No response to A321neoLR: Reuters reports that Boeing isn’t going to respond to the Airbus A321neoLR, the airplane intended to be a bonafide replacement for the Boeing 757.
“We are very happy with where the MAX 9 sits and feel the competition is simply doing things to catch up with it,” Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes said, Reuters reports.
There’s really no other choice but to say Boeing is happy. As we demonstrated in our three-part 757 replacement series in October, the 737-9 can’t be made competitive with the A321neoLR. As Tinseth notes in the Reuters article, and which we covered in our three-part series, Boeing could put another fuel tank (as does Airbus in the A321neo) in the -9 to match the range. But what Tinseth did not note in Reuters (or at least it wasn’t reported if he did), and which we did write, the 737-9 comes up more than 15 passengers short of the A321neoLR and 20 passengers short of the 757–and it needs 12,000 ft of runway to take off with a full load.
Boeing can’t upgrade the 737-9 to a “MAX 10” without an Extreme Makeover: new wings, new engines, taller landing gear, fuselage strengthening–all adding up to about three quarters of a new airplane.
Tinseth’s message also doesn’t resonate for another set of reasons: the A321neo outsells the 737-9 by two or three to one, depending on how some 737 Series TBD are assumed to be allocated. The A321neo has 709 orders from 38 customers, according to a tally by PDXlight. The MAX 9 has 217 orders from 10 customers, 100 of which are from United Airlines, resulting in a major customer concentration, never a desirable situation and one which lessors don’t like when considering an airplane as a leasing asset.
Airbus has 183 orders, 26% of the total, for the A321neo from 10 lessors. Boeing has 10 orders for the MAX 9, or 6% of the total, from two lessors, according to PDXLight.
PDXLight at the moment allocates all of LionAir’s MAX orders to the -9 while we think the preponderance of these will be allocated to the -9. Still, Airbus has nearly four times the customers for the A321neo and this sub-type represents 22% of the neo orders, PDXLight calculates–vs 9% for the -9 of the MAX orders.
Tinseth always puts on a happy face but we’d certainly not be “very happy with where the MAX 9 sits.” Nor would we believe the A321neo is “catch[ing] up” to the MAX 9. The A321neo has outclassed the MAX 9, and the sales figures demonstrate this. Neither the airlines and certainly not the lessors are stampeding to buy the -9.
Aerospace analyst Ken Herbert, of Canaccord (who has a Buy on Boeing), issued a note Nov. 20 in which he commented:
We believe that Boeing is facing a growing concern with its relative lack of competitiveness in the 200-260 seat market. Boeing’s 737MAX-9 has had limited success and the company is doing all it can to transition customers up on the 787 from the -8 to the -9. The last 787-8 order was in October 2013. This is basically the 757 replacement market, which Boeing continues to insist can be met by the MAX-9, but this is not a viable long-term solution, in our view.
After Delta loss, Boeing wins: The day after Boeing lost a 50-airplane order for wide bodies from Delta Air Lines, Boeing won a commitments from Kuwait Airways for 10 777-300ERs, with deliveries from 2016.
While not as important as winning Delta would have been, this does help the 777 production gap–as early as the year after next. We’ve been told by customers that Boeing has (or, rather, had) 8-10 empty slots in the second half of 2016. The gap grows dramatically in 2017.
It’s ‘huge:” After we broke the news Wednesday, that Airbus won the Delta order, The Seattle Times interview us for color for its story. Unbeknownst to either of us at the time of the interview, the commentary was more colorful than intended. From The Times:
Conversely, snagging a major U.S. airline in a head-to-head competition between the 787 and its rival A350 is a boost for Airbus.
“It’s huge,” said Hamilton. “Airbus’ widebody penetration into the U.S. market is minuscule.”
On Thursday, Dominic Gates wrote to us:
“In the cold light of day, this quote sounds a lot more graphic than it did yesterday.”