MD-11’s final pax flights contains lessons for McBoeing as NSA targets 2030

  • Boeing’s CEO, Jim McNerney outlines his vision for the next New Small Airplane in this report from Reuters. We believe this will cement Airbus’ dominance in the single-aisle market for the next 15 years.

A retrospective of the McDonnell Douglas MD-11 and the last passenger flights for enthusiasts contains lessons for Boeing, or McBoeing as many still call the combined companies.

Leeham logo with Copyright message compactAviation Week’s story by highly respected technical reporter Guy Norris contains this key paragraph:

Despite its many technical advances, most notably on the flight deck, the MD-11 was handicapped from birth by its derivative dependence on the obsolete DC-10.  Created on the eve of the era of the fuel-efficient big twin, the MD-11 emerged as a committed three-engined product too early to be redesigned around the new generation of big turbofans. Notoriously starved of serious investment by its ‘MD’ leadership, all attempts by the Douglas product development group to develop either twin-engined or larger stretched versions of the MD-11 sadly came to nothing. (Emphasis added.)

Boeing, burned mightily by the twin program development debacles of the 787 and 747-8, isn’t about to take any more “moonshots,” says CEO Jim McNerney. Yet Boeing is now at a crossroads where another moonshot is needed.

Airbus dominates the single aisle market today and is increasing the pressure with the A321neoLR to replace the Boeing 757 on long, thin routes. The A330neo should revitalize this product line into the 2020s and with the A350 coming on line, Airbus is poised to surpass Boeing production in wide-bodies by 2017 for at least the next five years.

But it’s the bread-and-butter single-aisle product line where Boeing has to take its moonshot–and this has to be done in the next few years.

The 737 MAX is widely characterized in the industry, even among customers who have ordered the airplane, as a band-aid solution response to the A320neo family. The launch of the 7E7 in December 2003 was influenced by the McDonnell family and McDonnell Douglas dominance on the Board of Directors and Boeing executive offices to engage in the industrial outsourcing that had become prevalent at MDC before the 1997 merger with Boeing. Spread the financial risk became the mantra. We saw how well that worked.

The McDonnells starved Douglas Aircraft for money, as Guy Norris noted above. After the Boeing merger, the McDonnells became the larger group of shareholders in Boeing and MDC’s CEO Harry Stonecipher became the largest individual shareholder. “Shareholder value” became the driving force and derivatives became the business strategy. The 757-300 and 767-400 became the “new” airplanes under the merged company strategy and funding for research and development plunged in the name of shareholder value.

Spreading the financial risk on the 7E7 would prove to be a financial disaster, which had an insidious affect on product strategy. The plan had been for the 787 to enter service in May 2008, after which a clean-sheet replacement for the 737 would follow and then a clean replacement for the 777 would come after that.

Given the billions of costs on the 787 program, coupled with the large losses on the 747-8 (itself also adversely affected by the 787 program delays), Boeing’s executive and board of directors became understandably nervous about green-lighting new airplane programs when the 787 and 747-8 were still in disarray. But that was in 2011, at a time when the 787 and 747-8 had yet to be delivered and a decision had to be made: launch the MAX or launch the New Small Airplane. The commercial unit wanted to go with the NSA. Chicago made the decision to go with the MAX, a decision forced upon executives by Airbus’ growing runaway success with the A320neo and a surprise capture of the order from American Airlines.

But now, with Airbus dominating the single-aisle market and soon likely to take over the twin-aisle sector, the McDonnell Douglas derivative mentality and McNerney’s no-moonshot philosophy risks recreating the McDonnell Douglas decline in commercial aviation.

The prospect of Boeing launching one new small airplane to replace the 757, let alone two NSAs to cover the entire 130-220 seat spectrum, scares the investment community and some lessors. The billions of dollars in costs and the impact on the MAX values are at the forefront of concerns. But to do nothing risks Boeing’s presence in the single aisle space. The 737-7 has but a sliver of the market share in this space, and we understand from our Market Intelligence Boeing doesn’t even want to build this airplane. The 737-9 has already lost the market share battle to the standard A321neo and will be further marginalized with the A321neoLR. Lessors are reluctant to buy the 737-9 because of its limited market appeal. This reduces the MAX line to predominately one model, the 737-8.

While investors look at the expense involved in developing one or two NSAs, lessors fear the NSAs will drive residual values down on the 737-8 before they have a chance to get their return on investment on the MAX.

Launching the NSA sooner than later will certainly put a chill on the MAX, but holding off too long will set Boeing back decades in its fight with Airbus. The prevailing view in Boeing Commercial Airplanes with those we have talked with is that there will never be another new airplane as long as Jim McNerney is CEO. The expectation is that he will remain in power through 2016 to see the 100th anniversary of Boeing. What his presumed successor, President and Chief Operating Officer Dennis Muilenburg, will be willing to do is a big question mark. What the hand-picked McNerney board of directors will be willing to approve upon a Muilenburg recommendation is also food for thought.

Boeing is between the proverbial rock and the hard place.

69 Comments on “MD-11’s final pax flights contains lessons for McBoeing as NSA targets 2030

  1. The 737 MAX is widely characterized in the industry, even among customers who have ordered the airplane, as a band-aid solution response to the A320neo family.

    That may be so, but it’s still selling quite respectably. 40% share of a ~8,000-10,000 frame market it still going to generate lots of money.

