SPEEA to stick head in sand on this.

      And the SPEEA graph on this subject is misleading as to the appropriate comparison

      Thats why I agree that SPEEA is/has been using ” new math” which is a polite way of saying – ” math challenged”

  6. RH Hastings :
    Will the NEO be “refined” into a “super neo?” When?
    And, how much “older” is the, “much older 737,” when then NG came out around the late 90′s verses the late 80′s for the A320?

    By super neo I mean that the A320neo, as it is conceived right now, has some margin left for further development. But Airbus elected to keep the modifications at a minimal level; enough to remain competitive with the MAX, and with a very small advantage.

    On the other hand the MAX is already MAXed out before the design is completed. The limitation comes from the basic airframe design which dates back to 1968, not 1993. You were talking about the new wing whereas I am talking about the fuselage. Very little can be done to ameliorate the ground clearance handicap. As the fan diameters are growing the 737 is reaching its inherent limitation. Therefore a new fuselage is required and it’s called the NSA.

    Further down the road I expect Airbus to ameliorate its offering on both fronts, the airframe and the engines. CFMI has some margin left to play with the fan diameter on the Leap-1A and optimize the engine to extract more efficiency if need be. But it might not be enough to to put the Leap-1B to shame.

    The greatest potential, or threat, comes from the P&W engine which is offered only on the neo unfortunately. The GTF is in my opinion the real MAX killer. Especially over the long term. A refined GTF along with an improved A320 airframe, hence a super neo, would leave Boeing unable to respond adequately and would make it lose market shares.

    By the time the Boeing position will have started to weaken to the benefit of Airbus the CS500 will have probably reached the market and would potentially further erode the 737 sales. BBD cannot be ignored like Airbus was until a not so distant past.

    The problem is that there is little that Boeing can do to defend its position other than come out with a brand new small airplane. I think Albaugh understood that, but not the other guy.

    • So to understand, the “super neo” is the “A320neo as it is conceived right now.” Simultaneously, “a refined GTF along with an improved A320 airframe,” is also a “super neo?” For the sake of semantics, let’s call the latter the, “Super Duper NEO,” the SDN.

      If the GTF is a success initially, surely P&W will improve it. But, an SDN is too far out to predict. Might they build a brand new airplane instead of this SDN to compete effectively against an NSA? In addition to engine improvements, by this timeframe surely industrial processes, materials and aerodynamic systems have advanced further reducing fuel burn.

      • A super neo is a neo + margin. The margin is the potential for improvement left in the basic A320 airframe. I believe Airbus has not played all its cards yet.

        On the other hand Boeing has no cards left unless they decide to design a new centre wing box to accommodate the GTF engine via a larger MLG. We could call this evolution the Super MAX. The latter would be considerably more expensive but would also last much longer on the market.

        Boeing had three options:

        1- MAX
        2- Super MAX
        3- NSA

        They chose the cheapest option. And what they will get is what they will have paid for. They chose the shortest route, in both sense of the word. Personally I think this route is a dead end.

        With the MAX Boeing will protect its existing customer base but compromise its own future. Wit the NSA Boeing would have retained control over its destiny.

  7. I agree the NEO has some further potential. IMO an A320 Plus slightly larger in capacity then the 737-800/-8, with matured GTFs, additional weight savings (Al Li, cfrp) could prompt Boeing to call it a day with the 737. Inherent advantages of the A320 series ( cargo, space, noise) would have more 737 operators make the switch.

    The Cseries has potential, certainly if the Chinese put their mass behind it in terms of financing and ordering. A straight forward Cseries 500 could be a hit if low cost carriers put 150 seats in it. They don’t mind about range and cargo..

    • You just love that 320plus, don’t you. 🙂

      As I stated above, I doubt there will really ever be a “super-neo” or super-max”. I agree that the max is reaching the end of its upgrade potential, which imo means that Boeing will push for the NSA as soon as resources are freed up from the 777x and 787-10 (so a launch maybe between 2019-2020). That will eventually overmatch the neo (not all that much upgrade potential left there either), end the train of incremental upgrading, and force Airbus to pursue their own NSA.

