Odds and Ends: Boeing jobs move; JetBlue’s trans-con plan; Airbus Innovation Days; BBD confidence

Boeing jobs move: We’re not a fan of Loren Thompson, but his commentary in Forbes yesterday is spot on. Boeing is moving jobs out of Washington State to bolster its Charleston (SC) cluster and simply to move to non-union locations.

Washington State needs to come up with some real planning to address the competitiveness in relation to the South. So far, what’s been unveiled is more of the same–there’s no innovation. This isn’t going to work.

JetBlue’s trans-con plan: The US discount carrier said it was contemplating two-class service across the USA. A filing reveals what it was thinking (with a tip to Mary Kirby on this one). What surprises us more than anything is the low density planned in the Airbus A321: just 156 seats. JetBlue’s single-class A320 has 150 seats. Strikes us that JBLU is leaving a lot of potential revenue behind.

Airbus Innovation Days: AirInsight went to the Airbus Innovation Days this week and has a number of postings here.

Here are some more stories coming out of the Airbus days:

Financial Times


Bombardier says CSeries is a “done deal.” Meaning no more delays. This is a pretty bold statement, given the history at Airbus and Boeing. The Reuters story reports the confidence at BBD, but from a pizzazz perspective, it still seems unlikely the CSeries will fly during the show. In the firmest indication yet, it now looks like the first flight will be the last week of June.

11 Abreast on the A380: Not for me.

787-10 Will be marketing “disaster.” So says John Leahy in this article** (all the way at the bottom). That’s not at all what we are hearing from the potential customers we talk to. Lessors and airlines alike look forward to the airplane. Leahy compares the 787-10 with the 767-400, which was a marketing disaster–only two airlines, Delta and Continental–bought the airplane. Both found a workable niche for it, but the 787-10 is no 767-400. With range of 7,000nm, it will have 82% of the mission range of the 8,500nm 787-9, A350 (and A380), it matches the A330-200 HGW, exceeds the 6,000 nm range of the A330-300 HGW and nearly matches the 7,200 nm range of the early 787-8s–with nominally 323 seats, the size of the 777-200ER and the A350-900.

** Readers may have to go to Google News and type in headline “Stretch Version of A380 still far off”

or try this URL directly


23 Comments on “Odds and Ends: Boeing jobs move; JetBlue’s trans-con plan; Airbus Innovation Days; BBD confidence

  1. Jet Blue’s A321 at 156 seats could bring a lot of revenue with high yield passengers.

  2. I cannot read The Australian article. Instead I will read John Leahy’s mind. When he mentioned the 767-400 he obviously had the A340-500/600 in mind.

      • Thanks Scott. I had done that and it did not work the first time around. Following your reply I tried it again and it worked!

        The 767-400 had a 5,500 nm range. The 787-10 has considerably more than that. The 787-9 kind of range is not required by all airlines. With its extra capacity the -10 will certainly be more profitable than the -8 for a majority of customers.

        At 8,100nm the A350-900 will be highly attractive for many operators around the world and should give this variant of the XWB a slight edge over the 787-10. But there are more than a few customers who need a highly efficient 7,000 miles range/300+ passengers aircraft. The -10 will fit the bill for many.

      • If Emirates says, the next 50 A380 we buy will be the -900, it will be built. It is as simple as that.

  3. I think one of the Keesje range diagrams from key centres for the 787-10 could be useful.
    Please as a late riser here in Manila do not annoy Scott anymore. I really missed the responses to the Leahy interview.

  4. Au contraire, Mr. Leahy, the 787-10, just like the other 787’s is, and will be a marketing success. Question is if the sales will also be a success, and if the performance in the end is as advertised.

    How does the scheduling look like for the new 777x versions and the 787-10?
    What is the design sequence (787-10 first?), when do they start on each model (version) and how much time is there between each version?

    I wonder what he means by not for some time for the A380 stretch? 5 years? 10? 15?

    • “just like the other 787-s is, and will be a marketing success”

      Two questions:

      1) was the 787-3 a marketing success?

      2) when airlines order airplanes and have to wait years beyond the original delivery schedule is that a success?

  5. I understand that Leahy is in marketing speak mode, but there’s almost no way the 787-10 will fail like the 764. In fact the plane is so well positioned, that I think the 777X has a bigger chance of failing(and I don’t think it will). Anyways, I guess Leahy is giving his dosage of mild BS this week, just like Boeing had their time in the sun last week.

