Pontifications: Boeing spin

Hamilton (5)

By Scott Hamilton

May 18, 2015: Boeing has always been masterful with spinning its message, but the spin last week strains credibility with its explanation over how it will bridge the production gap for the 777 Classic into production of the 777X.

Leeham News last week examined Boeing’s detailed explanation, emerging from its May 12 investors day. Reports from aerospace analysts recounted Boeing’s assertion that when “feathering” in 777X production on the 777 Classic, because production of the X will be slow (normal for a new model and the ramp-up/learning curve), the X will be the equivalent of producing two or three Classics–and thus today’s production rate of 8.3/mo (100/yr) will be preserved, as claimed from the launch of the X program.

Poppycock.

As noted in our report last week, suggesting the assembly of one 777X is equivalent of producing two or three 777 Classics is specious at best.

It’s Boeing’s spin machine working overtime. And it’s simply not credible. Yet many aerospace analysts, even while expressing skepticism over this, nonetheless let this subterfuge slide, maintaining Buy ratings. A few brave analysts, willing to risk Boeing’s wrath, have downgraded the stock before now. Others should be following suit.

This is hardly the first time Boeing spins things to the point of straining credibility.

After analysts beat up Boeing on the third quarter earnings call over weak cash flow, Boeing in the fourth quarter began approaching lessors and airlines to accelerate progress payments and increase the size of advances in order to pump up cash flow for the year-end results. The sharp increase in 4Q cash flow caught Wall Street by surprise and several analysts who were at the forefront of questioning Boeing over cash flow were embarrassed. It took several weeks for these analysts to smoke out what was happening and by the end of 1Q2015, several issued notes with detailed analysis of what was going on.

The large advances and progress payment accelerations were being done so Boeing could maintain its commitment to Wall Street on the level of shareholder buyback.

Boeing, at its investors day, coughed up additional detail. Once again, most analysts gave Boeing a pass. In essence, Boeing has been borrowing against the future. The question, which largely remains unanswered, is how long Boeing can keep this up. But since analysts are more concerned about the next quarter than the long-term, there have been largely no consequences; only a few have downgraded Boeing on cash flow. Most continue to maintain Buy ratings on what is highly dubious cash flow quality.

Boeing has a long history of playing fast and loose with facts.

  • Officials advance arguments that the 737-900ER and 737-9 are far superior to the Airbus A321ceo and neo. The case is closer on the ceo but the neo is far superior to the Max 9–and sales prove it. The market has spoken. I hardly expect Boeing to publicly acknowledge the 321’s superiority, but the message could certainly be altered that for its mission, the 900ER/9 does quite well.
  • Boeing for years made similar claims about the 747-8I’s “superiority” over the A380. The market clearly thinks otherwise. The A380 has around 90% of the Very Large Aircraft (Passenger) sector. Boeing plays with seat count numbers, artificially boosting the 747-8’s configuration to boost the economic numbers. It’s not credible in the market.
  • Boeing made an international case out of complaints over Airbus subsidies and tax breaks, but routinely takes tax breaks from states and local jurisdictions–and the largest tax break in US corporate history for the 777X.
  • Boeing for the longest time used out-of-date (IATA, 2006-2009), dubious (DOT Form 41) and skewed data (the newest 737 vs the oldest A320) to argue the 737-800 had 24% lower maintenance costs than the A320. Boeing finally dropped the IATA data and the latter figure has become a moving target (I’ve seen 17% and 19% used). I don’t know if Boeing is still using DOT Form 41 data to make its argument.
  • Recently a Boeing official ridiculed Airbus for proposing 11 seats in the A380 coach section. This, as Wall Street Journal reporter Jon Ostrower Tweeted, comes from the company that introduced 10 abreast on the 777 and nine abreast on the 787. I will point out that even at 11 abreast, the A380 coach seat is wider than the 10/9 abreast seats on the 777 and 787. (That passengers #1 and 11 are scrunched against the sidewall of the A380 is another matter.)
  • Boeing routinely ridicules the A380 and its high reliance on one customer, Emirates Airlines, which ordered 140 of the 314 A380s. Boeing conveniently ignores that fact that this same Emirates ordered 150 of the 228 777Xs.

Talk about Glass Houses.

Boeing’s propensity to stretching credibility makes it very hard to accept its arguments when it’s right. Early on Boeing began questioning whether the A350-800 would ever be built; it turned out to be correct (at least in the -800’s current form), but there were many doubters of Boeing’s position (me included).  Boeing also raised questions over the viability of the A350-1000, a position that turned out to be half right. But the credibility issue cast a cloud of suspicion over its views on this one, too.

There are more examples, of course.

Airbus is hardly immune to exaggerating,spinning and casting aspersions. But I’ve been covering Airbus and Boeing since 1985, and it’s my experience that Boeing is by far the more egregious.

It’s too bad, too. Boeing produces very good airplanes. It’s a sound company. It doesn’t need to resort to sophistry.

  • As I was putting the finishing touches on this post, The Seattle Times published a rare interview with Ray Conner, CEO of Boeing Commercial Airplanes and a vice chairman of the parent, The Boeing Co. Obviously the interview is to control the public relations damage that’s been occurring in the current Legislative session in Washington State, in which Boeing has been criticized for moving jobs out of state even after receiving a record tax break in connection with the 777X program. While I’ve just spent 900 words beating up Boeing for its spin and sophistry, I found the Conner interview to be refreshingly candid, acknowledging mistakes in how job transfers were handled and providing some thinking of long-term challenges. This is in stark contrast to the bunker mode and say-nothing-to-nobody approach of corporate CEO Jim McNerney. While BCA routinely shoots itself in the foot over comparisons with Airbus and Chicago pumps sunshine up the rear ends of aerospace analysts over things like cash flow and production gaps, Conner’s interview Sunday is the sort of thing Boeing should be doing on a regular basis.

 

133 Comments on “Pontifications: Boeing spin

  1. A great company like Boeing needs to watch its communication more carefully.

    The choices Boeing makes and the priorities they set did damaged the Boeing Brand in recent years.

    McNerney, Tinseth saying things like Airbus is only catching up with the A320NEO is a kind of arrogance that embarrasses even Boeings strongest supporters.

    Perhaps appoint a new communication advisers / firm? This isn’t a used cars show.

    • “I think we all know Scott’s deep sympathy for the home team. This Pontification are taking aim at the communication tactics coming from that company and the people behind that.

      A company that isn’t cutting production rates but “feathering in the X”. If AA/UA scrap / delay 787s they “modified Dreamliner orders to enhance fleet mix”. All to tweak perceptions of their supportive but moderately informed stock holders.

      Communication that seems to insult dedicated professionals working there and the bigger (tax paying) community supporting it.

      Of course Airbus / Leahy also pushes the limits of decent information transfer. Just knee jerking Airbus does the same isn’t cutting it. Because it ain’t so and people start to notice.”

      I can only say that, after reading that, I feel like Turkish here:
      https://www.youtube.com/watch?v=vZ-nirYb00s

    • “Tinseth saying things like Airbus is only catching up with the A320NEO”…

      Actually that was uttered by Nicole Piasecki, not Tinseth, I believe.

      “Airbus is hardly immune to exaggerating,spinning and casting aspersions. But I’ve been covering Airbus and Boeing since 1985, and it’s my experience that Boeing is by far the more egregious.”

      Okay, Mr. Hamilton, you’re killing me. Boeing far more egregious? Serious? With gems such as the following?

      1. Who put out ads trying to scare the public flying twin engine aircraft over long distances, while selling an airliner to do THE EXACT SAME THING?

      2. Pinochio ad?

      3. “4 engines 4 long haul”?

      4. “Heavy paper airplane?”

      5. “Dog’s breakfast” airplane lineup?

      6. “18 in seat the best” campaign? (Thoroughly rejected by industry and said manufacturer pushing configurations that will have 16.5 inch seat width?

      7. Calling the refs to truncate their competitor’s flying display in the name of “safety”?

      8. “Claims are as obsolete as the 747?”

      http://aviationweek.com/commercial-aviation/airbus-boeing-fight-over-747-a380-performance-data

      8. “Has had its day..” ad? http://www.wings900.com/vb/1-1-civil-aviation/64053-airbus-slams-b747-8-advert.html

      I mean, we got it. Boeing says some things, but to say they are more egregious than their competitor is really stretching it.

      • As noted, I’ve been covering Boeing since 1987, far more in-depth and frequently than @Neutron73. The rhetoric is indeed silly on both sides. The technical comparisons are another matter entirely.

        Hamilton

        • There is added meaning introduced via the hat worn by the person that espouses on something in scope of Boeing corporate communications.
          The basic info still is coming out of the “Boeing Corporate Brain” entitiy ( or whatever tag one wants to use in that context )

    • How about a new management group?

      Its the source that should worry you.

    • Top of the greatest hits for me is the following quote:
      “Our 737-800 today is more efficient than the NEO hopes to be in 2015 so we are well-positioned,” said Nicole Piasecki, vice president of Business Development for Boeing Commercial Airplanes.
      … 5 minutes later they launched MAX.

