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
Pontifications: Mitsubishi ramping up flight testing for MRJ
By Scott Hamilton
Aug. 15, 2016, © Leeham Co.: Mitsubishi Aircraft Corp. (MAC) is about to dramatically ramp up its flight testing of the MRJ-90.
Media has been alerted to an all-day event next month, complete with a tour of the Moses Lake (WA) facility, where test airplanes will be based.
The program is two years behind schedule for the brand new design, the first commercial airliner produced by Japan since the YS-11 turboprop more than 50 years ago.
New Customers
The program added two new customers within the last year. Aerolease Corp, a lessor, and Rockton AB of Sweden each ordered 10 and optioned 10, bringing total orders and options to 243/204.
But the customer base is still small. There are only eight. The customer concentration is also small. Fully 150 of the firm orders are with SkyWest and Trans States airlines of the USA. These two carriers also hold 150 of the options.
The MRJ-90 exceeds the weight limits on the labor contracts of the airlines SkyWest and Trans States serve, the so-called Scope Clause. Unless this is relaxed, it’s unclear what will happen with these two orders that dominate the backlog.
MAC said it can provide the smaller, lighter MRJ-70, but little development appears to be going on for this model.
Competing with incumbents
Despite the question mark over the Scope Clause, LNC sees the MRJ as the principal competitor to the dominant Embraer EJet family.
Bombardier’s CRJ family is aging and while BBD works to update the aircraft, the passenger experience in the EJet and the MRJ is and will be superior. BBD claims superior economics. We haven’t run this analysis for some time, so we don’t have an independent opinion.
We believe EMB and MAC will come to dominate the 70-100 seat sector in the years to come, with the CRJ eventually fading. Actually, we don’t see a future for the 70-seat jet. EMB dropped the E-170 with its E2 family, BBD isn’t selling the CRJ700 and MAC as yet hasn’t proceeded with the MRJ-70.
This means that if MAC wants a family of airplanes, it has to go up, not down, in size. This suggests an “MRJ-100” or “MRJ-110” at some point, placing the MRJ across from the E190-E2 and BBD CS100.
On another subject
With the reports last week that Greg Smith, CFO of The Boeing Co., further telegraphed the prospect of a stable production rate at 12/mo for the 787 instead of a boost to 14/mo, and the possible rate cut of the 777 below the 5.5/mo previously announced, I’m struck by the subtle changes in Boeing’s candor.
This follows the revelation that at long last, Boeing considers the termination of the 747 program as a real possibility.
Under previous CEO Jim McNerney, Boeing was well known for seeing everything through rose-colored glasses right up to the moment it didn’t.
Under McNerney’s successor, Dennis Muilenburg, there has been an evolving move toward more transparency and acknowledgement that the reality is different than the messaging.
Some aerospace analysts on Wall Street disagree and still say Boeing is less than candid. I don’t necessarily disagree on certain issues. But I do see an evolution.
Muilenburg’s willingness to take forward losses and charges that McNerney should have but wouldn’t is stepping up to reality.
I still believe write downs on the deferred production for the 787 are necessary, as do some others. So far Muilenburg hasn’t been willing to entertain this, at least publicly.
Nevertheless, Muilenburg is demonstrating a very different approach than McNerney. For this, he deserves credit.
Assuming that mitsubishi’s engineer’s have already sweated blood to try and lose the weight required for the scope clause (650kg?), why not do an MRJ 85?
Is it just me and my European ways, or are Scope Clauses a completely barmy aspect of employer-employee-union relations that presumably are at a very low ebb? Is it really a case of “Fly this plane.”, “No, it’s too heavy.”??!?!?!?
The mind boggles.
Me too, although Americans seem to think that it’s quite reasonable
The pilots of the non limited planes get paid a lot more, so logically if you fly on a regional jet your pilot is not as good and is much more likely to kill you and anyone in the way on the ground.
Also logically you should let the company choose the planes that will make them the most money so that they can share it out amongst the employee’s,possibly forced by the threat of strike action.
Its not to protect the pilots its to protect the big airlines. They dont want the regionals to be flying bigger planes to give them direct competition.
