It’s official: Boeing launches 787-10 with 102 orders, commitments

Here’s the Boeing press release.

Boeing expects the 787-10 to perhaps be the best selling model of the family over time. With a range of 7,000nm, it will have the ability to do most airline missions; 8,000nm-8,500nm range airplanes (let alone the proposed 9,400nm range of the 777X) is really more than most carriers need. We expect the orders to double by the end of the year.

In other Paris Air Show news, easyJet chose to stay with Airbus for its fleet renewal ordering a combination of 35 A320ceos and 100 neos. This was hard-fought competition. Boeing thought it won the deal on price, and Bombardier was ready to go with its own contract when Airbus came in at the last minute with a low price of its own, blowing both competitors out of the water.

Bombardier: This story explains in part why Bombardier has been challenged in selling the CSeries. The US Scope Clause inhibits sales to regional airlines; and lessors want to see a broader customer base. This is in addition to Airbus under-pricing Bombardier in key campaigns to block sales.

ATR landed an order for up to 90 ATR-72-600s.

Boeing will market the Embraer KC-390 to the Pentagon. After all the Boeing campaign about the Pentagon buying a foreign airplane for a tanker, this really takes the cake.

51 Comments on “It’s official: Boeing launches 787-10 with 102 orders, commitments

  1. “the discounts on the list price are greater for the NEOs than they were for the last major Airbus A320 orders”- that is the deal Easy Jet got ; so much so for “Neo premiums” ,both the big guys are going for share and volume and building huge backlogs. At least from a travel market view, Europe is not in recession.

      • Did I say anything about gospel? I’m taking it for what it is, a data point. Every source of info has some bias, and every person is biased. What else is new?

      • Well, I prefer data points that are not based on speculative numbers. šŸ˜‰

        A quote from Aspire:

        While Boeing lost easyJet & Lion Air, Norwegian Air Shuttle, at least Boeing put up a very good fight which rendered these deals as money-losing or profit-less for Airbus.

        So, if Boeing had won**, these deals would then have been profitable?

        Hmm, isn’t it pretty strange for someone to be so certain about the nature of deals he’s no even privy too?

        **Boeing only partly “lost” Lion Air and NAS since they have ordered plenty of MAX-frames as well.

      • “easyJet NEOā€™s went for a unit price in the low to mid US$30M range. This price seems unbelievably low to me.”

        That sounds about right. The first big Easyjet A319 order was said to be roughly a 56% discount, receiving them at $19.4M per A/C.

        I suspect they had to do better this time, in order to stop Boeing and Bombardier from poaching them.

      • “That sounds about right. The first big Easyjet A319 order was said to be roughly a 56% discount, receiving them at $19.4M per A/C.”

        It never ceases to amaze how some people just like that seem to pull some numbers out of a hat. šŸ˜‰

        Monday, August 11, 2003

        Airbus List Prices Rise While Values for New Aircraft Stagnate

        The most significant rise relates to the A319, where a 7 percent rise is represented. However, this is misleading, as the upper price of $61.2 million also includes the ACJ (Airbus corporate jet) and the A319LR. Even assuming a 4 percent rise, the list price of the A319 would rise to just under $54 million. Compare that to the probable price paid by EasyJet of well below $30 million and the more normal single unit value that can range between $32 million and $35 million. The extent of discounting on Airbus narrowbodies, therefore, exceeds 30 percent. The average list price of the A320 is now $60 million, but with values at around $42 million, the 30 percent discounting continues to be applied. Some values for new A320s even quote a figure of around $37 million, suggesting a level of discounting of nearer 40 percent. Actual prices may more approximate $40 million for aircraft currently being delivered based on smaller order quantities.

        http://www.aviationtoday.com/regions/usa/3757.html

      • OV-099 :
        Well, I prefer data points that are not based on speculative numbers.

        Uh, how do you know that Daniel’s number is speculative as opposed to the numbers in the articles you link?

        OV-099 :
        It never ceases to amaze how some people just like that seem to pull some numbers out of a hat.

        What is incompatible about Observer’s US$19.4M number and: “Compare that to the probable price paid by EasyJet of well below $30 million and the more normal single unit value that can range between $32 million and $35 million.”? How do know Observer’s number is “pulled out of a hat” when the quote you gave actually seems to support his number rather than refute it?

    • I think easyjet said Boeing was going to win because they knew Airbus would not allow price to be the only reason they lost that deal. Buying marketshare might make many feel good about their backlogs but it may not be the best position to take long term. What if the NEO fails to meet performance targets to the point the difference between a NEO and a CEO is meaningless? Will Airbus be forced to wie a check at delivery for all 2000 plus frames? And what is the winning position if Boeing wins all the widebody business and its profits margin end up being higher because of the discounts offered? I guess when you have two players in the market it might be smarter if both a profitable versus one trying to own share at the expense of profit. Boeing says they are 15% better with the -10 than the -900. If true major discounts will be required to offset that while also losing all A330 sales. So giving up the single for a widebody program that has better margins might have played into Boeing’s hands. If the -10 is 25% better than the A330-300 right now, trying to do the upgrades will not make this a close horse race. The -800 was left so where to from here for the Airbus program. Again, I find this most interesting because winners at all cost might have interesting results.

