Leeham News and Analysis
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Leeham News and Analysis
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
- A350-1000 or 777-9? Part 2 April 11, 2024
- Pontifications: Boeing “transparency”–not so much. April 9, 2024
- Airbus charges and write-offs since 1999: more than €33bn April 8, 2024
Pontifications: Airbus USA321 a milestone for US aerospace
By Scott Hamilton
March 28, 2016, © Leeham Co.: The first US-built A320ceo family member took to the skies for its first flight last week. The A321ceo, destined for JetBlue, is the first assembled at the new Airbus A320 plant in Mobile (AL).
This is a milestone for Airbus, obviously. The Mobile plant was first proposed as the assembly site for the KC-330 MRTT (Multi-Role Tanker Transport) proposed for the US Air Force to replace the aging Boeing KC-135s. Northrop Grumman, which paired with Airbus parent EADS (as it was then known) to offer the KC-330, won the contract. The celebration was short-lived. The Government Accountability Office overturned the award. Northrop bowed out of the next round of competition, which Boeing won.
Airbus subsequently decided to create an A320 assembly site at the same Mobile location planned for the KC-330. (I visited the site for grand opening last September.)
This is the fourth A320 assembly site, after Toulouse, Hamburg and Tianjin. Airbus hopes the Mobile site will help spur sales in the US, where it still trails Boeing in market share.
Milestone for US Aerospace
While this plant is a milestone for Airbus, it’s a milestone on a much more macro level, too. This is the first commercial airplane assembly site by a second airplane manufacturer since Boeing closed the McDonnell Douglas MD-11 and MD-95 (aka Boeing 717) assembly lines in Long Beach (CA) in 2000 and 2006, respectively. The last legacy MDC assembly site, for the military C-17, closed early this year.
The first A321 assembled at the Airbus Mobile (AL) plant takes off for its first flight. Airbus photo.
Initially, Airbus plans to ramp up production to 4/mo. The plant has the capacity to go to 8/mo, a likely prospect. There is enough land around the plant to dramatically expand production of the A320 Family, or theoretically locate a wide-body assembly site there (less likely).
The A320 plant will become a magnet for development of another aerospace cluster in the USA. Just as Boeing’s Charleston (SC) 787 assembly plant is growing as the hub of a new aerospace cluster, so will the Mobile plant. This is good for American jobs and American aerospace.
Washington’s suppliers should expand to Mobile
Here in the Seattle area, where I live, the companies in the state’s aerospace clusters should be aggressively seeking to expand to Mobile. Many already supply Airbus. By company count, Washington State is Airbus’ #2 supplier in the US. Certainly Boeing is keeping these suppliers busy, too. The 737 and 787 production rates are going up. But the 777 Classic and 747-8 rates are coming down. Many believe the Classic rates will have to come down further in the near-term as sales slow in advance of production for the 777X, which begins in 2018. The future of the 747-8 seems bleak, with few deliveries scheduled this year and next and none thereafter except for Air Force One replacements.
Our suppliers need to plan long-term with the expectation that tying their futures to Boeing isn’t a wholly safe bet. When the 747-8 program terminates—something I think happens in 2018, after AF Ones are delivered—there will be a big, gaping hole in Boeing’s Everett plant. Overhead for this space will have to be reallocated among the 777, 787 and 767F/KC-46A programs. The Department of Defense just last week cast doubt on Boeing’s ability to deliver 18 KC-46A on schedule next year and predicted another cost overrun that Boeing has to absorb.
The overhead and cost overruns mean that Boeing will continue to put the squeeze on suppliers to cut costs.
MOM looking less certain
The prospect of suppliers benefiting from development of a new Middle of the Market airplane that could be launched in 2017 or 2018 seems to be looking less certain. Momentum for this airplane appears to be slowing as the business case looks more and more iffy.
Development of a new, clean-sheet replacement for the 737 is unlikely to be launched before 2022 at the earliest.
So Washington suppliers need to begin now (really, even earlier) to plan for the future. Getting in on the Airbus Mobile plant aerospace cluster is their best opportunity.