Of course now the majors have moved up to the 140-180 seat level , having a regional at 100 seats wouldnt be a problem. You would think the next step is getting rid of the scope clause entirely but its highly likely to just upsized to 100 seats and weights to match. Again its to protect the major airlines as they have vacated that space.
That would be valid but the pilots unions were the ones that put in the scope clause. Its to protect the pilots.
And yes its a conundrum. Should the 747 pilot be better than the CJ Pilot? Not paid more, better?
Well said 747 pilot does have 350 or so souls and the CJ 60?
Ahh the real world. Pilots don’t just happen, like the trades they work their way up. Beginner not as good as the old hat (though the old hat is probably slipped)
So you start where you can get work (local and regionals) and grab a chance to work up.
That means the regionals are the feed stock for the big boys.
Oddly, not as many go down so there is some other dynamics at work that are not obvious.
In the case of AF447 you have to think a regional pilot is better than those guys were (more current in real world aircraft handling)
To be fair to Boeing they may get a large order for the 787 from Emirates. I would wait to see what that delivers before announcing a write-down on the program
Why would Emirates downsize. They only have 10 330/340s left flying and about a dozen 777-200s. All the rest are 777-300 and 380s.
Doesnt make sense for them to have a new smaller pax fleet, maybe for their regional operations around Gulf and Iran they could just as easily go for A330 neo with maybe 15 or so. An expensive small size ,long range optimised plane like the 787 doesnt make sense
It makes lots of sense. More than a 1100 787s have been sold, and more than 100 million pax have flown on those that have been delivered. Many new high-yield point-to-point markets have opened up with the 787. Emirates must get 787s for thinner markets, non-stop routes and route development. Nobody wants to fly on A330/A340 any more, and the A380 is only good for hub-to-hub and not point-to-point which is what people want and are willing to pay for. You probably don’t know that yields are substantially higher on point-to-point than via hub and that using A380s for new route develoment will result in bankruptcy. The A380 has the highest trip costs of any airplane, which is why airlines are avoiding it.
A few high new yield markets have opened up, most are existing routes.
Whats this ‘route development plane’ you talk about. No one I can think of has a small special fleet for doing this, they use an existing plane. eg Air NZ has 787-9 but its new routes its opened up are using its existing 767 and 777-200 .
Emirates uses the 777-300er for its route proving and then up-gauge to the mighty A380 if necessary.
Point to point is nice but hub to hub is where the volume is. US is unusual in that it has both plus a number of large carriers. They didnt even buy the 777-300ER until very recently and stayed with the 747 too long ( mainly because they were half bankrupt until recently)
120 new high yield point-to-point is not that few. Besides, the 787 is replacing older airplanes offering an unmatched passenger experience and comfort. No other wide body airplane has sold as well as the 787 in so short time or enjoyed as high production rate.
Oh goodness, this sounds like a Boeing blog.
Unmatched pax packing on overseas flights for the most part.
And no Emirate does not have to buy 787 (as much as I like it as an aircraft). Emirates will buy what works for their routes while negotiation the best deal they can get.
787 is thrust limited for Dubai, will have to see what is offered (both GE and RR have up-trusted engines coming out with GE ahead on total thrust) (as well as fuel improvements)
I will leave it to the highly respected Bjorn to weight in on if its enough improvement to meet Emirates hot needs.
@Andy: The most uncomfortable flights for me was the one with Austrian 777, Vienna-Bangkok. I stuck in a window seat with two big guys blocking my path once, it’s horrible.
The close second ones were Thai, Bangkok-Hanoi, which were 787.
Now I always try to get flight to Vienna via Moscow with Aeroflot, they use A330 for Hanoi – Moscow, which is heavenly comfortable compare to 10 across 777 and 9 across 787. And I’m not a big guy by you Westerner’s standard, at 178cm/84kg (or 5’10/185lbs in bizarre units).
The most comfortable flight for me was on a JAL 767 to Narita.
Airlines decide what kind of cabin installation they want. It has nothing to do with the airplane type.
Also not entirely true.
Aircraft mgs decide what the width is, you can tune that so that you can’t dense pack seat width.
787 case in point where you can add another seat.
777 as well.
These two are contradict each other:
1. 787 is comfortable
2. Cabin comfort level is decided by airlines, they can choose 2-4-2 or 3-3-3.
If 2 is true then comfortable is not an attribute of the 787.
