Odds and Ends: Turkish tests A380; Boeing’s cash out; A400M milestone before Airbus Group results

18 Feb 2015: Turkish Airlines is contemplating testing A380 operations according to Blomberg by wet leasing two A380 from Malaysian Airlines. Turkish did the same when they tested the Boeing 777 before ordering it, then by wet leasing 777 from Jet Airways.

The deal would be good for both Turkish Airlines which could test the A380 to see if there is sufficient demand on their densest routes and for Malaysian Airlines as recent disasters has meant they no longer need the capacity of their six A380.

Probable destinations for Turkish would be London Heathrow and JFK. The two aircraft would be operated by Malaysian Airlines pilots and Malaysian would also furnish half the cabin crew during the first six months, the other half coming from Turkish. After the initial period there would be a dry lease phase where Turkish would continue with own crews. A third backup aircraft should be part of the deal.

Boeings CEO, Jim McNerney, has told investors at a Barclay’s investor conference that Boeing can use of to 80% of its free cash flow to pay back to investors without endangering planned R&D projects reports Reuters. Partly this comes from being able to keep the 777 production rates at around the current 100 aircraft per year in the bridge to the 777X. To entice airlines to continue buying the present 777, Boeing is working on improvements to the aircraft that will increase the efficiency by 2 %,  half of which will be coming from improved GE90 engines and half from airframe changes.

McNerney further said the higher than expected deferred 787 productions costs were due to investments in production methods and the labor costs not coming down as expected. He also commented on the work on a new aircraft for the market between the present 737 and 787, “the 757 market” where he said the only thing which is clear is that the airlines want a slightly larger aircraft and we don’t see the market needing a solution in the near to mid term.

Airbus Groups results will be announced in a press conference from Munich Friday next week and their Military aircraft division is working on the outstanding improvements they owe A440M customers. Timely before the press conference they have now demonstrated the A400M working as a combined logistical transporter and tanker. In a series of rendezvous over four flights they transferred a total of 27 tonnes of fuel to two Spanish Air Force F18.

A400M refuels F18

A400M filling up two F18 with fuel. Source: Airbus.

From the press release: “With a basic fuel capacity of 50.8 tonnes which can be increased by the use of extra cargo hold tanks, the A400M is the most capable tactical tanker in the market. The standard A400M aircraft has full provisions for air-to-air refuelling (AAR) operations already installed and only requires the rapid installation of the optional air-to-air refuelling kit to become a tanker.”

Our article shows that this is but one of the capabilities that should have been in delivered aircraft by now, Airbus is expected to announce further provisions for A400M development at the event.

31 Comments on “Odds and Ends: Turkish tests A380; Boeing’s cash out; A400M milestone before Airbus Group results

    • And they probably can get 2 Skymark planes for a good price, if test proves the airplane is profitable.

      • Turkish Airlines can act with the new Istanbul airport as a hub in the middle just like the 3 Gulf airlines.

    • I assume favorable. Malaysian Airlines will be happy to get the cash.

      This looks more like a trial period than an evaluation of the A380, to allow Turkish Airlines to work how best use the plane. I think it would be a good fit for the airline. Istanbul is the largest city in Europe-ish and I think the A380 would work on most of the routes where they currently operate the 777.

  1. “McNerney further said the higher than expected deferred 787 productions costs were due to investments in production methods and the labor costs not coming down as expected.”

    What he should say is “My strategy with the unions is not paying off.”

  2. So the sales group has a high level of confidence that they can fill the 777 line at 100 per year? To entice customers the end of the line frames will be 2% better than current production? This strategy makes so much more sense because it enables the company to generate cash while transitioning over to the next gen a/c. By the way the improvements can be done to existing fleet as well. The 2% also impacts the performance bogie for the A350-1000 also. Might explain why Airbus added a few more seats to that frame knowing that the improvements cause questions about their offering. And people say dated air frames are not money in the bank with marginal improvement programs. I bet the 777 has gained, with this 2%, somewhere in the 5-7% performance improvement over the life of the program. As the A330 did to the 787 (not that NEO concept) trying to eclipse existing technology is not an easy thing. Where the advantage comes in is that the newer frame has a larger long term performance improvement slope than the older frame. It’s just that the starting points have to be so far down the evolution curve. And that is why Airbus does NEOs, they want to leverage the old with new. The challenge is the old has limitations that cannot be overlooked. There may be an initial bump but the slope will never be as steep. For the 777 2% is major this late, no matter where it’s coming from. Spreading the cost over 400 more sales, plus the aftermarket, at the aftermarket mark ups will be a bonus for GE.

    • McNerney gets most of his salary from vested shares, exercised stock options and restricted shares.

