March 9, 2016, © Leeham Co.: The war of words between Airbus and Boeing at the ISTAT conference Feb. 29-March 1 wasn’t confined to which company sold more single-aisle airplanes. Widebody aircraft were involved, too.
A Boeing official on the sidelines of the conference called the Airbus A330neo “dead on arrival.” He says that by the time the 330neo enters service, there will be 1,000 787s and A350s in service and delivery slots will be closer in than they are today.
The airplane is nothing more than a resurrection of the original A350 concept that failed in the marketplace, this official said.
Rather than ask Airbus for what would be a predictable response, LNC asked lessor CIT Aerospace for its assessment. To be sure, CIT is not without vested interest: it was a launch customer for the A330neo and it’s a large customer for the A330ceo. Still, it provides a third-party assessment.
“I think he’s wrong,” said Jeff Knittel of the dead on arrival comment. Knittel is the president of CIT Transportation and International Finance, the parent of CIT
Aerospace. “Our thesis for the 330neo—and as you know, we are a fairly big player in the 330 market in general—is that it is a great airplane. There are more than 100 operators. [This] is terrific in terms of opportunity. Have some of these people migrated to the A350? Have some of these people migrated to the [Boeing] 787? Yes. but there is a market there that says if we just need more fuel efficient airplanes that aren’t necessarily flying seven or eight thousand miles, this is an airplane.” The average stage length for the A330 is 1,800 miles.
“If you think about that, do you want to go out and invest in all that wing, all that structure, to fly 1,800nm? The answer is probably not,” Knittel said during a CIT media breakfast at ISTAT.
“What do you have in the 330neo? One, you get the 14% better fuel efficiency per seat. I think it’s under-appreciated that the wing is changed. It’s not the same wing. It’s a longer wing, it’s a more efficient wing.”
Steve Mason, vice president, Aircraft Evaluation and Strategy, CIT Aerospace, said the A330neo beats the 787 on economics in certain missions.
“The neo is an aircraft we think cannot be beaten across the Atlantic,” he said. “It cannot be beaten in intra-Asian flying. When you think about the capital cost of the aircraft and the savings from the COC [cash operating costs] perspective, it is a very competitive aircraft to the 787 and A350.
“When you think about operating costs of an aircraft, you think about three things. You think about engines, it’s the wing and it’s the weight of the aircraft. The weight of the aircraft has been honed for many, many years now.
“The wing is probably one of the best wings that Airbus ever developed. The engines are on a par with the 787, because they are the 787 engines,” he said.
“The development cost of the aircraft is obviously less for Airbus. This results in their ability to offer a lower capital cost in terms of price to the airlines. All these things combined really give the A330neo a strong foothold in the markets, like Asia and the Trans-Atlantic market,” Mason said.
“When you think of all the airlines that operate the A330 today, about half of them have not ordered any new technology aircraft. You have around 50 operators that have yet to make a decision. Some of them have never ordered new aircraft, but a lot of those guys will.
“All of these things combined set a very good stage for the 330neo going forward,” Mason said.
The Boeing official also has claimed the “Airbus wide body strategy is a mess.”
Knittel, who is also a customer of Boeing, chose his words carefully.
“Each manufacturer has taken a slightly different approach to their wide body strategy. It’s the function of the success and the aging of very specific aircraft.
“If you think about the situation with Boeing, the 767 was the rock-star intermediate twin for a very long time. As it aged, the 330 gained more and more share over time. The 787 was a logical thing to move forward on,” Knittel said.
“So, now where are you with the widebody strategy with Boeing? You have the 787 on the low end. Then you move up into the 777. The -300ER has been very successful. That market has shifted. People are looking forward to the 777X.
At Airbus, Knittel said, “Essentially what you have is a follow-on to the 330[ceo]. And by the way, the 330[ceo] continues to be ordered. Airbus is upping the production rates on the 330. That’s certainly a sign there is interest in the airplane.
“Then you move on to the A330neo. We’ve talked about the logic train on the 330neo and we wouldn’t have bought it if we thought it wouldn’t have held up.
“Then you move into the A350. The A350 by all accounts has performed well. It’s a very competitive airplane. The 787 and A350 are both very good airplanes. Then the question is, where do you go beyond the A350? Is it the A350-1100? How do you bridge that gap between the 350 and 787, and is it worth the effort?
John Plueger, president of Air Lease Corp., believes there is a market for the A350-1100. (Although media reports have variously called the stretch the A350-1100, the A350-1000 XL and the A350-8000, Leahy said no name has been settled.)
“There is [a market] because of the 777X,” said Plueger in an interview with LNC at ISTAT. The size of the market? “That’s a tougher one. The whole idea of the A350-1100 is to cast about 40 more seats that the 777-9.”
This came as a surprise; Airbus’ John Leahy, chief operating officer-customers, told LNC the stretched A350-1000 would be the same size as the 777-9, although he added that more passengers could be accommodated depending on the number of classes on the airplane. Plueger said an A350 that is 40 seats larger than the 777-9 would require a new engine.
“I have to tell you, the 777X is so far out there, it’s [first available delivery slot] is 2022,” Plueger said. “Fuel prices are low. You haven’t seen a whole lot of market activity or announcements on that. We talk to airlines a lot, large and small, especially the big guys on these big twins. We don’t see a lot of discussion on either the 777X or the A350-1000. The vast majority of the discussions for us has been on the 787-9/10 and not about the 777-9X.”