Odds and Ends: A350 state loan; Bridging 777 Classic sales; Embraer nabs E2 order; IAM chief speaks out

A350 Loan: The Wall Street Journal reports that Airbus and Germany ended talks about a state loan for the A350 program. Good. Airbus doesn’t need the loan and “divorcing” from state aid frees Airbus to make decisions for the production based on commercial considerations and not politically-driven jobs requirements.

Airbus is considering a second A350 production line to open up slots for the -1000 model. Germany made no secret that this line had to be in Hamburg in exchange for the loan. Our Market Intelligence indicates Airbus may want to locate the line outside Germany and perhaps outside Europe. Ridding itself of continue German meddling is a good thing for Airbus; now it “only” has the unions to deal with.

  • In a Guest Column in Aviation Week, Richard Aboulafia continues his A380-bashing, but what he has to say about challenges facing Airbus in the twin-aisle, heart-of-the-market sector bears reading.

Bridging 777s: Jon Ostrower at The Wall Street Journal published this story today about Boeing’s plans to support the 777 Classic sales in advance of the 777X. He reports that Boeing will try to pair 777 Classic orders with the 777X (something we forecast months ago). Boeing is also going to launch a 777 P2F program, persuading airlines to sell their older 777s to cargo carriers and replace them with new 777 Classic orders. This is a challenge because of the continuing softness in the cargo market and plenty of 747-400s available for conversion and 747-400Fs parked in the desert. Such a plan will make it increasingly difficult to support sales of the new-build 747-8F as well.

Although Boeing said it won’t shave the price on the 777 Classic to stimulate sales, we think it will (as it has on the 737 NG).

Embraer nabs E2 customer: Embraer today announced it won an order from an Indian airline for 50 E190 E2s and 50 E195 E2s with options for 50 each. The airline, Air Costa, is a current E1 customer. This is the first E2 order since the launch of the program at the Paris Air Show last June.

Reuters has an article from the Singapore Air Show quoting the Air Costa CEO. The article takes a look at the “small” aircraft market.

IAM chief speaks out: The president of the International Association of Machinists, Tom Buffenbarger, called the Puget Sound Business Journal to talk about the controversial Boeing 777X contract vote.

Why would Buffenbarger do this? He’s facing his first contested election since 1961 and his opponent is from IAM District 751 right here in Seattle. The article makes fascinating reading.

MC-21 profile: A Russian newspaper provides a profile of the Irkut MC-21 (or MS-21 or Yak-242). Talk about confused branding.

73 Comments on “Odds and Ends: A350 state loan; Bridging 777 Classic sales; Embraer nabs E2 order; IAM chief speaks out

  1. Re Aboulafia’s comments on ability to fund, iIsn’t the idea with any 330neo (and possibly 380neo) that the bulk of the devlopment cost be borne by the engine manufacturer(s) rather than by Airbus?

    • Well, he did say that “given the requirements of funding the A350XWB and A320neo, Airbus isn’t likely to have the resources to fund both an A330neo and A380neo and a new large twin, too. Tough choices will need to be made.

      Richard is pretty good at finding/creating “obstacles” for Airbus, and of course, he would never say that “given the requirements of funding the twice-as-expensive-as-the-neo-frame; namely the 737MAX, and further the 787-9, the 787-10 in addition to having to solvie the ongoing production problems with the 787-8 ASAP, not to mention the financial sinkhole that program finds itself in, Boeing isn’t likely to have the resources necessary to fund both the 777X, a 757 replacement and to bring the KC-46 into service on time. Tough choices will need to be made.” 😉

      As for the engine OEMs being able to fund, would that be GE you’re thinking about? Rolls Royce is not on the 777X and will be mainly through with TXWB-97 engine development a couple of years from now, and of course, they’re not doing an engine for the neo/MAX. Hence, that’s why they seem to be pretty eager to jump on an A330neo/A380neo bandwagon. 🙂

      • “the 737MAX, and further the 787-9, the 787-10 in addition to having to solvie the ongoing production problems with the 787-8 ASAP, not to mention the financial sinkhole that program finds itself in, Boeing isn’t likely to have the resources necessary to fund both the 777X, a 757 replacement and to bring the KC-46 into service on time. Tough choices will need to be made.”

        This isn’t very close to getting a completely new aircraft family into service with zero positive margin in sight in the near term, while updating the engines on the A320, and the A330, oh and the A380, and getting the second substantially different family member, the A351 into service all within a 6-year period of time. That is every family member going through a dramatic change in a short period of time while trying to launch something that can compete with the 779. That is a lot. BCA is already generating $5.8 B in gross profit and with $10B in cce so they should be able to self fund anything they need to develop even if they didn’t have local municipalities support. The risk comparison isn’t very close.

        The 757 replacement is a ways off yet.

    • Of course, you have no issues with what Aboulafia is saying, but anyway; the combined development and certification costs for the A320neo and an A330neo should IMJ be about equal to the total programme costs of the 737MAX. Re-engining costs for the A380 can be minimised if the fan of the new engine would have the same 116″ diameter as the current engines.* Now, it looks as if the A350-900 is sailing through flight testing, so perhaps that’s what you get when you learn from past mistakes and when you don’t launch on the cheap and on an abbreviated schedule. I would expect the A350-1000 testing and certification to be equally as uneventful,** and a 757 replacement programme whould about equal an A360X-programme. Hence, to me at least, it looks as if both OEMs have about an equally long to-do-list; both with about an equal dollar value. For Richard Aboulafia and others, however, the to-do-list must, of course, be more difficult and expensive for Airbus, because it has to, right? If not, their worlds would come tumbling down, and we can’t have that, can we? 😉

      *An A330neo should be able to be a re-engined with an engine as large as one having a 116″ diameter fan. As a starter, the door sill heights on the A330 are significantly higher than on the 787. If there were to be an issue with the ground clearance beneath the engines, the nose-gear blister fairing from the A330-200 could be adopted.

      **BTW, isn’t it smarter to keep your people busy developing and testing new things, instead of hiring and firing key personnel all the time due to the whims of mangement.