      • In order for Boeing to win the EasyJet RFP, they would have had to pay for the extra costs associated with that of switching fleet (i.e. new simulators, crew training etc.), which means, of course, that Airbus didn’t have to come in lower than Boeing on price, they only had to match it.

        “Boeing says they are 15% better with the -10 than the -900.”

        All things being equal, the A350-900 should have slightly lower trip fuel consumption than the 787-10. Hence, I’m not sure how Boeing can claim that the dash-10 will better the A350-900 by 15 percent.

      • l7room :
        Boeing says they are 15% better with the -10 than the -900.

        Boeing must have forgotten that the -900 is a twinjet and not a quad.

        Really, you’re looking at two twin engined aircraft that are of more or less the same generation but one claiming to have the kind of efficiency advantage that is bigger than that between the 77W and the A346.

        More Boeing BS.

    • so much so for ā€œNeo premiumsā€

      Are you sure about that? šŸ˜‰

      1. The table below sets out the aircraft list price (being the sum of the airframe list price, engine option list price and the price of certain assumed specification change notices) against which the price concessions are made, based on the relevant price catalogue in January 2012 at the economic conditions at that date. easyJet has negotiated a very substantial discount from the list price, as set out below:

      Current Generation A320 Aircraft US$76,260,569
      New Generation A320neo Aircraft* US$92,346,946

      *Applicable to both the firm aircraft orders and the purchase right aircraft.

      .

      http://corporate.easyjet.com/media/latest-news/news-year-2013/18-06-2013-en.aspx?sc_lang=en

  2. Its good to see the B-787-10 is off to a great start.

    I don’t know why Boeing decided to partner on the KC-390, but it has no airplane in that size, other than the B-737NG/MAX/P-8A. But Boeing could market it as a gunship as well as a small tanker.

    Of course Boeing could have partnered with the Kawasaki C-2 program, which is already in flight testing to develop a smaller freighter/tanker/gunship to compete with the C/EC/AC/KC-130J and the A-400M. But I don’t really know if the Japanese government would allow that.

    • Except the Japanese can’t sell the C-2 outside of Japan. Their constitution prohibits it. There’s no need to partner with KHI on the program because the ONLY customer for it already bought it. The KC-390 will give LMT some real competition. It’ll be much more advanced and capable than the C-295 or CN-235. With the partnership Boeing and Embraer have the A400M bracketed, even if there was a chance to sell A400Ms (which I don’t see), the EMB/BA partnership has a package that can support pretty much all needs. I think LMT is going to have to do a C-130K, or finally bite the bullet and come up with a new airplane. That will be hard for them, since their core market is cutting back, and exports are going to face stiff competition. It’d take LMT a decade to develop a new tactical transport. Good show EMB/BA.

  3. To the best of my knowledge, Japan’s consitution prohibits the export of arms material. I read some rumors somewhere that the current PM would like to amend that part… do not remember where I read it -> some salt to be taken.

    I also think the P-1 is interesting, and why this is not developed into an RJ instead of the MRJ eludes me (maybe I just do not know enough). Admittedly, four small engines is not ideal here, but that could have been taken care of I think.

    Do not know why they selected the quite old CF6 for a new program? Perhaps the GEnx-2B was not launched then, and no one wanted to invest in a new engine program. Shame to what seems like a nice a/c to not have new engine.

    The project costs seems very competitive, but unfair to compare to a US program, they are almost always very expensive (compared to those of smaller nations: Sweden, Japan, etc, perhaps not the pan-Euro ones…).

    • Because it’s a KHI bird, not an MHI bird. Don’t confuse the heavies. Also, they do NOT get along well with out METI to referee. Additionally it’d suck as a RJ… it’s a quad, think BAE146 vs. CRJ/ERJ… no contest. There’s a reason BAE got out of the RJ biz.

  4. If the 787-10 is like the 777-300 sales wise, it’ll need an ER version to do the business Boeing promises

  5. Congrates to Boeing for getting the -10 launched with 102 MOU’s/orders.

    Wait, I thought according to Leahy, the B787-10 will be the “B764 of the family” which no carrier wants???

    According to Hazy, the -10 will “rule the roost” so-to-speak.

    • It’s not nearly as good as a first flight, but yes, congrats to Boeing. Now they just need to make sure and execute this program well. The trend in that regard is looking up with the 787-9.

    • If, the 767-400 was a dog, due to an expensive wing rework, new heavy landing gear, new longer heavy fuselage, then it looks more like the A350-1000 scenario to me.

      • The 767-400 weak points included too short a range, lower hold not compatible with industry standard LD-3 containers (i.e. 767 uses unique LD-2 containers) and product entering into service too late (i.e. after the A330-200).

        A350-1000 will have around 500nm more range than the 777-300ER (i.e. 8400nm vs 7900nm), it will have the same number of LD-3 positions (i.e 44) and it’s entering into service just as the demand for replacing 350-seat aircraft should start to pick up.