First, move into the competitor’s neighborhood …
Next, knock on his door …
I guess if US suppliers can get good business from Airbus in Mobile, and indeed with Airbus everywhere, then they’re won’t be feeling quite so obliged to help Boeing out with cost cutting. Never beggar one’s suppliers lest they stop answering the phone calls.
Is it possible that the US airline industry could go the same way as the UK’s did a long time ago? We used to make all sorts, now it’s ‘just’ wings, engines, avionics, etc. Ironically the UK aviation industry is more valuable like-for-like now than it was in its “glory days”, even though we don’t make whole aircraft anymore.
Speaking purely hypothetically, would Uncle Sam ever, ever let Airbus take over or merge with Boeing (either in part or whole)?
NSA and MOM looks less likely…. Hmmm…
What are all those aircraft designers and engineers to do after 2018/2019?
Presumably the smart ones will see which way the wind is blowing and get out ahead of time. Maybe Northrop need a hand designing that new bomber? Regardless, it won’t necessarily help Boeing if their best staff start walking out ahead of time.
Boeing does hire and fire cycles.
Airbus due to _external restraints_ less so.
( IMHO a lot of Airbus competitiveness stems from having to act less capitalistic and less fixated on share holder value.)
Where Boeing acts to a part parasitic Airbus is forced more into a symbiotic role with its host nations.
There is a problem with hire and fire today. E.g. German companies are forced by law to keep the workers (also engineers) as long as possible and healthy companies have to pay a lot to get rid of them.
The advantage is a trained work force is ready after a down cycle. How long did it take Boeing to get the Charlston line running smoothly due to an untrained workforce?
The next point is US companies fire the wrong people during a down cycle: workers (engineers)! Instead to clean first office jobs.
I agree with both Ewe and MHalblaub
What about getting out away from the paxliner routine for a change … and do an UltraFreighter ? It would make good sense to try working TOGETHER instead of working against each other. Join forces with Antonov and Lockheed Martin as well. Together, conceive an AGA-liner for Modal Shift. 4 % to 6 % of world’s containerised merchandise or annually 4-to-600 billion candidate FTK of mercantile relocations are waiting out there for the right tool to appear on the market … such an UltraFreighter project would keep those clever guys busy for a while ?
As likely as it is for me to be elected President of the USA?
There’s already a good mega-freighter available. It’s called the 748-F and it’s not selling.
With all the cargo space in the bellies of passenger planes these days, there’s already more cargo capacity than demand. Between that and the conversion of old passenger jets, the market for dedicated freighters is nearly dead.
@ Transworld : what degree of likeliness did you give to a resurrection of SST in this decade ? … yet, it’s on its way back in full speed (pun intended).
@ Arcanum : with the venue of the Ultrafreighter two thing will happen (1) belly-freight will become obsolete, re-habilitating the A380 Series as the correct pax-liner, penalising 777 and A351 due to disproportionate fuselage length with empty underbelly space – or this space is re-visited for passenger bedding on long flights ? and (2) a tsunami of perishables and short-cycled merchandise will seek mercantile relocation from emerging zones in the Southern Hemisphere to the higher added value markets in the North, creating a self-justification for the Ultrafreighters.
By 2020? I don’t think so.
Yes NASA is being silly and proposing an X plane, I think we will get that stopped.
I figure I will live another 30 years, I also figure I will never seen the fist rib of an Ultra Freighter laid.
@ Frequent Traveller: I think you’ve got it backwards. With the advent of the 777 (and subsequent wide-body passenger planes like the 787 and A350) it is the freighter which has become obsolete. The passenger planes fly whether their bellies are full or not; any cargo carried is “icing on the cake” as they say.
As for the A380, while it is a wonderful plane to fly on (especially in a premium cabin), only the most die-hard of fans would claim it is the “correct pax-liner”. It is simply too large to operate profitably on all but the heaviest routes.
With the increasing focus on environmental awareness, I suspect point-to-point flights on twinjets like the 787/A350 will continue to increase relative to hub-based trunk flights on A380s and 777-Xs. More convenient for passengers, better for the environment, cheaper for airlines – what’s not to like?