To me, because most, if not all 787 are furnished with 3-3-3, I can safely say that “787 economy class are horrible”.
Even looking at Boeings own data for ‘new 787 point to point’ routes I can only count around 30 routes in operation.
http://www.boeing.com/commercial/market/long-term-market/network-and-hub-analysis/
So saying 120 routes is fanciful. Looking at those routes some seem hub to hub such as Tokyo to New York, LAX to Tokyo.
Oslo to NYC is an existing route by SAS ( A330)and United (757) so hardly a breakthrough thats its being flown by Norwegian 787s.
So the evidence points to a few real new routes, such as San Jose or Austin or Chengdu.
This maybe helps clarity the routes 787 is used on
http://www.heraldnet.com/business/787s-efficiency-range-allows-airlines-to-better-use-hubs/
I can’t think of a reason why they’d downsize. They’re also looking at A350 in competition to the 787. With Emirates’s established reputation for a smooth, comfortable and spacious A380 ride, the more spacious A350 may well be the thing they end up with.
Talking of downsizing, with Emirate’s operations having grown substantially on the back of the A380, Emirates have a vested interest in Airbus keeping the program going. If Airbus stop making A380s, Emirates’ business starts shrinking once the supply of second hand examples starts drying up.
So Emirates are perhaps getting themselves into the situation where they have to buy A380s simply to keep Airbus interested, not because they have a need for additional capacity in their fleet. Though doing that is kinda nuts. Emirates eventually need the A380 to evolve; the economies of scale cannot offset the cost/passenger/mile disadvantage forever. As the rest of the airline industry is at best so-so concerning buying more A380s, Emirates are being driven towards a go-for-broke-all-or-nothing strategy.
Emirates could buy out the entire A380 program, take a big stake in Airbus as a shareholder, offer so much that Airbus can no longer refuse to do an A380neo. It would be a mighty big and risky play, but if they actually did achieve that and they alone ended up owning several hundred stretched A380neos, well, that would change the equation of the passenger aviation market quite considerably.
Caveat – the above might all just be fanciful clap-trap…
Nobody wants the A380-800,EK have said they would like the normal sized 900. I’m not sure that is still true in today’s market though. So if it is EK’s call, it will be a bigger A380 so they can finish off the already crumbling competition, with even less apeal to some of the legacies, some of whom are looking doomed. Even Perth in Aus gets 2 EK 380s per day.
EK is two airlines, a sort of LCC and a full service airline. 787-10 suits the cheap market but not the best paying customers. It is also short on lift. I think there will be some A350s in the future EK fleet even if they take 787s.
Correct. Nobody wants any A380s.
Actually that is note entirely right, BA wants them, just not new ones (or more accurately they want them at the same prices they got when offered initially)
Well if BA want them secondhand, and Emirates want them secondhand too, that’s to the advantage of the seller.
On the other hand, selling one’s A380s secondhand means that BA/Emirates/whoever can then use them to flood the market in competition to one’s own routes. Better to crush them?
No indication that Emirates wants second hand A380s (unless you have source to cite?)
They have put out contradictory statements what they will do with their current ones when they age out (per Emirates standards).
That’s as few years off, Singapore has 4 or so on lease that are coming off in a couple years.
No I have no source, I’m merely noting that if Emirates remains addicted to the A380 for the long term and Airbus stop building them, Emirates would eventually have to buy second hand as their own fleet reaches end of life.
Eventually even the second hand market would dry up, leaving Emirates with a requirement for an equivalent VLA with no-one building them.
That is where things are headed right now, and it’s not going to sustain Emirate’s apparent success with A380 in the long run.
So assuming Emirates don’t want a reduction in the size of their business, how can Emirates change that?
1) Keep buying new?
2) Offer so much money so as to force an A380neo into existence?
3) Buy part of Airbus to oblige the company by being a shareholder with voting rights, not simply a customer?
4) Buy the programme outright and become a builder / operator?
Personally I think a blend of 2 and 3 is ultimately quite plausible if Emirates continue to dominate with their A380 fleet and keep making a ton of profit operating it and want to sustain that beyond the lifetime of the current design. A lot of and’s and if’s, but hey-ho.
I can’t see what other strategy might work in the very long run.