  6. So does anyone no how many new orders the 787 actually got? I think 10 out of United’s 20 were conversions and some of IAG’s were to?

    • The Aviation Week link I posted in the first comment above answers your question. The article says all were new commitments except for the 10 UA conversions.

  7. I don’t know fully about the IAG order, yet. They ordered 12 B-787-10s. I believe BA currently has about 8 B-787-8s, and 16 B-787-9s on order. BA had 18 options for the B-787, and I believe all of the B-787-10 orders are some of these options.

    Yes, UA converted 10 of the previously order of 25 B-787-9s (now 15) to the B-787-10, and placed a new firm order for the other 10. UA still has another 29 B-787-8s on order (out of 35 ordered, 6 have been delivered to their current fleet). UA also holds 50 options, which they can use to order any model B-787.

  8. I am not convinced the 787-10 is a viable stretch version of the 787. I mean, if I were buying aircraft, why would I want a 787-10 with a crippled flight range when I could buy a full-range A350? As a result, I understand why Aibus’ John Leahy has such contempt for the 787-10, and I am afraid this aircraft is going to be another money looser for Boeing.

    • Everything costs something, including range. If you are not operating primarily on routes that require,”full range” as you say, then it is not always a good choice to pay (price and operational cost) for the additional capability.

  9. OV-099 :
    ā€œThat sounds about right. The first big Easyjet A319 order was said to be roughly a 56% discount, receiving them at $19.4M per A/C.ā€
    It never ceases to amaze how some people just like that seem to pull some numbers out of a hat.

    Monday, August 11, 2003
    Airbus List Prices Rise While Values for New Aircraft Stagnate

    The most significant rise relates to the A319, where a 7 percent rise is represented. However, this is misleading, as the upper price of $61.2 million also includes the ACJ (Airbus corporate jet) and the A319LR. Even assuming a 4 percent rise, the list price of the A319 would rise to just under $54 million. Compare that to the probable price paid by EasyJet of well below $30 million and the more normal single unit value that can range between $32 million and $35 million. The extent of discounting on Airbus narrowbodies, therefore, exceeds 30 percent. The average list price of the A320 is now $60 million, but with values at around $42 million, the 30 percent discounting continues to be applied. Some values for new A320s even quote a figure of around $37 million, suggesting a level of discounting of nearer 40 percent. Actual prices may more approximate $40 million for aircraft currently being delivered based on smaller order quantities.

    http://www.aviationtoday.com/regions/usa/3757.html

    “It never ceases to amaze how some people just like that seem to pull some numbers out”

    The numbers I provided came from an article that I am having a little trouble locating at the moment. I will continue to look for it… But it was based on the following article and it said the actual discounts were 56% not the 50% as covered in the WSJ piece.

    The article dates back to Feb 05, so I don’t know if you can access it? So I will take a couple of quotes from it.

    http://online.wsj.com/article/0,,SB110746205226745296,00.html?mod=todays_us_money_and_investing

    “Analysts figure easyJet received a 50% discount on the $44 million list price of an A319. EasyJet itself told shareholders at the time of the purchase that it was 33% less costly than the Boeing 737 aircraft that formed its initial fleet.”

    “Mr. Avery figures easyJet buys the planes at around $22 million each, assuming a 50% discount. It quickly sells the bulk of them to different aircraft-leasing companies for about $28 million each, published figures reveal.”

    Now the number I posted used the same $44 million list price. $44M x 56%(.44)= $19.36M. Sorry I rounded up to $19.4M šŸ˜‰

  10. OV-099 :ā€œThat sounds about right. The first big Easyjet A319 order was said to be roughly a 56% discount, receiving them at $19.4M per A/C.ā€
    It never ceases to amaze how some people just like that seem to pull some numbers out of a hat.

    Monday, August 11, 2003
    Airbus List Prices Rise While Values for New Aircraft Stagnate

    The most significant rise relates to the A319, where a 7 percent rise is represented. However, this is misleading, as the upper price of $61.2 million also includes the ACJ (Airbus corporate jet) and the A319LR. Even assuming a 4 percent rise, the list price of the A319 would rise to just under $54 million. Compare that to the probable price paid by EasyJet of well below $30 million and the more normal single unit value that can range between $32 million and $35 million. The extent of discounting on Airbus narrowbodies, therefore, exceeds 30 percent. The average list price of the A320 is now $60 million, but with values at around $42 million, the 30 percent discounting continues to be applied. Some values for new A320s even quote a figure of around $37 million, suggesting a level of discounting of nearer 40 percent. Actual prices may more approximate $40 million for aircraft currently being delivered based on smaller order quantities.

    http://www.aviationtoday.com/regions/usa/3757.html

    The investment community has mentioned that the price is low, however no one mentioned and excate number. Are you upset that the planes were given away? Or are you upset that JL’s victorys are at the expense of company profit? I would think that if all of the offerings made to take share away from Boeing were at a price close to the easyjet sale, someone at Airbus should be concerned. So you get an 80% share but at a cost that impacts all cost cutting activities. After awhile the supply chain stops supporting Airbus demand for cost cutting. Doing this type approach is not good for the industry and at some point Airbus will feel the pain of suppliers pushing back and not bidding on the next round of opportunities. Winning at all costs can be a major blow to all parts of the supply chain. That’s why 50/50 split was a better postion for the industry. Keep it up JL and you will begin to get internal pushback because it really makes no sense to give aircraft away. Aerospace employees need to eat too.