@ Arcanum : My point with the A380 ‘rehabilitation’ was to deter the main criticism directed against this type, ie its poor freight-carrying capacity over and above CIL (checked-in luggage) of only 8 LD3 … after the UltraFreighter takes over long-haul freight operations, supplanting belly-freight turned obsolete, the lower number of empty LD3 containers in the A389’s underbelly holds turns into a comparative quality, not anymore a disadvantage vs the half-empty – because turned obsolete – bellyholds of 779 or A351, due also to the much more competitive Ultrafreighter …
We see Boeing floundering a bit in terms of strategic direction. MOM or not! The pause for thought could be a good thing as it forces senior management to consider their competitive position going forward.
WB is the sexy side of the business but when it comes to churning income and profit year on year the NB market is the bedrock of Boeing. If we discount pretenders to the throne (comac/irkut/bbd) just on the basis of limited production capacity this is a slugfest B vs A.
What about returning to the NSA (and all its iterations) and look to develop a A322 type product first but with scope to have a smaller winged A320 type factored into the design process. Boeing can take advantage of all the current developments to leapfrog Airbus (materials, wing design, engines, avionics) and address all the known issues with current short haul operation. The big advantage is that so many of the technologies are currently not evolving massively and a state of the art NSA would put A on the back foot.
Doing nothing is not an option and Boeing should get its bounce back
The foundering today and the bedrock thing go together.
Boeing is floated by an endlessly pimped 1960ties design?
The prospect of suppliers benefiting from development of a new Middle of the Market airplane that could be launched in 2017 or 2018 seems to be looking less certain. Momentum for this airplane appears to be slowing as the business case looks more and more iffy.
Development of a new, clean-sheet replacement for the 737 is unlikely to be launched before 2022 at the earliest.
I’m very tempted to say “that’s what I’ve been saying all along”. Never mind the ongoing hype around a new MOM plane (which conveniently started around the same time as Airbus’ A321NEOLR launch) I never understood – and still don’t – how the business case for a 2017/18-launched MOM type could be made. Yes, there are a bunch of 757s out there, but the majority of those is already being replaced by A321s and 737-9(00ER).
A “proper” replacement (in terms of the 757s unique-ish combination of capacity and range) would only make sense as part of an aircraft family – and neither Boeing nor Airbus, who are both heavily invested in their MAX and NEO programmes (which are only entering service this year and next) as well as the 787 and A350/A330NEO, respectively. They should have zero interest for another 5-7 years at least to launch a plane (and start sinking money into it) that’s either going to be part of the NEO/MAX replacement family, or that’s going to be part of a family that replaces the 787-8/A338.
What about returning to the NSA (and all its iterations)
Boeing has only just started flying the MAX, for which it has ~3000 orders and to which an NSA in any shape or form (even if you start selling at the large end of the NSA family) is a direct threat.
Boeing can take advantage of all the current developments to leapfrog Airbus (materials, wing design, engines, avionics)
As a reminder: NEO and MAX are already using the very latest in engine technology available today. Their contribution to performance/efficiency gains is much bigger than the contribution of, say, new wings – which also cost quite a lot more to develop.
Don’t forget there’s a reason Boeing went with the MAX and not the NSA. That reason being number-crunching and feedback from customers.
The big advantage is that so many of the technologies are currently not evolving massively and a state of the art NSA would put A on the back foot.
You ignore that if Boeing was to launch such an NSA, there’s nothing to stop Airbus from doing the same if they thought it was a good idea.
Doing nothing is not an option
Except: It actually is. Boeing doesn’t really need to do anything right now.
They’ve invested a few billion dollars into MAX, which is selling brilliantly. Better than any 737 variant before it, it fact.
True, MAX is lagging behind NEO at a ~40:60 ratio – but seriously, who cares? This is “lagging behind” at a ridiculously high level where their investment is still going to pay off many times over. Jeopardising this investment by launching an NSA too soon and thus killing off MAX before its time would be the really insane thing to do.
Long term its an isuse overall.
Short term its an issue as Boeing has zero completion (regardless of what they say) in the A321 Sector.
Airbus can get good value for the A321s vs the cut rate dog fight for the A320/7379/900 groups.
Boeing has no where to go in that whole area, Airbus does
Despite being ardent USA support, give me Airbus position in that sector any day of the week. I’ld be pretty happy to take the A330NEO and A350 combo as well.
Adjust that to Airbus has zero competition and Boeing has No aircraft in the A321 category.