      As Neutron73 said, the NG v neo comparison came from Piasecki.

      • “As Neutron73 said, the NG v neo comparison came from Piasecki.

        See my post above.

        • Depends what reference is used. Piasecki specifically said that the pre MAX 737NG is better than 2015 A320neo *before* MAX was launched. Tinseth, in his quote, is comparing MAX 9 to A321neo, presumably, *after* the MAX was launched. Two different time points, which illustrate how Boeing denied the airlines were interested in a re-engined product, while Airbus were getting orders by the bucket load. We disscussed it in 2011, see comments:
          https://leehamnews.com/2011/07/25/30m-for-the-737re-and-a320neo-wells-fargo/

          • Thanks, UKAir, you explained it much better than I could have managed.

          • Alright, if we’re gonna get down to semantics…

            We have to ask Keesje what specifically he was referring to.

            But at first glance, out of the three keywords – “Tinseth”, “A320neo”, “catching up” – two of them match my quote above and despite the ambiguity of the third one, it could also be taken to refer to any member of the A320neo variants. He probably generalised it to fit McNerney’s remark as well. See: http://www.flightglobal.com/blogs/flightblogger/2011/02/boeing_ceo_jim_mcnerney_were_g/

            I can’t find any instance where Piasecki specifically said “catch up” in relation to the neo, although there were other ways the same meaning was conveyed.

          • It really doesn’t matter who said “catch up” first. Boeing’s messaging is always very consistent: when a talking point is agreed, everybody uses it.

  2. “Chicago pumps sunshine up the rear ends of aerospace analysts over things like cash flow and production gaps”

    Lol, you really made me laugh this morning 😀

  3. I will point out that even at 11 abreast, the A380 coach seat is wider than the 10/9 abreast seats on the 777 and 787. (That passengers #1 and 11 are scrunched against the sidewall of the A380 is another matter.)

    The same applies to passenger #1 and #9 on the 787. Maybe a bit less – hard to tell. The issue is that the floor doesn’t extend as far to the side as the seat cushion above, particularly to allow for floor level ducting.

    • There are also a 10 seats abreast A350 and a 9 seats abreast A330 configurations.

      • Which is even worse. However 9 across is standard on the 787 and 10 becoming so on the 777, whereas most A330/A350’s are staying at 8 and 9 seats respectively. The point about 11 across A380 is that it is essentially no different from the standard 787 and 777.

      • Sure.

        The contentious issue is the comparison of humungous-across Boeing seating against (more) acceptable-across Airbus seating to warp the Boeing offer into a competitive position.

  4. The seat point is well made Scott. Look on trip Advisor or Seat Guru to see the striking and almost unanimous level of dislike of the paying public for the 9 abreast economy seating in the 787.
    When I was involved in buying 787s for a lessor about 8 years ago it was sold by Boeing as a 767-300/400 replacement with superior comfort and economics. In the meantime the 330 got so much more capable and the 350 came along. Boeing have no option but to push 9 abreast to keep seat mile costs down. The thought of 12 hours in what is essentially an Avro RJ seat is enough to make me reconsider taking a cruise for my holidays!

    • In this part of the world, the 9 abreast 787-9 which was supposed to be a 767 replacement has turned into 777-2oo replacement. And with the lower fuel prices 767s have been held over for new routes.

  5. “…the X will be the equivalent of producing two or three Classics–and thus today’s production rate of 8.3/mo (100/yr”

    I sill don’t understand why Boeing just doesn’t announce a production rate reduction for 777. The -X will be produced with the converted 787 surge line. So, even if it is true that the production of the -X is equivalent to 2-3 CEO, the production rate of the 777 production line will be reduced will all the consequences (higher unit production cost, reduced profitability, etc.)

    • The transition from the 777 to the new 777X will happen “without a hit to production rates,” McNerney told an investor conference hosted by Barclays Plc in Miami, addressing a key concern about the company’s future performance.

      I would say that’s a borderline dishonest claim from a couple of months back, if he intends a slower production rate with the same resource requirement to mean no “hit to production rates”. Now it’s possible that Boeing’s story is changing but they are trying to disguise the change. The other issue is about expected sales. Until proven otherwise they can continue to say they will make high sales. Boeing are leaving until the latest possible moment to prove that they do have the sales or admit they won’t get there.

      • Weelll, it appears to be a rather roundabout way to express that there will be no workforce expansion in the transition time 😉

        In this context Airbus obviously is disadvantaged as they don’t have to pimp their updated frames so excessively.
        A330 NEO probably never goes beyond 1.2 A330 CEO and the A320 transition could potentially never exceed parity.

    • “I sill don’t understand why Boeing just doesn’t announce a production rate reduction for 777.”

      I believe Boeing is just trying to buy time because it is more convenient for their present strategy to pretend that everything will continue unabated. And because there is still a few years left before we get there they have plenty of time to re-adjust their forecast in due time. All they will need then is some half-cooked excuse and most analysts will forgive them because Boeing is always right. In other words they are invincible.

      This was indeed the case for a long while, especially after M-D went out of business. They had at that time 80% of the market to themselves and we created an aura around them that eventually became part of the Boeing mythology. Airbus would never catch-up with them simply because Airbus was not Boeing. There was only one Boeing and they were bulletproof like their original 707 Stratoliner.

      Boeing has been surfing on their well deserved reputation for a long time now. But the world has changed and Boeing never felt the need to make the necessary adjustments. From 80% they went down to less than 50%, and I have the impression that the 50/50 market share with Airbus that we see today is moving south for Boeing and North for Airbus.

      Like the Titanic, Boeing is not unsinkable. No matter what the captain says.

  6. It is sad to see McNerney turning that once great company into a McBoeing fiasco, very sad as there are people more capable out there to do a better job and ensuring a great next 20 years.

  7. “the existing A330ceo is not competive at all as it is, the 300ER at reduced price is!!!”

    The A330 is more comparable to the 787 in size and capacity. In fact, the current A330NEO proposals is very similar to the original A350. The current A350XWB is comparable to the 777 in size and capacity.

    “The A330neo is a paper plane, and only. if at all. competitive, and only partially so, if the very doubtfull wishful efficiency is verified”

    The A330NEO EIS is due to 2017, that is very soon. It will fly probably by the end of the next year. 777-X is essentially a new aircraft. Everything change except the fuselage section. New wings, new engines, new nacelles, new cockpit, new ECS, probably new landing gear, new fuel systems, new hydraulic systems, new electrical systems, new pneumatic system, new electrical systems, etc. The EIS is only due to 2020.

    “Another issue which some analysts are very concerned is that the 300ER is selling very cheap, forgetting that due to the enormous success of this aircraft the standadr profit is very high, plus the fact that the plane is already totally amortized. So, even if now there is a large discount, by no means is sold at a loss.”

    An additional discount of 10% on an aircraft like the 777 means up to 30 millions less profit per air-frame and a considerable reduction in cash flow. So Boeing will lose billions in cash flow until the introduction of the 777-X.

    “And equally important, the 300ER, and more so which the “small” efficience increase Boeing is offering it, is still competitive, even less than the 9X, with the A350-1000, precisely because the strong reduction of the price.”

    The performance improvement of the PIP is 5%, only 2% is from engine and airframe (aerodynamics and weight) improvements and the other 3% is from increased seating.

  8. Some more spin here: http://boeing.q4web.com/files/doc_presentations/2015/05-2015_IR_Conner_v001_c64v9n.pdf

    Page 4: “Most comprehensive product lineup in the industry”
    Comparing 12 different Boeing aircraft against 8 Airbus aircraft. Even the 767-300ER is shown. Maybe to hide the gap between MAX200 (too far above the “200” line) and the 787-8.

    Page 7: “777X – Design simplicity continues to drive producibility”
    No folding wing tips?

    Page 9:
    – “Expand market leadership”
    – “Maintain competitive advantage”

    • @MHalblaub: I think Conner’s slide 4 is fair. Inclusion of the 763 is a little cheeky, but beyond that, fair.

      Hamilton

  9. I know you are labeled news and commentary but this article should have a special flag in the title. You have gone quite visceral on this subject.

    • “Pontifications” is in the title, thus providing the label @John seeks.

      Among various definitions, from the web:

      to speak in a pompous or dogmatic manner
      To express opinions or judgments in a dogmatic way

      and my favorite, from Urban Dictionary:

      The act of speaking out for the purpose of hearing oneself speak.
      Posturing…speaking to people that don’t really care what you say one way or another since you’re speaking solely to front yourself as “someone in charge”.
      Speech or written communication that is generally pointless except to cast favorable light upon the speaker or author as if the message were a pronouncement from on high.
      Usually full of shit.

      No question this column was particularly harsh on Boeing. It had it coming. Just as my recent strong defense of the 787 was appropriate when it unfairly was characterized.