      • “Of course, you have no issues with what Aboulafia is saying”
        – I did not say that. In fact Mr Aboulafia says the following: “Airbus must decide whether it needs an “A380neo” to keep Emirates satisfied or should focus on expanding the A380 customer base beyond the current level.” I don’t see how making the A380neo limits your customer base or how not doing it allows you to focus on expanding it. I think if AIrbus can get the engine OEMs to fund it and if they can get EK to pay for it, Airbus should do it. You can’t disappoint your ‘only’ A380 customer. If Airbus can get P&W to do it, even better, so the improvements won’t flow back into the 787.

        What I disagreed with was your assessment that Boeing’s plate appears equally full in terms of cash and resource demands. Airbus is significantly changing every one of their programs in 6 years from the looks of it. During a time when they A350 and the A380 won’t be making money and they are changing the one wide body program that is making money which could diminish its sales opportunity in the short term. And if they want to do that and launch a closer 779 competitor it is going to weigh on cash flow. On the revenue side Boeing is projected to deliver more aircraft and definitely higher value deliveries with ~250 wide body aircraft this year and $6-8 Billion in cash flow for each of the next two years. Now if the 777 classic hits a sales wall Boeing’s outlook for 2018-2020 cash is not going to look much brighter, if at all.

        The difference may be in that I am not including the 757 replacement in my assessment. If they do a clean sheet replacement in the next 6 years then my view would change. But it is my opinion that they are years away from that yet and won’t come before 2022 after the 777x models are in service. And I think it will be the first model of the NSA and maybe a LGW GE-2b variant of the 788 with a smaller wing rather than a clean sheet separate family.

        Yes, it is best to keep your engineers busy. But having them work on non successful programs isn’t much better.

        • I you want to compare both airframes as to sensibly available resources for developement you can not set Airbus “real” accounting numbers against Boeing’s project accounting base. IMHO you have to take the “alternate” set of Boeing results. ( For the last couple of years Boeing accumulated quite a bit of losses there )

        • I did not say that.

          No, but: Qui tacet consentit.

          I would guess that we’ll just have to disagree on the gloomy predictions made by Aboulafia in regard to Airbus.

          As for cashflow, I agree with Uwe. Boeing seems to back-end load their programme losses, while Airbus, for example, took a one-time, upfront charge on the financial loses caused by the A380 production meltdown. Wall Street seems to like the former as it’s all about the next quarter, right?

          As for revenue, I would expect Airbus to at least match that of Boeing when the A350 reaches 10 per month. At that time, Airbus customers will, in all likelihood, have continued the trend of moving towards larger aircraft in all segments; A321, A330-300, A350-1000 and even the A380. 😉

  2. “Richard Aboulafia continues his A380-bashing, but what he has to say about challenges facing Airbus in the twin-aisle, heart-of-the-market sector bears reading.”

    If Airbus just sticks to the plan & starts delivering the A350-900 this year, A350-1000 in two years and starts thinking about a simple -1100 stretch for EIS 2018-19.

    Tell me, who is facing challenges? Will UA, AA, BA, SQ, CX, AF, LH, JAL, SQ, EK, QR and EY cancel their large A350-XWB orders? Virtual reality anyone?

    Richard is telling everyone correctly how the A350-800 orderbook for this variant has fallen by about half, and about all airlines dropping their -800 orders. Forgetting to mention Airbus is openly pushing this for yrs now & had all upgrade to -900s is exploring the boundaries of intellectual honesty IMO.

  3. And John Leahy is always telling everyone that the 787 is the “wrong” size, when it is clear that the A350 is the wrong size, as it can’t effectively cover the 787/777 segment.

    • John Leahy and Randy Tinseth are both merely doing their job in selling airplanes. Have you ever heard of a successful salesperson not touting the superiority of his/her products?

      As for the A350 not being rightly sized, how so?

      The A350-900 is slightly larger than the 777-200ER, while the A350-1000 is about the same size as that of a 777-300ER having 6 abreast in business class (i.e. 7 abreast on its way out for most blue-chip operators) and 9 abreast in economy class. That seems to me to be a pretty large market.

      • As for the A350 not being rightly sized, how so?
        he,
        to cite someone else:
        “Humor, it is a difficult concept”.
        Or did I interpret wrongly Mr. Shaw? 😉

        • Because they tried to cover the 787 and 777 segments with one model and ended up with an A350-800 that few want. They should have aimed squarely at the 777 segment, and then done a A330 neo, to compete with the 787.

        • Think of the -800 as a decoy that successfully helped nurtured the “A350 is a 787 answer” mantra.
          A 2018 A350-1000 matches the larger 2022 “sardine interior” 777-9x in CASM.
          There is a reason Airbus gets the orders and Boeing the options.

        • Spot on, with Airbus having been long pushing to drop the 800, the entire concept that A350 competes fully with 787 and 777 has evaporated. Meanwhile, Airbus have a viable option to NEO the A330, possibly sharing that engine with A380. I really think Airbus and their customers have better things to think about than Boeing harping that A350 doesn’t fully cover 787’s niche… Their ever rising sales prospects would do. 🙂

        • I partially agree with Rick Shaw. Airbus’ problem is an historic one. In 2005 they found themselves in the situation where the proposed replacement for the A330 was losing out to the all-new 787 and at the same time the A340-600 was a useless competitor to the A340-600. The A350XWB tried to compete with both the 787 and 777 planes. It was successful on the second but not the first. Airbus’ bacon was saved by the 787 production woes and by being able to offer a competent and, importantly, available A330.

          The important point is that Airbus still hasn’t resolved its 787 competitor problem. The A350-800 hasn’t worked out; the A330 would get a short term extension of life with a NEO. It needs a new plane. Logically this will reuse large parts of the A350, but be a different and more compelling plane on shorter, lower yield routes.