    • I’m not upset about anything.

      I do find it highly amusing, though, that based on pure speculation and hearsay you conclude that the “planes were given away” and that supposedly John Leahy’s “victorys are at the expense of company profits”!

  11. Baroque :

    l7room :Boeing says they are 15% better with the -10 than the -900.

    Boeing must have forgotten that the -900 is a twinjet and not a quad.
    Really, youā€™re looking at two twin engined aircraft that are of more or less the same generation but one claiming to have the kind of efficiency advantage that is bigger than that between the 77W and the A346.
    More Boeing BS.

    They said it, and we’ll find out sometime in 2018. Think we’ll have to wait until the -10 flys and then compare the two before you can really say Boeing BS. My point is the 25% improvement over the A330. If that’s true the A330 PIPs are not going to stop the bleeding. If you thought the 777-200ER sales went up in smoke, watch what happens to the A330 fleet. Airlines will cancel leases and the flood of frames in the next 8-10 years will drive down resale prices. If that 25% number is right Airbus better do something quick with the -800 strategy.

    • Read my comment again. I never said anything about the A330. And yes, I agree that the writing is on the wall for that model.

      “Boeing says they are 15% better with the -10 than the -900.”

      This is the part of your quote that I was referring to as BS. You don’t have to wait till 2018 to find out. For one thing, as I mentioned it’s a bigger difference in efficiency than between the 77W vs. A346 and you know why this was so. And you don’t need to wait till 2018 to find out whether the -900 is only 10% better than the A333 (did you just blindly accept Boeing’s numbers without working this out?). It’s like saying that the 788 is only 10% better than the 767 (either this or you think that the A332 is ~10% better than the 767) and it sounds awfully similar to this pile of Boeing BS.

      http://oi43.tinypic.com/23lh4aq.jpg

      According to Boeing, a 555 pax A380 burns only 5% less fuel per seat than a 416 pax 747-400. Some BS are plain obvious, but you must see an inkling of truth in it because “they said it”, right?

  12. “Analysts figure easyJet received a 50% discount on the $44 million list price of an A319. EasyJet itself told shareholders at the time of the purchase that it was 33% less costly than the Boeing 737 aircraft that formed its initial fleet.”

    That would be less costly than the 737-300 Classic which formed EasyJets’ initial fleet, not the 737-700NG which competed against the A319 in the 2002 RFP

    For a low cost carrier (LCC) operational costs is more important than the purchasing price is important. Otherwise they would just operate second hand aircraft. Since LCCs operate their fleet with very high utilisation, they are the ones that are the the most operational costs sensitive.

    I wouldn’t put too much trust in the guidance of “analysts” who are seemingly relying on speculation, hearsay and rumours.

    ā€œMr. Avery figures easyJet buys the planes at around $22 million each, assuming a 50% discount. It quickly sells the bulk of them to different aircraft-leasing companies for about $28 million each, published figures reveal.ā€

    And that’s supposed to be the truth just because Mr. Avery was figuring out something on the go. In this case, that EasyJet made a quick $6 million just after EIS on most of the A319s they received from Airbus. Yeah, right!

    Now the number I posted used the same $44 million list price. $44M x 56%(.44)= $19.36M. Sorry I rounded up to $19.4M.

    Please excuse me from asking, but has it occurred to you that if Airbus supposedly was offering such massive discounts to just a few selected customers, how would the rest of Airbus’ single aisle customers react if they found out that they were paying vastly more for roughly the same number of frames than some of their customers.

    All things being equal, let’s for the sake of argument assume that Boeing in 2002 offered EasyJet 737-700s for $30 million per frame; or $3.6 billion for 120 units. Someone named Colonel Klink mentioned on pprune shortly after the deal was published that the “A319 came in Ā£100 million cheaper”; or about $150 million (i.e. in 2002 exchange-rate/dollar-value). I would assume that would be Ā£100 million cheaper for the entire deal of 120 aircraft. So, $3.6 billion minus $150 million (price differential), divided by 120, is $28.75 million per A319 (i.e. Airbus offer); or 4.2 percent lower for the Airbus offer. That sounds more reasonable, doesn’t it?***

    Colonel Klink 14th Oct 2002, 12:11

    When the final envelopes were opened, the A319 came in Ā£100 million cheaper, thats why easyJet had to buy it (and why Stelios is so delighted). Since no airbus yet built has taken a pounding with a dozen takeoffs and landing a day on the sectors we operate, it will be interesting to see how they do hold up. Knowing that theyt are now committed to buying 120 aiframes should help the pay negotiations for the pilots, because under present conditions they will never get enough guys to fly them!!:cool: :confused: šŸ˜® šŸ˜€ šŸ˜®

    http://www.pprune.org/archive/index.php/t-69745.html

    ***Add a few extra services, free of charge, and the deal seems to have been a no-brainer from the point of view of EasyJet.

