Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- 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
Boeing investors day: Conner: today’s hard decisions assure future
May 11, 2016: Decisions Boeing has made today have been hard, but assure Boeing will be around another 100 years, says Ray Conner, CEO of Boeing Commercial Airplanes. “We compete every day with aggressive competitors.”
Note: Boeing is holding its annual investors’ day (really a half-day) today, with presentations by: Dennis Muilenburg , Chairman, President and Chief
Executive Officer, Greg Smith , Chief Financial Officer and Executive Vice President of Corporate Development & Strategy, Ray Conner , Vice Chairman and Commercial Airplanes President and Chief Executive Officer and Leanne Caret , Executive Vice President and Defense Space & Security President and Chief Executive Officer. We’ll report on the presentations by Muilenburg, Smith and Conner, but not the DSS unit.
Conner sees continued growth in aircraft demand. Boeing’s backlog continues to grow, but Boeing also continues to monitor global conditions. But compared with 2001 after 9/11, Boeing’s backlog is more diverse in the world and among the type of customers. Deferrals, cancellations and skyline adjustments are “way, way below historical averages.”
Boeing’s view of the Boeing and Airbus product lines. Source: Boeing.
Boeing has learned “hard lessons,” but has reached a “nice equilibrium” between innovation for innovation sake and innovation that is customer driven.
Conner says Boeing sees freighter demand recovering in 2019, which will be met by the 777F and the 747-8F.
“When it comes to the narrow body market…naturally we are in continuing discussion with our customers,” he said. “Our priority right now is completing the MAX and 777X programs.” There have been a lot of discussions about the MAX [7X and 737-10], but no decisions have been made, Conner said.
Two hundred of 250 737 customers have yet to make a decision between the MAX and Airbus A320neo, Conner said. The top five 737 customers, such as Southwest Airlines and Ryanair, have been “pretty conservative” about ordering the MAX, leaving a lot of opportunity for future sales. Airbus pursued a different strategy for growth, rather than growth and replacement, Conner said.
Boeing has captured 50% of the single-aisle market vs Airbus since the launch of the 737 MAX, Boeing says, including sales of the 737NG and the A320ceo. But Airbus leads in the neo-MAX sales. Source: Boeing.
Boeing has surpassed 400 hours of flight testing for the MAX, Conner said.
Development of the MAX, 787-10 and the 777X is moving ahead “well,” says Conner. There is 95% commonality between the 787-9 and 787-10, which will reduce production costs.
“We have a lot of people who can retire in the next five years,” Conner said, allowing Boeing to use voluntary retirement to reduce head count. “By doing this, we are able to manage this in a much different way than in the past.”
- Boeing’s presentations at the Investors Day may be found here.
Boeing seems to avoid to mentio the A321 in high density configuration with about 240 seats but mentions the 737MAX200.
Boeing investors day – so don’t mention to much about possible A350-1100 available with 777X.
It is indeed quite perplexing that they include high density versions for the 738 and A320 but not the high density A321 which a few airlines have signed up for already.
And, I wonder how many 747-8s will be around to be delivered after the 777-9 enters service.
Plus they have put the 777-300ER at 400 seats making it a VLA ?
It seems Boeing purposely left out the first 8 months of 2011. The whammy summer. People read the slide’s title only 🙂
http://www.pdxlight.com/neo3.png
Perception management for shareholders. Them and Boeing, neither wants to know reality.
What hard decisions is he referring to?
Ordering cupcakes instead of Kobe beef?
Boeing’s definitely massaging the numbers here to come out to a 50/50 split. It’s really 55/45 right now (or maybe 56/44), based on the existing narrowbody backlogs.
Also, I think Boeing’s portfolio does provide slightly better market coverage than Airbus — but only slightly. Obviously, the A321neo is bigger than the MAX 200, whatever Boeing may say. In fact, all of the seating comparisons are tilted in favor of Boeing — but in all fairness, Airbus does the exact same thing in its presentations.
It would be interesting to see which aircraft in the impressive 11 aircraft line up actually sold well over the last 2 years.
Not the 737-7, 737-9, 787-8, 787-10, 777-8, 777-300ER, 777-9, 747-8.
Only the 737-8 and 787-9 do well. The 777-8, 777-9 are years away. Perception management again.
So true, the power points always impress by their lack of objectivity both ways. I am thinking of offering up my personal hs125 at 120 capacity (I wish in both respects)
I don’t have a problem with a sales split if the production was solid. Valid that they started later (their fault) and playing catch up, so maybe)
However, 737 production wobbled the first of the year which meant(means) they had a gap, so the current production if far more iffy than they indicate.