    I’m a big opponent of the sort of cost-saving that eventually effectively put MDD out of business; but at the same time, I don’t think it would make any sense to prematurely kill the MAX by announcing an NSA just after MAX’s EIS.
    Sure, it would put pressure on Airbus and the NEO as well, but it would – more significantly for Boeing – kill the MAX very early on at a point when it’s still selling more than respectably. (And MAX was a good bit more expensive to develop than NEO.) Even worse: It would do that at a time when, according to Leeham’s own analysis, Airbus is also producing more widebodies than Boeing.
    And then there’s the matter of Airbus potentially leapfrogging an 2020 NSA within 5-10 years. So at that point, Boeing would have unnecessarily killed the MAX and then launched an NSA with a relatively short lifespan before the first major upgrade is required.
    Doesn’t sound like good business sense.

    MAX may be a band-aid against the NEO, but remember: Boeing are still planning production rates beyond anything that’s ever been seen. It’s a cash cow, and that needs to be milked for a bit.

    Airbus are by their own admittance not planning any moonshots in the next 10 years, either, so Boeing can indeed sit quite comfortably without trying a moonshot just for the sake of it.
    In that sense, MDD’s position was quite different at the time from Boeing’s today, as MDD tried to compete with somewhat minor derivatives (MD-80/-90, MD-11) against a major upgrade (737NG) and even more completely new planes (A320, A330/A340, 777).

    Launching the NSA sooner than later will certainly put a chill on the MAX, but holding off too long will set Boeing back decades in its fight with Airbus.

    See above – I disagree. Airbus aren’t planning any moonshots, and trying to eclipse NEO with a new frame may end up being a pyrrhic victory.

    • anfromme:

      I agree with your analysis. Your newsletter; I would like to subscribe to it.

      I think it would be ridiculous for Boeing to prematurely sunset the MAX. It is still selling, and killing it a year after EIS to say “Look guys! Here’s the new 737!” The 737 is making Boeing money hand over fist right now and suggesting they kill it is curious, at best.

      They have time. It isn’t like the A320NEO is on its way to complete control of the NB market from 2018 forward.

      What gives? I know two different places can have different analyses, but

  2. Shareholder Relations:

    Showing profit when there is none doesn’t really lay the foundations for _healthy_ shareholder relations.

    When the concept of deficit spending was initially applied the idea was to spend now and recoup later from increased tax income.
    History shows that the “recoup later from increased tax” part of the cycle has lost volume with every cycle.
    We see something similar here and with a very similar outcome at that.
    It is a problem not limited to Boeing or the Aero Industry.
    Thus tagging this the MACDAC disease cannot lead to a solution.

    • You don’t actually believe them?new 737/757 2019ish,when 777x engineering slows down a bit I reckon ,of course Airbus can force them along a bit by rewinging 320.ab must have something in mind to keep their guys busy as well.a very interesting game.by the way,thanks a lot for the fundamentals thing.veryinteresting even if I’ll have to run through it a couple more times! amost enough to persuade me to pay for the site ,think of it as good karma…….

      • You need the tech to show something worthwhile from a clean sheet design.

        With the A330 NEO available how many Billions has Boeing churned and burned to bring a 0 .. 3 % improvement to market 😉
        Then, a lot of that money was burned in a nonproductive way or in (imho) technological cul-de-sac solutions.

        A new design will have to show better than 20% improvement over what can be cheaply added to existing designs for a simlar EIS.
        ( 787 was announced as 20% more efficient than a 20++year old design without further potential! )

        • You need the tech to show something worthwhile from a clean sheet design.

          That’s the point. And that – IMHO – would be the problem with launching an NSA in ~2018 for EIS in or around 2025.
          a) You kill your own product that’s only seen EIS a year earlier
          b) You spend billions on a new plane whose efficiency gains are highly dependent on engine technology, which in turn is unlikely to have made the next big LEAP (pun not intended) before 2018. So you’re spending all that money on a new frame, but because of engine technology limitations you gain only in or around ~10% over MAX/NEO, while you could potentially get ~20% if you simply waited a bit longer, i.e. launch in ~2022 for EIS in 2030.

          A new design will have to show better than 20% improvement over what can be cheaply added to existing designs for a simlar EIS.

          Exactly. Otherwise, it’s not wise to endeavour to spend ~$10bn on a new design.

          • Good points but I’m looking at them from a slightly different angle. 2030 will be really pushing it to the very latest for a new 737 replacement that is 20% better and it could give Airbus some breathing space to further upgrade the A320 to close that gap.

            The A320 already has the key qualities that are being explored for the NSA built into it (save for the wings) – long legs, wide fuse, container cargo etc. As you said most of the efficiency gains come from the engines.

            Suppose Airbus does a neo 2.0 around 2027 using the next generation GTF engines which will be available then, it will be a lot cheaper and faster to market (faster production ramp up) and could cut down that gap to less than 10% again. Development costs for neo’ing is said to be around €1 billion (airframe only). Compare this to what one would have to spend on an all new airframe for just 10% better efficiency…it’ll bring them back to 2011 all over again. Airbus could probably go even one step further to “777X” the A320.

            I agree with leeham above in saying that Boeing is stuck between a rock and a hard place in the narrowbody sector.

