Odds and Ends: 777X Shell game; CSeries updates; EADS unions; More oops

777X Shell Game: TheStreet.com asks whether the Boeing 777X orders announced at the Dubai Air Show amounts to a massive shell game. By this, the column means whether these orders merely will come from other airlines as traffic is diverted from the legacy European, US and Asian airlines to the Middle Eastern carriers as the latter expand their services.

There is no question there will be a diversion of traffic. Boeing a few years ago pointed out the diversion, then at around an estimated 5%, as the Middle Eastern airlines–Emirates, Qatar and Etihad–rapidly expanded into markets. But this is what competition is about. And this is what has got Delta Air Lines of the US so exercised over the US Export Import Bank financing the likes of Emirates Airlines.

Air traffic growth will accommodate some of the competition.

There are more than 1,000 Boeing 747-400s and 777 Classics in operation or on order that will require replacement by the 777X and the Airbus A350-1000. Business Week raises the question, how will Boeing maintain sales of the 777 Classic now that the 777X program has been launched?

CSeries Updates: Bombardier is “mulling” a new program schedule for the CSeries, according to this story from AIN Online. BBD should announce any new timeline for its flight test program, and presumably entry-into-service, within a few weeks. Flight Global reports that the program will see the addition of the second flight test vehicle shortly, which will increase the frequency of flights. Flight Global also reports that BBD officials see more orders and better pricing starting to flow as more flight tests and data from the program comes forth.

Bombardier now has 419 orders and commitments for the airplane.

Here is a profile of BBD’s top official in China.

EADS unions: Lest one forget, Boeing isn’t the only aerospace company with union issues. Airbus parent EADS is facing a walkout next week by one of its unions. Reuters reports the walkout is to protest layoffs as EADS restructures its defense subsidiaries.

Speaking of oops: Yesterday we reported that a Washington State advertisement supporting the Boeing 777X used a picture of an Airbus airplane. This lit up Twitter and made news all over the country. Today we woke up to find Twitter and the news lit up with reports that a Boeing Dreamlifter landed at the wrong airport in Kansas.

26 Comments on “Odds and Ends: 777X Shell game; CSeries updates; EADS unions; More oops

  1. No love for my column on Monday? Was two days ahead of Business Week on the 777 bridge story.

    Sent from my iPhone

    >

  2. Nothing like keeping the 777x issue and delivery problems in the news cycle.

  3. Yeah, the B-747LCF landed at a small airport with only a 6,000′ runway. Now Boeing is trying to figure out how to get it out of there. I might point out that Atlas operates the B-747LCFs for Boeing, they are not Boeing crews. Evergreen use to have the contract.

    • I’m sure they can offload and partially defuel and get it out. BTW If you check re 747 and small airports- In the late 60’s-early 70’s- Boeing wanted to refurbish two 747s after flight tests. had no room at then inn.. So they flew TWO 747’s into renton field 9 and back out later ) The first one in the pilot ( with a few managers observing in the cockpit ) landed about 3 to 5 feet to low on the end of the airport that ramps into lake washington. Tore off /cvollapsed gear on one side. Somehowm managed to keep plane on centerline, but also then damaged one engine ( outboard as I recall ).

      Had he not kept it on centerline- would have wiped out several 707-727, etc

      Listed field lenth is about 5,300 feet.

    • Back memory lane:
      In 1967 the Spantax chief landed a Convair Coronado in XFW instead of HAM
      with a gross of journalist and travel agents aboard for a show off flight to go against “Spantax unsave” rumors.
      ( only a couple of miles apart, same runway designation but at the time only 1360m/4460ft long. neither people nor sheep were hurt 😉

  4. While everybody is wondering if Boeing can move the B777 from Washington it occurs to me that the biggest risk in the program might be the wing. Boeing don’t build large composite wings, MHI do. Boeing didn’t design the 748i wing in Washington either did they, and look where that landed them. I have my doubts that Boeing has the ability to deliver a large composite wing in time.

  5. Remind me, what is wrong with the 748I and 787 wing? Why wouldn’t they outsource this to Mitsubishi?

    • My point is that they might have to. 748 had flutter problems. Incidentally A350 recently finished flutter testing, no problems reported.