  6. I remember some years ago when a far east carrier traded some A340’s for Boeing aircraft and airbus loudly announced they would not supply parts for those planes and the Boeing response was, we stand behind every aircraft we sell.
    I don’t know if it was Leahy who made that arrogant childish remark or someone else at airbus but at that point I loss respect for a company who would let a comment out.like that
    Its usually a when person feels backed in a corner who then lashes out trying to regain his perceived superior position.

  7. Reading all these tit for tat comments shot back and forth between the two manufacturers is sort of like watching reality television. They provide only the lowest form of entertainment and contain no useful information.

    Also, trying to assign blame or figure out who is at fault is like trying to solve the chicken and egg problem.

    Boeing will do just fine with the 787-10, as long as they make sure there are available production slots. The so called wide body “sweet-spot” that is often talked about seems to be more dependent on availability than anything else recently.

  8. Scott:
    The Loren Thompson link is wrong. It leads to the JetBlue article.

  9. TC :
    If Emirates says, the next 50 A380 we buy will be the -900, it will be built. It is as simple as that.

    Given the current profit per frame of the 380 is negative and at the end of the current backlog it will be in the 10’s of million per frame and that the -900 would likely require on the order of 2-4 billion, that means that they will need to sell on the order of 66-100/133-200 frames before they see any ROI on the 389(more from a NPV perspective). But that does factor in that the 380 currently exists and is paid for, so we have to really look at the incremental for the 389 vs the 388 and that put the financial break even point for a 389 at even a higher frame count. So the reality is that they actually need a market for more 389s than they’ve sold 388s to date to make it a go from a financial perspective.

    All this is to say that it would take much more than emirates signing on for 50 to make it happen, esp when their other option is the 380 that already exists.

    Airbus won’t look at doing the 389/re-engine until airlines that would of been a candidate for the 388 order 779s instead.

    • Doing new engines for the A388/389 will likely be cheaper. Airbus is fortunate to have a new frame that uses engines of similar thrust class as the A380. We already have RR with the TXWB. And if Pratt goes ahead with their widebody GTF ambitions and gives Airbus the second offering on the A350, they could also produce a minimum cost derivative for the A380. This could be similar to what Boeing has done with the 748’s GEnx, but it will be quite a good selling point if Airbus can get common engine offerings for both the A350 and A380.

  10. I hate to break it to you Boeing Fans, but Boeing is going to get stomped in the market they previously ruled with the 777, and there is no way they can stop it from happening. The a350-900 will insure that the 777-200 remains dead and the a350-1000 will curb-stomp Boeing’s 777-300 in the market. Meanwhile, Boeing will keep proposing the magic 777x airplane they’ve been discussing for years, but nothing much will come out of the talk and the a a350 will prevail. I was listening to Jim McNerney discuss the Boeing 777x during the annual investors conference and he let it slip that the 777x will have scalloped wings, not folding wings. As a result, I figure the airlines will look at this, yawn and tell Boeing to bugger off.

    • Make sure the 777 is dead before you burry it. The 777 remains the strongest element in the Boeing portfolio. But everyone agrees that it needs to be revamped in order to remain competitive. And there is no time to waste here. I think the Boeing engineers understand what they HAVE to do. But at the moment they are figuring out what they CAN do and HOW they will do it. Boeing will do the 777X, there is no doubt about it. And its larger variant will be alone in the upper segment, like the 747-400 was in the past.

      But Boeing is going through a phase where it appears to be playing catch-up on all fronts, except for the 787. The 737 remains the best selling commercial airplane in history, but not for ever. That title will most likely pass to the A320 in a few years from now. The problem is that Boeing is trying to stay competitive with a fifty year old model. The 777 is much younger, but nowadays an aircraft of that size absolutely needs more composite material to remain competitive.

      Initially Airbus lacked the vision to dislodge the 777. They just wanted to revamp the A330, period. But their customers sent them back to the drawing board and the Airbus engineers had to come out with something more attractive to face the 787 threat. That is when they came up with the XWB concept. Which today is probably the boldest decision Airbus has ever taken. It offered a response to the 787 competition while challenging the 777 position at the same time.

      It is interesting to think that a similar scenario could have happened with Boeing. Imagine if it had been pushing for a 737 MAX, only to see key customers balk at the idea and ask for a modern replacement instead; like for the XWB versus the A330Mk1 that Airbus was offering at the time. But apparently it is the exact opposite that happened. Boeing wanted to do the NSA when they saw some of their key customers balk at the idea and request the MAX instead.