        • So if the new A330 NEO is only about 0…3% less efficient than the 787, how much less efficient is it as compared to a350, I guess the a350 is 20% better than the a330 neo and that justifies AB investment into the project.

  3. Airbus should do the last and final step within the A320 family and stretch the A320 to create a real 200 seater without the need to use some wacky stuff like the space-flex-lav. This would put the 737-8 under further pressure on and create additional interest from potential buyers like the large LCC´s of this world!

    • Airbus should do the last and final step within the A320 family and stretch the A320 to create a real 200 seater without the need to use some wacky stuff like the space-flex-lav.

      Well, the fact they can just about get there with the space-flex-lav shows you how small a stretch of the A320 would be required to get there. You’d end up with a very niche airplane, an A320.5, sitting between the A320 and A321. Don’t think sinking development cost into this would make economical sense.
      An A322 might make more sense, but even that is unlikely to happen because it would need a new wing or at least significant modifications to the wing and with the end for NEO/MAX already spelled out for ~2030, the RoI on that is likely to be minimal.

      • “Well, the fact they can just about get there with the space-flex-lav shows you how small a stretch of the A320 would be required to get there.”

        Not really.

        The space flex will give you 189 seats with a mixed 29”/28” seat pitch. That’s ok for LCCs, but not for operators offering 32″ seat pitch in economy class (i.e. about 3 less seat-rows when pitch is increased to 32″) and/or a two class configuration. Hence, a 7-8 frame stretch would increase one class seating capacity to around 200 when the seat pitch is 32″. Also, please do keep in mind that the 737-900 was only stretched by 5 frames over that of the 737-800. As the A321 was stretched by 13 frames over that of the A320 and required a significantly modified wing with slightly more wing area, increase in wing camber and double-slotted flaps, there seemsa to be plenty of “room” between the A320neo and A321neo. Stretching the A320neo by 6-8 frames, having the same MTOW, using the same wing which has single-slotted flaps etc, would seem to me to be a relatively trivial undertaking, but which might have a large market appeal. It would lack the (excess) range capabilities of the A320neo and 737-9MAX, but would have a significantly lower fuel burn per seat.

        • The space flex will give you 189 seats with a mixed 29”/28” seat pitch. That’s ok for LCCs, but not for operators offering 32″ seat pitch in economy class

          Fair enough, but the 737 MAX200 isn’t giving you that comfort level, either. If you want 200 seats at 32″ pitch, you’ll have to go for the 737-9/A321 in any case.

          • An A321neo having a reconfigured cabin, door arrangement and SpaceFlex can — according to Airbus — accommodate a maximum of 40 rows of six abreast seats at 28″ and 29″ pitch. That’s up to 51 more seats than an A32o outfitted with forward seats at a 29″ pitch with aft seats at 28″ pitch. With pitch being increased to 32″ on the reconfigured A321neo you’d have about 36 rows of six abreast seating; or 216 seats. On the A320neo you’d have about 28 rows of six abreast seats; or 168 seats. Thus, such a reconfigured A321 is really too big in an all economy configuration at 32″ pitch as it will have to carry an additional flight attendant under the one flight attendant per 50 passengers rule. Therefore, a seat differential of up to 50 seats between the reconfigured A321neo and the A320neo, there would seem to be enough “room” IMJ for an A320 derivative that could bridge that seat gap.

            Airbus appears to be intending to lift the A321neo’s potential capacity to 240 passengers, up from a previous figure of 236.

            The airframer had already laid out plans to offer a reconfigured cabin and door arrangement on the type which is currently restricted to a 220-seat maximum.

            Combining an extra overwing exit and a new space-saving aft cabin would give the A321 the ability to accommodate 236 seats.

            But a recent Airbus Group investor presentation detailing the A321neo states that the type will have “up to 240 seats”, and places the twinjet in the 185- to 240-seat bracket.

            http://www.flightglobal.com/news/articles/airbus-indicates-potential-for-240-seat-a321neo-398524/

  4. I still don’t see this Boeing-oriented crisis. They’re @ 40%+ in real single aisle sales (excluding 250 frame Indian mirages), and in the WB segments that matter Airbus is the one limping on a derivative 330NEO they can’t sell plus the 359 is essentially a family of one. I never heard an inkling of an all new 777 to replace the 777 family after 787.

    Boeing was at double Airbus’ market share in sales around the half point this year in WB’s. At some point between now and 2020 they’ll launch the NSA but why worry about doing so too soon? They can’t make enough 737’s to satisfy market demand as it is, and Airbus will struggle, across all of their costly production sites, to match the 737 annual output. There’s no real empirical reason to think the putative 5 years from launch NSA will be anything but a technological-limit aircraft family, semantics about moon shots aside. It also won’t be a “we’ll get this thing into service in 3 or 4 years” product development; it will show the reflect net time the 787 AND A350 took to develop and enter revenue service.

    The protracted gnashing of teeth about McD is irrational. Phil Condit’s gone, and McNerney will be soon. Finally, the NSA has to be built around an engine first (the wings/airframe won’t be so challenging as the 787). What engine is available in 2015 and 2016 for this purpose/launch, especially in the larger 757 class (36K thrust)?

    • derivative 330NEO they can’t sell plus the 359 is essentially a family of one.