      Hamilton

    • It is not clear to me how you stretch an airplane which already has questionable performance characteristics. Maybe someone can explain. The A350-1000 feels to me like the A340-500/-600 in terms of market appeal. Glad I don’t have any residual value exposure.

      • Questionable performance? A340-like market appeal? I guess airlines like UA and BA didn’t get the memo. And rather odd to see the likes of CX and QR who got rid of most of their A340-600s rather quickly to commit to the same “mistake” again.

      • “questionable performance characteristics”

        Nonsense. It’ll beat the 777-300ER by such a massive margin that it has forced Boeing to spend upwards of $10 billion on the 777X – which IMJ might go down as another serious strategic error. Believing that they can maintain production of 777s at an annual output of 100 per year through the next decade, looks like another fanciful projection by McNerney & Co.

        Now, the A350-1000 will have about the same fuel burn per seat as that of the 777-9X. The latter will only beat the former on CASM – which it should do as larger aircraft are not competitive if they aren’t able to beat smaller ones on CASM.

        Interestingly, the 777-9X will only manage to beat the A350-1000 on fuel per seat thanks to the GE-9X engine that will better the Trent-1000-97 engines by some 5 percent in TSFC. Depending on better engine technology in order to maintain parity doesn’t sound like a good idea to me. Imagine if the A350-1000 would be re-engined 10 years hence with an engine that has 5 percent lower TSFC than the GE-9X. I’m not sure how Boeing would be able to respond to that. The GE-9X will have a 132-inch diameter fan. That’s 14 inches more than the diameter of the fan on the TXWB-97 engine. In short, the 777X is maxed out both engine-wise and gross-weight-wise. You can’t put a larger engine on the 777X and the triple bogie landing gear has no growth potential (i.e. it can’t support much more than 352 metric tonnes in MTOW) A heavier 777X (i.e. 777-10X) would need a 747-type landing gear. In contrast, the A350-1000 platform has a massive growth potential both in engine size and in MTOW growth.

        As for stretching the A350-1000; it’s possible to stretch the A350 by 18
        frames depending upon how much the landing gear footprint can be increased from the current 32.5 m. Assuming you could stretch the A350 fuselage to 85 m (i.e. 18 frame stretch), Airbus could modify the current wing – by the way of a two fuselage frame insert at the wing root. Thus, you’d have a chord-wise insert of 2×25″ in addition to an increase in span to over 75m. In fact, such a modified wing would have a wing area greater than the wing area on the 747-8 wing. So, Airbus could develop a new family based on the A350. Let’s call it the A360 family: A360-800X, A360-900X and A360-1000X. The A360-900X would be just short of 80m in length and would have the same capacity as that of the A777-9X. The A360-1000X would have a length of some 85m and have about the same capacity as that of the 747-8I. The A360-800X would be equal in size to the A350-1000 but would have a range of 10,000 nm. Finally, therefore, depending on the landing gear footprint, an 85m long A360-1000 is doable. It would , in fact, have a slightly lower fuselage slenderness ratio than that of the 757-300 fuselage – so, answering your question; yes, the A350-1000 is definitely stretchable. 😉

        Page 48:
        http://www.airbus.com/fileadmin/media_gallery/files/tech_data/AC/A350-1000_Airport_Compatibility_Brochure_August_2014.pdf

        • The A350 is perhaps stretchable but this will very expansive, probably similar to the development cost of the 777-X. Moreover, this will create further internal competition with the A380.

          I am not saying that stretching the A350 is a bad idea, I am not just as enthusiastic as you.

          • Will the 777X present a bigger effort for Boeing than Airbus invested into the A340/A330 platform for the A340-5/600 ?

            I’d think so. My guess would be about double in money spent .

          • @Jacques Xing

            IMJ, stretching the A350-1000 and adding a two frame chord-wise insert would be more akin to the development of the A345/A346, than to what is required for the 777X. Where the 777X needs an all new wing (i.e. upwards of 40 percent of the costs for an all new aircraft), a stretched A350-family (i.e. A360X-family) would retain the leading and trailing edges of the A350-1000 wing, although the movable surfaces would be increased in length further outboard.

            However, it contrast to the A345/A346 wing, the insert into the wingbox would not have to be tapered since there would be no need for an increase in the sweep angle of the wing. Therefore, the chord at the tip of the wingbox would also be stretched by 2 x 25″ (2 x 0.635m); leading to a near doubling of the width of the outer wingbox near the tip. The outer wingbox on the bigger wing would be stretched further outboard in order to put the folding wing hinge mechanism at about 32m from the centre line of the fuselage. Two 5-6 metre foldable wingtips would be attached, by way of the hinge, to the larger wingbox. Airbus would probably have to add a centre spar, inboard of the engines, though (i.e. there’s no centre spar on the current A350 wing).

            Hence, I would tend to agree with Uwe below. The 777X will be at least cost twice what it took to develop the A345/A346, while a stretched A350-family (i.e. A360X-family ?), would be comparable to the A345/A346 in both scope and in financial resource requirements.

            NB: Descriptions of A345/A346 chord-wise tapered wing inserts:

            http://www.flightglobal.com/pdfarchive/view/1996/1996%20-%202680.html

            http://www.flightglobal.com/pdfarchive/view/1998/1998%20-%202367.html

          • “The A350 is perhaps stretchable but this will very expansive.”

            Yes, it will in fact be both expansive and expensive. 😉

        • Like Jacques, I am not too hot to the idea of stretched versions of the A350-1000, and for the same reason: internal competition with the A380. And besides, I think it would tend to look like the CRJ1000. When you say that “the A350-1000 platform has a massive growth potential both in engine size and in MTOW growth” I think you are ‘stretching’ reality a little bit. 😉

          We have to accept the fact that Airbus chose to attack both the 787 and 777 with the same airframe. So when viewed from that angle the A350 is in fact a compromise. As they say, you can’t have your cake and eat it. You have to share, and in this case Airbus had to share it with both the 787 and 777.

          To fill the gap between the A350 and A380, while responding to the 777-9X challenge, Airbus will have to develop a new fuselage width carefully chosen to be optimized between the former two, and perhaps slightly wider than the 777. But that will cost a few more Euros. I think that today Airbus is in a better financial position than Boeing to develop new models, but tough decisions will have to be made in the coming years. For simultaneously developing an A380neo and an A370 will not be possible.

          As for the A360 family that you propose, this does not make much sense for this observer. I am not competent enough to be able to respond technically to what you put forward, but let me just say that you failed to convince me. And likewise, Airbus might fail to convince their customers. By any chance, are you the guy that persuaded Airbus to do the A340 family? Just joking. 🙂

          • Airbus can simply stretch A350-1000 into 1100 with the same MTOW with shorter range that will beat any 777X economics handily. As this will not have the capacity or the legs of the A380 it will not hurt so much.

          • I like the way you put this. It’s both clear and simple. You sure know how to persuade with only a few words. That is something both OV-099 and myself are incapable of doing. 😉

          • This is the enjoyable armchair designer stuff.

            I don’t think Airbus will make a decision on the A350-1100 until the 1000 model has been flying for a couple of years and possibly had its first improvement program and MTOW boost. They will then be able to evaluate what further improvements will be necessary to meet a minimum specification for the 1100 model. The other reason for not committing now is that they are sold out on the A350 for next several years. There’s no point in incurring the expense of developing a new model you can’t sell straight away.

            If they do a 1100, I expect it to be 5 metres longer than the 1000. The stretch is constrained by the requirement to keep the exit doors no more than 60 feet apart. A stretch that is shorter than that wouldn’t be worthwhile; a longer stretch would require an additional pair of exit doors, which wouldn’t be justified for another couple of metres of cabin length.

            The minimum payload range target, I think, is all passengers and bags to fly 7300 nm. This was the capability of the 777-300ER on entry into service, which was regarded at the time as being somewhat underpowered. 7500 miles would be better. Airbus would then need to work out what modifications are necessary to get there with the current airframe. Could they go with the current engine for the time being, or do they need to wait until the second half of the next decade for a NEO?

            Airbus should be in a good position with a combination of 1000 and 1100 versus the 777-9X. I would expect them to move from one third of the large twin market to half or two thirds. As it gets more capable the 1100 would become the mainstay and the 1000 the niche aircraft for longer ranges.

          • “This is the enjoyable armchair designer stuff.”

            This is indeed “enjoyable designer stuff”, armchair or not. Thanks for making this situation much clearer for me. I just hope it will be as clear for Boeing. But to see this they will need new glasses. For with their present limited vision they can’t see much further than the next quarter.

          • @FF

            I don’t think Airbus will make a decision on the A350-1100 until the 1000 model has been flying for a couple of years and possibly had its first improvement program and MTOW boost. They will then be able to evaluate what further improvements will be necessary to meet a minimum specification for the 1100 model. The other reason for not committing now is that they are sold out on the A350 for next several years. There’s no point in incurring the expense of developing a new model you can’t sell straight away

            All very good points. I wouldn’t expect anything but a simple, stretched A350-1100 to enter service before 2025.