      His interest is to cash as much as possible in 2015 -16 and retire.
      An ‘unforeseen’ 777 production gab / stock dive would be after 2016 .

      Seeing no 777 issue is a profitable vision for Jim. Every stockholder supports, as long as they can sell/cash in time.

      I say Buy!

      http://www.usatoday.com/story/money/business/2014/03/14/compensation-for-boeing-ceo-soars/6425487/

      • Money, money, money, always seems to be at the bottom of most business decisions. But saying something and not actually having justifiable proof has been a crime in the US. I assume, whether he retires before completion of a smooth 777 switch over may not matter in a court of law. Your guess is as good as mine though?

      • Interesting that Turskish is trying the A380 instead of a 747. Also note that it does not add anything to the Airbus book or even possibilities as there are A380s available (which tells you something as well). Get them cheap enough and its viable. Pretty heavy infrastructure to pay for though when you are only going to run 10 or so per airlines.

        Not that the 747 is better, just that with its central location a 747 would be better suited passenger count wise and the range not the big factor.

        Turkey is also centrally located enough for Mid East and Africa that singles aisles can reach viable destinations.

        They are also limited as the main airport is over capacity and they have not managed to get more capacity build.

        • Emirate can supply TA with lot of A380s soon, Delta like move, what’s not to like?

          • Maybe there were no 747-8 around for them to evaluate. The cost of conducting a A380 eval was less? You might be right but get LH to lend them two of their heavily used fleet. Hey KA has one at factory?

          • <i≥Maybe there were no 747-8 around for them to evaluate.</i≥

            Quite possibly, although Boeing has retained at least one frame originally destined for LH.
            But yeah – MH's current difficulties certainly make it easier to get some A380s on wet lease.

            But to imply they're only evaluating an A380 because that was cheaper to do than evaluating a 747-8i misses a point: Namely the meaning of evaluating. On actual routes and with actual TK crews that – thus – get trained up on the type already.
            I'm not saying a TK A380 order is a done deal yet, but to try and dismiss such a wet leasee followed by dry lease deal (if it does materialise) as not that meaningful is a bit disingenuous.
            But you're missing an obvious point: To evaluate

            The cost of conducting a A380 eval was less?

        • TA is exploring a new type of aircraft for their future. The 747 has no future. The gap to the big twin engined aircraft like 777-9X or A350-1000 (or -1100) is to small.

          • Fair point but if TA can pick up used A380s on the cheap does that mean the A380 really has a FINANCIAL future as well?

            The Concord flew on for years loosing big bucks, Airbus may be able to afford to carry the A380 loosing money forever, but what does that do to other programs that can return money?

            Boeing will drop the 747 because its never going to make money and has no future sadly enough, Airbus won’t drop the A380 not because its a commercial success but because it was an ego project.

            As long as Airbus can get away with it well and good but that is not the same thing.

          • It is an urban legend that Concorde operations by BA or AF were not profitable.

            Sometimes a company needs a product to offer the complete range and this product sells not so well today.

            The A380 is for sure an Ego project. Just read the bad comments about this aircraft here and you will see that some people have a problem with it.

  3. On the other hand, defense-aerospace.com reported this on the A400M.

    http://www.defense-aerospace.com/art…artners-due-to-meet-in-berlin.html

    “Customers also have found lapses in quality control. and delivered aircraft do not meet all contractual specifications. France has found several hundred deficiencies on its A400Ms, Collet-Billon said, although these are of varying gravity and range from nicks in the paint to serious capability shortfalls.

    For example, the aircraft is not yet cleared to drop paratroopers through its side doors, although paras can jump through the rear ramp. It looks unlikely that the A400M will ever be able to refuel helicopters in flight, Collet-Billon said, because of the strong propwash and induced instability generated by its large, contra-rotating turboprop engines. This is however a contractual requirement, and the capability should be delivered by 2017 or 2018.”

  4. How can this be a win win situation. Malaysian is no different than 90% of the other e380 operators, they simply do not need that capacity now. .

    • Malaysia Airlines should never have taken it in the first place. Fashion statement, ego, playing with the big boys.

      Also note they took the A400, hmmm

      You might note that for their highly vaunted air force they would not scramble a fighter at night to check out MH370

  5. A380 looks nice for LH premium y at 8 abreast. In a perfect world, middle seats should get a double armrest and a divider to lean against.

    McNerney says no response needed? Let’s see how the A321 pans out in five years. Sweat pants is formal attire at headquarters if Boeing’s given up.

    • Turkish is merely playing catchup to the Gulf carriers on routes that use A380.

      They have to match like with like.

      • EK alone has 58 copies flying to 31 destinations. With another 83 on the way (give or take on how the NEO offering goes) TK couldn’t catch up to the likes of the ME3.

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