          Airbus Plan E (Plan A: A330 NEO; Plan B: A350 mk I; Plan C: A350-800XWB; Plan D: A330 NEO, again; Plan E: New plane)

        • I must partially disagree with you FF. I can’t see a historic problem for Airbus. The A350-900 aimed right in between 777-200 and 777-300. The A358 aimed right between A332 and A333, the A3510 is bigger than the 773 and the 779 will just have 25 seats more with less comfort. Don’t use Boeing’s seat count metric. https://leehamnews.com/2014/02/03/updating-the-a380-the-prospect-of-a-neo-version-and-whats-involved/#more-11394.

          Airbus has no “787 competitor problem”. In the last 5 years Airbus sold 50 % more A330s than Boeing 787. The A330 did get better and the 787 was not as good as expected. So there is no need for an A358. With an engine newer than the ones on 787 an A330 could be in the competition for more than 10 years. An A350MK 1 with an all new wing is nonsense. An A350-300 with a wing optimized for ranges of about 4,000 nm would make far more sense.

        • @mhalblaub

          I don’t think any serious observer can see a future for the A350-800. With the American swap to A350-900s, the writing is on the wall for the future of this program. Do you think banks are going to be interested in financing an airplane type with so few orders?

          Too many of the postings on the site come from Airbus or Boeing cheerleaders. It is a waste of time. Reasonable analysts can see right through the amateurish spin.

      • OV-099 the A350XWB family was created to attack the replacement of Boeing aircraft. They were not designed to address market growth because that would have meant impacting the usscess of their own A330 family. If you look at the numbers of replacement for the A350-900, it appears to be a one to one replacement of the 777-200ER. The A350 replace was to address the 777-300ER, and you see that may be true. The Airbus marketing game went so well against the 777-200ER, it resulted in limiting the market appeal of the frame into spaces owned by the A330. Well, Boeing got the message too and put the 787-800, 900, a and -10 over the A330 and used the 777-9X to cover the 777-300ER replacement. If you look at the numbers you will see that the market for a A330 is far better than the market for the 777-200ER. Airbus not having a A330 replacement, and trying to be cost effective (using other people’s mone) will work for a short period. Long term the claims that the A350-900R and other variants will solve the problem of not having an in-kind replace will be good for us to watch and arm chair discuss. Will the intro woes of the 787 be enough to offset the product limitations of the current widebody platform at Airbus? I don’t know but trying to say that there are no holes is like going fishing without fishing gear, something may jump in your boat but it would have been better if you had the right equipment.

        • I7room, I was merely responding to Rick Shaw who seems to believe that “it is clear that the A350 is the wrong size”.

          As for market growth, I’m not quite sure what your point is. The A350-900 has already some 150 more orders than the highly successful 777-300ER, and that’s even before it has entered into service. As the market is growing, the A350-900 could IMJ quite easily see another 1500 sales before the next decade is out. The A350-1000, of course, targets the same size segment as that of the highly successful 777-300ER, and it has forced Boeing to act on what to me looks like a half-baked response.

          As for the A330-300, the current model has had the short and intermediate ranged market all to itself for nearly two decades. The 199t and 242t versions should help keep the assembly lines busy until the end of the decade due to, as you say, the ability of the 242 tonne version of the A330-300 being capable of handling up to 90 percent of typical route segment currently being flown by the 777-200ER. Due to the massive 787 backlog though, the 787 won’t be able to curb A330 sales for at least another couple of years, hence the production output of the current A330 models should be able to be kept at 10 units per month for the next five years.

          As for “holes” in Airbus’ product line-up; sure there are holes, but not where you’re looking. IMO, the current A330-300 complements the A350-900 quite well, so the question of course, is what about the future? In fact, the business case for a re-engined verision using not the old tech of the 787 engines, but rather 2020 state-of-the-art engines is — perhaps for some people — surprisingly strong. If an A330-300neo can close the gap to the 787-9 to within 5 percent by using 787-derived engines, can you imagine what an A330neo with a tech-2020 engine could do? However, an A330neo like that would still be rather complementary to the A350-900. It would have about 1000nm less range, and carry some 30 passenger less. Now, as I said in another comment, why can’t Boeing do a 777MAX, when Airbus can seemingly get away with a mere A330 re-engining programme in order to remain competitive in the sub 300-seat wide-body market?

          As for using “other people’s money, please keep in mind that bar the engine, Airbus would still have to pay for the development, testing and certification costs for an A330neo, which would probably be in the neighbourhood of $1 billion, at least.

        • Addendum

          That should be the 777-200ER and not the 777-300ER:

          As for market growth, I’m not quite sure what your point is. The A350-900 has already some 150 more orders than the highly successful 777-200ER, and that’s even before it has entered into service

        • A350 to 777-200ER 579 to 422 in orders. Not like it’s buring up the forest and we do assume that to be for growth. Also keep in mind there is nothing in the space for competition currently. I think the 5% number is associated with the comparions of a highly optimized recently produced A330 and not one from say 5 years or older. Performance comparison number might be different if an A330 10 years old is compared to the current 787-8. So the ones coming out of service will not be new but the older a/c. Now, looking at the current backlog of A330-200, 200F, and 300, there are currently258 outstanding. Givern your rate of 10 per month puts Airbus at 2.2 years. Let’s see where does that end up against the end of the decada? Not close, so the A330NEO is being done for what reason again? To keep the line open and to reduce development costs. Me thinks your story of bright will require some addtional light. As I’ve said to K, the story on the 777-9X is too early to call. I’ve always thought that the A330NEO was there to get 100-200 more frames which would get the end of production much closer to the end of the decaade at the 10 per month rate. If there are no 200 orders out there for the next 12-18 months, the A350-800 story will need to opened again because the 787 (if it gets its act together) will be a much stronger player and that 5% performance number will be only for a small subset of the flying fleet. Airlines with fleets holding 7+ years average age will be duming faster than Airbus can get the -800 to market. It will not make it to the 2020 engine improvements because the program will be sucking in quite a bit of air. But you know all so I’ll just sit back and watch.

        • With all due respect, I’m still not quite sure what your point is in regard to the 777-200ER vs. the A350-900, and frankly, the same goes for most of your other points as well.