Logic fails here as second had other than MA lot of 6 are being used up as well.
The small airplane market is crowded with airplanes like MRJ, ERJ,CRJ, etc, and all of them will not survive.
Regarding the VLA, Boeing has sold over 1500 747s. The program has been extremely successful. But as large twins like the 777 got larger and better, 4-engine airplanes no longer made sense from an economic point of view. The A340 never became a success despite -200/-300/-500/-600 versions. It is no longer offered after a relatively short production run of only 377 airplanes. The A380 never took off as hoped and one can already see the end for the A380.
Scott: I too have seen that change with Muilenburg’s rise. I know it will make your day I agree! Where it is going stay tuned, but I do continue to have some hope.
The 787 production cut (I expect 8 per month long term) is going to be a rough one as the logical place now is Charleston. You would hope that puts the 797 in Everett which is logical with the space they will have (747 and assuming 787 off to Charleston)
And on other subject, this is a well written article on Flight Global on the A380 situation.
https://www.flightglobal.com/news/articles/opinion-airbuss-endless-battle-to-make-the-a380-a-428501/
Two key aspects jump out, one of which I have pontificated on
Initial Group Price: While it was the usual hugely discounted launch, the problem is that today that is the norm and no one wants t pay the real cost. Those early deals were too good, sucked up the whole market and created unrealistic price expectations that was how it would go into the future.
Some of those deals were 777 prices. Boeing probably did the same on the 747-8 . In todays age you can’t expect to raise prices, 787 sees that problem as well though not nearly as dire.
The larger the program (aircraft) the fewer good deals you can cut and recover costs from.
Flexibility: BA is obviously looking at long term and down turns and the inability of the A380 to make ends meet if that occurs.
If Emirates gets into that they are going to shed cash like a hairy dog in summer.
The defib revived me….
Glad to hear that!
Your points about the A380 launch prices is I think very valid, that is what makes me worry about then 777-X What did EK and QR pay for 60% of the order book?
Agree that DM is making more sense. I feel sorry for the guy as he will have more bad news to impart, and he needs to find a way to do it without affecting bind prices. (as buybacks go on who cares about the share price)
To add to this, the dark side is the Rockwell Collins issue with payments. Boeing hit their quarterly results by holding back and I believe that is a Mullenburg tactic (delaying payments)
At issue is what was agreed to contractually. Rockwell Collins is saying it violates the agreement.
IF Boeing incorporates that deferred payment schedule into future agreements then its acceptable but if not and they violate current agreements then that is not only illegal it shows poor judgment.
That’s the some and some part, still have to see what the totality of Mullenberg is and if in fact Rockwell had payment schedule that Boeing violated.
I would think Rockwell would not have raised the issue if they were not on solid ground but stranger things have happened.
Boeing talk about industry standard terms. I assume that means they thinks Airbus are getting a longer deferral of payment. Or it could just be muddying waters, take your pick.
When you see things like that its a cherry pick to suit your position.
Again they can change future, but they can be taken to court if they violate current (you can’t unilaterally re-negotiate a contract)
That is an interesting article on the A380. It is odd how Emirates seem to be able to make it work whilst everyone else is hummm-haaaing about it.
Could we end up with Emirates operating a vast fleet of A380s that earn them enormous revenue that offsets the “uncompetitive” cost/passenger/mile, whilst everyone else is picking up the breadcrumbs of the market that Emirates somehow aren’t already carrying? Who knows, but Emirates seem to be making a good attempt on it.
I have read articles (some time ago) about US passengers flying US-Dubai-London simply to get on an A380 and avoid slumming it on a cramped US-operated 777 / whatever. Ok, that’s pretty extreme levels of passenger choice, but there doesn’t need to be too much of that kind of thing going on to keep the A380 viable for Emirates for a long time to come.
Seen articles recently about pax avoiding point to point as they feel they need a break of trip from the slum conditions. I´ve flown CDG to SIN on an AF flight in which the only way I could get to the toilet was to ask the cabin crew for help (business class toilets) before I had to do ¨le Depardeau.¨ She had a laugh, AF cabin crew are the only good thing about AF. I would have loved to have had to change planes, even a Twin Otter beats AF tourist on 77Ws
Next time fly with AF A330/340 which are much slower than the 777 and you can spend even more time in AF’s “slum” conditions, as you say.
