Japan Airlines deal: Two items of note came across our desk concerning the Japan Airlines’ order from Airbus for the A350-900/1000. The first is from Bloomberg, which has an interview with Airbus CEO Fabrice Bregier. Lots of speculation exists that JAL ordered the A350 because of the problems with the Boeing 787. While this may have played a role at some level, Bloomberg reports that Bregier began his efforts prior to the JAL 787 fire in January.
The other is the October newsletter from Richard Aboulafia of The Teal Group that takes Boeing to task for essentially blowing the opportunity to retain JAL’s business for the 787-10 and/or the 777X. At this writing, Aboulafia hasn’t uploaded his newsletter to his website (so keep checking). In a nutshell, Aboulafia raps Boeing management for dithering on both airplanes. Had Boeing authorized the 777X six months ago, Aboulafia writes, Boeing could have kept IAG (British Airways) and if launched in 2012, Cathay Pacific could have been kept.
Aboulafia also predicts JAL’s rival, ANA, will buy the A350. Otherwise it will be at a competitive disadvantage, he writes. The newsletter is quite harsh.
“Aboulafia also predicts JAL’s rival, ANA, will buy the A350. Otherwise it will be at a competitive disadvantage, he writes.” Is he implying the B777-X isn’t as good as the A350 or that the delay to get the B777 will be too expensive? A350 backlog must pretty well stretches past the B777-X EIS, so it looks a bit like the first. It sounds like he is saying that without a tacit agreement between “competitors” to use the B777-X operators will loose out if they take it over the A350.
Maybe the EIS I think？While most of the new developments are likely to delay nowadays and the single reliance risk is also a disadvantage.
Aboulafia is referring to the gap in delivery dates, resulting in flying new aircraft vs old, not the economics of new v new.
Aboulafia says the sky is falling again…run for your lives. Drama queen indeed.
Launching the planes doesn’t necessarily change when they would enter service. They would still not be delivered until significantly after the 350’s could be delivered, so they wouldn’t have fit JAL’s timetable regardless.
Development of the -10 and 777x have been going on behind the scenes since they were first proposed and having the fanfair of an official launch wouldn’t have made a lick of difference on delivery dates.
The 777x is further being held up by GE, since the plane depends on the engines for a significant proportion of its improvements.
It does get annoying when an airline that has dozens of Boeings buys a plane from Airbus which has no direct competition from Boeing…and suddenly, Boeing is doomed. It may make exciting press but it doesn’t make a lot of sense.
The 787, 777x and 350 are all different planes with different capabilities. Each will be better at some things than the others. Airlines have the luxury of choice, where they can tailor a fleet exactly to suit their needs and not have to settle. They get to maximize the efficiency of their fleets. Since no one manufacturer is all things to all airlines, it shouldn’t be surprising to have airlines choose both manufacturers.
Aboulafia spanking Boeing…? That’s a laugh.
I do believe that the amount of money that can be spent on aircraft development is significantly limited until the program launch is approved by the board. The launch is not just a PR event.
Rather suprised to see that Mr. Bregier did a career stint in Japan.
This guy seems to go for a bit of of understatement. In comparison silent, friendly and effective.
If not having the A350 indicates a competitive disadvantage unremediable by ordering/owning 777X this is imho a rather damning statement on that Boeing product.
Predictable reactions IMO. It must have been politics, 787 problems, late 787-10 / 777X launches, brilliant Bregier tactics, steep discounts, bad Boeing management, something unfair, anything.
As long as it doesn’t touch the concept of Airbus actually offering more innovative aircraft of a higher perceived Quality. The Last Taboo so to say 😉
The 787-10 doesn’t have the range for Europe / US with a lot of cargo, headwinds and reserves, the 777X has 1990 roots, is heavy, not launched, post 2020 and undefined.
So a 350-900/-1000 fleet beats a combined 787-10/777-8X/-9X fleet on simplicity, flexibility, payload-range, efficiency, comfort and commonality.
It ain’t so complicated IMO. Sorry if I hurt any feeling 😉
No hurt feelings keesje. Actually a good laugh, It’s sort of like listening to my kids dreaming of what they want for Christmas. Santa, please make my airplane……….
IAG always made it clear the A350 was being considered. It would be politically difficult for them to have done anything else and compared with the past airlines now have choices
How would it have been politically difficult? British Airways inherited its product preferences from BOAC, which was very heavily pro Boeing. Did BA buy A300s when the UK govt had a stake in both? No. A330s? No. A340s? No. The only Airbus product they had bought previously that had a close Boeing competitor was the A320 over the 737.