      • Normand, I’m pretty sure the 777 is dead, so I don’t think I’ll wait to start shoveling dirt over it’s corpse. The 777 was a great plane that had a very-profitable production run that’s yet to be completed. However, it’s nearly 20-year-old technology and is about to meet the new Boyz on the Block – the a350-900 and the a350-1000. The a350-1000 will do to the 777-300 what the a330-300 did to the 767 and the 777-200: it will slowly make it go away – forever. However, I do think the 777-220F will be around for awhile and making some money for Boeing.

        Also, you say that Boeing isn’t playing “Catch-up” with the 787? Well, I guess that’s true from a technical perspective, but from a financial perspective the 787 is a living nightmare. Do you remember the guy Javier who was an analyst for airbus and who questioned whether the 787 would ever break even? Javier put out some very depressing charts of Boeing’s cash burn for the 787 and a lot of people accused him of being an Airbus fanboy. But – HE WASN’T! It turns out that Javier waaaaaay underestimated Boeing’s Deferred Production Cost problems with the 787 and these Deferred costs are accruing at an actual rate that is far worse than anything that Javier dreamed of – and Boeing has to pay interest on this money! Javier only predicted an additional $4 Billion Deffered Cost from 2011-2015 while the actual result has been $11+ Billion form 2011 to 2013! (http://theblogbyjavier.com/2011/10/28/will-boeing-787-ever-break-even/) So far, Deffered costs for the 787 are over $20 Billion (as admitted by Boeing) and every model I’ve constructed says they’ll go over $50 Billion before Boeing breaks even on a unit-cost basis – and I haven’t even counted R&D costs like Javier did!.

  11. Just idol curiosity Jimmy but are you a new Nom de plume for either Uwe or Keesje? Just wondering.

  12. Jimmy :
    Normand, I’m pretty sure the 777 is dead, so I don’t think I’ll wait to start shoveling dirt over it’s corpse.

    Like Mark Twain once said: “The reports of my death are greatly exaggerated.” 😉

  13. Jimmy :
    Also, you say that Boeing isn’t playing “Catch-up” with the 787? Well, I guess that’s true from a technical perspective, but from a financial perspective the 787 is a living nightmare. Do you remember the guy Javier who was an analyst for airbus and who questioned whether the 787 would ever break even?.

    Yes I was looking at it from a technical perspective. Where Boeing is playing catch-up with the 787 it is on the production side. They seem to be making good progress on that front though. It is true that the 787-8 will probably never be profitable. You can check my own posts on this subject along those made by Javier on this blog. But for the 787-9 it is a different ball game. The asking price is much higher, and the learning curve is behind Boeing for this particular model and the upcoming 787-10.

    Still, it might take another ten to twenty years before the overall programme breaks even. But the much needed positive cash flow will come before that.

  14. By end of 2018, it is likely that Boeing will be producing close to 14 787s per month. They will thus have the availability to deliver 172 aircraft in this size range a year. It is likely that most of these will be the 787-9 and 787-10 as they will be the most attractive for airlines and the most optimized for their capacity. The 787-9 will clearly outperform the a330 and the 787-10 will take orders away from the 350-9 where airlines do not need the 8500 mile range of the bigger aircraft.

    The a350-009 will be a great aircraft. The a350-800 doesn’t look too popular right now. The a350-1000 is gaining some traction, but it will lose some sales to the 777-9x and 777-8x.

    Both manufacturers build good planes that are safe. It is only a rare anomaly that occurs where a new design completely obliterates the others offering (777 vs 340). Even the 767 will end up being a reasonable business case since it springboarded the tanker offering.

    Overall, airlines must optimize their fleets to match their needs. It makes no sense to order an aircraft with too much capability when a competing aircraft fits the bill and is 8% more efficient…especially when your profit margin is 5% or less and you are in a highly cyclical and volatile industry where it is possible to bleed cash and go bankrupt in a heartbeat.

    I would expect both Boeing and Airbus to produce and sell every aircraft they can make except in the VLA market where the demand just doesn’t seem to be present. Now if there is a bubble or downturn… that could upset the apple cart for sure. I would guess it would occur in the NEO/MAX size range as that is where some of the most questionable orders are being made. Or the VLA market where there seems to be a limited business case for only a few airlines that need them and can make them work.

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