    Airbus has agreed to provide extensive pre-delivery and ongoing support relating to the introduction of the Airbus A319 aircraft into easyJetā€™s fleet. Specific support will also be given regarding training for easyJetā€™s pilots, cabin crew and maintenance personnel. Airbus has also undertaken to put in place arrangements, in keeping with the low cost operation, to provide that the cost to easyJet of maintenance for the Airbus A319 aircraft shall not exceed the cost of maintenance for its Boeing 737-700 aircraft.

    http://corporate.easyjet.com/~/media/Files/E/Easyjet-Plc-V2/pdf/investors/shareholder-circulars/2003-Airbus-Circular-FINAL.pdf

    • Hey OV-099,

      I am not here to change your mind, or waste my time trying to convince die fan that the sky is green. If you want to paint others views or analysis as wrong or misleading because it doesn’t support your views? I’m Ok with that.

      OTOH:

      “EasyJet Chief Executive Carolyn McCall said Airbus and Boeing competed hard for the airline’s latest order.

      “Ultimately, Airbus offered us the best deal, and at a price with a greater discount to the list price” than the 2002 deal, she said.”

      http://www.chicagotribune.com/business/sns-rt-us-air-show-easyjet-tradebre95h17n-20130618,0,1230122.story

      So, you now have the Easyjet CEO telling you the Airbus sold cheaper again. “with a greater discount to the list price” than the 2002 deal” I don’t know? But, “That sounds about right” (quoting myself up thread). Those low $30m’s numbers and 65% discounts are very likely in the ballpark!

      • I am not here to change your mind, or waste my time trying to convince die fan that the sky is green.

        Well, you do seem to have time to post ad hominem attacks.

        “If you want to paint others views or analysis as wrong or misleading because it doesnā€™t support your views? Iā€™m Ok with that.

        Well, I seem to have missed out on all that “analyses”. Where was it, exactly?

        I did find out, though, that there was a lot of speculation and hearsay then, as there is now.

        “So, you now have the Easyjet CEO telling you the Airbus sold cheaper again. ā€œwith a greater discount to the list priceā€ than the 2002 dealā€ I donā€™t know? But, ā€œThat sounds about rightā€ (quoting myself up thread). Those low $30mā€™s numbers and 65% discounts are very likely in the ballpark!”

        Yes, “those low $30mā€™s numbers and 65% discounts are very likely in the ballpark” because that’s what you want to believe.

        Never mind that the list price for the A320neo, as referred to by EasyJet themselves, was US$92,346,946 per aircraft, and that the same level of discount level in percent now as it was back then, will lead to a higer absolute value for the A320neo discounts now when compared to the absolute value of the A319 discounts then.

        As I wrote up thread, in order for Boeing to win the EasyJet RFP, they would have had to pay for the extra costs associated with that of switching fleet (i.e. new simulators, crew training etc.), which means, of course, that Airbus didnā€™t have to come in lower than Boeing on price, they only had to match it. Why then must Airbus, according to you, have had to resort to a fantasically high discount to retain EasyJet as a customer?

  13. Mike Bohnet :

    OV-099 :
    Well, I prefer data points that are not based on speculative numbers.

    Uh, how do you know that Danielā€™s number is speculative as opposed to the numbers in the articles you link?

    Daniel Tsang: However, Airbus made a last-ditch proposal with a per unit price in the low-to-mid US$30 million range which Boeing couldnā€™t match, as Boeing will make a loss otherwise.

    http://www.aspireaviation.com/2013/05/27/boeing-lost-grounds-all-fronts/#comment-3920

    Daniel even provided a link to EasyJet’s announcement:

    http://corporate.easyjet.com/media/latest-news/news-year-2013/18-06-2013-en.aspx?sc_lang=en

    And where it’s noted that The table below sets out the aircraft list price (being the sum of the airframe list price, engine option list price and the price of certain assumed specification change notices) against which the price concessions are made, based on the relevant price catalogue in January 2012 at the economic conditions at that date. easyJet has negotiated a very substantial discount from the list price, as set out below:

    Current Generation A320 Aircraft US$76,260,569
    New Generation A320neo Aircraft* US$92,346,946

    *Applicable to both the firm aircraft orders and the purchase right aircraft.

    So, for Daniel’s claim to hold true, Airbus would have had to give EasyJet a discount of about 65 percent (of US$92,346,946) for the per unit price to come in “the low-to-mid US$30 million range”. I’m sorry, but that’s not credible at all.

    OV-099 :
    It never ceases to amaze how some people just like that seem to pull some numbers out of a hat.

    What is incompatible about Observerā€™s US$19.4M number and: ā€œCompare that to the probable price paid by EasyJet of well below $30 million and the more normal single unit value that can range between $32 million and $35 million.ā€? How do know Observerā€™s number is ā€œpulled out of a hatā€ when the quote you gave actually seems to support his number rather than refute it?

    I’m sorry, but the quote I gave does in no way support the claim of EasyJet supposedly paying just $19.4 million per A319 frame.