I said it yesterday. Boeing present management spends too much time fighting the unions, deciding on where to build this or that plane; just look how long it took to make a decision on the max, the 787-10, the 777x. Some of their key customers were even imploring them to react to their rival’s (Airbus) move. Jim McNerney spends his time intimidating anybody who has ideas contrary to his. This guy deserves to be sacked. He is more worried about pleasing shareholders (giving them dividends) than building good quality products or spending on R&D. He deserves to be sacked!
I agree..I tweeted Boeing a comment basically as such. McNerney is basically turning into an overpaid [edited as violation of Reader Comment rules].
I think not only does top-level Boeing management need to be sacked, but the Board of Directors should be replaced as well.
Boeing is no longer an engineering produut focused organisation… more energy is spent on making sure powerpoint presentation have correct font-colours than the integrity of the data they contain.
“Aboulafia raps Boeing management for dithering on both airplanes”
Little drama queen.
The 777-9 is a different size airplane (60 more seats). Just like many airlines are ordering both 789 and A359, many will operate both A351 and 779 too. Don’t be surprised to see IAG ordering the 779 in the future, because it would fit nicely in between the A351 and the A380. In fact, all A351 customers have shown interest for the 779 too.
I’m interested in dating Angelina Jolie. Doesn’t mean it’s gonna happen. 😀
True, but so far, the majority of airlines then only purchases one or the other, not both. The one exception so far was LH (to a point), who went for 779, and also retained flexibility to convert some of their A350-900 orders to -1000. Their fleet strategy is a bit odd anyway, though, as with that order they line themselves up for A350-900/-1000, 779, 748 and A380. Not a mix that (m)any airlines will copy.
I wouldn’t see too many other airlines ordering the A350-1000 and 779, to be honest, besides two or three Middle East-based ones.
A big disadvantage for the 77X line as we know it today may be that it effectively only consists of a single member that’s of interest to airlines, namely the 779. With the A350, airlines can cover two size segments using the -900 and -1000, while still only adding a single type. The 77X will be a completely different type that’s only able to effectively cover a single size segment.
Mind you, I’m not saying it won’t sell, but I do think that this factor will limit its sales appeal somewhat.
To clarify: By that, I mean side by side. I do think that both the A350-1000 and 779 will find more customers 🙂
Based on a small sample of one airline (Lufthansa) and a possible other airline (Cathay), it seems airlines are interested in the 777-9X rather than the A350-1000 more for the grunt available for freight than the ability to carry extra passengers.
I agree that most airlines will order one or the other. On the other hand airlines don’t seem to have a problem ordering both the A350-900 and 777-9X.
I would have thought it is important to recognise what the minimum viable fleet sizes are for specific models within an airline and also the commonalities that should exist between 787 and 777X, especially re pilot certification. As airlines (and especially airline groups) grow ever larger surely it becomes more likely that there is sufficient demand for and capability to operate niche types in the overall fleet. So, even if an airlines orders the 350-1000, if it also seems a need for an aircraft with more capacity but not the huge amount more of the 380, the 789X should stand a very good chance.
I guess JAL wouldn’t go for a 10 abreast 777 cabin. That makes the seatcapacity difference between the 777-9X and A350-1000 rather small. Airlines don’t decide on marketing 405 seats hoopla. Start with a 232 seats and add two rows for the 777-9X. Then do those per seat cost savings vs investments vs a 777-300ER.. bye bye 20%.
JAL is now certain that thy will get an excellent deal if the order the 777X 🙂
A little competition does not hurt!
JAL just has to mention a magic number to reduce the price: 1100
Over at VeroVenia everybody agrees Airbus is Crossing The Point Of No Return with the A350-1000. http://verovenia.wordpress.com/2013/10/07/crossing-the-point-of-no-return/ Now Airbus Have to build it and Boeing has Airbus in a dead triangle with 787 and 777X verisons. Everybody agrees because if you do not agree your post gets deleted. I published a factual A350 sales update among 777 customers. Deleted within 5 minutes without any comment!.. Amazing intellect.
“The Point Of No Return”
Interesting, and who determinate this “point of no return”? Jetliners including the 777 were launched with way less firm orders in the past.
[Edited as a violation of Reader Comment rules.]
LMAO. Truer comment has never been posted.
What an embarrassment of a blog that place is… It is actually slowly sinking to the depths previously only reached by fleetbuzzeditorial… Carry on Captain Vero Venia.
Thank you for the encouragement. I will continue for sure.
to keesje, nobody needs A350 sales statistics. You can find it here http://en.wikipedia.org/wiki/A350_orders
Is is really so hard to understand why JAL is giving Airbus a try? Could there really be a meaningful “Backstory:? I mean, just how pleased could JAL be with their current fleet of brand new Boeing 787s: which were delivered 3-years late and overweight, and that have spewed both fuel and fire?
Seriously, I would have figured JAL to be a bunch of shnooks if they had gone with Boeing again.
You want a backstory? Here’s one I just made up:
Airbus CEO: Well…how many A350’s are you going to buy?