      As for the Cseries, it does have potential, but it is still unproven, and Bombardier will have work to do to stretch up to a CS500, which would be necessary to truly break into the mainstream narrowbody market. Furthermore, I really don’t see the Chinese throwing their weight behind a Cseries stretch, due to the C919. The current Cseries is too small to really compete in the same market as the C919, but any stretch of it definitely would.

  8. I agree with the contention that the problem for Boeing development is or will be a cash shortage.
    Accounting rules may allow deferral of bottom line losses for years, but the fact remains that every 787 and 748 delivery lowers the level in the cookie jar. That has to be a serious drain on resources except of course for directors annual bonuses.

    • Actually, no. The losses on the 787 sitting around half-finished are very real, but they really won’t hurt Boeing’s cash flow. Why, you might ask? It’s because Boeing has already spent the cash on building those.

      Let’s pick some easy numbers, and assume that an early 787 was sold for $100M net of penalties. And it might cost $150M to build after all the required changes. So Boeing would lose $50M on each one in this scenario.

      From a financial reporting point of view, the excess building costs are amortized over some hundreds of aircraft (sorry, don’t remember how many at the moment), so Boeing’s bottom line will be taking a hit for years to come.

      But from a cash perspective things are not nearly so bad. Boeing might have spent $125M building one of those partly-finished aircraft. Now, let’s say it might cost another $25M to finish it, flight test it and deliver it to the customer. And then the customer will pay Boeing $100M for it.

      A loss of $50M, you say. Boeing will run out of money! Well, no. Boeing has already spent billions of its cash building up its fleet of unfinished 787s. To actually deliver one, using numbers above, will cost only another $25M in cash, while the customer will pay $100M for the finished aircraft. Net result: a positive cash flow of $75M for each deliver aircraft. The bank account will be happy, the financial results, not so much.

      • Well, IMHO it is more complicated than that.

        Money spent on the lawndarts is currently complemented by inventory value ( looks like the full cost is transfered to inventory ). The reason why the Quarterlies still look good.

        The first 400 frames were sold for an average of $87m ( + engines, src: Ostrower/Flightglobal )

        Now every delivery brings ~$60m? final payment for an
        inventory adjustment of -$240++m ( guessed numbers ) for
        the intensely reworked frames. This is valid for the first 50 sellable frames and only changes in the numbers for later builds ( well, the time they sit on the inventory list should be much shorter )

      • Uwe, using your numbers, Boeing will take a large hit on its financials for each aircraft it delivers, and especially for the early ones. And I agree with that. But that $60M is still positive cash flow, unless there is more than $60M of outstanding work remaining on the frames currently sitting on the tarmac.

        My point is that the cash has already been spent on these, now Boeing will bring in at least some cash when it delivers them. The cash for the costs is already largely built in.

      • ” To actually deliver one, using numbers above, will cost only another $25M in cash, while the customer will pay $100M for the finished aircraft.”

        The loss in ‘cash’ is more like $200Million per aircraft, and thats excluding years of interest.

      • @Peter, am not arguing actual losses (I know they are large). My point is that Boeing has already paid for the costs so there is little additional cash outlay to delivery the aircraft. The losses will show up on the income statements but not on the cash flow statements.

  9. Brian :
    If the doom-and-gloomers are right and the neo significantly outpaces the max, they will do it sooner rather than later. That will eventually kill off the A320neo (I’m talking about 10-15 years from now) and force Airbus to follow suit with their own NSA. The CS300 may cramp the max7 and 319neo, but it will not stand up to either A or B’s NSAs.