Then you add in the A321 beating the living daylights out of them where they have no competitor and that is serious. Airbus gets a lot more for that than Boeing with its already severely discounted 737 not to mention a lot more bucks into the MAX to make it competitive
Upper line you can make a case for, but there is a capability they simply do not have in the single aisle line and Airbus is working up to 50% Production of that aircraft. Not at all good.
This is worth reading
http://www.wsj.com/articles/boeings-buyback-spending-makes-some-analysts-jittery-1462920092
Seems like Boeing’s main challenge is that Delta, American, and JetBlue are buying the A321, and United and Alaska haven’t ruled it out. The simple answer is to leapfrog the A321 with a small light middle of market.
A MoM could be two models, 55m long with 4000nm range, and 48m long with 4600nm range.
2-2-2 across, 65t empty / 130t MTOW, 44m wing / 44K engines, 92″ fan
JetBlue density, 55m – 250 seats, 48m – 220 seats
Of course a substantial commitment from Boeing, airlines, and engine makers will be needed first.
Conner pays lip service to the need for Boeing to be competitive . . .
http://www.seattletimes.com/business/boeing-aerospace/boeing-execs-see-rosy-times-ahead-despite-challenges/
Meanwhile him and the company cut a sweetheart deal for an extra $7.6 million . . .
http://www.seattletimes.com/business/boeing-ceo-took-home-almost-29m-last-year/
#Zero_Credibility
Its a $100 billion company , $29 mill is nothing unusual, hes probably the lowest paid employee CEO in Seattle for a world scale company, and they have a few.
Yes, or maybe not.
For reducing costs by cutting wages at the other side? The missing 5 %.
Gigantic deferred production cost and massive share buybacks on one side and gigantic bonuses on the other side. I am sure that is purely accidental, isn’t it?
Its all about my bottom line, not Boeing.
I have no problem with executives and exorbitant pay.
Only when they pay pay themselves exorbitant pay and then go out and preach to the rank and file about the need to be cost competitive and take away pensions and other benefits.
Smoke and mirrors, the omission of the A321 and the probable A350 1100. Yes, Boeing have sold approximately 50/50 to the A320 since the MAX launch. But, what about the massive NEO sales before it? Would it have been 50/50 if Airbus had more production slots. As I said, smoke and mirrors, sadly they are going the way of McDonnell, with this and recent management.
I wonder if anyone asked a valid question with the fuel price at less than $50. There was time about 2-3 years back, when the runaway fuel price made all leading airlines order planes by dozens with better fuel efficiency, just to stay afloat in the market. With oil at this level, there is already a a move in many airlines to defer taking delivery of new aircraft – or why not go for some very low priced used ones. This move will become more common if oil remains at this level for another 4 years. It will upset both Boeing and Airbus sales and future orders. What effect then on the charts produced by Boeing now? Mind you many of the orders by airlines are not yet confirmed orders.
“Two hundred of 250 737 customers have yet to make a decision between the MAX and Airbus A320neo, Conner said.”
Is this an accurate statement? If so, then maybe they are not in such dire straits. On the other hand, it might be their opportunity to pull the trigger on something new before things get as grim as some believe they will get.
“Airbus pursued a different strategy for growth, rather than growth and replacement, Conner said.”
Is he trying to suggest that Airbus is leaving itself open to a competitor poaching on their A320 customers?
And did 50 go with Airbus?
And SW and Ryaniar (one other?) have not full ordered, future thoughts of C series, better deals, A321s?
If not is the glass half full, which way its it going, filling up or is there a hole in the bottom and its going down?
Emphasis on services rather than making aircraft?
I worked for Honeywell when they did that, turns out that it doesn’t pay like they thought it would and a lot of completion out there. Not their forte, typical corporation , they dumped us and gave us all bad reviews (read that they screwed it all up and wanted us to disappear so we weren’t a reminder)
“Two hundred of 250 737 customers have yet to make a decision between the MAX and Airbus A320neo, Conner said.”
What % of that 50 737 customers have already switched sides… I would ask why they are already wondering how many customers they will lose!
Maybe all the presentations were put together by Randy T.
More like Mr. Spin
“Two hundred of 250 737 customers have yet to make a decision”
What percentage of the world 737 has yet to be decided upon? AA, DL, BA, AF, LH, QF, ANA, EY, EZY, QR, SAS, AZ, SR, THY are not among those. But Trans Air Congo has yet to make a decision..
This fabricated 200 out of 250 number says nothing. 80% of world 737’s fleet has probably been decided upon, not 20%, as not said, but suggested 🙁
Aggressive spin can hurt credibility.
Assume you have any to start with, or you can go with Stalin “A lie repeated often enough becomes the truth”. Of course it helps if you can shoot the people with contrary views.
I liked Fords take, we have a problem and we are going to deal with it.
Yep, they took a short term hit and they came through it with flying colors (the only US auto mfg NOT to go bankrupt.