            “If they do a 1100, I expect it to be 5 metres longer than the 1000. The stretch is constrained by the requirement to keep the exit doors no more than 60 feet apart”

            Please do take a look at the A350-1000 Airport Compatibility Brochure in the link below. On page 10, you’ll see that Airbus already offers a type C exit between doors 3 and 4 for high density layout configurations.

            Stretching the fuselage of the basic A350-1000 by more than 3 frames aft of the wing will exceed the 60 ft limit. For example, a 4 frame stretch would mean that the distance between doors 3 and 4 would be 60.5 ft.

            Now, by increasing the chord of the wing by the equivalent of two fuselage frames, you’d probably look at a 3 frame stretch aft of the wing and 4 frames forward of the wing (NB: +fuselage frames in the centre section). Thus, only 8 doors would be required on this conceptual 79.5 m long A360-900X.

            On the conceptual 85.2 m long A360-1000 (e.g. the direct replacement for the 747-8I), you’d need a type C exit between Doors 1 and 2 and between Doors 3 and 4. The type C exit between Doors 3 and 4 would be similar to the 777-9X configuration, but the requirement for a type-C door between Doors 1 and 2 would be an all new development since no current widebody has 12 doors on the main deck.

            However, if you’d put the 2nd type C exit between the first class and business class sections in the forward fuselage, an operator could introduce the same type of first class as is now available on Etihad’s A380s. If the first class only had one aisle, the area between the type C exit doors would be perfect area for a transition to two aisles for business class – problem solved! 🙂

            http://www.airbus.com/fileadmin/media_gallery/files/tech_data/AC/A350-1000_Airport_Compatibility_Brochure_August_2014.pdf

            Finally, I agree that a simple A350-1100 should be easily doable. However, I would argue that a more ambitious programme that would produce a wing for both an A360X and an A380-derived twin (e.g. as described in my response to Normand Hamel), could very well turn out to be a very astute move on the part of Airbus. IMJ. it would make life very difficult for the 777-9X. A simple A350-1100 would IMJ not be able to fully match the 777-9X in capability.

            The wing would be about 25 percent greater in size, which would mean that the A360X would be slightly “over-winged” (i.e. dry centre wing box), but should be about right-sized for an A380-derived twin having an intermediate range capability. The MTOW of such an aircraft would be around 400 metric tonnes, and it would have a 747-type MLG.

          • @Normand Hamel

            1.) An 85m long, stretched A350-1000 would look like any other “super-stretched” aircraft having wing-mounted engines. E.g. like a 757-300 or a DC-8-63/72 (minus two engines).

            2.) The MTOW of the A350-1000 is 308 metric tonnes. The triple bogie main landing gear system that’ll be used on the A350-1000 can quite easily be modified to handle up to about 355 metric tonnes in MTOW. That’s 15 percent more than the MTOW of the A350-1000 – or IMO, a mssive growth potential. 😉

            3.) The fan diameter of the Trent-XWB-97 engine is 118 inches. Increase fan diameter by 12 percent – and you’ll get the same fan size as that of the fan on the GE-9X engine. Keep in mind that engine to fuselage centerline on the 777X is 0.91 m (3 ft) further outboard compared to the 777-300ER; or 9.61 m + 0.91 m = 10.52 m! Hmm, the engine to fuselage centerline on the A350 is 10.5 m – so, the A350 can indeed have as large as engine mounted to its wings as that of the 777X wing. However, a 12 percent increase in fan diameter is still relatively “massive”. 😉

            http://www.aspireaviation.com/wp-content/uploads/2013/12/777X-airport-compatibility.pdf

            4.) “We have to accept the fact that Airbus chose to attack both the 787 and 777 with the same airframe

            IMO, Airbus chose to counter the 777/787 with the same wing (i.e. the wing on the A350-1000 is largely the same as the one on the A350-900, except for larger flaps etc. on the trailing edge). That doesn’t mean that modified or different and all new wings could be put on the basic A350 fuselage platform in the future (i.e. like the A300/A310/A330/A346). What’s a compromise on the A350-1000 is its slightly less than optimal wing aspect ratio. In that sense the A350-900 is the equivalent to the A300B2/B4.

            5.) “To fill the gap between the A350 and A380, while responding to the 777-9X challenge, Airbus will have to develop a new fuselage width carefully chosen to be optimized between the former two, and perhaps slightly wider than the 777. But that will cost a few more Euros.

            An all new aircraft is, at least, a $15 billion undertaking. An A360X-family as described above would IMJ be a $5 billion undertaking.

            If Boeing had gone down the route of developing an all new Y3 successor to the 777-family, IMJ Airbus would probably have been forced to follow suit since a fuselage optimized for 10 abreast and exceeding 75 m in length, will start having a more favourable fineness ratio and less relative wetted area.

            Now that Boeing has chosen once again to upgrade an old and heavy airframe, and depending on better engine TSFC to achieve parity on fuel consumption per seat, Airbus is IMO in an enviable position to counter with a relatively cheap A350-derivative programme. Also, keep in mind that an A360-900X would be stretched by 9 frames, or 5.7 m over that of the A350-1000, and would have an overall length of 79.5m (i.e. 3 m longer than the 777-9X). This would be the airframe that would, at the minimum, equal the 777-9X in capacity and payload. However, it would have a superior wing aspect ratio, lower MTOW and lower engine TSFC than that of the 777-9X. Hence, such an undertaking would is definitely doable.

            When it comes to an 18 frame stretched, 85,2 m long A360-1000x, it would have about the same floor area and passenger capacity as that of the 747-8I. The only major show stopper would IMJ be the increase in the landing gear footprint (NB: page 48 in the link below). The distance from the centre-line of the nose gear and MLG would be increased from 32.5 m, to about 38 m. The equivalent centre-line distance on the 777-9 is “only” 32.3 m. Now, as you can see on page 28 in the link below, the turn capability for a 180 degree turn width is 59 m for the 777-9X and 66 m for the A388, which would seem to indicate that, indeed, an 85,2 m long A360-1000X could operate on all airports that are cleared to handle the A388 (i.e. Category F).

            http://www.airbus.com/fileadmin/media_gallery/files/tech_data/AC/A350-1000_Airport_Compatibility_Brochure_August_2014.pdf

            6.) As for the A340, IMJ the development of the A345/A346 provided Airbus with a whole lot of lessons-learnt on how to integrate a chord-wise insert into an existing wing. That could very well turn out to be a very valuable experience moving forward.

            7.) Finally, as the A380 and the A350 have the exact same fuselage frame spacing, it should be possible to put the A350-derived, modified and larger wing onto the A380 fuselage, although a the centre wing box would have to be slightly stretched in the y-axis, and be modified in order to be integrated into the A380 fuselage structure

            So, we would be talking about a wing that would be slightly larger than the one on the 747-8, and much more advanced. Such an undertaking would lead to a twin engine double-decker that would be similar to how the A330 was designed vis-à-vis the A340.

          • It looks like your posts also benefit from the same kind of massive growth potential. 😉 They seem to fall into the ULR category (Ultra Long Reply). 🙂

            Paragraph 4.): “That doesn’t mean that modified or different and all new wings could be put on the basic A350 fuselage platform in the future.”

            To make sense of that sentence I would need to add the adverb ‘not’, as in “that does’t mean a new wing could not be put”.

            Paragraph 5.): “Now that Boeing has chosen once again to upgrade an old and heavy airframe, and depending on better engine TSFC to achieve parity on fuel consumption per seat, Airbus is IMO in an enviable position to counter with a relatively cheap A350-derivative programme.”

            I think you have touched a raw nerve here. Ouch!!! 🙁

            Paragraph 6.): “As for the A340, IMJ the development of the A345/A346 provided Airbus with a whole lot of lessons-learnt on how to integrate a chord-wise insert into an existing wing. That could very well turn out to be a very valuable experience moving forward.”

            The exact same thought had occurred to me while reading your previous post.

            Paragraph 7.): “As the A380 and the A350 have the exact same fuselage frame spacing, it should be possible to put the A350-derived, modified and larger wing onto the A380 fuselage.”

            I am afraid you lost me there.

            Normand

          • @Normand

            1.) Yes, writing a ULR is OK to do while listening to this: 🙂

            https://www.youtube.com/watch?v=tfK_3NuRHt8

            2.) Yes, you’re right, of course. I left out the adverb “not”.

            3.) “As the A380 and the A350 have the exact same fuselage frame spacing, it should be possible to put the A350-derived, modified and larger wing onto the A380 fuselage.”

            I am afraid you lost me there.

            Forces are transmitted from the wing to the fuselage only at the wing base; or at the junction centre-wing box and outer wing box, and centre wing box to fuselage. Since the radius of the lower fuselage on the A380 is slightly bigger, a modified A360X centre wing, stretched slightly in the y-axis would have to be manufactured separately.

            However, since the frame spacing on the A350 and A380 is identical, the wing box on an A380-derived twin engine aircraft and the A360X would be equal in length in the x-axis, it could therefore have an identical interface between the outer wing box and the centre wing box.