    • “So, for Danielā€™s claim to hold true, Airbus would have had to give EasyJet a discount of about 65 percent (of US$92,346,946) for the per unit price to come in ā€œthe low-to-mid US$30 million rangeā€. Iā€™m sorry, but thatā€™s not credible at all.”

      So, the discount is just too large to be true? I wonder if that argument would fly with you if the situation was reversed.

      “Iā€™m sorry, but the quote I gave does in no way support the claim of EasyJet supposedly paying just $19.4 million per A319 frame.”

      More importantly, it does not at all refute the US$19.4M number, which I believe was your intention behind quoting it.

      • “More importantly, it does not at all refute the US$19.4M number, which I believe was your intention behind quoting it”.

        The intention was to point out that according to the quote, the extent of Airbus discounting in 2003, on their single aisle line-up, exceeded 30 percent, while some values of then new A320s “suggested a level of discounting of nearer 40 percent”.

        The extent of discounting on Airbus narrowbodies, therefore, exceeds 30 percent. The average list price of the A320 is now $60 million, but with values at around $42 million, the 30 percent discounting continues to be applied. Some values for new A320s even quote a figure of around $37 million, suggesting a level of discounting of nearer 40 percent. Actual prices may more approximate $40 million for aircraft currently being delivered based on smaller order quantities.

        So, yes, the speculative 56 percent discount level falls way outside the discount range quoted in the article. But of course, since some people really want to cling on to something they steadfastly believe in, despite solid evidence to the contrary, some die hard A-bashers will continue to cry out loud that Airbus must have resorted to fantastically high discounts just in order for them to compete with Boeing, since apparently Boeing products are either; (i) always superior to the ones from Airbus, or (ii) Airbus is only being competitive because of “illegal” subsidies, hence the “belief” that Boeing won’t match Airbus’ supposedly “massive discounts”, because “they can’t”!

        “So, the discount is just too large to be true? I wonder if that argument would fly with you if the situation was reversed.”

        Just curious, but are you trying to go down that ad hominem route Observer seems to be going?

        Funny thing is, though, that the situation never seems to be reversed. It’s always Airbus “this”, or Airbus “that”. When did we last hear of Boeing “must have given extraordinary discounts to a customer — far higher than the industry standard — just in order to retain that customer. So, apart from discounts associated with 787 late deliveries, I can’t seem to recall when the situation was reversed. Perhaps since you may seem to know when that happened, I’d be happy if you could help me out. šŸ˜‰

      • “So, yes, the speculative 56 percent discount level falls way outside the discount range quoted in the article. But of course, since some people really want to cling on to something they steadfastly believe in, despite solid evidence to the contrary, ….”

        The article that you quote actually makes the point that the first easyJet A319 purchase falls below the typical discount range. So, in my opinion, it falls far short of solid evidence to the contrary.

        Article quote: “Compare that to the probable price paid by EasyJet of well below $30 million and the more normal single unit value that can range between $32 million and $35 million.”

        $30M is a 44% discount
        $27.5M is a 49% discount
        $25M is a 54% discount

        What does “well below $30M” mean? It sure does not mean it was in the typical range. Does this mean that I’m sure easyJet only paid US$25M? Of course not, but if AIrbus provided a discount outside the normal range before, it is conceivable that they would do it again.

        “Just curious, but are you trying to go down that ad hominem route Observer seems to be going?”

        How was I attacking you instead of your argument? Since you quote numbers from various sources who are not publicly privy to the deals they report on, I took your following statement “I wouldnā€™t take Aspireā€™s word as gospel.” to mean you doubted Aspire as a source because they are biased. If you imply that others are being influenced by their biases, you should expect your bias to be questioned as well.

        While we are on the subject of the ad hominem route, how about this: “some die hard A-bashers will continue to cry out loud that Airbus must have resorted to fantastically high discounts just in order for them to compete with Boeing,…”. I don’t recall ever bashing any Airbus product in this forum or any other.

        “So, apart from discounts associated with 787 late deliveries, I canā€™t seem to recall when the situation was reversed.”

        The United and Ryanair 737 MAX purchases come to mind. There have been many comments in this forum where the 737 is criticized because it is an old platform, with the implication that the 737 getting it’s market share on the basis of price and/or availability.

      • $30M is a 44% discount
        $27.5M is a 49% discount
        $25M is a 54% discount

        Please do note that the list price was US$44.2 million for an aircraft including engines, hence a 44 percent discount would lead to the price paid being $24.75 million; a 49 percent discount means the price paid would be $22.54 million, while a 54 percent discount would lead to a price of $20.33 million.