737-900/9 is a good bird but only ad an adjunct to the 737800/8 not realistically close to the A321.
Boeing would be better off lumping the 737-900/9 in the with 800/8 for sales.
People would not laugh so hard
@anfromme
I tend to agree with some of your specifics but the problem that Boeing has is that MAX is second best at launch and looking long-term Boeing must consider something else. The order numbers are massive but put another way it will be less than 5 years of production.
It is now that Boeing has to grasp the nettle and by soft launching an A321/2 competitor for entry 2022 would stop that product in its tracks without compromising the MAX. Then develop off the same fuselage cross section but with a revised wing an A320 replacement for 2025-7 depending when the MAX sales start to look weak.
A whole new NB philosophy and platform but looking to dominate the NB sector across all sizes and ranges. Of course Airbus may react but the playing field would be levelled
I am talking long-term and in the event of a downturn and a little fettling of the A320 (small stretch to increase capacity within scope) the 40:60 could quickly become a 30:70 of a reduced market or worse. The winner takes all nature of the market makes this a strong possibility.
I feel the MAX was done off real nervousness about bringing to market a new product after the B787 fiasco but Boeing appears to be getting some of its pomp back.
Doubtless Scott knows more about Boeing’s timing of a future NSA than any of us but my heart, as an aircraft enthusiast, would love to see an early launch of a NSA family just as Sowerbob suggests and in the order he suggests.
It would hurt their cash flow short/medium term but they need to worry more about the longer term IMHO.
Make it either marginally wider than the 32x and keep 3-3 seating or +/- 12″ wider and go to 2-2-2 seating. That will cost some but offer a major improvement in loading/unloading and comfort (only window and aisle seats!) that pax will really notice. One can dream.
Yea, as noted with Frequent Traveler, NASA needs to focus on the real and let someone else have another failed SST.
NASA does feel that they can do a 40% improvement in the 2020 time frame with what’s in development now.
Interesting it has to be a GTF to do so.
This is a reply to Matthew. Airbus is limited in aerospace and it will stay that way due to EUROPE unwilliness to spend money on defense. Almost all Boeing civil airplane eventually end up in one form or the other as a military aircraft. It will happen to 777 also. Boeing single isle factory have the capacity as AIRBUS four single isle production line. Ask Scott he will confirm it.
Not sure what production vs broad use means?
A330 is selling a fair amount of tankers, AWACs and smattering of use of 707, 767 is not a big deal. A few 757 as transports?
747 military sales small and pretty much irrelevant as its the content not the airframe.
767 as a nice new tanker, but A330 while a bit large does fine.
I think where Airbus does loose is the tech transfer form military to civilian.
On the other hand, the A350 airframe that I thought would be non competitive is very much so.
Overblown advantage maybe.
In 2010, the big question for the new single aisle was carbon fuselage or not? They are still probably not any closer to that answer now than then. Then there is the economics of the new single aisle. Can it compete in price with the A320 or 737? There’s a great case for a MoM or a new single aisle, it must requires long term investment in new fuselages.
Like competing against an A330NEO or 767CEO, you sure can crank em out for low cost.
Airbus had reasonable success with its A310, which was a shortened A300.
There must be sound reasons for not doing the same with the A330, which in my view could be an excellent MOM in terms of range and capacity.
There must be a few learned contributors who could explain its lack of traction?
At the time the A310 got a brand new (IMU fully supercritical) wing.
OEW ~80t.
The A330 has an even better wing, full FBW _and_ an OEW of about 30t more. Everything is scaled accordingly.
Something like a resurrected A310 + NEO could be an interesting fit.
At least much better than a 767 refurbish.
Though in my opinion there is a reason for the Twin Peaks
arrangement that places the MOM in the deepest valley of ineffectiveness.
Could be done, but I never heard Airbus seriously considering it.
http://i191.photobucket.com/albums/z160/keesje_pics/AirbusA330-700Light.jpg
Under 260 seats / 7 hours, a single aisle seems hard to beat.
The reason why I think the MOM as a distinct fuselage arrangement sits in a deep valley of inefficient use and will not happen.
We’ll see the single aisle arrangement being stretched further.
The large gaps between single and twin aisle and twin aisle and quad aisle aka double deck are there to stay.
