Odds and Ends: A330neo; The 12th Man; Boeing’s earnings

Clearing the air on the A330neo, again: Bloomberg News has an extensive story on the prospective development of the A330neo. Following a report from Reuters, these two news articles basically confirm everything we reported in December.

The 12th Man: The Seattle Seahawks, which plays in the Super Bowl Sunday against the Denver Broncos, is well known within the National Football League for its “12th Man.” This is the fan base which has set records for being the loudest fans in football, at a record 137db. They’ve also been recorded on the Richter Scale for their stomping at the Seahawks’ Century Link Field (that’s a local phone company, and the name is routinely shortened to “the Clink”).

Boeing is a corp0rate sponsor of the Seahawks and rolled out its 747-8F house test plane in a new Seahawks livery.

Boeing’s earnings: Boeing reported its 2013 earnings and while they were a record profit, the forecast disappointed and the stock took a major hit Wednesday. The Seattle Times has the recap.

25 Comments on “Odds and Ends: A330neo; The 12th Man; Boeing’s earnings

  1. Also, the story seems to confirm that Airbus wants something a bit more advanced than a warmed over 747-8 engine….. 🙂

    • “Bloomberg News has an extensive story on the prospective development of the A330neo. Following a report from Reuters, these two news articles basically confirm everything we reported in December.”

      As well they might if a lazy journalist simply paraphrased your original article! The similarities between stories by supposedly different news articles frequently leads me to suspect that there are some very lazy journalists out there!

  2. Airbus: projects were either technically unfeasible or business case didn’t work.
    Loose translation: we have to do something but we don’t know what. Orrrr: W know what we are going to do but we aren’t going to admit it to you.

    Boeing: Go figure. They have had all sorts of kicks the last couple of years and the stock keeps rising. But one less than stellar forecast and the stock drops. Wonder how long it will take to recover. Probably not long.

    • Boeing stock:
      Somebody botched the (erroneous) purchase announcement of another batch of dreamliners by Air Berlin just ahead of the earnings publication.
      This will not happen again 😉

  3. Is the impression correct that this will deviate from the A320NEO model
    by way of competing the new engine between the interested manufacturers
    for a single winner ?

    • If Airbus is going ahead with a significant A330 upgrade, it won’t necessarily just be a neo-type upgrade. In order to be effective against the 787, Airbus IMJ should perhaps differentiate an upgraded A330 family from the 787 by lowering MTOW to around 199 metric tonnes and not keeping it at the 242 metric tonnes MTOW level. A 5 percent better TSFC than the 787 engines, structural modifications in order to make the frame lighter, and perhaps even a span extension featuring A350 type winglets — and consequently a lower take-off thrust requirement — should enable such a 199 metric tonnes MTOW version to be nearly as capable as the current A330s. In short, therefore, by re-optimising the A330-200 (A330-800?) and the A330-300 (A330-900?) for sector lengths of up to 6500nm and 5500nm respectively, an upgraded A330 should become a more formidable competitor to the longer ranged 787. Hence, since the A330 originally was optimised for intermediate range, it would platy to the strength of the original design if Airbus would re-optimise the aircraft by lowering MTOW, instead of just extending the range of the current models.

      • As the articles say, the A330 is popular for intra asia and transatlantic flights, so optimising the neo for that sort of range and lightening it ought to help the competitiveness. Why try to compete over much longer ranges if that isn’t what the market wants?

  4. If that is the case, productivity must be really low, considering the wage diff between Tianjin and Hamburg/Toulouse.

    • I heard in an interview in context with current International Toy Fair Nürnberg that for some German toy makers producing in China is now to expensive according to the relation of loan and quality. One company already closed a factory in China and shipped the machinery to Germany.

      • I have read in an article some years ago that in 5-10 years (then) 30% of US companies in certain industries would benefit from moving production from China to US. I do not recall any specifics unfortunatley, but it was based on a report from a larger think tank, this findable by googling a little.

        • Problem with all the ThinkTanks is that they usually
          do not hand out predictions but strategic directions.
          They are rabidly partisan.
          So you have to scrape off the chrome plating and
          look for those that “lead from behind”.

    • Also consider effects of currency: China keeps it currency down in exchange value. Pretty much all of the – correction: the entire – airframe needs to be shipped to China. Not sure how the accounting is done, but the Tianjin line is disadvantaged by several external factors.
      However, there is some truth in it (and I like the quote from the toy fare). China is not competitive in each and any respect. We here in the West have some advantages, too!

  5. If the 787 is 10-12% more fuel efficient then the A330, it is IMO within striking distance of a A330NEO.

    Assumptions that a A330NEO will be just 10% better then a A330 CEO seem not based on any verifiable data, such as GE GENX claims or Sharklet test data.

    It seems a “healthy 787 advantage anyway” result is taken as starting point and possible A330 efficiency gains limited to keep that intact.

    I expect Boeings Randy to go pre-emptive soon, claiming the 787 is 18% better then the A330 really. They did that when the A320NEO surfaced, inventing the 737NG was 6% better then the A320 to start with, and base a comparison on that new insight. http://www.aspireaviation.com/wp-content/uploads/2012/04/max-v-neo-sfc.jpg

    Useful for the home front and stockholders. Clearly the airlines didn’t pay much attention and voted with their wallets.

    If there will be exclusivity for one A330NEO engine (sources?), I give GE the best chances. The GENX-2 has proved bleed architecture, and can benefit from maturity/PIP’s gained by the 747-8. In line with an A330NEO business case for a very reliable, predictable product leaning on existing infrastructure readily available for a sharp price.

    Plus GE / GECAS no doubt wants to regain some territory with Airbus operators. Not being on the A350 simply proved a bad idea. RR is strong on the A330, 787, A350 and A380. GE wants that market selling power too.