            NB: If what I’m saying is still incomprehensible, please take a look at the link below. There, you’ll se several Airbus centre wing boxes and the integrated fuselage frames, forward and aft.

            http://www.ewshm2014.com/Documents/Nantes_Airbus.pdf

          • I am a long time Argerich admirer. Thanks for this most admirable piece of music. 🙂 Who told you that I loved Chopin?

            By the way this weekend I mentioned to a friend what was then for me the first musical piece that you had posted here: Purcell’s Music for the Funeral of Queen Mary.

            https://www.youtube.com/watch?v=AYELAu9hqdU

            That was the day I became an OV-099 fan. At the time I preferred the interpretation I had in my own library. But I have since changed my mind and adopted this one as my reference.

          • @Normand

            Well, who doesn’t love the 2nd movement of his piano concerto number 2? 🙂

            BTW, I forgot to mention why I’ve been talking about 85m. It so happens that the people behind the Al Maktoum International Airport (DWC) expansion project in Dubai is planning for the future, and increasing Category F aircraft box dimensions from 80m x 80m, to 85m x 85m. Thus it would seem as if Emirates could be very interested in both an 85 long A360-1000X and an 85 long A380-1000X. 🙂

            The main characteristics of the airport are the following:

            Five parallel Code F runways of 4.5 Km each in length spaced wide apart in order to provide for simultaneous quadruple parallel aircraft approaches.

            The first all-weather, Instrument Landing System (Cat IIIB) which allows operations under low visibility conditions.

            Triple Code F parallel taxiway system next to the two runways on either side of the central terminal area. Triple Code F cross field taxiways across the central terminal area in order to minimize taxiing distances and time.

            Critical aircraft box dimensions of 85m x 85m that cater for the new generation expanded aircraft versions from the leading manufacturers of Airbus and Boeing.

            Apron design encompassing dual Code F push back taxi lanes for each contact stand.

            http://daep.ae/press-release/al-maktoum-international-phase-1/

          • Addendum:

            ……Thus it would seem as if Emirates could be very interested in both an 85m long A360-1000X and an 85m long A380-1000X!

          • For some real estate owners the new airport will be a noisy wake up. The artificial islands of Palm Jebel Ali are just 15 km away from the threshold of 5 runways.

            Maybe the steady vibrations of aircraft engines will cause the artificial sand islands to sink much quicker then expected.

          • Would you please take the “sidebar” conversations offline?

            If the posting is not germane to the topic being discussed it detracts from Scott’s fine site.

          • Thanks for the admonition mister Calvin Qi. After four years of commenting on a daily basis I had completely forgotten about this rule. I am sure Scott Hamilton, the editor of this excellent blog, did not forget about his own rule, but perhaps he was too busy to remind me himself.

          • I saw what you are talking about in the Nantes document that you provided. The fuselage frames are already integrated to the centre wing box like if they were built into it. It’s a beautiful design.

          • I would not start to optimize a single deck aircraft with a 10 abreast seating. The optimal aircraft has low capital costs, low fuel burn and low crew costs.

            Low capital costs and low fuel burn is reached by small aircraft.
            Therefore we most time fly single aisle on short ranges.

            B737-8: ~ 219 kg EOW/pax
            A320: ~ 240 kg EOW/pax
            A310: ~ 315 kg EOW/pax
            B787-9: ~265 kg EOW/pax
            A359: ~ 265 kg EOW/pax
            B777-300ER: ~305 kg EOW/pax
            B777-9X: ~325 kg EOW/pax
            A380: ~ 325 kg EOW /pax
            pax: maximum certified

            We don’t fly single aisle only because people dislike to have many stops on their trips. One of the main reasons for big aircraft is range.

            Another interesting thing is fuselage volume
            737-8: 2.0 cbm/pax
            777-300ER: 3.4 cbm/pax
            (rough estimation: cabin cross section X fuselage length)

            Could Airbus build an A350 XWB 18 inches / 45,7 cm wider? Fuselage diameter for XWB is about 6 m wide. So an A350 XXWB would be 6,46 cm wide. Frontal surface would be increased by 16 % to go from 9 to 10 abreast seating or to add just 11 % more passengers. The surface of the fuselage is just increased by 8 % but to compensate for more weight the wing surface would also need to be increased… It looks like the XXWB would not be far more efficient than the XWB and just a longer XWB would do. The only way to overcome these geometrical problems is to add more decks.

            The 777-X trick is to scratch out some diameter from the inside without increasing the outside diameter. For 18 inch seating the remaining fuselage has a thickness of just 6.5 centimeters or 2.5 inches. We will see what other consequences this trick will have.

            It could be that 9 abreast seating is quite optimal. Was not the 777 original 9 abreast? I like 9 abreast with 3-3-3 seating because there is only one middle seat.

  10. I think we all know Scott’s deep sympathy for the home team. This Pontification are taking aim at the communication tactics coming from that company and the people behind that.

    A company that isn’t cutting production rates but “feathering in the X”. If AA/UA scrap / delay 787s they “modified Dreamliner orders to enhance fleet mix”. All to tweak perceptions of their supportive but moderately informed stock holders.

    Communication that seems to insult dedicated professionals working there and the bigger (tax paying) community supporting it.

    Of course Airbus / Leahy also pushes the limits of decent information transfer. Just knee jerking Airbus does the same isn’t cutting it. Because it ain’t so and people start to notice.

  11. The Connor article may be candid, but it’s also crammed with lies, half truths, misconceptions, and pants wetting.

    It’s also an employee relations disaster.

    He talks about 30,000 hires as a if it’s a net gain.

    The economic situation will preclude a portion of the expected retirement churn. Virtually everywhere, older workers are delaying retirement and holding younger ones out of the workforce.

    Outsourcing, automation, lean, and the retirement of747 will mean large net job LOSSES, not gains. The impact of further 737 rate increases on employment will be minimal, a few hundred at most.

    Sales generally, have flattened, and why there is no alarm over the lack of further 777x sales I can’t fathom.

    Boeing’s commercial R+D is flat on it’s back, with no clean sheet aircraft being seriously contemplated. Airbus continues to chip away at Boeing’s major cash cows, as with A-321LR, and Boeing can’t respond.

    It’s propping up it’s own stock with buybacks and dividends it cannot afford, while spending heavily on infrastructure and program missteps, using either cash or borrowed money matters not.

    Meanwhile, ray Connor doesn’t impress me with his salesman rhetoricals, his whiny hyperventilation, or his abuse of simple logic.

    Here is a typical Connorism:

    “You see abandoned buildings and you see a place that’s gone from over 50,000 people at one point in time, to like, 1,300,” Conner said. “That’s just something that we can’t let happen to the Boeing Company.”

    Ummm, Ray, it just did, because in case you didn’t notice, the C-17 program was owned by Boeing, lived and died by it’s decisions, as did aircraft manufacturing in Southern California.

    “Conner acknowledged the bitterness left by the 777X labor deal that froze the pension plan of Machinists union members at Boeing.”

    I suggest then Mr. Connor, that you and the rest of the executives and senior managers stop bayonetting the corpse of the IAM and your other unions and try to come to some sort of detente with them. You got what you wanted, yet seem dedicated to continuing the clumsy, harsh and ham fisted style of dealing with them as has been the case the past few years.

    • I’m going to have to agree with what Normand has said in previous threads. Boeing is spending billions on stockholders which should be going to new airplane programs, if they want a sustainable company. Basically we are watching a decades long slow liquidation of assets built over a century, for a current group of owners who are cashing out, because they can.

      The 787 was due to fly in 2008, in 2020 an all new aircraft was due. Instead there is the 777x which is half new, so that is six missing years, so the 777x takes us to 2014. A dozen years from that is 2026 when a clean sheet aircraft is due, or Boeing begins to bow out of the game.

    • Here is a typical Connorism:

      “You see abandoned buildings and you see a place that’s gone from over 50,000 people at one point in time, to like, 1,300,” Conner said. “That’s just something that we can’t let happen to the Boeing Company.”

      Ha – I was a bit confused by that as well. Sure, he tries to imply that Boeing can’t/mustn’t go down like MDD has. But Long Beach has been a Boeing site for almost 20 years now, and it was under Boeing control that the 717 and C-17 lines were shut down with nothing (e.g. 2nd 787 line) put in place to replace them.

      Also agree generally with a few (not necessarily all) of the points you make (which can be summarised as “I’m not terribly impressed by Conner’s comments.”)

  12. Follows a few personal comments on the Seattle Times interview. Each excerpt is followed by a related comment, like I often do.

    “Anticipating a wave of employee retirements in the next few years.”

    This is part of the unfavourable convergence I have been talking about in previous posts.

    “Boy, we can do great things …but we’re going to have to really tighten up here. Because the other guys are good.”

    This is something I would like all the Boeing fan boys to understand: that the other guys are indeed very good. It’s time to recognize this. It’s actually long overdue. It was the first thing I noticed when I discovered this blog five years ago; mainly that Leeham has recognized much earlier than any other Seattle resident (or any other US resident for that matter) that “the other guys” are indeed very good. At least as good as the home team.