          Why do you keep comparing the total number of sales for an aircraft that’s apparently no longer in production with one that’s some 11 months away from EIS. That’s bizarre, to say the least. However, if you really want to make a comparison, why don’t you look at the number of sales before EIS. By the time the 777-200ER entered into service with British Airways on February 9, 1997, Boeing had secured 281 firm orders for the extended range, B-Market dash-200 model. As you say, the A350 is at 579 firm orders,…..and counting.

          I’m sure Boeing, though, would argue that their 787-9 is targeting the 777-200ER replacement market. Hence, it’s competing with both the A330-300 and the A350-900.

          As for the A330 backlog that you seem to be so concerned about, wouldn’t you agree that availability is a real issue? Also, where the action seems to be at the moment is in Asia, hence one can expect a large number of A330 orders from this region in due course. China even, might still order 200 frames for delivery from 2016 to 2020 if Airbus opens an A330 completion centre in Tianjin.

          http://www.reuters.com/article/2011/09/27/us-boeing-albaugh-idUSTRE78Q52720110927

          As I’ve already mentioned, the huge 787 backlog is a real problem for Boeing in the near term. Prospective customers have to look elsewhere over the next few years if they are in the market for 788 and 789 sized planes.

          So as for your last remark; by all means, just sit back and watch. I presume that you’ve got a sufficient supply of popcorn. 😉

          “What I want to do is burn the backlog down because when you tell a customer you can’t deliver an airplane for another 5,6 or 7 years you drive the customer to go and buy someone else’s airplane. So it’s not just about having the best airplane, you have got to have the best airplane available,” Albaugh said.

          Boeing has enough business on its books to keep some plants running for seven years. “I think somewhere in the neighborhood of 3.5 to 5 years is where I want to be,” Albaugh said.

          http://www.reuters.com/article/2011/09/27/us-boeing-albaugh-idUSTRE78Q52720110927

        • Addendum

          That first link should have been to AW&ST:

          http://www.aviationweek.com/Article.aspx?id=/article-xml/avd_02_04_2014_p01-02-660120.xml

          Airbus is offering to build an A330 completion center in China, probably in Tianjin, says a manufacturing industry official, as the European airframer steps up efforts to promote the type as an answer to China’s shortage of pilots, technicians and airspace capacity.

          In return for the completion center, Airbus is asking China to commit to buying a large number of A330s, possibly 200, says the official.

          The Chinese government, which heavily influences aircraft purchase by the mainly state-owned airline industry, is still considering the offer. The proposal has accompanied Airbus attempts to promote lightweight certification of the A330 as creating a Chinese version of the type, while Boeing is arguing that narrowbodies offer better economics for China’s domestic routes.

          The offer completion center has apparently been made as part of talks for orders to fill requirements for the next five-year planning period, 2016-20, although the facility and its deliveries would presumably last longer than that.

      • I recall John Leahy being highly critical of 9x seating, until the A350XWB was launched. I remember him criticizing Boeing for stuffing the crew rest in the overhead bin, until Airbus did the same. Remember 4 engines for the long haul? When it comes to saying idiotic things and then having to eat your words, Leahy has no peer.

        • Yeah but John is selling his product, just as much as Randy is selling his offer too. We cannot blame a company for changing because the market demands a certain solution. Both try to clown the other’s offering until the market defines the value.

        • Well, as for seating comfort, he was right IMHO. Just as the 767 is more comfortable than an A330 from a passenger’s point of view (i.e. the 767 has the same 18-unch seat comfort as the A330), the A330 is more comfortable than a wide-body having 9 abreast (i.e. the A330 at 8 abreast has no “double excuse me” seats). However, as you increase the size of an aircraft. you’ve got to increase the internal cabin width as well if you want an optimised airframe. Hence, the typical 9 abreast, 10 abreast or even 11 abreast (i.e. coming soon to an A380 near you) configuration on the large wide-bodies of today.

          As for eating crow, who exactly dropped the ball and allowed one of their best customers to jump ship to the competition, and made John Leahy look like a genius when American Airlines ordered 260 A320 family aircraft?

        • I recall John Leahy being highly critical of 9x seating, until the A350XWB was launched.

          He certainly wasn’t critical of 9-abreast as such, because the 10-abreast A380 launched way before even the 787, never mind the A350XWB.
          It’s always a function of the fuselage diameter.

          Remember 4 engines for the long haul?

          We do. But that was a Virgin Atlantic slogan, not a Leahy slogan.

          When it comes to saying idiotic things and then having to eat your words, Leahy has no peer.

          Randy would come to mind, if you care to re-read a lot of his blog posts, e.g. regarding how Boeing would do a new plane to counter Airbus’ neo, which was doomed for failure.

          Mind you, they’re both just doing their jobs. That includes throwing stuff out there that you hope will stick and influence/change market perception. If that doesn’t happen – move on and adapt. The business of selling things in a nutshell, be it cars, planes, or printing presses.

  4. Buffenbarger’s statements are strewn with lies, fabrications and contradictions, but many of his statements are strangely incoherent.

    Moving the tanker to Long Beach? He created that out of thin air.

    What was a few hundred phone calls and e-mails in December has multiplies like rabbits into thousands.

    • BTW, I may have misread the chart in there. Perhaps the blue arrow on 2022, at the end of the green bar, is the intended start of flight testing, with the green bar indicating development work.

  5. That whole not shaving price is a nice idea for the 777 Classics. We all want to hold price, but customers know what’s going on, so they get price reduction with nice add on orders. They also get lease deals until the new a/c arrive. The conversion thing is a nice idea but man Scott is so right, the 747-8F is sunk. Boeing does need to do something because just like Airbus the well is getting dry.

  6. For the younger readers, a decade ago Richard Aboulafia contributed to a report concluding the A380 should not exist, the Gellman report. It was used by US politicians to attack the European Union and Airbus. Guess who sponsored the report financially. The popularity, reliability and broad acceptance of the aircraft among the worlds biggest airlines still seems to make him mad. The airlines just don’t understand.