    I agree with everything you say here. But my point is that if this “doom-and-gloom” scenario does indeed materialize Boeing might not be in a position at that time to launch a NSA because of other ongoing projects like the 787-10 and 777X. By that time their finances will probably be exhausted because important projects will have to be carried through at a time when the revenues are already drained by the 787 production problems (manufacturing costs + penalties).

    My strategy of launching the NSA right away, as soon as possible after the Dreamliner, was meant to kill the business case of both the neo and CS500 right away. Airbus would have been stuck in low gear with the neo and Bombardier would have been unable to contemplate a CS500, let alone a 700 or 900. That is the reason I call the NSA a preemptive measure. But Boeing chose a defensive measure instead.

    • Boeing would have been stuck with an expensive project started too early to
      actually leverage new tech for a distinct product.

      Boeing currently is bound to a wheel of “Hobson’s Choices”.

      Even if they had (much earlier) decided against the NG path and filled that slot with their version of a New Design might have not made a difference. Boeing is unwilling/unable to make premeditaded longtime investments.
      Caught in the Quarterly Cycles, they are 😉

      • If Bombardier can do it I don’t see why Boeing cannot. All the Airbus fanatics out there must feel quite relieved that Boeing elected not to do the NSA at this time. Because if it had the neo would be on the ropes and Boeing would be in the driver seat.

        • The CS300 fits a slot below the core A320/737 in seats and range.
          (i.e about what the planned AE31X targeted )
          That is not the place the NSA was to cover.
          How would a potential CS500, designed for an optimum @ A320.5
          capabilities perform against the A320NEO/A321NEO ?

    • Boeing invested 10 to 15 billion in the +4000 mile markets with the 787 and 747-8. If they put a similar investment in the segment below 4000 miles, that should cover the MAX and the NSA.

      Another option for the 777 is a simple re-engine and keep using the existing wing which is paid for. A 230′ length version with 99K Rolls Royce or GTF engines would provide a less expensive alternative to the A350.

  10. 2 Years ago, when Boeing was in the process of convincing the world and themselves small improvements would keep the 737NG “Plus” current until 2020 ( Airbus is only catching up), I sketched a more radical 737 upgrade.

    Biggest investment being a redesigned wing / LDG / center wing box to house both 75inch fanned Leap and GTF engines. Making the 737 acceptable for the next 15 yrs.

    Quickly dismissed of course and the rest is history..

      • I think a lot but not so much. At the time I estimated 2 billion for the wing- engine- ldg, 1 billion for the cockpit and 1 billion for the rest. Inbetween a minimum modification and a new aircraft.

      • Are there numbers around for what bringing the NG to market incurred? ( That was about a “new design” around a set of existing wingbolts for grandfathering rights. )
        How much did the minimal change 747-8* upgrade cost ?
        The A340-5/600 is said to have cost ~$3.6b in its time.

        • The main difference here is the wing box. It would have to be completely redesigned to accommodate a larger MLG. And since it is the fuselage interface it could potentially complexify the grand-father clause issue. That is precisely what Boeing is trying to avoid on the MAX. After you have spent a certain amount of money, past a threshold, you might as well spend a bit more and get yourself a clean-sheet design.

          Still, if Boeing is really strapped for cash and cannot afford the NSA because they have other priorities right now, I think they should at least redesign the wing box to accommodate the GTF engine. Because as it is conceived right now, even if the MAX has a great immediate future, its longevity is not assured. I would even say it is severely compromised.

  11. RH Hastings :
    Will the NEO be “refined” into a “super neo?” When?
    And, how much “older” is the, “much older 737,” when then NG came out around the late 90′s verses the late 80′s for the A320?
    As for the C-Series, we’ll have to wait and see.

    IMO the A321 NEO may be a first step to go closer to the Super NEO !
    The following steps are :

    Al-Li, just to give some use at the two huge mountains of Al-Li, Airbus has programmed with Alcoa – Constellium for the next 10-12 years ! How much tons may they get from a 2 Billion program ??? ..; X times more than all the WB may ever need …

    A more modern wing profile, probably Al-Li, may help with some CFRP included !
    And a slight increase in fuel tanks capacity !