        Under the Airbus Contract the aircraft basic price of each A319 aircraft (including the airframe basic list price, the sum of the specification change notices and the propulsion systems basic list price), as at January 2001 being the date by reference to which the contractual base price is quoted, was approximately US$44.2 million. Thus the total list price for 120 new A319 aircraft would be approximately US$5.3 billion. However, the Company has been granted very substantial price concessions by Airbus and the selected engine manufacturer. The Company believes that it can now purchase Airbus A319 aircraft under the Airbus Contract (taking into account these substantial price concessions) at a price approximately a third per seat below the price for the Boeing 737-700 aircraft delivered to it under the Boeing Contract in August 2002. These prices are subject to price escalation to reflect inflation.

        http://corporate.easyjet.com/~/media/Files/E/Easyjet-Plc-V2/pdf/investors/shareholder-circulars/2003-Airbus-Circular-FINAL.pdf

        What we have not discussed is the level of discounting by the engine manufacturers. Obviously CFM had to fight to retain EasyJet as a customer, since on the A32X-series IAM is also an engine supplier. If the engines on the A319 in 2001/2002 cost around $16million (in then-year dollars), The actual list price EasyJet is referring would be around $28.2 million. Hence the actual engine price is the actual wild card in these discussions. Since EasyJet, at the time, let it be known that there were very substantial price concessions by the selected engine manufacturer as well, it could explain some of the confusion. For example, if CFM offered the engine with a 50 percent discount, and Airbus offered the airframe with a 40 percent discount, the actual price paid per frame would be just short of $22 million per airframe. As for EasyJet talking about ā€œthe price being approximately a third per seat below the price for the Boeing 737-700 aircraft delivered to it under the Boeing Contract in August 2002ā€, can be explained by the initial Airbus offer, and probably the Boeing offer as well, was for airframe minus engines. The engine manufacturer usually only conclude negotiations after a customer has signed a firm order with the OEM.

        So, I agree that the total price paid by EasyJet for the A319 + engines could well have been in the low twenties. However, too many analysts seem to be missing the entire story, and then you have the average Joe running around talking about astoundingly high discounts on the part of one OEM.

        Four years ago, the extent of assumed discounting on the same aircraft would have approximated 25 percent. Far from Airbus incurring the full extent of the estimated discounting, as with all list prices, the full list price of the engines are also included. The engine manufacturers, in anticipation of future spares revenues, are offering extremely generous discount on newly installed engines. Consequently, a 50 percent discount on the list price of the engines will represent a considerable amount of overall discounting. A 50 percent discount on a narrowbody’s engines will represent some $8 million.

        http://www.aviationtoday.com/regions/usa/3757.html

        As weā€™ve previously noted, it is not unknown for engine makers to deeply discount engine prices even more than the airframers discount their airplanes. In the lawsuit between Pratt & Whitney and Rolls-Royce over patent claims for the engines powering the Airbus A380, court documents revealed discounts as steep at 80% or more.

        It is also not unknown for engine makers to actually give the engines to the customer free in conjunction with an after-market and MRO contract. These services are where the profits truly are.

        http://leehamnews.wordpress.com/2012/01/27/cfm-aftermarket-drives-safran-revenues-profits/#more-5736


        How was I attacking you instead of your argument? Since you quote numbers from various sources who are not publicly privy to the deals they report on, I took your following statement ā€œI wouldnā€™t take Aspireā€™s word as gospel.ā€ to mean you doubted Aspire as a source because they are biased. If you imply that others are being influenced by their biases, you should expect your bias to be questioned as well.

        By wondering if ā€œthat argument would fly with you if the situation was reversedā€. Which, of course, it would, despite what Observer might believe.

        As for Aspire, how would you characterize this:

        Hence easyJet got a price even lower than the 2002 A319 deal (which WTO wrote black-and-white as a causualty of illegal launch aids Airbus enjoyed & one could argue for this A320neo order as well)

        While we are on the subject of the ad hominem route, how about this: ā€œsome die hard A-bashers will continue to cry out loud that Airbus must have resorted to fantastically high discounts just in order for them to compete with Boeing,ā€¦ā€. I donā€™t recall ever bashing any Airbus product in this forum or any other.

        Iā€™m sorry you interpreted it that way, as it was not supposed to be directed at you. That was not my intent. I apologize if you were offended.

        The United and Ryanair 737 MAX purchases come to mind. There have been many comments in this forum where the 737 is criticized because it is an old platform, with the implication that the 737 getting itā€™s market share on the basis of price and/or availability.

        Ryanair was sole source as Airbus apparently refuses to deal with Mr. Oā€™Leary.

        Questions in regard to aircraft availability, is fine IMO. Exaggerating discounts on deals one knows little, or nothing about, due to some sort of an agenda, is not OK IMO.

      • OV-099, I appreciate your well explained and supported response. I also appreciate your apology as well.

        I mistakenly assumed the list price at deal time was the US$54M as stated in the first quote you posted. However, I do realize now that was for 2003 instead of 2001.

        Of course Aspire is biased toward Boeing! It’s pretty obvious. Does that make all the numbers presented there unreliable? Not necessarily. Using the numbers is not the same as using the analysis presented with them unless those numbers are a product of said analysis. I posted the number as a factual reference, not to serve an agenda.

        The fact is that we are all biased. It’s probably obvious that I’m biased toward Boeing, for no better reason than because growing up in WA trumps my German heritage. I’ve been reading this blog for a while now, but only started commenting during the recent 787 battery fiasco. My perception during this time is that you are biased toward Airbus, mainly because I have never read anything positive from you about Boeing or its products. Not that I think there is any requirement to be positive toward both sides, because I really don’t.