  7. In reality, Richard Aboulafia was way too optimistic when he estimated A380 deliveries. The actual A380 cumulative delivery will only exceed Mr Aboulafia’s prediction in 2014 or 2015.

    The numbers are plotted in one of my posts: http://wp.me/piMZI-2bX

    I guess some of you would say that the predicted 787 deliveries number was well above the actual deliveries.

    Well, let’s also look into A350 deliveries. The first A350 delivery was initially planned for 2012 (with A350 Mk1 planned for 2008).
    You can read this post about the A350: http://wp.me/piMZI-2eI

    • I guess that is a unique, flawed way of looking at things. That aircraft, A350 Mk1 wasn’t even build, how can deliveries be delayed ?!

      • keesje, there were about 200 “firm” orders for the A350Mk1. All of those orders have been canceled or converted to A350XWB. There was no formal closure of the A350Mk1. The was even a period when orders for BOTH A350Mk1 and A350XWB coexisted.

        • keesje, there were about 200 “firm” orders for the A350Mk1. All of those orders have been canceled or converted to A350XWB. There was no formal closure of the A350Mk1.

          Myself and others have addresses this before – in the comments section here, too. Might be time to let it go.

          True, there never was a formal “A350Mk1” closure that was publicly announced. Call it marketing spin, but they called it a redesign. Publicly, it remained the A350 project, but with drastically changed specs (and the added “XWB” suffix).

          The was even a period when orders for BOTH A350Mk1 and A350XWB coexisted.

          Only on the books while Airbus was working with customers who bought the original specs to cancel or convert their orders.

          There was never a time when you could have placed an order for 20x A350Mk1 plus 20x A350XWB.
          Nor was there any chance for anybody to still take delivery of an original-spec A350 once the A350XWB redesign was announced.

          So, yeah, one can look at the delay between 2008 and the eventual EIS in late 2014 regarding the A350XWB. But one shouldn’t then expect to be a) taken seriously b) have everybody agree with that notion.

    • According to your blog the delivery for the first A350 was not “planned” for 2012 it was just “foreseen”:
      July 2006: “Entry into service for the A350-900 is foreseen for 2012.”
      Industrially launch December 2006: “Entry into service of the first A350 XWB is planned for 2013.”

      These announcements look like as they have put some pressure onto Boeing as we have seen on 7-8-7. You might remember that date. Some airlines had to lease A340 to compensate for late 787 deliveries. The point for Airbus is not what some people had announced. The point for Airbus is what is written in the orders.

      Do you have such a statistic like you have for the A380 also for the 747-8? How successful is or was the -8?

      • mhalblaub, I do not have the same data on the 747-8, And I am not sure Boeing issued a detailed delivery plan like Airbus did for the A380. In addition, Boeing’s forecast number for VLAs is significantly lower than that of Airbus.

        I agree with you that the A380 deliveries have been significantly lower than what was expected by Airbus. The question is always whether the slow delivery is due to lack of demand ors if it really is because of industrial issues. In any case it proves that VLA market is small and will remain small.

      • By the way, I updated the delivery chart with the latest numbers.
        In addition, the projected delivery rate is put at 30 units per year instead of 35 in the chart I posted in 2012.

        Check my blog to see the updated chart.

  8. In his January letter Richard Aboulafia says:

    “For several decades now I’ve maintained that Boeing’s widebody strategy is superior to Airbus’s; I still believe that, and the very successful 777X and 787-10 launches last year illustrate that superiority. Our forecasts call for the company to maintain a 55% market share by value over the next ten years.”

    It seems the airlines are not stumbling over each other ordering 787-10 and 777X. LH explained why they (unexpectedly) did not order the 787-10.
    “The 787-9 is too small for our requirements and the 787-10 does not have the necessary range for around 40% of the destinations”

    It’s a 5000NM aircraft, like the A333. It lacks wing where the A333 lack fuel capacity. Not unexpected (2006..) but denied all the more.
    http://www.flightglobal.com/news/articles/boeing-admits-787-10-could-face-pressure-from-new-airbus-a350-900-xwb-variant-but-doubts-211760/

    If the 777-9X really is 2020-21 (says Tim Clark) and weighs 20t+ more then the A350-1000 IMO there is a marketing issue.

    If Airbus does a simple A350-1100 stretch and EIS a year before the 777-9X, what market niche is left for the 777-9X? 17 Hours in a 17 inch seat? How hot is the 777-8X really in the market place? LH and CX ordered the 777X. They also fell for the A346 and 748i.

    I wonder if Boeing has a plan B. Or Y3 if the airlines just aren’t as convinced as Richard appears to be. Lets take Airbus pumping 500+ light and comfortable A350-900s and -1000s into the biggest 777 operators before 2021 as a starting point, and pick it up from there.

  9. Ridding itself of continue German meddling is a good thing for Airbus; now it “only” has the unions to deal with.

    As before, I disagree with the “unions are bad” notion. They can be bad, sure, but they’re not inherently better or worse than management or other entities.
    Also, Airbus’ unions in Germany and France don’t seem to be particularly obnoxious. There’ll probably be strikes in the defense business – but that’s to be expected with the cuts the company is going to make. Which are probably necessary, but I wouldn’t expect anybody to just shrug and give up once job cuts are announced.

    moving away from government ownership and influence. It’s becoming more like Boeing.

    So instead of taking loans from governments in exchange for placing jobs in their respective countries, they’ll now also go to taking tax breaks and asking for free real estate?

    In a Guest Column in Aviation Week, Richard Aboulafia continues his A380-bashing, but what he has to say about challenges facing Airbus in the twin-aisle, heart-of-the-market sector bears reading.

    I – predictably – have to disagree.
    In fact, from that article I probably agree most with some of the things he says about the A380, as it is indeed a bit of a pickle that Airbus are getting some pressure do re-engine a pretty expensive programme only seven years after EIS. Yet, particularly given the money already spent on the A380, I see every reason to re-engine it. Airbus won’t shut down that line in 2020 after just 15 years of production.