    May be a more modern fuselage, either with Al-Li Or/and Glare skin’s ! It may include 2-4 inch internal diameter increase, and wider windows … and wider doors too for Easy-Jet, just to send MOL a message !

    And so on …
    I’m sure, there is a second round in John Leahy sleeves, beginning partly with A321NEO, and following with a much more modern A320NEO , may be an 3201/2 … EIS : 2018-19 !
    Be sure Airbus will not make the slightest official move, until they are sure the B737MAX is definitively frozen , I bet on the second semester 2013, to get public info !
    This may explain Airbus and JL are downplaying a lot, the due responses to Randy overoptimism !

    It’s just a personal bet, but it’s the most logical move for Airbus … the A320 NEO has been an easy and very cheap move today … and very well rewarded !
    The heavier and costly stuff , will come with certifications !

    I don’t think they will scatter their NB working development teams, and since the A321NEO development, is still half secretive today, I’m just waiting for more to come !

    • The amount of Al-Li may be missleading.

      Milling parts from billets tends to loose 90% .. 95% as shavings into the reclamation bin.
      ( perfect method probably would be a CNC forging technique ( one can dream ;-))

      • Uwe raises an important point. This is one reason Boeing likes composites–there is less industrial waste with composite than with any metal….

        • Boeing is not the only one to find advantage in composites 😉

          But the playing field is more complex than that.
          Shavings from milling are reclaimed, CFRP cuttings are “Sondermuell”.
          CNC millings allows variable and mostly toolless manufacture, i.e. you can manufacture a wide range of different parts on the same machine by just changing programming.
          Any kind of CFRP parts starts out with an expensive mould ( even if you use CNC type fibre/tape placers/cutters
          Note: GLARE is one way to use the advantages of composites in context of the machining advantages that metallic parts provide.
          lastly: Airliners are sold ~ $2000/lbs i.e. in relation actual costpercentile of raw materials may be overestimated.
          Will be interesting to see if 3D printing processes find their way into this field.

    • Constellium is 31% Rio Tinto (Alcan/Pechiney/Alusuisse). Alcoa is their main competitor.

  12. IMO
    Shavings with beams may be low, in the 10-20 % range, the same for “Formed” profiles and/or extrusion for stringers !
    Waste percentage is still low with sheets, may be 25-35 %
    Forging too allow a fair use of all Aluminum alloys !
    The perfect example of somewhat abusive milling, is the cockpit windshield frame, with 90-95 % off for the A350, but it may avoid reenforcing CFRP with titanium …!

    Note : providers accept nearly 100% re – processing off the shavings too … this is true value, for the AL-Li business !

    Since Al-Li, allow a larger frame time between visits, it may compete seriously with CFRP, since maintenance costs of plastic, are still largely in the books, but, in fact a really unknown territory …
    AL slight and easy repairs, VS a possible de-lamination tragedy , you may have to think in it seriously ! just ask it to cir-cum navigators !

    These Al-Li alloys may be worthy for old frames , like B737, A320, A330, since modifications, are mainly, like UWE says, just a question of machinery, without heavy tooling investments !

    Sure, introduction of Al-Li in an old frame is not so easy, and will need a lot of R&D, and certifications, but I personally think, the rule of 80-20 may apply !

    The Al-Li bonanza may apply with 20 % of strategic and heavy parts, weighting may be 80% of the AL parts of the plane !
    I just think, Beams, Ribs, ant Sheets, and stringers, are likely candidates, just to begin !
    It is not necessary to go 100 % Al-Li, to shave 2-3 tons of the A320 Frame ! Either with the B737 !
    Just my idea for now!