JAL CEO: Well…I don’t know if we should….we’ve always bought…
Airbus CEO: Hey…do you want to go with Boeing again and be a world-class shnook, or do ya’ want to man-up and but some equipment that’s going to make you some money?
JAL CEO: Well…if we could just have some more time to consider…
Airbus CEO: No. Make up your mind now. I don’t have all day to wait around – ANA and the Chinese will be more than happy to buy our equipment and make money with it.
JAL CEO: OK. We’ll buy.
Airbus CEO: Good. We got about 30 open slots and that’s what you’ll take. Sign the paper.
JAL CEO: Yes Sir.
Aboulafia is not, actually NEVER to be taken seriously on anything. His record about the A350 where he kept on moving goalposts as Airbus kept meeting them is testament to this. He comes across as a reactionary fanboy as quite frankly doesn’t have anything of note to say. He’s really just doing to Boeing what he did to Airbus 3-4years ago when the sky was supposed to be falling on Toulouse too. Best ignored and hopefully it will go away.
I don’t get Dick sometimes… first he is saying that Boeing has a clearly superior widebody line up in the 787 and 777X offerings (meaning those who ordered A350-1000, JAL included, have no idea what they’ve done) then he goes on to say that the ANA A350 order is more likely… that is because JAL has ordered it… Yep, solid logic.
Why is everyone giving the Boeing boss grief? Share price up! Problems with 787, shares up! Planes grounded, shares dipped a bit. Customers grumbling about compensation re: delays and faults with newly delivered jets, shares up! 748i dead, shares up. MAX late to market, shares up! Labour woes, shares up! Need I go on? He’s a shareholder’s liquid dream. Keep filling the cup till it runneth over
Perhaps somebody can say about Boeing Commercial Airplanes’ operating margins.
In Q2 it was close to 10%. May be they maintain similar level of operating margins in Q3?
Most shareholders or investors are Q-junkies. Q-junkies will ruin a company on the long run.
Spreading out high unexpected cost over the next (partly unsold) 1400 Dreamliners helps enormous for next Quarterly results and stock related management bonuses.
And as long as everybody wants to be excited about the next Boeing Quarterly results and doesn’t (want to) know what’s really happening, everything is just fine. (dispatch) Reliability for the 787 is excellent anyway!
After the shock comes the analysis and I believe there is more to it than has been put out.
The one major factor that has not been discussed is size. The A350-1000 (couldn’t they startin the low hundred dammit?) is much smaller than the 777-9X. JAL looks to have downsized permananly to the787-8&9 and the 777-300 has worked.
While not the whole picture at least part is the 777-8X weight vs the A350-1000 supposed economics (we still have to see if they manage that complex structure they were forced to throw together). So there may be a significant factor for JAL in that they simply did not want a 747 sized pax load (or thought they could fill it) and the supposed economic favor the A350. The orders for the A350-900 would seem to support that.
You need to analyze JALs routes, load factors, how well they are filling them in whats a mature market (no big surprises in sudden blossoming (pun intended).
The lateness of the launch of the 777X comes into play as well and regardless, the A350 will have shown how good or bad it is by the time its to be delivered and if its a dog then JAL can still shift gears. You can bet there are very easy terms, drop clauses at no penalty etc based on failure to perform to the specifications. No A340 debacle will be allowed.
New aircraft vs a more proven one has to be a major factor as well and even a 777X in 2017 would be new. Far less likely to have the 787 teething issues as its still a solid bleed air machine, but also possible delays and at least some problems.
I think the part that should concern Boeing is not the sudden one order issue, its the loss of a number of them that they supposedly has sewed up. That smacks of a sales force issue as well as upper management dithering (and thats a likely factor as well).
Why can’t Boeing use the new type of aluminum that Alcoa has developed? It is said that it is as light weight as composite if not lighter than composite. That may reduce dramatically the weight of the 777X (both the -8 and -9) and make the 778X-8ore competitive in terms of weight. Whenever Airbus realizes that it has developed an inferior product, it is always willing to adjust its product to make it more competitive without paying attention too much to the cost. The Boeing bean counters will always refrain for innovating for fear of depriving the shareholders of the “much needed cash”. Your take on this!
Initially, Boeing said not using Al-Li on 777X was because there would be new tooling required (even though it is aluminum, it’s not the same tooling process as the current metal) and this would add to the cost. We were also told, though not by Boeing, that its corrosion tests were not as good as Alcoa was suggesting. We asked Alcoa about this at a conference and Alcoa essentially said they believed Boeing’s tests were flawed and were working the issue.
We then asked Boeing about the use of Al-Li during the 2013 pre-Paris Air Show briefing and the answer had shifted from “no” to “we’re still studying it.” We don’t have an update from last May.