      The A330neo hasn’t been doing all that badly so far considering it’s been offered for less than 6 months. If you want to point to how many orders are firm yet, look at how long it took for the 777X orders announced at launch to be firmed up (launch: November 2013, firmed: July 2014).
      Regarding the A350, it seems you’re forgetting a family member there…

      • The A350-1000 is at 169 ordered airframes and has been stuck there for quite a while. (And the A350-1000, lest we forget, is the closest thing that Airbus even has to an actual competitor to the 777X.) If you want to portray the 777X as a slow-selling family of airliners (despite it being the fastest-selling widebody airliner in history), then let’s in fact do like texl1649 did and not mention the A350-1000 at all.

        • There may be other factors at play here. Boeing exists in a country where it is OK to ramp up production when times are good, and lay off people when times are bad – and historically they have done just that. Airbus, in its European locations, can’t do that.

          One result is that even though Airbus has a 60:40 split of single aisle aircraft orders they projected ramp ups of both manufacturers are much closer to 50:50. This must mean that getting delivery slots is harder with Airbus and also must mean that they can avoid discounting quite so much. Much the same goes for A350 and 787, which could account for some of the lack of recent orders for A350-1000

          In addition it seems clear that Airbus cannot simply lay off its engineers as programs, such as A350, pass their intensive design phase. They will have to give them some work to do. Boeing has been announcing engineering layoffs, although I’m not sure how many of those are actually design engineers.

        • The A350-1000 is stuck there because (outside of the ME 3 and Asia) the majority of 777 replacement orders have not rolled in yet. Sooner or later the A350-1000 order growth spurt will occur. While the 777-x will be awesome, both models will be too much plane for most airlines. Furthermore, most of the orders by their potential consumers have already been placed.

          It is interesting to read that Boeing is looking at adding even more seats to the -300ER. I wonder why.

        • ” …despite it (777X) being the fastest-selling widebody airliner in history”

          – A rather pointless milestone for a small time window. It has only been around 12 months since the formal launch, but don’t expect ME3 sized orders to keep rolling in. I cannot see its orders tally come anywhere close to the 787 or the A350 numbers at EIS.

  5. all cards are on table for airbus n boeing…both hv said no new planes till 2030…airbus seems to be open to the idea of new derivatives…both hv holes in their line up…some think a350 is a single member family but so is 777x…in next 15 years market will decide who has a better product line…lets wait n see

  6. anfromme

    The A320neo is widely characterized in the industry, even among customers who have ordered the airplane, as a band-aid solution response to the C-series family. Even AB acknowledged that the neo was a response to the threat of the C series other new entrants.

    • @Le bon vivant
      True for the A319neo, and you can indeed see how well that is selling (just like the 737-7).
      But for the A320neo and A321neo, BBD isn’t a competitor.

      • A319 has better than twice the range of the CS300 ( and no CS300ER has been sold yet ).

        • True, but its operating costs are not sufficiently below the A320neo to make the A319neo an attractive proposition for the vast majority of airlines. If you’re chiefly interested in the specific size and don’t need the range, the CS300 is a better fit with – presumably (as we haven’t seen real life data yet) – much lower operating costs.

          • I should have been more verbose.
            A319 has twice the range of the CS300 this makes it a heavy frame for the task. NEOing it gives it more range but not less structure.
            Not much gained. Same for the equiv. B item. actually even less gain.
            Same for a potential 757 MAX : more range but no impact on dead weight. IMHO only frames that can grow from below into a demand slot make sense to reengine as shown by the A330 ( both in the historic regular updates and the future NEO ).
            To close: similar metrics are valid for the 777-300ER: it was more or less placed center in its slot. Gains in efficiency move it out of this spot ( overranged ) thus the 777X needs to be much more than an NEO/MAX upgrade. more expensive too.

          • “IMHO only frames that can grow from below into a demand slot make sense to reengine as shown by the A330.”

            Partly agree. The A320ceo doesn’t seem to lack range on most route sectors flown, yet it made a lot of sense re-engining it. In fact, both the A320neo and A321neo will have excess range capability on most route sectors flown as well. That’s why Airbus IMJ could trade range for capacity by stretching both the A320neo by 6-8 frames (i.e. same MTOW, same wing) and the A321neoLR by up to 10 frames (i.e. same MTOW, same wing with double slotted flaps etc).

        • According to Airbus.com, A319 range 3740 nm. BBD website, C Series 2950 nm. A far cry from twice the range.

          • Ups I had miscopied the range for urban ops ( low noise, STOL)

    • Swapping out 737 for A320 turns that statement from true to false.
      ( as can be seen this trick only works for factless statements 😉
      The argument at the time was imu from Boeing because in their view
      they already had shown their card: the NSA Joker.
      In Boeings presentation Airbus NEO was to fend of the C-series to avoid sliding down to third place. Quite a bit of hybris, imho.
      ( One reason why I think Boeing is innovating words only.)

  7. The 737-7 has more order than the a319NEO. Yet leeham presume it will not be built. One of the customer has a requirement for the 737-7 to the volume of 300. It is more fuel efficient than a319NEO. Boeing is going to build it for this customer.

    • firm: 49 A319NEO versus 55 for the max7 going by the info on pdxlight’s order accounting. You have different info?
      My understanding is that Airbus has an eye on the ACJ in this context.