    • According to Pareto you are probably 80% right and 20% wrong. 😉

  13. Note: GLARE is one way to use the advantages of composites in context of the machining advantages that metallic parts provide.
    lastly: Airliners are sold ~ $2000/lbs i.e. in relation actual costpercentile of raw materials may be overestimated.

    Very interesting UWE and very true !
    In the real life … under 40 M$ for +/- 40 000 kg ! For an A320 NEO or A738 Max !
    May be below 1$ per Kg now !
    The true value now is in the weight savings vs perf’s, since the engines are said to be equal … hum … !
    Without entering in the grandfather cause, which is a 2-4000 lbs PAX security case concerning the B737, inducing some advantage on costs and weight evaluation !

    But, in any case, 5-8 % weight (And maintenance) gains through Al-Li, weight savings are extremely valuables, roughly 5-800 000 $ per year, for a 10-20 years life of the plane !

    Just hoping Airbus will make the first move !

    • The Eagle has landed. May he now rest in a Sea of Tranquility.

      • The day he stepped onto the moon surface was the morning of my 12th birthday. I’ll never forget it.

        • I cannot imagine a better birthday present!

          In a sense it was also the Earth’s birthday. For that day man planted its feet on a different “planet” for the first time and gave a new meaning to the expression “our planet”.

          Uwe, today would you say that this was the single most important event that brought you to astronautic?

          • It was the culmination of a process for me. I had keenly followed the space race for some time already. ( And the reporting and writing in that time really helped one along, quite a bit of synergy between (Hard) SF literature and the (Hard) sciences ).
            That Literature has changed and our perception of tech has changed too. Star Treck Pseudo Tech really ruined the venue. The beauty from function done well has been inverted.
            Looks good ? Must work good . A Fantasy universe.

  14. TCook :
    Another option for the 777 is a simple re-engine and keep using the existing wing which is paid for. A 230′ length version with 99K Rolls Royce or GTF engines would provide a less expensive alternative to the A350.

    You have a good point about re-engining the 777 while retaining the existing wing. It was what I expected Boeing would do until they announced that they were going with a new CFRP wing. I was actually quite surprised by that decision. Initially I saw the 777X the way I see the A330neo: same basic airframe, with a few key improvements, and new engines.

    I would like to see the figures for the expected benefits of the various options (wing + engines) and the cost associated with each one.

    The big question is this: for the current 777, are the fuel burn figures expected from the new 100K engines from P&W, RR and GE of the same magnitude in terms of efficiency gains as the narrow-body engines like the Leap-1A/B and GTF are in relation to the latest CFM56? And would that alone be enough to keep the 777 competitive with the A350-10? Probably not.

    And what about an Al-Li wing? Is that a viable option? Could it be an acceptable compromise? I would like to see the cost/benefit of retaining the same basic wing design versus a new Al-Li or CFRP wing.

    • Al-Li is not Al-Light. ( That’s a bright quip, isn’t it 😉

      What I wanted to say:
      You can design parts with Al-Li to be significanly lighter than the current run of alloys.
      But you don’t get that advantage from just swapping out materials and keeping the existing design.
      Measuring up: How would the current A380 wing fare against one done in CFRP. or one done in Al-Li ?

  15. Compared to the 787 and A350 the 777 is relatively heavy, still offering 9 abreast and two LD3s side by side in the belly. It seems there a lot of “waste” space under, above and in the cabin. And the high OEW weighs in at all the cost. The 777-200ER lost out to the A330-300 because it carries the same load + 20t of steel, Al and plastic around the world. The range advantage of the 777 shrinking/ not beeing needed did the rest. A new wing could enhance this, but the fuselage is still a bit oversized. That’s why the 787 is narrower.

  16. Without doubt, it’s a Quantas issue, it’s nothing 787.
    Unfortunately there’s more to come like this, as other airlines are struggling, too.
    It will sum up and might put profitability of the 787 program in serious danger.
    Remember, profitability of the 787 program is shaky anyway with heavy forward losses already incurred, due to development overruns.
    At some point, accumulation of debt will eat away every profit until phase-out of the 787 into obsolescence.