  6. It is hard to say if General Electric is the preferred engine supplier of Boeing or vice versa. 😉


    “The cumulative total of deferred 787 costs reached $21.6 billion at the end of 2013, and Boeing projects that figure to continue rising and peak at about $25 billion late this year.
    Using that accounting method of amortizing 787 costs, Boeing Commercial Airplanes reported Wednesday a net profit of $5.8 billion in 2013.
    If the 787 unit costs were booked as each plane was built, that would have shifted to a loss of $1.6 billion, the company said.”

    easy to understand why the stock took a major hit!
    These figures are just dreadful!
    each 787 manufactured in 2013 lost more than $100 million!
    Ok, cost per plane went down 20% in 2013,
    But Learning curves are not straight! rule is minus 20% for each doubling of cumulated production. this means that cost per plane will probably go down 12% in 2014 8% in 2015, 6% in 2016, 5% in 2017, etc…..
    Just read this (published last June)
    “Quickly cutting production costs is essential for Boeing, which spent an estimated $14 billion developing the Dreamliner, according to Barclays Capital, and has already suffered costly delays. UBS analysts estimated last month that Boeing spends about $242 million to build each plane, and sells them for an average of $113 million. They and other analysts estimate that Boeing’s losses will sink to at least $20 billion by the time costs fall enough that each Dreamliner sells for a profit, likely in 2014 or later. Boeing doesn’t say exactly what year it expects to hit that milestone.”
    actually, it is not 20 but 25$Bns!
    average cost was probably in the area of 230mn in 2013,
    future costs will go this way
    2014 200
    2015 185
    2016 174
    2017 165
    As most planes in the existing order book were sold at terrific prices around 120mns, all of them will probably lose lots of money!
    break even will come very late indeed!
    fortunately 789 have better prices, and 787 1000, even better, nevertheless the question is: How much time will they need to recover the 25 000 000 000$?
    (just for comparison, The comparable hole for Boeing’s last new twin-aisle jet, the 777, first delivered in 1995, was about $3.7 billion, adjusted for inflation, according to data provided by Boeing.)
    Only this very creative accounting allows M.MAC DERMEY to keep his bonus
    EUROPEAN accounting standards do not allow this type of creativity!
    Nasty surprises hit the accounts the year they occur.
    380 is not breaking even yet, it has hit heavily AIRBUS accounts of each year since EIS
    Depreciation is allowed for investments, prototypes, but certainly not excess costs of first production frames, travelled work, or tech issues.
    For instance the A380 wing issue is already included in the accounts
    Using european standards, BOEING would have been in the red zone in 2013, in 2012, and will very probably still be in the red in 2014, possibly less loss per frame but larger quantities!
    Only this large lake of red ink allowed BOEING to look more profitable than AIRBUS these recent years
    weakening 737, 777 and defense cash cows mean more and more difficulties for coming years!!!!

  8. I think Airbus may go for a more extensive modification than just a ‘NEO’, more like an ‘X’ (as in 777).
    Airbus also has A350-1100 as a fruitful possibility. After that, they really have nothing to do until an A320 replacement.
    Upgrade to A380 will happen at some point, but there seems a decent window for a more comprehensive A330X to apply their dev talent.
    That would also allow new engines well beyond 787/747, a folding wing ala 777X, and optimizing other aspects.
    They can announce that, and in the mean time sell minimally updated A330’s profitably at a low capital cost to airlines.

    I agree that optimizing around shorter lengths is the way to go.

    • nothing to do apart from
      – 380 upgrade,
      – if the 320 successor has the same size as todays 319-321, it might be an option to build a bigger member of the 320 family eventually with new wings to replace the 757 and attack the 787 from the lower side
      – ATR model for 100 pax
      350-900 R, 350-900 F, and don t underestimate the possible 350 models you can build with slightly enlarged wings.

  9. To escape all things aeronautical last week I sailed on the inaugural voyage of the NCL Getaway on a shakedown cruise from the Southampton to New York arriving in New York early Sunday on what was a quite lovely, bright but chilly morning.

    Whilst in New York the NCL Getaway is to be used as a hotel for fans of one of the teams involved in this sport final, a game which is more akin to British Rugby than what Americans call soccer.The vessels sponsor purports to be beer manufacturer a fact any knowledgeable beer drinker would unanimously disagree with.

    Informal & informal en passage conversations with NCL officers & crew highlighted the degree of trepidation they had of the impending fan invasion & it’s potential effect on their precious, sparkling & virgin charge.

    Setting aside local Seattle American soccer emotions, from a marketing perspective such localised support from an important national & global supplier would be seen as a serious marketing no no.

    • About the marketing no no, I initially thought the same thing, but in context I think Boeing has some serious fence mending to do with Washington state, and since they are unlikely to ever do anything substantive that is even remotely helpful to that relationship, I think they are probably well advised to make some of these sorts of big empty gestures. Its not like anybody anywhere else in the world, including Denver i should think, will care all that much.

      • Based on the Seattle Times article above, Boeing realize they have some serious fence mending to do with their Washington State workforce. Judging by the overall tone of the comments, the workforce are very skeptical of Boeing’s intentions.

        It’s not really about unions. It’s about treating your workers with respect, which Boeing failed to do with their sign up right now to this package or we’re away ultimatum. The fact the Union mucked up too doesn’t alter any of these facts.

        Richard Aboulafia has a good comment on this in his latest newsletter: It’s such a fine line between clever and stupid.

        • We’ve seen this before when US politics discovered “European Soft Power” and tried to emulate that in cargo cult style ( i.e. mimic superficail visible aspects while ignoring the foundational aspects ).

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