A330 MOM would need a new wing box and a much smaller wing, 70% new airplane cost? I guess Airbus don´t see a case for it or they might have done it by now.
The A321s are taking over transcon flights with America, Delta, Jetblue, Spirit, Virgin America expanding. Soon many hundreds will be over the MidWest at any time.
United hasn’t ordered the A321, CEO nor NEO, nor had Continental. No doubt Boeing is discu$$ing under which condition UA could become MoM launching customer. Committing to e.g 100+100.
Now Leahy isn’t the lets wait & see type.
United and Continental are one and the same.
I do just wonder if Boeing regret protesting the MRTT award to Northrop/Airbus. Now they have a a money losing contract for the MRTT and competition in their backyard for the very profitable 737.
If they had not protested the award they would not be losing money and they might very well not have competition from a US based completion center for A321.
I realize that military contracts have a habit of being very profitable on the backend, but that may not be the case when there is a real competitor MRTT with a lot more individual customers.
Sorry for being iterative … but for the MOM to put y’all in consensus :
– prefer the sharper economics of the narrowbody;
– prefer the better turn-around efficiency of the twin-aisle;
– prefer the boosted APEX well-being and cabin safety of the twin-aisle;
– prefer three-class near “Sweet Spot” modules;
– prefer the convenient cargo duality of a CLS-featured underbelly …;
Thanks, Gentlemen : you’ve named the H21QR … or its larger sibling, the H22QR for capacity development, CQFD !
FT, H21QR, removing a seat per row is an instant cost per seat disaster. Most people look no further than that.
Now if you added 12 seats without compromising comfort, that would turn heads 😉
Fortunately, doing business in Air Transport of Passengers (and Cargo) is about Trip Yield or better, 24h Fleet Yield, not Seat-Mile Cost. Excel spreadsheet analysis gives an edge to H21QR NEO or even to H53QR MAX over A321 (3+3) NEO. When at last this fact penetrates the awareness region of airline CEOs’ frontal cortex, feeder operations will evolve … but you’re right, keesje : those people’s crust of skull-bone appears to be incredibly thick … that’s what we’d refer to as “Nostalgy”, I guess ?
FT, I think the truth is not so much in the calculations, but in the assumptions.
For yield management the current paradigm is to cram as many as possible passengers into a fuselage and fly the hell out of them at minimal cost.
The comfort spec is usually “acceptable”. Passenger preference: schedule / price driven.
@FT
Narrow body wide aisle is about the only compromise that will be forthcoming. A question re turn around issues, the longer the sector the less importance a turn around time maybe? This prompts the question as to whether a wide aisle NB for all sectors is the way to go. Take the A320 cabin width and increase by 12-15 inches and allow more seat space ( new staggered/ echelon seating designs) and more aisle space for entry/exit. Push as much of the galley units downstairs and you have a MOM/new NB standard that combines most of what is needed at substantially lower CASM than the alternative mooted.
@ Sowerbob : concerning the “Wider Aisle Option” offered by Airbus for the A32X Series, involving an aisle width of 25″ instead of the standard 19″ obtained by installing 737-type triples of 59″ each in lieu of the customary 62″ A320-type triples, we published the following Pamphlet to explain why this avenue misses the intended target : http://media.wix.com/ugd/4f7666_627481e5e5279820281709d46d659894.pdf?dn=PIP%2B-%2Bthe%2BAirbus%2BA32X%2BSeries%2BWider%2BAisle%2BOption.pdf
I understand your reservations, keesje … but I’m also fully aware of hidden costs that I want brought to the surface, instead of letting them remain buried deep in the wishywashy number-crunching of quote/”cramming as many as possible passengers into a fuselage and flying the hell out of them at minimal cost”/ Unquote – which I agree is the unfortunate mainline paradigm of “yield management” to the unsophisticated many ? Because the misconception is rooted in a failure of modern time’s Analytic Accountancy to correctly detail how to source Trip Yield. By doing literally what those guys profess to be the “ultimate yield spinner” they actually kill the goose laying the famous golden eggs ! The only reason for saving the day is that the A321 is an incredibly efficient aircraft, it takes real masterminding to misuse those aircraft in the intent to losing money !