    • It might actually be a good thing for the profitability of the program. For each time an order is cancelled it means a new slot opens up for a new customer and Boeing can now sell the airplanes at a higher price.

      Boeing underestimated the production costs of the Dreamliner and offered the initial batch of 787 at what can be considered today as a ridiculous price. Unfortunately for Boeing that initial batch is huge. Maybe Boeing had the slow start of the 777 sales in mind and offered an “introductory price” that would ensure a rapid success.

      That brings to mind the Fable of the Tortoise and the Hare.

      Once upon a time there was a hare who, boasting how he could run faster than anyone else, was forever teasing tortoise for its slowness. Then one day, the irate tortoise answered back: “Who do you think you are? There’s no denying you’re swift, but even you can be beaten!” The hare squealed with laughter.
      “Beaten in a race? By whom? Not Airbus, surely! I bet there’s nobody in the world that can win against me, I’m so speedy. Now, why don’t you try?”

      And the rest is History.

    • Not having the contracted 40 787-8s and -9 profoundly hit the Quantas bottom line in a big way, effectively blocking their network strategy. A harsh and direct consequence of the more then 4 yrs delay during a crusial time frame of rising fuel costs and competition.

      Hard to digest / accept. No 787 for QF, just a few for Jetstar.

      I fully agree with Jon Ostrower/ WSJ, Qantas and the CAPA Cemter for Aviation on this. QF is very pissed about this ( their words) and I do not now how the relationship between Boeing and QF will develop. Depends on wether they dive or help I guess. And everyone is looking.

    • Build by the end of the decade or start designing by the end of the decade?

      Personally I believe the latter.

  17. Metal shawings are 100% recyclable into new pieces which is not the case of cfrp, any excess material is a pure waste, often toxic one because of the uncured resin or risk with carbon fibers.
    A lot of people tend to ignore this aspect.although it was highlighted by Alcan recently.

    leehamnet :
    Uwe raises an important point. This is one reason Boeing likes composites–there is less industrial waste with composite than with any metal….

    • @CBL – Actually there are developments underway to recycle carbon fiber composites, too. There’s already a pilot plant running in Germany, where the composites are being decomposed in a special reducing atmosphere (whithout oxygen) to recover the valuable carbon fibers.

  18. Uwe :
    How would a potential CS500, designed for an optimum @ A320.5
    capabilities perform against the A320NEO/A321NEO ?

    The CS500 range would be no match for the A320neo. The CS300 has a decent range (2950 nm), but I assume the CS500 would have a lower range. Yet, for many operators in Europe and elsewhere around the world the CS500 could be very economical to operate over typical distances. The CS500 would trade range for fuel efficiency when compared to the A320neo.

    The more passengers the CSeries can carry the more benefits it can derive from the Al-Li fuselage and CFRP wing/empennage. The same logic would apply for the CS700/900 versus the A321neo. An even more limited range, but a very fuel efficient airplane.

    So because of the range limitation, the CSeries will never dislodge the 737 nor the A320. But it can hurt their sales for sure. Of course all this is pure speculation. But when we consider what Bombardier did with the Challenger business aircraft, we can say they have a very impressive track record. They have become masters at stretching fuselages.

    A bit of history: shortly after Bombardier acquired Canadair in 1986 the Challenger became the CRJ100/200, the first Regional Jet. Later on they came out with the 700/900. Now they offer the CRJ1000, their first foray into the FBW world (rudder).

    It reminds me of the 737 trajectory. Is it a coincidence that Gary Scott, the former 737 VP/General Manager, was hired in 2004 to lead the CSeries project? Boeing has always been a great source of inspiration for Bombardier.