    “You see abandoned buildings and you see a place [Long Beach] that’s gone from over 50,000 people at one point in time, to like, 1,300,” Conner said. “That’s just something that we can’t let happen to the Boeing Company.”

    It may look impossible at this time, but things can change quickly in unfavourable times. That is why I regularly denounce the fact that Boeing never had a long-term strategy to counter “the other guy”. That’s because Boeing was considered ‘untouchable’. At least that was what they have been thinking since the demise of Douglas-McDonnell (reversed intentionally).

    “He admitted that some of the recent work transfers — more than 6,000 local engineering jobs in total were earmarked to move out of state — had been handled poorly”.

    Like I have said in a previous post, this is a small tragedy. Especially in the context of a company that used to be associated with its engineers. Boeing is shooting itself in the foot.

    “Citing Boeing’s investment of more than $1 billion in building new 777X wing and fuselage facilities in Everett.”

    That was the price Bombardier paid FIVE YEARS AGO to build a similar infrastructure in Belfast. But this one is considerably bigger and much more ambitious. If we use the same ‘accounting system’ as BBD we can easily project a 3-4Billion dollar price tag for the entire venture.

    “Conner defended the various work transfers as a way of retaining top engineering talent at Boeing defense sites around the country that could otherwise have been lost due to the downturn in military business.”

    At least they recognize that there is a “downturn in military business”. Again, this is part of the convergence I have been talking about for a few years now.

    “He insisted it’s a mistake to think Boeing doesn’t value its local engineers.”

    I wonder who is the most mistaken here. I believe it’s a BIG MISTAKE to threat your engineers the way Boeing has been treating theirs for years now.

    Like the 777 and a few other beautiful birds, the following video has been ‘put together’ in Seattle. That’s why I thought it might be appropriate to post it even though it’s unrelated and completely off-topic. I hope you will enjoy it as much as I did.

    https://www.youtube.com/embed/Pwe-pA6TaZk?rel=0

    • Nice comments but does Boeing really care what you think? You believe that Boeing woke up yesterday and thought about the future? Sorry they didn’t. They make money, they money because they have to make tough decisions, if they did not they would be out of business. You and others need to understand they know Airbus is good, and they also have certain beliefs internally that drive them to approach decision making in the manner done.

      I bet they like engineers, but they can’t afford to pay for the same number of engineers as they did in the past. WHen production workers are cut due to production moderinization, the same thing happens to engineers. Technology has cut needs across the board. Also, technology has caused/allowed people to move to differing work locations. Maybe those decisions are done because of cost, because of development planning, or simply because people don’t want to move to the northwest? Don’t know, but before you say these things you better acknowledge that the guys making the decisons have a reason for their approach. Understanding that approach will help in your comments going forward. You get it because I read that you do, but understanding why is what is missing. Please don’t say they don’t know because a comment like that makes your work a waste of time. DOn’t think that’s what you are driving to accomplish.

  13. Scott – I guess this article will drive Boeing to the brink of dispair? You have called the company out and it will certainly drive them to change their business approach. Interesting how they could get their customers to pay higher fees for future deliveries. The company covered its cash flow, made analyst eat crow, made those same analyst spend long hours trying to uncover the method used. What you and others failed to understand, they back up their claim with results. No investors wants to read the company failed to deliver, which Boeing did not do. Why are you so determined to prove they won’t do it this time? A company as large as Boeing has to place their corporate repuation on the line each time they make these type statements. And, it’s not just the statement but the results that are most important. You’re going real hard trying get them to throw in the towel on this, and honestly do you think they’re going to just because you’re writing a blog? The program will happen, it may not happen in the manner you want it to be, but it will. Why because they want you to eat your electronic words. You’re doing a good thing, being willing to put yourself on the line like this. Whether you’re right or wrong, the price of your words are far less stressinducing than the Boeing words. Don’t think you’re going to get many, for you eyes only conversations with this for of story. Not that you care, my focus would be more on the nuts and bolts of actully making it happen and less on the, “oh I can’t believe they said that this time,” approach. You would have been a much better investigative reporter if you can explain why their customers were willing to pay more cash up front. That way you get to explain what customers really think of Boeing as an investment partner. These customers are allowing money to by placed in to Boeing and reducing their options to use it in other parts of their operations. Why Scott, why would a leasing company, or an airline, be willing to fund Boeing?These stories fail to share much about the driving factors behind this form of corporate messaging. All we got was you were pissed that they are willing to share this kind of crap to the public. What, you or no one else got, was what market intellegence is driving the company to promote this position. It’s obvious to write this, but it would be better to expalin why Airbus went one direction over the approach Boeing is doing. The story is not this but the business case being used internally to drive the the approach. That story helps the market understand the driving principals of business decisions in the aerospace industry, in Boeing, and in the airlines. You’re being an after the fact writer and you have far more expereince than to waste your time wrting this kind of story. Find out what question their analysis is trying to answer. Based on what you wrote you really don’t know, and you’ve shed little light on much expect to validate that you’re starting the week off as lost as you were last week. That and a cup of coffee will get you little in to understanding what really drives decision making. And for this you may have wasted valuable access to getting to the bottom of the real story. The one you and other missed about why people continue to fund Boeing production if they are stupid enough to tell stories like this about production strategy. We all lost today because you were typing pissed.

    • He’s an aerospace analyst. It’s his JOB to cut through the hype. propaganda and doublespeak, and give his best estimate of the situation. I see no evidence that he’s attempting to get Boeing to change it’s ways.

      Frustration? Sure, why not? Like many politicians, Boeing can seeming say anything and get away with it. They get a free pass at the moment, and nobody remembers what they said ten minutes later, or if they do, hold them to it.

      And arguing with Boeing is somewhat akin to:
      https://youtu.be/kQFKtI6gn9Y

      • They are an investment based company and saying anything is not how you deal with the markets. This not a game and you make it appear that way Raoul. Please come up with a better argument than what is presented here. His job is not to be fustrated, his job is to uncover the reasons behind his fustration. The blog is his and I’m sharing a prospective. I do not read it to hear him rant. I read it to understand what he has learned over what I know. All companies share stories like this about programs. It’s the really good reporters who ask the tough questions and drive for more. Blogs allow for this kind of story and I know Scott is more that this type of writer. You might be okay with it Raoul, but as for me I want to know what’s driving the industry to support Boeing’s current approach. Airbus publically announced cutting A330 production and they did it far faster than Boeing is doing on the 777 program. There is a reason for that and there must be market intelligence driving that decision allowing for the cut in rate. That’s the story. If it were not Boeing would have dropped the messaging. Airbus must have known that the A330, in its current form was not going to gain any more sales. Had it been otherwise the messaging would have remained that rates were not coming down. The rate number also tells us that A330NEO sales have not been at a rate where a new rate change needs to be made public. If it did, the world would have known. Boeing on the other hand is holding firm and the customers are not saying otherwise. That is the story, this is not, and using the blog to express this causes the industry to be less inclined to speak to Scott about their thinking. Had he gone to the leasing companies, asked them for their thoughts on the Boeing 777 story, that would have caused Boeing to call and speak. Same purpose but looking to uncover how others in the industry view the same story. Is it a common concern across the industry. Does GE accept the current forecast? If not why?

    • @L7: I’ve written posts over time that address many of the topics you raised here. “Pontifications” is an opinion column. I expressed my opinion. Thank you for expressing yours.

      Hamilton

      • And, that is why I commented. Trust me I respect you and your approach but I saw something in this that made me go, hmmmm. Thanks for the comment. Vincent

    • Ah another disgruntled mcBoeing stockholder. And please speak for yourself only “we” did not lose.

      • @grubbie LOL. I think I prefer British pissed.

        Hamilton

  14. Had we been in Roman times I think when Scott gave his early messages to the world about how he foresaw the issues at Boeing, he would have been shot!
    Unfortunately history has and is proving he was right in both warnings and predictions.
    If its from Airbus, Boeing wont use it!
    Although I would like to see a linked sidestick, the concept is infinitely more convenient and user friendly than the traditional yoke.( I wonder if they had one installed in the Potemkin version of 787)?
    Boeing are still using that ridiculous ABCD computer keyboard instead of QWERTY.
    Their accounting method is a disaster waiting to happen, somewhat akin to sweeping the rubbish under the carpet.
    Heaven help the succeeding CEO and CFO.
    My personal view is that the only thing that will save Boeing in the long term is the “its too big to fail” syndrome.
    Glad I am not an American taxpayer.

    • Talking about Roman times….. 🙂

      IMO, this is perhaps the most impressive structure ever built by man (NB: Imagine if the the portico had been built using 50 ft by 6 ft monolithic column shafts instead of the sixteen 40 ft by 5 ft monolithic column shafts that were actually used.):

      https://www.youtube.com/watch?v=305niNDG8c4

  15. OK, Everyone, some of these comments are entertaining but they are really crossing the line in some cases to personalized back-and-forth (I am not talking about those directed at me, BTW–I’m a big boy and can take it). The personal back-and-forth between Commenters is against our rules, so please confine to the issues raised in Pontifications.