  8. reading the Reuters article referenced above it is disappointing that Boeing seems to already be ruling out any truly innovative NSA solutions, instead planning a “mini 787” not that the 787 isn’t a darn nice airplane and the current pinnacle of tube and wing tech.

    but in order to get the efficiency step change needed, both in the air and on the ground, it is time to start looking at more radical alternatives.

    the MIT side by side Double Bubble, but with over-wing mount engines for structural efficiency provides the kind of step change in aero efficiency required, while preserving the easy stretch of tube and wing, and improved turn times due to twin aisle layouts and shorter overall tubes.

    combining that with a canard planform and mid fuselage main doors further improves turn times and L/D ratio while maintaining compatibility with existing gate structures.

  9. One potential innovation that hasn’t been mentioned is what might be done to effect a very significant reduction in capital cost. If that could be accomplished – even with a plane that only had a marginal improvement in operating costs – it would open up opportunities for new routes where the plane remained on the ground for longer periods of time. e.g. giving service at times that suit the customer rather than trying to get in as many flights as possible each day.

  10. with the -8 seemingly better sized than the 320 and airbus unable and/or unwilling to push 32x production rates sufficiently high to force boeing’s hand the key thing to me seems to be access to suitable new powerplants. re this i wonder how boeing’s ge favouritism has gone down with p&w and rr and whether this will impact its access to p&w and/or rr engines should these two have clearly better offerings than cfm, and/or whether the eu will pressure snecma to prioritise airbus with any engine they (co)develop using clean sky derived tech.

  11. I would call this a case of Nero fiddling while Rome burns.

    While I do not accept the total analysis, the spot section on the single aisle is accurate and in the long term affect the company (not only can they not wait until 2030 market wise , they loose all their engineer talent in the interim)

    737MAX is a medium short term patch, not a solution. the -7 has a limited future, the -8 will do fine medium short term as will the -9.

    What eats Boeings lunch is the A321NEO and the LR version, as the market shifts up Boeing has NO answer in that category and I believe its 30% of Airbus production and Alabama is reported to be ALL A321s (you can guess what Airlines they are targeting with that!)

    If Airbus wants to up the game, then a new wing on the A320 series does that (or a new wing on just the A321). Airbus has all the single aisle options right now, Boeing has welded itself into a corner.

    If Boeing waits until 2030 they will have no single aisle market. There are some hard decisions to be made before 2020 or Boeing is in extremely deep trouble and they need a paradigm shift to get out of it.

    • 737MAX is a medium short term patch, not a solution. the -7 has a limited future, the -8 will do fine medium short term as will the -9.
      What eats Boeings lunch is the A321NEO and the LR version

      You’re contradicting yourself there in that the A321NEO will eat Boeing’s lunch, while you also think the 737-9 will do fine. Those statements sound somewhat mutually exclusive.
      As it stands, the A321NEO has ~700 firm orders, while the 737-9 has ~200.

      As for the A321NEOLR – I don’t expect this to see too many orders overall, to be honest. Maybe around 100-200 total, which is respectable, but not enough to get Boeing much more worried about the 737-9 vs A321NEO than they already are.

      If Airbus wants to up the game, then a new wing on the A320 series does that (or a new wing on just the A321). Airbus has all the single aisle options right now, Boeing has welded itself into a corner.

      I think just a new wing on the existing line-up doesn’t make any sense. NEO is selling quite well as it is, and a new wing is an expensive, time-consuming endeavour that wouldn’t gain much for NEO. The one derivative that would most likely benefit from a new wing is a stretched A321, aka A322. But the fact this variant would need a substantially reworked/new wing to me says that it won’t happen, given that an A322 wouldn’t EIS before ~2021 even if launched today, and an all-new narrowbody family from Boeing and Airbus would EIS 10 years later, making the RoI on a new wing A322 minimal.

      If Boeing waits until 2030 they will have no single aisle market.

      I think that’s nonsense.
      They’re competing well enough with Airbus in single-aisles at the moment; true, they’re lagging behind a bit, but still at a ridiculously high level, at production rates that would have been inconceivable even 10 years ago. Airbus is not going to do anything drastic before their own NSA launch that would significantly upset that current ~60:40 balance. Which, again, is a balance that – leaving ego aside – Boeing can quite comfortably live with.

  12. Man, am I frustrated by Jim McNerney’s conservatism. Boeing only has one competitive model in the narrowbody market – the B-737-8 MAX. If Airbus did a small stretch to the A-320 NEO (i.e. the A-320.5), that competitive advantage would evaporate. To sit on the B-737-8 MAX for the next 15 years will lead to a greatly diminished Boeing.

    Boeing should be planning on introducing a new small airplane (NSA)around 2025. Rolls-Royce and presumably other engine manufacturers will have a new generation of engines available at that time. I would also assume that Boeing could make a huge advance in composite structures over the next 10 years – perhaps a carbon nanotube composite that can be manufactured in an out of the autoclave environment.

    I believe that a Boeing developed NSA would be complimentary to the B-737-8 MAX rather than competitive. Presently, the sweet spot of the narrowbody market is about 175 seats at 32″ pitch. By 2025, the market will prefer airplanes with 200 seats or more. And as you advance the seat count over 200 seats, the designers have the option of introducing a new light twin aisle aircraft which can facilitate loading and unloading and thus cut 15 minutes off the turn time. Plus the cabin on a new light twin is much more comfortable than six abreast seating in a single aisle.