  19. Reply tp Keesje #56:

    Perhaps there are two truths. The one Gates first reported, that B was slowing delivery of the 777X, and the second, that B would deliver the plane by the end of the decade, a change B made in response to the furious criticism from their customers. Unlike B, A ignored its best customers when they set the final specs for the A359-1000. If I were hoping that the -1000 would get a big boost from this fracus, as I suspect you are, I would think again. B’s customers’ furious reaction to any delay in 777X delivery is the latest best evidence that the -1000 is not a satisfactory -300ER replacement, and B’s 777X proposals are.

    Or, perhaps there was never any “first truth”, just a mistaken impression or speculation that B would delay delivery, while B’s real intent was only to delay launching the program. In his first article, Gates quotes a B official as saying as much.. In any
    One point is unclear to me, however. As I understand B’s current proposal, it is for a family of planes consisting of the 778X at 353 seats and a range of more than 8000 miles, and the 779X at 401 seats and a slighty longer range. Which of these planes is the one B’s customers want and were so concerned about? Or, do they want both? If these customers want the -9X, and also need something like the -1000, perhaps B will give them that with the -8X. In any case, it looks like the -8 will be the competition for the -1000, and the apparent demand for that plane tends to rebut your criticism of it’s fuselage width, somehthing all current -300 users want and like

    • “Unlike B, A ignored its best customers when they set the final specs for the A359-1000.”

      If you are talking about Emirates Airlines I agree with you. When Airbus announced their latest plans with the A350-1000 I was surprised that it made a very important customer so unhappy. But that also indicates to me that if Airbus maintains its position it is because the A350-1000 is part of an overall strategy. And if A and B have different strategies, so much the better for customers.

      The morale of the story is that it is not good to put all your eggs in the Emirates basket.

  20. Which demand for the 777-8? Can you go in more detail? Is there any source then Boeing?

    While Boeing remains 100% behind the 747-8i, sees strong interest from the industry, is talking to a dozen airlines and expects to announce some orders soon, the 777-9i might be more then just strenghtening the aircraft portfolio, continuing delivering maximum value to the airline industry.

    Lufthansa and the risk sharing 8i supply chain might be unexcited..

  21. Evin Ormond :
    @CBL – Actually there are developments underway to recycle carbon fiber composites, too. There’s already a pilot plant running in Germany, where the composites are being decomposed in a special reducing atmosphere (whithout oxygen) to recover the valuable carbon fibers.

    I doubt that this would be viable (if it was possible). Carbon fibers are pretty cheap and not that valuable per se.
    What is valuable is the the tissue (woven or not) made of them and the fact that the fibers are aligned in regular patterns.

    The only viable recycling is grounded as filler in other materials or as combustible to recover the energy. 🙂

      • This is not a very bright comment that was made. When one has to balance the book of af his company he has to consider what makes the most financial sense, not what the ecological flavour of the month is…
        The recycle product as mentioned in your link is as a filler for lower value material (than in the initial aerospace application).

        With metal shawings, 100 % can return to the original application once melted into a new billot.

      • @ CBL:

        As you point out the decision to use one material above the other is a financial decision. So besides the residual value of the waste product, which can or cannot be recycled there are many other factors that weigh in.
        Somehow in your comments all you mention is the fact that a material is recyclable or not. Have you ever wondered what the value of metal scrapping is compared to a billet? What are the cost of melting and processing metal scrapping?

        How do these compare to the cost of carbon fibre with less waste during production (which might be valued at zip)?

  22. Normand Hamel :

    TCook :Another option for the 777 is a simple re-engine and keep using the existing wing which is paid for. A 230′ length version with 99K Rolls Royce or GTF engines would provide a less expensive alternative to the A350.

    You have a good point about re-engining the 777 while retaining the existing wing. It was what I expected Boeing would do until they announced that they were going with a new CFRP wing. I was actually quite surprised by that decision. Initially I saw the 777X the way I see the A330neo: same basic airframe, with a few key improvements, and new engines.
    The big question is this: for the current 777, are the fuel burn figures expected from the new 100K engines from P&W, RR and GE of the same magnitude in terms of efficiency gains as the narrow-body engines like the Leap-1A/B and GTF are in relation to the latest CFM56? And would that alone be enough to keep the 777 competitive with the A350-10? Probably not.