    Hamilton

  16. “But I MOST CLEARLY was comparing with
    the B777-300ER which is precisely the contrary to “Paper””

    I don’t see the point to compare the A330CEO or NEO to the 777CEO or 777-X, particularly with the -300ER.

    • The 300ER is the default aircraft in its sector at present but it would have to be priced very keenly to make it compete with the A350 or the X. It may benefit from availability but to me it is a dead duck with large operators which would be needed to make a dent in the shortfall. And as pointed out that price will severely damage the cash flow on what is they key cash cow for Boeing

      • Kind of like the A346, 747, A380, once price is reduced to cost to manufacture, they still hits a point where their value becomes less than cost to build and they are rendered fiscally obsolete. When the 773 hits that point? The A346 only sold about 100 total, so giving the 773 another 100 sales from today seems generous.

  17. Maybe Airbus can keep up A330 production rates by feathering NEO’s, 2 NEO’s equivalent to 3 CEO’s.

    After Emirates modified their A350 orders to enhance fleet mix, the battle now seems to be between the A350-900 and 787-10.

    http://gulfbusiness.com/2015/05/emirates-plays-airbus-a350-boeings-dreamliner/

    I would not be surprized if A350-900 network compatibility with the 777s and A380 and hot field performance succeed over likely lower 787-10 seatmile costs.

      • One thing to remember about drawing Great Circle lines is these never reflect winds. Subtract as much as 20% from any such range to allow for winds, reserves, alternates on these super-long routes. That’s why EK needs an 8,500nm range (or more) airplane to do DXB to LAX with full payload and pax cargo.

        • There is usually a sleight of hand on long range routes in this part of the world. An airport that is overflown or passed by nearer the destination is used as the ‘paper destination’ and the actual destination is the ‘alternate’. If the conditions are Ok, the switch is made and you land at the final airport with minimal reserves.

  18. Thank You Scott. We are drifting away from the point. Boeing, while they make the statements that they make , will have to sleep in the bed that they made if they can’t deliver on those very words. Lest we forget that this is not Jim Bobs Errspase, it’s Boeing. So while they burn batteries, over-promise and under deliver, they still churn out the worlds finest aircraft that returning customers still continue to buy. It’s very easy to spew dross towards a company and about a company that one has little if any idea how the inner workings are handled. Furthermore Airbus is no stranger to saying on thing and doing the next. This

    In closing, we don’t know what will happen after the 2016 but a company as large as Boeing is not going to risk their reputation and shareholder revolt to appease the media by telling them what they want to hear. Personally I think that they expect a couple of large orders for 77W’s or 77X’s this year in Paris or in Dubai. Shutting down the surge line and transitioning it to the 77x came out of no where and if Boeing is adamant about keeping the rate the same, then you might not need to dip your toes in the hot tub to know if it hot.

    • Shareholder revolt ? The share buy backs are all that Wall St is worried about, if that. A company making products from aluminium and plastic ?, pleeese there are heaps of like business with less risk. After all Wall st can make more money by cornering the market in storing AL ingots and just moving the product around.
      An analysis of IBM since 2000 , found they have made about $35 bill in dividend payments and over $100 bill in share buybacks. The reason why is get into the lower risk part of your business, and that allows you to borrow up to fund share buybacks.
      Cash flow funds borrowing ( especially at very low interest rates). Sounds like Boeing ? Wall St is happy , investors ( if there is such a thing) are happy.

  19. It’s funny with how forceful vitriol any criticism towards Boeing is met at the web. This all when there are blogs and self-called analysts whose life mission is to exclusively poop on everything Airbus does. So much that you start to think they are Boeing’s media arm.

    • My personal impression is that it is becoming increasingly difficult for the Boeing fanatics to be condescendant towards Airbus. Especially after the very successful introduction of the A350, and in view of the A320neo looking stronger than ever. So the fan boys who until yesterday were on the offensive towards Airbus are now increasingly on the defensive about Boeing. That in itself is not a good sign. It means the fan boys are sensing something that they cannot explain. I don’t want to be unnecessarily harsh on Boeing and their supporters but I think we are witnessing the first phase of decadence: the denial phase.

      Please forgive me for my two cents psychology.

      • @Norman And it’s Canadian two cents. Worth even less…. 🙂

        • Canada no longer uses the penny. So it is rounded down to zero anyways. 😉

        • @Scott – I just read another person’s perspective, and I assume it was driven by you. I wonder whether Boeing has a deal with China for a boatload of 777Fs to fill out the line? Somewhere you would think that they will need lift and the only effective freighter for the type of freight will be the 777F. Once the current line closes (which is what I would say) the ability to produce another freight will be awhile? If done right Boeing could get some -300ERs too? The current order books for China are low, and Airbus has given up trying to get Chine to buy A330ceos, so the alternatives for Fs is slim to none? If they knew they had a deal and the announcement is nothing more than a timing issue, they could say all kinds of things because they know what is about to hit? Everyone is surprised and Boeing wins? Crazy but there is something that has them comfortable about being uncomfortable.

          • Market Intelligence says Boeing is working on a 777 deal with China, but that’s all I have.

  20. I’m still betting the 777 drifts down to about 50/yr and stays there even for the x. On the other hand, I see the 789 picking up speed and becoming the new go to aircraft. Maybe another line once the 747 is done, 2020 prediction the 787 will be at 180/yr.

    • Boeing already to ramp up to 14 units/month that this 168 units/year

  21. With a long history as an aeronautical engineer I have been party to countless meetings on aircraft procurement decisions.

    Generally type selection is always a well thought out planned process. However in recent times I’ve been party to some astonishing early selection meetings, primarily LCC’s where major carrier decisions have seemingly been made made on the back of a [cigarette] packet, price being the determining motivator.

    The author of this article rightly identifies that the market has spoken on single & VL types, he’s patently correct as generally the market only buys as a result of detailed analysis & an informed decision process.

    It’s deeply worrying when your sat around the table with key decision makers who openly criticise the techniques used by your only competitor.

  22. Regarding the interview with Conner, I disagree with Scott that he (Conner) is straight-talking in it. On the topic of his salary he basically shrugs in a “look, not really my business” kind of way, which seems a bit easy for a man of his intelligence. (He’s not alone in that, of course.)
    On everything else, he also evades the actual issues and effectively says “I understand, but we did what we did – look: jobs; look: competition!” (the CEO interview equivalent of shouting “look, a three-headed monkey!”). At least to me, there’s not a single quote in the ST article that would indicate that Conner would handle things at all differently today if faced with the same/similar situations. On the contrary – he repeatedly emphasises he’s glad he’s got an eight-year agreement with the unions. He doesn’t have to deal with them (and particularly with them striking, no matter what happens) that often.

    OK, he does actually give Airbus credit for being very good. Problem is – the only reason he does that is to be able to keep painting his picture of “we’re under threat”, which he uses to justify pretty much everything that has happened in terms of labour relations in the last few years (and anything that may happen in the future).

    So in short: That interview doesn’t seem like a change of tack at all. It’s mostly an exercise in defending some of the decisions that led to soured labour relations, trying to show some compassion, but remaining defiant about the underlying issues.

    (On a personal note – I’m not sure the whole emphasis on competitiveness, and Conner’s philosophies of “Winning Together” and “make a commitment, meet the commitment” are terribly motivating. It seems a bit stuck in the noughties, to be honest. But as I said, that’s me personally, coming from a different cultural background and all that.)

  23. Sir, I find your analysis totally biased!! You lose all credibility with this piece, as I would most likely believe the executives at Boeing over you, an obvious airbus fan boy in disguise! !

    • @Christopher

      Well, no sh*t, Sherlock. An opinion piece is by definition biased.

      Obviously you haven’t read LNC for very long; we’ve thumped Airbus plenty of times.

    • Just like beauty bias is quite often in the eye of the beholder.

  24. Keep in mind , Conner got promoted, he drank the purple cool laid and has toed the line since.

  25. My 72+ years may be showing, but answer me this:
    B-377 Stratocruiser
    DC-7C Seven Seas
    L-1649 Starliner
    Which aircraft company is building airliners sixty (60) years later?

    • A company which produced and produces aircraft like:
      Do-X
      Ju 52
      Fw 200
      Me 262
      Caravelle
      Concorde
      A380

    • Answer: Douglas Aircraft Company (McDonell-Douglas with a new name!)

    • Norm, this reminds me that in those days Douglas was running circles around Boeing. That’s because Douglas had better aircraft and a much larger customer base. Douglas was then untouchable, indestructible and unsinkable. But as good as their aircraft were, they were also a poorly managed company.