  6. The 748 flutter problems had nothing to do with Japan or outsourcing. They (i strongly suspect Loads & Dynamics Department) simply messed up some calculations (or someone in the chain providing them with non accurate data on wing or actuator stiffness). To outsource just the production part is IMHO not such a big risk if the Tier 1 supplier has the proper skills and facilities in place to produce the outsourced components. I think that the Japanese have the proper skills, also for specific design work.

  7. In all seriousness the toxicity of the IAM751/Boeing relationship seems to inexorably escalate at every single step. It’s amazing that a city council woman could, potentially, have such an impact at such a critical moment.

    • Neither the union nor the company really care what she has to say, let her squawk her nonsense. IAM called her remarks stupid on their twitter feed already. She’s an empty-headed Fremont curiosity, just like the giant statue of Lenin down the street from my house.

      • You have a statue of Lenin????? Don’t knock it down, there are so many Russians pining away for the good old days it might become a tourist attraction.

      • They sure do! The only one in the US… (duh!). They also have a rocket and a troll thst lives under s bridge. I like Fremont, full of fun stuff (troll might be i Wallingford, but hey…).

      • WCOG,

        She might say some outrageous things, but I don’t write her off as a lone fool. I believe there is a possibility that she is a political tool whose purpose is to broaden the scope of the acceptable political debate. As a result, she may be very-well funded and very-well informed and, as a result, clear the path for a lot of changes before she is ousted.

        And, don’t worry…she will be ousted – fairly or unfairly – or criminally if need be. This country has always had two parties (owned by the same people) and only two parties that matter…and nothing politically meaningful ever occurs outside these parties.

      • Lenins statue may well wind up as the centerpiece in front of the city council chambers- Ms socialist is just the only ADMITTED socialist to run or be on the council or in the state legislature. Everyone else is considered to be a ‘ moderate ” welcome to the Supreme socialist state of Washington ( state ) although one could possibly consider the other in running.

      • Yep, some local picked it up on the cheap when communism fell in Slovakia (I think). Some other local dutifully paints blood onto his hands from time to time, it’s an interesting neighborhood. I don’t really fit in with a lot of the people who live there but I enjoy being around them anyway 😛

  8. There was an article on FG this past week looking at the different models of the ME3 and how Qatar feels being in an alliance is important, which is relevant from the viewpoint of not ‘stealing’ from the other members of your club. Also, on the long haul transit hubs of the general region, they’ve forgotten Turkish Airlines.

  9. From the column:

    “There are two issues with the order,” said Richard Aboulafia, aerospace analyst for Teal Group. “One is it’s other people’s traffic. The other is it’s three guys with the same idea.”

    The orders “are great news — it’s good to see new products launched — but they are not additive,” said Aboulafia, who is attending the Dubai Air Show. “Most of them will come from other people’s jets.”

    It seems to me that Dick has a hard time realizing that global air travel doesn’t revolve around the American airline industry.

    https://www.youtube.com/watch?v=VjHePahW7Os

    Tim Clark at 04:50:

    Listen, what is happening is not about the Gulf Carriers, it’s about the realignment of business models and in those I include the alliance players, to adjust and align what they are doing with the way the global economy has shifted significantly since the mid nineties, to reflect the growing demand for air travel, which takes different forms in terms of the traffic patterns that we’re now seeing — emerging countries to emerging countries; emerging countries to developed countries; developed countries to areas that perhaps where considered to be, and I would describe that by way of an example — the African Continent where there was a massive pullback in the seventies and eighties — but here we have new markets emerging — so, what you’re seeing is the recognition that; one, the Gulf Carriers are not going to go away; two, the size and scale of what they are doing on a global scale has to be reckoned with — there is no point to continue to throw bricks or trying to take us down, because you’ve doing that for years and years and it hasn’t got you anywhere. In fact, if you look back to when you started, and what we were then, and what we are now; hey ho there’s absolutely no point to it. But why have we been successful. Why have we been able to grow our business — because we have been able to align what we do with the new world order is functioning. They must do the same — to survive. Alliances and the current structure of them — in my view, in my humble opinion — do not reflect what the 21st century requires of the industry. They do reflect what the airline industry required of them in the seventies and in the eighties — but you know that was light-years ago. So, basically what we are doing with Qantas — and perhaps what James Hogan has been doing with his clustering of other carriers, and Akbar, of course, going into OneWorld — it suggests that there is change of it, but we are not changing our policies of aligning with what I would consider perhaps fairly Jurassic blocs. We want to be able to charter our own destiny, go anywhere, and if we can fine like-minded thinkers who see benefit, mutual benefit — these are partnerships, these aren’t a multifaceted complex alliance, these are simple partnerships — we’ve had one with Sri Lankan many years ago, we’ve had multiple arrangements with carriers. Qantas is probably the biggest one. Hopefully, it will be the most successful one.