    Just because they plan to go that way, who says the Board will approve it? I can see TCook’s option being closer to what finally comes out.

  23. Scott, did you miss the aviation week article about A350? A 787 repeat seems like it is in the works, another new air plane program hitting bad snags.

    We have learned the lesson from other programs, I wonder if those words are regretted today? The first block points will equal the 787 terrible teens. I guess there will be compensations paid in this program as well.

  24. Qantas to recive $433m in compo & deposit back from Boeing for the delays but that cash can be recouped by selling the slots at a higher price.

    • I don’t think that will go beyond navigating around some compensation payments. ( That certainly has its own value )
      The 787-8 may actually never sell in numbers again. But even that could be “A Good Thing” (TM) for Boeing.

    • I think we will see a lot more -9 conversions once it EIS, the -9 will be the best 787 model of them all, the -8 seems suboptimal in many ways. A mature-9 with mature engines, compareed to a overweight and 4-2% miss on the engines for the EIS -8.

  25. Reply to Keesje #70:

    “Which demand for the 777-8? Can you go in more detail? Is there any source then Boeing?”

    I have no evidence, only a conclusion from what little I know. I do not know precisely why Emirates and Qatar are so dissatisfied with the -1000, or which 777X they are interested in; or whether they are interested in the family. I mentioned the 777-8X because I do know that Emirates wants very long range generally for their wide bodies, and the -8X is closer in pax size to the -1000 than the -9X, which is 40-60 seats larger than the -1000, depending. Emirates could not reasonably expect A to increase the -1000 the size of the -9X, so the -8X is likely the one. Airinsight below says its range is more than 9000 miles, but I think that was for the speculated -8X-LR, not the standard plane. But whatever its range is, it will likely be more than 8000 miles.

    Nor do I know why other airlines to date have not bought lots of -1000s, and instead stocked up on -300ERs last year; which means they will not be replacing them until well into the 2030s at the earliest. Maybe these airlines bought the -300ER only because A could not deliver large numbers of the -1000 until well into the 2020s and with fuel prices rising, they, like A320neo customers, could not wait for the -1000. Maybe they feel uncertain about A’s A350 production schedule (to my knowledge, A hs not announced definitive production schedule and monthly rate for any 350 varient) and/or performance, so bought -300ERs for certainty of delivery time and fuel consumption, just as many airlines have bought the A333 vs. the 787. Remember also, no matter when B launches the 777X, they will be continually improving the -300ER’s performance with the PIP program.

    As for Cathy’s recent -1000 conversion/new buy, my impression was that they were driven by unusually high fuel costs and a very, very low price, something they bragged about when they bought the A359s, but maybe not. It may be that the A359/1000 will do very well as -200ER replacement because for the moment at least B will only be offering the 7810 in that performance range. I’d watch United and SIA (which already have A359s on order), and BA.

    Or maybe the mkt has changed dramatically since the advent of the A346 and -300ER, creating a whole new segment,shifting upward to 350-410 seats with range of at least 8,000 miles that can be covered only with two plane types. If that is true (and both B and its customers seem to be saying that it is simply because they are not buying the -1000), then airlines may be looking for a family of planes covering that mkt to get the advantages of commonality. The 777X seems taylored to such a mkt while the -1000 is not. (I note parenthetically, as others have, the amazing similarity between B’s 777X problem in competing against the new composite A350 and A’s A333 problem competing against the 788/9 – to re-engine/re-wing the old design or not.)

  26. Pingback: KUOW: Boeing, Microsoft, Amazon Web Services » Michael J. Parks

Leave a Reply

Your email address will not be published. Required fields are marked *