      On the other hand Boeing was a military manufacturer trying unsuccessfully to balance its business between military and commercial, hoping it would help them to compensate with one business when the other one was in a down cycle. Eventually they came up with a DC-3 of their own: the 707 Stratoliner. And what brought them there was a management team and an engineering team that were both of extremely high caliber.

      Now, let me ask you the following question: what have we been witnessing at Boeing in the last twenty years?

      Answer: Various management teams of relatively low caliber (compared to Bill Allen’s time) who have been increasingly treating their once formidable engineers like disposable merchandise.

      Let me quote Conner one more time: “You see abandoned buildings and you see a place [Long Beach] that’s gone from over 50,000 people at one point in time, to like, 1,300,” Conner said. “That’s just something that we can’t let happen to the Boeing Company.”

      Is Conner unconsciously sensing that something is wrong?

  26. Boeing executives are payed based on short term stock prices.

    I hope I’m not right but it seems boosting stock prices by short term results by deferring costs, having airlines paying earlier, being overly optimistic, telling half truths, diverting attention and downplaying the competition pays off. Far better then longer term investments or being honest about performance and results. Maybe bluffing pays off in hard cash. And stockholders only want good news anyway.

    http://americasmarkets.usatoday.com/2015/03/13/at-23-5-million-boeing-ceo-mcnerneys-compensation-remains-virtually-level/

  27. While we are on the topic of production rates, what is your take on the A380’s production rate outlook up to when the possible neo arrives?

    The 777 production outlook is very much debatable, the A330ceo is somewhat more certain, but the A380 seems to be a whole new can of worms waiting to be opened.

    • We have A380 rates going down to one/mo in the next few years, neo or not.

      • With the introduction of the A380 Airbus was crowned the new King of Commercial Aviation. The King (747) is dead, long live the King! (A380). But it may not be a very confortable crown to wear.

        After Jesus’ sham trials and subsequent flogging, and before He was crucified, the Roman soldiers “twisted together a crown of thorns and set it on His head. They put a staff in His right hand and knelt in front of Him and mocked Him.

      • “We have A380 rates going down to one/mo in the next few years, neo or not.”

        The A380 will only be cash positive by the end of this year. That means that the A380 will only be cash positive for perhaps two or three years before being cash negative again. The prospective looks not very good.

        So the interest to launch a NEO version seems limited. Emirates committed to 100 A380NEO but this is barely enough to cover R&D and probably not enough to recover R&D and production lost, reduced A380CEO profitability etc.

    • I guess that NEOing the A380 would have less impact on the production than on any other aircraft due to the fact that the biggest customer wants the NEO.

      The OK for the A380NEO production is linked to an order by this big customer. So Airbus and this customer will negotiate when the production will switch from CEO to NEO.

  28. @Scott

    I know this is a thread about the 777, but I am intrigued by your one a month number for the A380 (ceo or neo). For me this number only makes sense for the 380ceo. For the latter is not a viable alternative to the 777X, just like the 777 Classic is not competitive with the A350XWB. But for the A380neo the situation would improve dramatically, like it will for the 777X.

    Boeing will eventually get a good return on its investment but Airbus finds itself in a quandary. At a production rate of one a month the ceo will quickly become cash-flow negative again, with no prospect for improvement. On the other hand the neo can distance itself from the 777-9X and eventually win interesting orders. But how many orders would make this project viable? And how long can Airbus wait for a favourable upturn in the market?

    For me the A380ceo is not going anywhere long term. But the A380neo would give another lease on life to the programme. I don’t expect Airbus to make much money with it, if at all, but at least they would be able to keep it in production for an extended period of time. And in my view the A380 could eventually gain some traction if the number of passengers keeps rising at the current rate in the coming years.

    I always believed, and still do, that there will come a turning point when very large capacity aircraft will become a must on certain routes, and this could tip the balance in favour of the A380, provided Airbus elects to do a neo version.

    I tried to be realist as much as possible here, but this post might be perceived by some people as a little optimistic. Frankly I don’t really know what to think.

    One parting question for you Scott: When you mentioned one a month even for the neo, did you have in mind the transition period from the ceo to the neo, or was this a long term view?

    • One parting question for you Scott: When you mentioned one a month even for the neo, did you have in mind the transition period from the ceo to the neo, or was this a long term view?

      Long-term if there is no neo, for the transition if there is a neo.

      • https://leehamnews.com/2015/04/16/rolls-royce-displaces-engine-alliance-for-emirates-a380-order/#comment-105015

        As I wrote; assuming that all of the 90 A388s powered by the Engine Alliance GP7000 will have been delivered by the end of 2017, Emirates would have a fleet of 115 A380s by the end of Q1, 2018. So, that’s another 55 A380 deliveries to Emirates over the next 36 months. Thus, another 25 A380 deliveries over the following 24 months seems reasonable.

        Hence, the one per month rate for Emirates would not be reached before Q2 2018. In fact, EK seems to want many more A380s. What seems to be holding them up is capacity constraints at Dubai International Airport (DXB). In 2023 phase 1 of the new Al Maktoum International Airport at Dubai World Central (DWC) airport is scheduled to open with 100 contact stands for the A380. That’s enough for an A380 fleet size exceeding 300 units. 😉

        • By implementing the carbon panel technologie of the A350 into the A380 it will be possible to stretch it into a -900 without changing the enpty weight. Such a development needs more time – enough time to wait for the new large geared engines from any one of the three big makers, but probably either PW or RR. Such a project would also match the capacities of the engineering department at Airbus, with the NEOs and A350s all finished.
          I don’t think that Airbus is as hesitant about the future of the A380 as it might seem. I would rather think they are waiting for RR and PW to progress.

  29. This is quite a tirade even if it is labeled “pontification.”

    May I respectfully suggest the publisher change the banner ad on the site from “no hot air” to “occasional hot air”.

  30. Scott, you allude to but do not mention the potential confluence of two Boeing decisions-
    a) the management decision to use US Accounting regulations to defer the bulk of the 787 development programme costs to a later date so that the current management team can collect their bonuses and leave the costs off the balance sheet until the next team takes over.
    b) you mention the spin being employed to suggest full income in the lean years of 2018 and 2016 in 777 production.
    If these two items come together simultaneously in 2018 and 2019 – there will be tears and gnashing of teeth for shareholders. Elephant in the room – analyst will sell sell sell late 2017, just before the chasm (just do not tell anyone else).
    PS: Brilliant article, as always.

  31. To be honest, I have been looking with surprise and amusement at the communication around the A350-1000.

    At first sight, its one of the hottest specs in the market. Right in the middle of the important twin aisle segment. Just right seat capacity, range, empty weight, engines, cargo capacity. Also it seems well positioned to replace most 300 seaters of the last 20 years for the next 20 years, such as the 772, A340, A333.

    Still there seems to have been a almost coordinated persistant effort to create doubts, uncertainties, questions about the A350-1000. It didn’t stop after United, BA, JAL, CX, QR and other bought a bunch and more said they included them in their -900 contracts (SQ, AF, LH). Even when the -900 development proved much smoother than anyone expected / hoped, the doubts creation didn’t stop.

    Based on.. ? Fear ?

    I guess the fact competitor Boeing has a gap here. The 777-200ER and 777-300ER dominated the segment for the last 20 years.

    Now the 787-10 and 777-8 have to take it over. The first one pay-load weight restricted the second one heavy and ULR.

  32. Take it easy, Normand ! OV-099 is diverting into my favorite topic, the Prandtl-winged 900t+ MTOW/350t+ payload UltraFreighter, which we have discussed separately. In this exercice, the A350 wing, made free of pylons, is inserted in the high position, keeping the A380 wing in the low position, the tips joining in a U-let. Such a double-decker would feature dual BWB effect : best wingbox optimised lift (Prandtl theory) plus Blended Wing-Body aerodynamic lift from the fuselage adding portance to the wing-lift. The live aerodynamic control surfaces of the double-decked wing will allow enhanced pitch control, which is welcome given the inertia momentum (from the 350t payload alongside the x-axis) on the y-axis, exposing the T-tailed empennage to the risk of stalling under pitch manoeuvres.

  33. Beeing a fan boy of this blog + Aviation week + Aibus and back to the subject,

    I have to say that on the top performing companies published by AW&ST Boeing is by far number one … this pleases the financial institutions
    http://aviationweek.com/defense/top-performing-companies-study-sees-rocky-horizon

    Even if it has problems with fasteners suppliers who delayed 787 EIS !!
    Even if it double count sales (51 Copa 737 this year) USW …

    however Aibus is pleasing the market ( selling A320 like hot cakes for decades)

    This do not say anything for the future

    • Lovely! I enjoy baroque music very much, especially when played on authentic instruments. That’s why I am a big fan of the 737! 😉

      • It’s rather odd to have the words “big fan” and “737” in the same sentence, isn’t it?

  34. All this talking on a A350-1100, A360 etc. would suggest the A350-1000 isn’t the hottest spec in the twin aisle space. Which I wouldn’t agree on.

    There is a reason who some have been trying to play it down for years.

  35. Pingback: » Daily Aviation Brief – 21/05/2015

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