    I am in agreement with Bilbo on design features of a new small airplane. Specifically, I would include these features in a new small airplane.
    – A wide oval fuselage with twin aisles and seven abreast seating (eight abreast seating is also a possibility). The wide oval fuselage would be 198″ wide and 174″ high and thus have about 85% of the frontal area of a B-767.
    – The wide oval fuselage would feature two LD3-45 containers side by side with a vertical structural wall separating the two containers to cut the floor beam span.
    – The aircraft would have forward swept wings with an 18 degree or so sweep angle and a canard foreplane to generate lift.
    – The aircraft could have the Rolls-Royce Advanced engines to be available in 2025.
    – The engines would be mounted over the wing near the trailing edge. Please read Honda US patent 6,102,328 for all of the aerodynamic advantages of the over the wing engine.
    – The forward swept wing plus over the wing engines will permit a shorter and lighter landing gear.
    – As the MIT D8 studies show that boundary layer ingestion generates a 7% reduction in drag, I would also investigate electric duct fans or electric driven prop fans on the trailing edge of the fuselage to ingest boundary layer and fill in the wake behind the fuselage.
    – The fuselage should be designed as a semi-lifting fuselage to provide lift at low speeds and at high angles of attacks thus providing additional lift at takeoff and landing speeds. The semi-lifting fuselage would eliminate the need for forward edge slats in the wing thus permitting a laminar flow wing. See US patent 5,769.358.

    Mr. McNerney, aerodynamics have advanced since Boeing established the Boeing 707 configuration in the 1950’s. I think a new aircraft could advance beyond the 1950’s style aircraft configuration.

    I urge Boeing to be bold and innovative. Boeing has a deep bench of engineering and aerodynamic talent so I urge Boeing to make the necessary investment to introduce a new small airplane into market by 2025 and have a design that will be serviceable for the next 30 or 40 years. Failure introduce a new small airplane in a timely manner will mean that Boeing will cede the narrowbody market to Airbus and others.

    • In my original response, I advocated that Boeing should adopt a new airplane configuration – namely a forward swept wing with a canard foreplane. Bilbo has recommended a like configuration.

      To further support the above configuration, I would like to reference a study performed by DLR entitled The DLR Project Lam Air.
      http://enu.kz/repository/2011/AIAA-2011-3526.pdf

      In this study, DLR took a standard A 320 and converted it into a configuration that looks like a DC-9 with forward swept wings. When they transferred the engines from the wing to the rear fuselage, the aircraft gained 5,280 pounds or 2,400 KG in weight. However, the new configuration resulted in a 9% fuel efficiency from the baseline A-320.

      I propose an over the wing position for engines to prevent weight gain from fuselage mounted engines. The Honda patent says the over the wing location offers the least drag of any engine mounting position. Likewise, the Honda patent says the over the wing location permits an increase in cruise speed of M.017 due to the favorable interaction between the wing and engine nacelle.

      I believe with an advanced aircraft configuration, Boeing should be able to realize a 10% to 20% fuel savings just from advanced aerodynamics.

      • Interesting read.
        They/You’ve just blown up the Hansa-Jet 😉
        http://www.hansajet.de/indexen

        NIH.
        Independent of the advantages I’d expect Boeing to
        start another 30years war with the IAM than producing
        a Euro design :-()

    • With all due respect I think a forward swept wing and top mounted engines are complete non starters. Nothing in the current tool set indicates these have anything useful to offer. different is not the goal, better is (or competitive)

      There is a reason that the current configuration works, the same as all cars have 4 wheels, it what reallyh is optiial for the job and the rest is refinements though there is huge improvements in the refining.

      I also disagree on the curretn 900 and -9. Neither competes with the A321, both offer more seating than the 800 or -8 and are a step up or an adjunct for operators (Alaska Airlines is picking up a number of these as they need more lift than the 800 gives them)

      Where it fails is to compete with the A321 and there is nothing to move up to from them. Ergo, if I was doing a fleet and there is any possibility of an A321 class aircraft needed, why would I buy a 737? The only reason Boeing can sell them is Airbus can’t deliver all the A320 series needed.

      • “With all due respect I think a forward swept wing and top mounted engines are complete non starters.”

        Never say never …..

        The present paper gives an overview on the current status of the DLR LamAiR (Laminar Aircraft Research) project, which deals with the design of a laminar wing for short and medium range transport aircraft operated in the transonic regime. In particular it was investigated if a forward swept NLF wing can successfully be designed with the top level aircraft requirements of an Airbus A320-200 and the goal to substantially reduce fuel consumption. Using Streit’s new conical approach for inverse design and analysis, a set of airfoil sections was generated with extensive laminar flow on upper and lower surface especially designed for forward swept and tapered wings oper-ated at a design Mach number of 0.78. Drag rise calculations then showed that with theses sections a high-speed off-design Mach number of 0.80 can also be reached without excessively increasing wave drag. Forward swept wings might suffer from divergence. When constructed as a conventional metal structure, bend-ing of the wing under load will lead to an additional nose-up wing twist, i.e. washin. Within the frame of LamAiR, aeroelastic tailoring with CFRP materials was employed to overcome this problem. A procedure was established that optimizes the main stiffness directions of upper and lower skin of the wing box in order to deliver a bending-torsion coupling under load, which counteracts the additional twist. A sensitivity study on wing weight with respect to wing area, aspect ratio and taper then revealed that forward swept wings can be designed without significant weight pen-alty. Employing the preliminary aircraft design code PrADO, the data gained in the basic aerodynamic and structural design studies were used for the sizing of an aircraft featuring a NLF forward swept wing. The resulting configura-tion, called LamAiR III, complies with the initially defined TLAR’s and additionally shows a 9% reduced fuel consumption at the design point when compared with the turbulent reference. However, it became clear that only with the future development of capable high-lift systems that are compatible with laminar boundary layer flow the full benefit of this technology can be exploited.

        http://enu.kz/repository/2011/AIAA-2011-3526.pdf

  13. – The engines would be mounted over the wing near the trailing edge. Please read Honda US patent 6,102,328 for all of the aerodynamic advantages of the over the wing engine.