    Question at 23:00: You mentioned the huge backlog you’ve got … and you and the rest of the Gulf Carriers have, and there’s an interesting stats that was on twitter earlier about your order book exceeds the value of the entire US airline industry apparently.

    Tim Clark: I wouldn’t have thought that was difficult…

    • While I’m not a big fan of RA, I wouldn’t be so quick to construe his commentary to just US-airline centered. The US still has a sizeable domestic market. The same cannot be said for the EU. The Middle East isn’t the a super convenient a connection point for the US other than to Africa. Fifth freedom flights notwithstanding, the ME3s bread and butter is the Europe-Asia/Africa connection, so if anything the “other people’s traffic” is coming from the likes of IAG/LH/AFKLM. Just one look at these carriers reluctance to go for more A380s, while EK is flying 40+ with even more coming, should dispel the notion that this is a US-centered question that is being raised.

      Also, The dig from Clark seems to be a great putdown on face, but care to see how their order compares to the European airline industry? or even the industry as a whole? The value of just EK’s backlog exceeds its own market cap plus the market cap of the top 5 valued carriers combined. It exceeds Boeing’s market cap and EADS’. Such are the vagaries of finance. Its not quite a meaningful comparison.

      • 40 years ago, the US airline industry led the world. The trends set by the US airline industry was usually copied by everyone else, and not the other way around. At the same time, the US large civilian aircraft (LCA) was a totally dominating entity outside the Soviet-aligned bloc.

        Hence, it may look as if Dick as hard time grasping that the trends and developments in the global airline industry are no longer set by the US.*** That was the point, not that certain European legacy airlines are feeling the pinch in certain market segments due to the competition from the Gulf.

        Just before EK announced that they’ll order another 50 A388s, Dick managed to say that supposedly “it’s very unlikely that EK will have a fleet of 90 A380s at any given time”. What’s he smoking?

        http://www.ainonline.com/aviation-news/dubai-air-show/2013-11-15/teal-group-analyst-aboulafia-has-misgivings-about-a380

        In addition, Dick seems to be oblivious to what’s happening in global travel patterns. Again, quoting Tim Clarke: ..”the global economy has shifted significantly since the mid nineties, to reflect the growing demand for air travel, which takes different forms in terms of the traffic patterns that we’re now seeing — emerging countries to emerging countries; emerging countries to developed countries; developed countries to areas that perhaps where considered to be, and I would describe that by way of an example — the African Continent where there was a massive pullback in the seventies and eighties — but here we have new markets emerging”.

        ***

        As these changes are digested and their repercussions spread in 2013, the global map will look increasingly different, especially as new radial alliances take on more entrenched status, delivering enhanced profitability.

        In this evolution, on current trends US airlines look very likely to be sidelined, raising questions, for one thing, on their likely value as international partners in the global alliances – beyond providing access to the protected US domestic market.

        Boeing’s long term forecasts, which have a habit of being remarkably reliable, have Asia-Pacific, Europe, and the Middle East regions accounting for more than 90% of widebody, long-haul aircraft demand in the 20-year forecast to 2031. Of the total, an astonishing 65% of aircraft will head to the Middle East and Asia alone. (Boeing Current Market Outlook 2012)

        The countries whose airlines industries are growing faster – and the ones that are buying aircraft for the long-haul international markets. The graphs on these two pages illustrate broadly the direction of various national industries in the next two years and beyond.

        http://centreforaviation.com/analysis/capa-global-aviation-industry-outlook-2013—pursuing-certainty-in-an-uncertain-world—part-2-104436

  10. A significant number of “analysts” seem to be more into VooDoo Dance “wishing for how it should be ” activities than into a realistic assay of market requirements tendencies. My guess is these show pieces are complemented with a bit of armtwisting behind the scenes.

    A really interesting question is:
    Why is Tim Clark seemingly unreceptive to these VooDoo Dances while other Airline management seem to have succumbed to this black magic.

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