AF 340s are tolerable, they haven’t been updated. Rest of AF fleet is horrible, except I’ve never flown their A380s. Believe me an hour saved wasn’t worth it.
Thanks TW
I have always suspected that the production costs of the A380 were prohibitive. In trying to earn a sensible profit (breakeven) Airbus have had to hold on price. Any airline CEO in the past 5 years would look at that and just drop by Seattle to pick up a couple of B773s instead at a knockdown price. Further not helped by the reputed heavy launch price discounts for B787/a350. The trouble is that the building costs are not coming down soon if ever, each one being effectively hand built and requiring massive transportation costs.
And of interesting as well, the MH370 Independent Group analyses a report handed to them. You have to make a determination of its accuracy but the general flight outline is eerily similar.
https://blogs.crikey.com.au/planetalking/2016/08/15/60842/#comment-40040
Thanks for the link. I think the connection is tenuous at best. He had hundreds of routes on his sim and it would be almost odd if one did not at least in passing resemble the believed route.
To me it looks like he was just fooling around trying to see if he could make McMurdo.
I would agree if this was the only piece of evidence we have, much like a murder case up here a few years ago, they never had the smoking gun as it were, but they built a very solid (data and fact wise) that lead to a conviction.
If I was going to fly McMurdo, I would not plot it, I would just start the Sim at decent point. Again not a given but typical Sim ops (what you would like to see is the rest of his flights and how they were flown)
But the other evidence does add up to a pilot intervention. The flight involved two very radical turns and a couple of significant turns (which took the 777 over the PIC over his home town)
Both ACARs and Transponder were turned off. Not that they could not have failed in a catastrophic event, its just that the aircraft would not have kept fling 7+ hours either.
PING track confirm the rough plot South. Found and ID of wreckage confirms it went down in that region of the Ping Track (7th ARC)
If you are going to do a full flight to McMurdo, why would you do that route up the Malacca straights? (that was confirmed on radar)
As stand alone maybe not, but as part of the facts (if true) it looks extremely damming to me as while not exact route wise, the flight pattern is identical.
Only way this will get sorted if if they ever find the wreckage, which is looking unlikely, or a smoking gun gets washed ashore, ie pilot seat with bullet holes, burn pieces etc. I don’t like calling it suicide or terror, just default words for we don’t know.
Terror attack makes no sense if you don’t tell people who they are supposed to be afraid of, no claims, no video, no nothing makes it seem unlikely.
Suicide? If you are trying to hide it why make obvious interventions in the planes course? Suicides want to get it over and done before they loose their nerve, fly around conscious for 1/2 to one hour? No suicide note or message. Lastly we have seen a million pundits talking about this but I have not seen a single psychiatric opinion that this could be suicide. Questionable to me.
Heading back to land is sensible if you have a problem, the rest doesn’t make a lot of sense but to a sick or dying pilot it might.
MartinA:
I will disagree with you on reading the mind of a suicide and in this case also a large scale murderer.
Sans something left behind (unlikely) saying so, you simply do not know what goes on in the mind of an insane person.
The often quoted thing about suicide notes is the same sort of common knowledge. Some do, many don’t leave a note.
As this is large scale murder (if pilot involved) then that’s a whole different level of insanity as well.
Probably will never be solved. Still that flight path plotted sends shivers up my spine.
I have spent the last days thinking about this but I think if the pilot had evil intent when he plotted this sim track he would have thrown the computer away. No point in trying to hide what he was doing and leaving this hard disc in existence.
Again, no evidence of anything, nobody knows.
MartinA:
Irrational behaviors does not mean a master mind criminal that covers all the bases.
The run up the Malacca straight is a case in point, why do it?
Make a right turn and you can avoid all radar.
Turning off ACARs is the act of someone very knowledge about a 777 (applies to oceanic twins but to know which switch on that aircraft.)
However, not knowing the satellite ping still was in operation would be the signature of someone smart but not as smart as they thought they were.
So in regards to the hard drive, not a clue why if Zhairie did it he would not throw it away (erasing does not work unless done to high specs)
It was fragmented so maybe he thought he had done so.
What I think is impossible to ignore is how close the pattern is as well as the early profile being almost exact.