    See VFW 614, FF 1970 😉
    never could fathom what special feature allowed a patent for Honda.

    A low slung airplane like the 737 has two resultant limitations.
    plane lack of space under the wing for engines.
    solvable by over wing engines, OK.
    lack of rotational capability. not enough space under the tail to get to an AoA that provides enough lift for take off at acceptable speeds.
    this is significantly more difficult to solve cheaply.

    • Uwe,
      The requirement for rotation on takeoff is driven by many factors, as an example, the B-52 doesn’t rotate at all, and in fact has a slightly nose down attitude on both takeoff and landing.

      A Canard configuration as I propose above would have a more rearward MLG positioning due to different aerodynamics.

      the “just behind the CG” position of MLG on a conventional aircraft is largely due to the need to provide enough leverage for the tail to push down hard enough to lift the front of the aircraft. with a canard and lifting body fuselage, the need for that degree of leverage and rotation would be reduced allowing a more rearward gear position, making a shorter (and therefore lighter) MLG feasible while still providing sufficient rotation margin.

      • also the CG itself would be more rearward in a canard, further reducing required MLG height for rotation.

  14. Boeing and Airbus face the same problem in ten years, they can’t cover the 150 seat and 200 seat airliner with one wing design, they will need two purpose built CFRP designs. Granted, Airbus can use the A320 fuselage and production system, so they’ve got that advantage. But like Boeing today, in twenty years it will leave the A320 as the offering with the most obsolete fuselage.

  15. Boasting future expected 737 production rates is a totally free ride. But apparently it works. Contracted sales, un-undisclosed customers, healthy margins and future upgrade options are more relevant.

    If Boeing starts producing at 50-60 a month they’ll run out backlog fast. And cash because they are competing against superior CSeries and NEO’s. Forget 2030, or even 2025.

    I think Airbus keeps a 200 seat A320+ in the drawer to not hurt the A320 CEO backog short term. It would likely trigger a wave of conversions and additional orders and an unpredictable reaction from Boeing. And maybe people at higher levels concluding Boeing is a national strategic assett that deserves a “level playing field” or similar worded protectionism.

    http://i191.photobucket.com/albums/z160/keesje_pics/AirbusA320NEOfamilyconcepts.jpg

    • If Airbus produce an A320+, that should give them a nice four airplane family with many engine and weight choices. If they rewing CFRP, I could see an even larger family of two new aircraft the A322 and A323. 47m and 53m long, 47m wingspan with 45K engines and double axle gear, EIS in 2025.

      • Didn’t the 757-300 have boarding issues ?
        It certainly didn’t sell many.

        IMU a lot of airlines where happy with the A300 as an efficient paxmover.
        weren’t the gestating requirements 300 pax from 3000′ elev for 3000km or thereabouts ;-?

        • I think the 757-300 came out too late, plus the A323 would have more range. Now that the A321 is in premium config with American at 102 seats. A premium config A323 would be at 130 or 150 seats with near A330 range. Frankfurt-Seattle, Amsterdam-Portland? Lots of possibilities for a light density 53m single aisle.

    • Boeing can have a nice four airplane MAX family through 2035.
      MAX7.3 – 117′, Southwest for 500
      MAX7.7 – 124′, United, American, Delta, Alaska, as a 150 2-class.
      MAX8 – everybody and anybody
      MAX9 – United, Delta, Alaska, maximum capacity single aisle.

      2025 Boeing will produce a 45 to 50m CFRP wing to compete with the A322/A323.
      Boeing has the option to go new single aisle, or new light twin. 200 to 240 seats, possible 8 to 10 hour range. For Southwest, what’s the optimal 200 seat aircraft that can use Midway airport? Probably easier to build that specific wing than lengthen a runway.

      • Two new variants of the 737-7? To replace the current one? And how will the 7.3 become competitive with the CS300/CS500 and and the revised E-Jet?

        • The CS300 is 135 econ seat, similar to the 737-7, A319, 195E2.
          CS400/ 8′ stretch = 737-7.3 at 150 econ.
          CS 500/14′ stretch = 737-7.7 = A320 at 150 seat multi-class.
          It would be a trade-off between the lighter CS, or the fleet commonality of the 737 or A320.

  16. One other though is we can hope that Mcnanut is muddying the waters and they are indeed going to do a A321 competitor, single aisle or light twin aisle.

    I am probably smoking the now allowed marijuana though.

  17. I think there is a growing awareness of Boeing weakened market position, NB and WB, within the company and with its stake- and stock holders.

