Airbus and Boeing squared off once again Monday, this time at the ISTAT Europe conference in Istanbul, once again pretty much over the entire product lines.
Boeing’s VP Marketing Randy Tinseth began with two focal points, the 737 with its latest developments and Boeing’s “superior” Twin Aisle line-up. Tinseth claimed Boeing has caught up to the A320neo with the 737 MAX.
After an A320neo head start of a year, Tinseth says Boeing has kept the same sales rate per year for the 737 MAX. The backlog of 737 MAX now stands at 2,300 aircraft and he described why Boeing thinks it is well positioned in this market segment.
Tinseth said the single aisle markets average size lies just below the seating capacity of the 737-800 right now and this center shifts with about 6-7 seats upwards every 10 years. In 10-20 years the center of the market will be slightly above the present 737-800, he said. This means the A320/A320neo and the 737-800/737 MAX 8 represents the heart of the hot-selling single aisle market and at this part of the market Boeing has the most advantageous positioning versus the A320 family, he claims. Tinseth said the 737-800 has a 2.2m/88 in longer cabin which allows for two additional seat rows compared to A320. With trip costs being similar, Tinseth said the per-seat cost is than better for the Boeing alternative.
Tinseth then pointed out that about 30 % of the 737-800 delivered over the last five years were with the max seating capacity, 189 seats. With single aisle demand being around 25.000 aircraft over the next 20 years and 40% of today’s sales being to low cost carriers (LCC), he said the maximum capacity 737 MAX 200 was bound to happen. By adding the emergency door arrangement from the 737-9, Boeing could increase the exit limit capacity of the 737 MAX 8 to 200 passengers. Such a configuration will decrease the per seat cost by 20% compared to today’s 189 seat 737-800 flown by, e.g., Rynair, Tinseth said.
Tinseth then went to the dual aisle range where he pointed out how well Boeing now covers this market. Boeing has competitive aircraft covering from 250 seats to 450 seats with about a 30 seats step between models. He then pointed to Airbus line-up, which he says did not have a modern offering under 270 seats until a late re-birth of “what 2005 was a bad idea, the original A350 and still is a bad idea today. “The A330neo has a fuselage with a cross section that the market rejected, a wing from the 1980s and engines that were optimized for our 787.”
Going upwards from the “bad idea,” (the A330neo now covers Airbus 250-300 seat segment), he pointed out that over the 350 seats of A350-1000 there is a huge gap until the 550 seats A380. In this segment, Boeing has been selling over 1,000 aircraft with the 777-300ER and it has a strong offering going forward with the 777-9X at 400 seats and the 747-8i with 467 seats.
Even though one can take issue with the 467 seats for the 747-8i (real seating is more like 430 seats), his argument has a point: Boeing’s lineup is homogeneous and well spaced whereas Airbus line-up lacks aircraft between 350 and 550 seats. He also said “the market at 550 seat level is a niche and dominated by one customer, Emirates.” .
Leahy launches counter attack
Not surprisingly, Airbus’ John Leahy, chief operating officer-commercial, disagreed.
Leahy quickly replied that the time between Airbus A320neo decision and Boeing’s decision to launch the 737 update (then not yet called the MAX) was more like six months and not a year and that the A320neo backlog was now at 3,200 aircraft and the A320ceo backlog was very strong at 1,500.
Leahy acknowledged that not all of these orders will result in the airline actually being able to take delivery, therefore the the double-booking practice undertaken by Airbus (and by Boeing). Airbus has therefore since 2,000 carefully matched their output to fit with predictable losses in the backlog. As a result, Leahy said Airbus has not been forced to cut production like Boeing has done and Airbus will therefore think more than twice before it increases the single aisle production rate over the already decided 46 per month.
Leahy then announced that weather permitting the A320neo would make first flight 10.30 CET Thursday this week. Going forward, he said that in 2019 the A320neo will get a 2% boost in the engine efficiency for the Pratt & Whitney Geared Turbofan (CFM has not yet confirmed an equal PIP program) which, together with the recently increased seat limit from 180 to 189 seats, will increase the per seat efficiency from 15% to 20% over the A320 of 2010. He then said, “and by the way, those 189 seats are all retro-fittable for the A319 and 320, apart for perhaps a change of an evacuation slide it is just paperwork” “For the 240 seat limit of the A321 we have made hardware changes”.
Leahy then went to the recently introduced A330neo. He said that the A330-800 and A330-900 matched the 787-8 and 787-9 on both fuel and cash operating costs and beats them on direct operating cost by virtue of lower purchase prices, they are therefore indeed a good idea. With 127 aircraft commitments from 7 customers at Farnborough Air show and a further 4 customers that he is expecting to close before end of year, the market agrees he said.
He then turned how to serve the 70 mega-cities of tomorrow. These mega-cities will route 90% of the worlds passenger traffic in 10 years, Airbus believes. With passenger numbers doubling every 15 years, there simply will not be slots for the type of aircraft the market would offer without the A380, Leahy said. These 70 mega cities are premium-heavy and the trend for such routes are to four class twin aisle airliners. When going to four classes, densely packaged aircraft like the 777 and A350 loses more seats than A380. The A350-1000 and 777-300ER lose about 24%-25% and end up around 275 seats, he said. The 777-9X loses 26% and now seats 300 passengers, whereas the A380 only loses 10%, ending up at 506 seats from 558.
“Do you believe we will serve those 70 mega cities with 300 seat aircraft?” Leahy asks. “ No way….”
We later met with Tinseth and Leahy. Tinseth confirmed that Boeing thought most of the 30% of the 737 that go out maxed with 189 seats today will transfer to 737 MAX 200 by 2019 (when the configuration will be available).
We asked Leahy what he thought about Emirates Airlines president Tim Clark’s prognosis that Airbus will reach an A380 re-engine decision within the next six months. “Tim is a very important customer and we always listen very carefully to what he says, I do however think that it will take a little longer.”
By Leeham Co EU