    Other than that – he’s painting the usually bleak picture of all things Airbus.

    The alternative is to develop a re-engined A330, which could carry on the A330’s profitable legacy. The problem with that approach is that it would cost more in non-recurring and ongoing overhead costs than simply offering one family of twin-aisle twinjets under the A350XWB range.

    Seriously? Exactly the same thing can be said about Boeing’s approach. They’re offering one new product – the 787 – while redoing another – the 777 – to cover the twin-aisle market, while leaving the gap between both largely to their competitor.
    But as always with Aboulafia – it’s great when Boeing do it, and it actually gets Airbus in a corner. When Airbus does exactly the same thing, it’s a big problem for Airbus.

    Airbus’ original approach for the A350 was condemned by Aboulafia as a half-hearted measure against a newly developed product – while he now says that the 777X (which takes the same approach) is a big problem for Airbus. In fact, the biggest problem he can make out in Airbus’ whole product line.
    Well, the 777-9X is. He conveniently ignores the 777-8X, as well as the fact that the 777X is a less-than-cheap response to the A350 (note how Boeing is allocating the same development time Airbus spent on the A350 – which when first announced was deemed much too long by Aboulafia, among others). He goes on to assume in an off-the-cuff kind of way that a potential A350-1100 wouldn’t be able to match the 777-9X. Why exactly, he doesn’t say.
    I’m not saying Airbus shouldn’t take the 777-9X seriously, but the way Aboulafia paints this seems hugely exaggerated.

    Airbus isn’t likely to have the resources to fund both an A330neo and A380neo and a new large twin, too.

    Very interesting – considering the bulk of the cost of a neo project is borne by the engine makers.
    Very interesting rhetorically as well – the only one suggesting here that Airbus need to do a “big twin” any time soon is Aboulafia himself. Airbus have actually said they don’t intend to launch a new product line in the next 10 years.
    But if Airbus now don’t do a big twin, he can say “Told you so.” and throw in a few quips about how this shows how Airbus are going with half-measures. If they were to actually launch a new twin, he could point out how that’s very expensive, compared to just modifying an existing paid-for product line.
    However, this seems to me as going against the (publicly known) facts.
    For all we know, the A350 is Airbus’ big twin.
    They can shrink it (and call it the A350-800), and they can stretch it further (aka -1100). I really don’t see the need for an all-new big twin beyond that in Airbus’ portfolio. Not in the next 10-15 years, anyway.

    So my prediction for the next 10 years in Airbus twin-aisle is (in this order): A330neo, A350-1100, A380neo, reworked A350-800.
    A350-1100/A380neo might swap, depending on how much traction the 777-9X is actually getting, and in which campaigns (i.e. whether against the A380 or the A350-1000).

    • IMHO Scott Hamilton is wrong to demand Airbus be “fully capitalist”.

      One primary difference between Airbus and Boeing _is_ moral influencing
      of management decissions by the “State” as executive arm of the sovereign.
      RLI carried an Oath of Fealty in _both_ directions.
      ( Not limited to RLI : the legislative framework for workforce emancipation, healthcare, allowable contracts, … )
      This is inverted in the US with quite obvious massive negative impact.

      • Long time readers know we don’t like corporate welfare in any form. The real objection to the state aid to Airbus we have is that state meddling comes with it, denying the Airbus management the ability to make business decisions strictly on commercial basis. One need look no further than Germany’s constant meddling over production jobs and the opposition the the BAE merger.

        • Using Boeing as an example could you please point out the advantages of unfettered management decissions ;-?
          My position is that Airbus success is based on this “unwanted” supervision.
          And even if management bodies and purists demand this to stop it does
          not bring the advantage envisioned.
          The model you seem to favor shows all its negative elements when the
          market can not any longer expand freely as it starts to selfdigest destroying
          the base society it lives on.

          • It’s a cultural difference in philosophy, Uwe. Europeans have one view and Americans have another. I don’t like government meddling in private business. Period.

            Hamilton

        • It’s a cultural difference in philosophy, Uwe. Europeans have one view and Americans have another.

          Frankly, I think that’s overly simplistic.
          If it was that simple, why hold Airbus accountable to “US philosphy” at all?

          I don’t like government meddling in private business. Period.

          That’s fine – but also unrealistic, to be honest.

          There is always going to be some meddling – and both ways, mind you.
          For instance, the private sector constantly meddles with government policy by means of (occasionally quite aggressive) lobbying for/against legislation, tax breaks, etc.
          And vice versa, governments will at least meddle by way of introducing legislation, e.g. for health & safety, environmental issues, taxation, etc.

          The difference in some European countries seems to be (and even that is often hugely exaggerated) that governments are more active with some meddling of their own, rather than just being subject to meddling by private sector enterprises.
          Something that wasn’t quite that unusual in the US a couple of decades ago, either, by the way, if you look at the very active role the US government took in the civil aerospace industry particularly during the 60s and 70s.

          All of that is before we even begin to breach the subject of military spending, which Boeing, Lockheed, Airbus, BAE etc. all depend on to some degree. To which extent is a private business engaged in making defense equipment actually private to begin with, considering 99.9%of its revenue is generated by government customers, and their products would be considered relevant to national security and safety in most countries?

          Lastly – you don’t even have to go into the argument of “What role does private enterprise serve in society beyond generating money?” to realise that a full segragation of private sector business and government, with no meddling either way, is a complete illusion.

  10. Boeing long haul Strategy on the 777 and A350 proved plain wrong.

    Rewind to 2007.

    “777 updates
    Chief Executive Jim McNerney said recently that Boeing will consider revamping its hugely successful big twin-jet, the 777-300ER, if Airbus brings out an all-composite A350-1000 of similar size.

    Carson said that means only incorporating improved technologies as Boeing has done on other programs.

    Boeing won’t need a new airplane or even a major new 777 derivative to counter the A350-1000, he said, because Airbus’ timing is off.

    That biggest version of the A350 isn’t due to enter service until the middle of the next decade.

    But Carson said that’s about the time Boeing expects to announce its next airplane program, after the 737’s replacement It would be a 777 successor to enter service around 2020.