        I honestly thought you might not accept the same argument if the situation was reversed. However, since you say you would, I will take you at your word. I apologize if I have mischaracterized or offended you in any way.

  14. The talk of ‘greater discount to the list price than the previous 2002 order’ doesn’t need to mean in percentage terms, it can be in flat dollar terms which may well be equal or less on a percentage basis considering price inflation.

  15. GT :
    The talk of ā€˜greater discount to the list price than the previous 2002 orderā€™ doesnā€™t need to mean in percentage terms, it can be in flat dollar terms which may well be equal or less on a percentage basis considering price inflation.

    Really?? Are you kidding!

    “a greater discount to the list price”

    So now the CEO of Easyjet is (FOS) full of “sh*t as well? Interesting…

  16. l7room :

    Baroque :

    l7room :Boeing says they are 15% better with the -10 than the -900.

    Boeing must have forgotten that the -900 is a twinjet and not a quad.
    Really, youā€™re looking at two twin engined aircraft that are of more or less the same generation but one claiming to have the kind of efficiency advantage that is bigger than that between the 77W and the A346.
    More Boeing BS.

    They said it, and weā€™ll find out sometime in 2018. Think weā€™ll have to wait until the -10 flys and then compare the two before you can really say Boeing BS. My point is the 25% improvement over the A330. If thatā€™s true the A330 PIPs are not going to stop the bleeding. If you thought the 777-200ER sales went up in smoke, watch what happens to the A330 fleet. Airlines will cancel leases and the flood of frames in the next 8-10 years will drive down resale prices. If that 25% number is right Airbus better do something quick with the -800 strategy.

    Sure. That’s exactly what happened with BA and UA for example who dumped all their 772s in favour of A333s for TATL, so that they can compete with others operating the type.

    Oh, wait…

    Airlines will only cancel leases if they have the money and the ability to buy other planes. At current order levels and production rates, that won’t happen in the next 8-10 years. 950 787s will take Boeing through to about 2021, and the same applies for the A350 and I am sure there’ll be more orders for the types shortly. There are not going to be many production slots this side of 8 years from now.

  17. Mike Bohnet :
    Did I say anything about gospel? Iā€™m taking it for what it is, a data point.

    Well, I hope you are using the United 737 (eye opening) and the Ryanair (I wouldn’t even tell my priest what discount I got) deals as data points for that graph you are plotting. Let me know what you get to derive from it.

    The truth is we don’t know what *overall* deal is done for the purchase of those planes. Simple frame discount tells you nothing.

    • No graphs on this from me. I’m not really that interested in price discounts. I’m more interested in what it actually costs to make an A320 or 737.

      The point I was trying to make with my post is that even though the source is biased, it does not mean that the cost info is bad. I am treating the cost info as a data point, not necessarily agreeing with the analysis that came with it. I don’t agree with disregarding info merely because the source has a bias contrary to mine, or that the info does not support my current opinion.

      As far as discounts are concerned, both companies obviously use that tactic to sell their aircraft in situations where they deem it to be strategically beneficial. Or perhaps in situations where they just feel like sticking it to the other guy, I don’t know.

      • “Iā€™m more interested in what it actually costs to make an A320 or 737.”

        Sorry but quoting Aspire’s alleged discounts will tell you *nothing* about the “cost to make” a neo. I reinforce the point I made earlier, the deals being done with the airlines are every complex and typically will involve extra items like training, flight hour support etc. Given that Easyjet have the type already it is unlikely to include all the extras Airbus was willing to throw in back in 2002. I am not even sure that the price includes engines as typically those are negotiated separately. Tsang’s assertion that Airbus will be making 135 aircraft for delivery to Easyjet at a loss is total nonsense. Given the HUGE neo backlog and the 60% market share, Airbus has no need to produce them at a loss. Honestly, this sounds more like something coming out of a Boeing PR department.

        On the cost of production, you know several things:
        – Both 737NG and A320ceo have paid off their development costs long ago. Given continuous cost reduction drive they are making very good profit on those deliveries. This fact is beyond dispute, ask any analyst. Although Tsang might have to check with the Boeing PR before replying…
        – neo development costs for Airbus are laughable as the majority has been picked up by the engine OEMs. Don’t know the numbers for MAX.
        – For neo commonality will be 95% with the current A320s, great majority of the tooling stays in place.
        – You will never ever ever find out the true cost of producing an A320, Leahy will guard it closer to his chest than the password to his own bank account. So stop trying šŸ™‚

      • You misunderstand what I meant. I’m not at all trying to use alleged discounts to divine the actual production cost. My first post in this thread was merely an informational response to Vaidya Sethuraman. Like I said before, it’s a datapoint to file away.

        Being a hard core technical guy, I have more appreciation for the engineering/production point of view than the marketing/sales point of view, hence my comment about being more interested in production cost.

      • OK, my more general point is that you either have to treat the deal as a whole with all the extras, which you do not see anyway or plot the graph with the data points coming from both manufacturers, which you will never know anyway. šŸ™‚
        Sorry but I am very skeptical about Aspire as a serious publication to take anything from that blog seriously.

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