    No, the 737MAX isn’t as good, no the 777X isn’t 20% better & around the corner and no, deferring 787/748 depts doesn’t make them go away. IMO the supportive, loyal (stock owning) deniers at all levels have been part of the problem. Also outside the Dreamliner process. http://www.boeingblogs.com/randy/archives/2010/08/sharks_and_jets.html

    Leeham addressing tough realities & speaking out shouldn’t be necessary.

    That’s IMO acceptance is a necessary start working towards a sustainable, strong market position. McNerney short term stock price based strategy has IMO brought Boeing into a position it shouldn’t be. And isn’t an unforeseen event either.

    He has to go, simple as that. Future Boeing executives should have well paid multi year contracts, not connected anymore to short term stock prices. It proved to create rich people while deeply damaging to the company. End it.

    • keesye,

      The International Institute for Strategic Leadership has been tracking the 787 learning curves generated from Boeing’s quarterly financial reports since 2009. The question is not when but if the airplane programme will break even during it’s production run of 3,000 to 4,000 airplanes. a detailed analysis can be found here:
      http://ii-sl.org/ii-sl/Learning_Curves_in_MPM.html

      While I may think the IISL may be pessimistic I also have to bear in mind they are an independent body with no axe to grind. It is certainly worth a read.

      • A little nit to pick here: cost accounting is incomplete for at least those early planes that have not been completed yet ( and that would consume significant funds to complete. you can see the spikes for the “fixed” frames.)
        No idea how to factor that into the presentation.

        For the first 400 items B will get an average of ~$87m ( sans engines, but B doesn’t make engines )

      • “Note that the theoretical 787 programme break-even would occur at approximately 13,000airplanes.  This ignores the initial development costs which were in excess of $20 billion.”

        Lets hope they have it wrong. But if they are at one stage able to make 10 milj nett profit per aircraft, to get back the 20 of so billion.. ouch.

        • As I wrote elsewhere and IMHO cost for the early frames is underestimated due to them not having cosumed their full outlay to reach “deliverable” status.
          If you add that in the “learning exponent” will rise (faster learning) leading to an earlier production cost break even.
          But I don’t think that this fact will change the result into any semblance of what Boeing tries to present in public.

          • Did Boeing already reach this point: “production cost break even”?
            Is a “faster learning curve” just a nice paraphrase for approaching break even?

          • Actually no and no.

            Faster learning curve means a bigger number in the exponent ( simplistic: more percent decrease per year ). To start with a project that has been completely FUBARed has more potential for reduction and probably faster achievable too ( like “arg, that was duh obvious” ).
            In the exposition referenced here some of the extra cost associated with fixing early builds does obviously not appear in the data used. But these frames haven’t been sold/delivered yet. As they stand they are just so much decorative plastic at the moment.
            Thus for meaning full accounting in relation to a learning curve you must either include the putative cost for delivery of these frames or remove them from accounting and fold their cost as “punitive learning” into the sold frames.

            This would increase early cost significantly. A fit through this fixed data set would then show higher initial cost _but also_ a faster learning curve.
            due to the exponential nature this would have significant impact on production break even.
            project break even is the integral of production cost minus revenue.
            One would have to do the math but I’d imagine that this could half the frames to production break even. i.e. ~2000 ? ( just guesswork )

        • keesye

          To quote from IISL’s website:
          “IISL Fellows represent a network of international leaders in industry and academia who have worked together in partnership for over a decade to build The Institute and the knowledge upon which it rests. The Fellowship comprises practitioners who teach, and academics who practice. These distinguished Fellows include business leaders from Fortune Global 100 companies and leading academics from MIT, The University of Oxford, The London School of Economics and Ashridge Business School.”

          I to hope they have got things wrong – the world needs competition.

          Problem I have is in reconciling the Wall Street analysts rosy view of BA and the likes of reports . Also since GFC, AAA mortgage bonds, Enron and the fact Ken Lay was voted CEO of the year I have ceased to take Wall Street analysts seriously and rely more on my own judgement.

          Boeing’s published accounts for 2Q14 showed the following:
          787 Deferred Production Costs 24,242 million
          787 Unamortised Tooling etc 3,442 million
          787 Gross Inventory 74,801 million

          These are heady numbers even for a $US90B company .

  18. Lots of interesting comments – great to read.
    To add some points not raised in the article or by the commentators;-
    1. Boeing’s investment in composites in the B787 seems to have be shelved somewhat. The planned 777x plainly shows that – in that jet being mostly metal and traditional flight surface activators. A regional plane will have to endure multiple takeoffs and landings, far in excess of a wide-body. Would plastic be able to take that strain?
    2. A re-winged A320 NEO or CEO, will force Boeing to do a NSA as the 737NEO will likely be the last hurrah for that platform. Boeing may find that their NSA may equal a re-winged A320 NEO if the engines are the same (range, per seat costs). That is a tough one as rewinging an A320 can cost as low as 1B Euros, while a NSA can be 3 times that.

    • RE: point (2), I did touch on it above, in my reply to anfromme.

      I think the business case for doing an all new clean sheet NSA will largely depend on how much you are prepared to invest for every percentage efficiency gain from an airframe-only point of view. Efficiency gains through new turbofan engine technologies and other systems (e.g. fuel cell electric systems in place of APUs) that could be featured on the NSA can also be applied to existing frames albeit with minor penalties. The gap could be narrowed even further if the existing airframe could be re-winged with a more efficient one.

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