    “They are going to be trapped, I continue to believe this, a half a generation between our normal improvement cycles,” Carson said.

    “The 777 is great. If they try in mid-generation to replace it … we trump them one more time with better technology.” “

    http://seattletimes.com/html/businesstechnology/2003756347_carson21.html

    Fast forward to 2014. The airlines didn´t wait and think the A350-1000 was unclear. Airbus has basically taken over 300-350 long haul segment. Boeing sees and is throwing around wild claims and powerpoints as if the 777X is around the corner and success assured. And the 787-10 is hot for long haul afteral.

    http://i191.photobucket.com/albums/z160/keesje_pics/A350XWBcustomers_zps927fbabd.jpg

    Market reality has still to sink in among Boeing stock holders and supporters. Maybe Richard is in another rush. In denial anyway.

    • We will see about the -1000. I believe for the most part, the A350-900 will replace the 777-300ER, and the 747-400 market before it.

    • “The airlines didn´t wait and think the A350-1000 was unclear. Airbus has basically taken over 300-350 long haul segment. ”
      The 787-10 has outsold both the A351 and the A359 since its launch and when you add the 778 its about 50% more orders in the same period of time in this same space. The 781 has sold more units in the last six months then the A351 did in its first 6 years on offer. I think the 781 will hold its own in the market after all it has a 1knm more range than the A333 and should have better seat costs than the A359 while offering more cargo volume. More revenue and lower cost is a good combo. You site the LH example but that was for an A343 replacement where LH needed cargo range. When their A333 replacement comes up I bet the 781 will have a chance (still the A359 could definitely win out). If you look at examples like BA and UA its not hard to see circumstances where the 781 beat out the A359. Now I do believe combined that the A351 and the A359 will have dominate share in this space, mostly due to the A359 in my opinion, but it will be contested.

  11. Maybe the A350-800 still has more sales than the 777x. A350 at nine abreast is comparable to 747-8 at ten abreast. Similar to the A350-800, the 777x may be a non-starter. Boeing can cover the upper market with the 747-8, which I believe is not as large as claimed. Save the resources for the midsize, 150t market.

  12. I ters of a new site for the A350-1000, would there be any advantage to placing it in the UK, about the only major manufacturing site where the Belugas have to travel to empty (though I assume this is not much of a cost).

    • The UK government seems to think that there is more money to be made with banking and snooping.

  13. With Boeing getting world record subsidies for the 777X production. I say Airbus should pursue every avenue to get state loans from Germany just to keep level playing field with Boeing. Aboulafia is clueless as ever.

  14. The size/capacity of an A33X NEO is an unknown variable, closely related to the EE spec to be adopted for this full revamp. For eg a “regional” variant, targetted for ASEAN + China markets, the cabin of A336 NEO (twin engined NEO version with A346 cabin) the 61m/2,400″ long cabin fitted 2+4+2 @ 33″ would theoretically accomodate 72 rows or 576 pax (if 9 abreast : 648 pax) without accounting for G/L/EE, whereas the present EE limit with four Type A doors is 4 x 110 = 440 pax.

    Consequently, very likely A33X NEO – whichever, A332, A333, A335 and/or A336 ? – will come with an optional SCN for a fifth Type B (+ 75 pax) or Type A (+ 110 pax) additional (overwing) EE, setting the new exit limit to 515 or 550 pax, respectively.

    This will enable operators (and in particular : regional LCC people movers) to greatly improve the capacity of A33X NEO Series, specially if pitching down the aft cabin to below 33″ and going 3+3+3 in Y-class for selected short-to-medium range regional hub-to-hub markets ?

  15. The A330-200 did and does play a crusial role in opening up new long haul routes for European and ME carriers during the last decade and e.g. Chinese carriers these days. The A330-300 proved succesful later in its carreer on increasingly long flights. The requirements for regional traffic seem to be more in the 250-300 category. A 9 abreast regional A330-300 easily passes 350.. so right sizing would require some attention.. Maybe a NEO A330-250 and -350? Did a sketch yrs ago.

    http://i191.photobucket.com/albums/z160/keesje_pics/Airbusa330-400.jpg?t=1202857705

  16. Boeing- China

    http://www.bloomberg.com/news/2014-02-12/boeing-can-t-rule-out-having-assembly-factory-in-china.html

    Boeing Co. doesn’t rule out the possibility of building a final assembly for single-aisle planes in China in the future, the planemaker said at a briefing during the Singapore Air Show.

    “Never say never, we’re always looking at our options,” said Scott Fancher, Boeing Commercial’s head of aircraft development, said today when asked of possible interest in assembling planes in China.

    Boeing for four consecutive years has increased its estimate for demand from the world’s second-biggest economy. The company expects the country to need 5,580 new planes costing $780 billion through 2032.

    The Chicago-based planemaker counts China as a key player in its global supplier base, with a number of joint ventures in areas including composite parts manufacturing, overhauling aircraft and training. Boeing’s head of marketing, Randy Tinseth, said at the same briefing that its joint ventures with the Chinese employ 6,000 people.

    To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

    To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net
    ++++

    But in 1992- MDC tried that game and . . .

    http://www.fas.org/news/taiwan/1992/s920311-taiwan.htm

    starts

    THE MCDONNELL DOUGLAS-TAIWAN AEROSPACE DEAL (Senate – March 11, 1992)
    [Page: S3346]
    [Begin insert]
    Mr. GORTON. Mr. President, recently, I attended a hearing by the Joint Economic Committee to address the proposed sale of 40 percent of McDonnell Douglas’ commercial aircraft business to Taiwanese business interests. I believe that there must be fair competition in the commercial aircraft industry and the United States in general.
    Retaining jobs and expanding economic opportunity is vital to the economy of Washington State, and to the Nation. This proposed venture, which appears would be subsidized by the Government of Taiwan, will create an unfair advantage for the McDonnell Douglas/Taiwan consortium.

    It is essential that we continue to expand economic opportunities and not hinder competitiveness by creating an unfair advantage by allowing foreign government subsidies to bolster development and sales.

    The proposed joint venture would have serious ramifications for the Boeing Co. and for America’s balance of trade. This is a very serious issue and one I have taken all the way to President Bush.

    Mr. President, I ask to place the testimony of Mr. Daniel Hartley, president of the Seattle Professional Engineering Employees Association, and Larry Clarkson, vice president of the Boeing Co. that they delivered to the Joint Economic Committee last week in the Record at this point.

    The testimony follows:

    Statement of Mr. Daniel B. Hartley

    My name is Daniel B. (Dan) Hartley. I am an engineer . . . who has worked in the trenches of engineering for over 35 years. I speak from the viewpoint of the working engineer, one who has also been chosen by my peers for my position as President of the 46-year old Seattle Professional Engineering Employees Association (SPEEA). Although I work full time at Boeing, my views are my own and may or may not agree with any Boeing testimony. I am not trying to sell any particular product to the government. I am not requesting money. I’m not asking for some special favors. To me it seems like everyone who comes here is always saying how to cut the pie. We engineers want to tell how to make the pie bigger.

    SPEEA is the bargaining agent, the union, for 29,000 Boeing engineers, primarily in Seattle and the Puget Sound Area, but also in several other (but not all) Boeing locations around the country. We are far and away the largest concentration of engineers in the world, and also one of the largest independent local unions. We are the people who design the Boeing airplanes. Currently about 80% of us work on commercial airplanes, with the remainder working on government programs, space and military mostly. I wrestle with the problems of aerospace engineers
    daily. . . .
    +++

    Those who dont learn from history- DONT learn from history !!

  17. I think it might be wise fro Boeing to reconsider the 777X spec while they can. 400 seats long haul is a niche. 17 niche long haul width and mini F & J seats to back up that seat-count is marketing deception.

    The 777-8X doesn’t look very hot. Less seats, 20t extra OEW for routes no one wants to fly. Why even go there..

    Maybe Boeing should consider skipping the 777-8X and add a 777-10X to prevent the 777X series becoming a one trick pony. There is time to optimize the wing, landing gear and GE9X for that. B should offer a more realistic replacement for the 747s and facilitate credible long cabin comfort.

    http://i191.photobucket.com/albums/z160/keesje_pics/Boeing777-10XConceptfeb14_zpsdf3d7445.jpg

    • “The 777-8X doesn’t look very hot.”
      -The 77L and 77F will combine for over 200 units sold. I don’t see why the 778 and 778F combo won’t do the same. Should be more than enough to warrant its development.

      “Maybe Boeing should consider skipping the 777-8X and add a 777-10X to prevent the 777X series becoming a one trick pony.”
      – I like the idea of the 777-10 but only if the ME3+ support it. Only 8 A380 routes are over 6knm and only 3 airlines fly them so I wonder if just a simple stretch is enough to be useful.

  18. IFAIK the total spec or the 777x (8,9) program is still unknown. Ok. So there are 8 ordered, (EY) 35 committed to (EK) and of what QR committed to we don’t know what that breakdown will be. DO you REALLY think Boeing will cancel/reconsider the 778x?? Come on. It won’t sell in record numbers but won’t flop either.

    I think where Boeing is as far as products go, they are just fine. The current 77W, 3 versions of the 787, and now 2 derivatives of the 77W. The only issue I see is B being able to successfully bridge the production gap from the 77W to the 777x program.

    As far as 747 replacements go, people can say that the A380 is it but the A380 is it self a niche product. Lower than expected sales with a majority coming from one major carrier and more from another leasor. Beyond that sales are sprinkled around. 10 here, 5 there, top up of ___ from ____. If the imaginary mega twin idea that’s been floated comes to life well that may be a 747 replacement (depending what the specs are) but remember that your team is on record saying that they won’t be developing a new program for the foreseeable future. But whatever A decides it has to be careful because it will encroach on A380 sales with the “Mega Twin” or sabotage the A350 on the lower end of the spectrum.

    Boeing? They will hang on to the 748i as long as they can and when they know the well is dry, it will be an easy transition to the 777x program until a a clean sheet wb design is made.

  19. I think Airbus just will stick to the plan. Deliver A350-900 this year, A350-1000 in 2 years and maybe A350-1100 in 2019. Maybe do an additional low risk A322 NEO and A330NEO to stir up things.

    I think the 787-10 lacks payload range (LH says so) and the 777-8i would become the SUV of big twins. Like the A350-800 and 777-200LR. Capabilities nobody needs.

    For airlines that want to replace 747 fleets and find out 10 abreast on a 777 is one too much longer then 10 hours, and J class isn’t 40 inch any more, floor space is important to not drop capacity too much on daily 747 flights.

    http://i191.photobucket.com/albums/z160/keesje_pics/Boeing777-10XConceptfeb14_LH_zpsd0f60a43.jpg

  20. The pretended ‘need’ ? for an Airbus-incepted next newbuild “Mega-Twin” – above/beyond 777X – is indeed a red herring (on whose obscure motives ?) … IMJ, Airbus is correctly geared with what WB twins are or will be available. The 777X out-ranges itself from the bulk of its own market positioning … and if (reasonably ranged !) BIGtwin capacity demand is confirmed, then Airbus has always a strategy-option to offer a structural ‘lightweight’ twin-engine version of A388 with again much better floor area than whichever 777X, and should be good enough for 80 % of the heavier 777X routes/markets ? I mean to say, if A333 NEO or eventually, A335 NEO and/or A336 NEO (resp A350-1000 or A350-1100) would not be big enough/come in sufficient numbers ?

  21. The MS-21 article doesn’t add any new information. They want to be lighter and better, but they never said how. I’ve seen some testing with my own eyes, and talked to some people. In my opinion the MS-21 will at best be able to compete with the A320NEO. But I doubt they will be able to get it operational before 2018. Not having the GTF as engine option hurts. The PD14 (the Russian engine choice) is no option for anyone outside Russia. Don’t bet on the MS-21.

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