Pontifications: Leahy’s retirement from Airbus

Hamilton ATR

By Scott Hamilton

Nov. 14, 2016, © Leeham Co.: News emerged last week that Airbus super-salesman John Leahy has a new deputy, Kiran Rao.

A new title for Rao wasn’t revealed in the Bloomberg story. He currently is EVP-Strategy and Marketing, so he already was right up there behind Leahy.

But the report, which is presumed true (Bloomberg has a good track record on this sort of thing) is pretty clear indication that the 66-year old Leahy is soon to retire and Rao is almost certainly his successor.

Leahy is Chief Operating Officer-Customers for Airbus Commercial.

Joining Airbus
John Leahy, COO Customers, Airbus Commercial. Photo via Google images.

John Leahy, COO Customers, Airbus Commercial. Photo via Google images.

I’ve known Leahy almost his entire time at Airbus. He joined what was then called Airbus North America in January 1985. Airbus has virtually no presence in this region then (Mexico, the US and Canada). Airbus had a small global market share. Boeing was dominate and McDonnell Douglas was the No. 2 producer of commercial aircraft in the world. Lockheed had just exited the commercial airliner business, for the second time, with delivery of the 250th L-1011 in 1984.

Leahy has a brilliant mind and a mercurial personality. He’s one of those love-him-or-hate-him kind of guys. Boeing officials simultaneously are infuriated by him but many also have grudging admiration for him. He’s brusque. He has a quick, biting wit. And from a reporter’s perspective, he is imminently quotable.

His take-no-prisoners approach and acerbic personality is tough for some to take. But nobody can deny his success.

Leahy’s achievements

When Leahy was named chief commercial officer in 1994, moving to the Toulouse headquarters in the process, Airbus only had a 18% market share. McDonnell Douglas was in the final slide. A merger with Boeing was announced in 1997.

Last year, Airbus’ market share increased to about 60% of the backlog for single aisle airplanes and it reached parity with Boeing for wide-body sales. Much of this was due to Leahy, not just for sales but also for product development.

Product development

Leahy, with his US perspective, continually push Airbus designers to think beyond their European roots and come up with long-range aircraft to compete with Boeing’s dominance in this sector.

The A340 was already in the pipeline by the time Leahy arrived in Toulouse and there wasn’t much he could do about this airplane. But Leahy, with strong support from his marketing staff, pushed to develop the A330 from a medium-range airplane to one that rivals the Boeing 787. The A330-200/800 flies more than 7,000nm. The A330-300/900 flies more than 6,500nm.

There were miscues, to be sure.

Leahy originally dismissed the 787 as another Boeing paper airplane pipe dream. When sales took off, the original response was a re-winged A330 using 787 engines that was named the A350.

It was a market dud. Furthermore, it took four or five more tries to come up with the A350 XWB. Even then, the smallest model, the A350-800, proved unpopular and has been all-but dropped.

The A350-1000 needed tweaking that eliminated some engine commonality and how Airbus handled the revisions openly irked Tim Clark, the president of Emirates Airline and a launch customer of the A350-900 and -1000. Clark later canceled his order for the A350, saying it was no longer the plane her ordered.

A380 development

The most controversial product development during Leahy’s long tenure is that of the A380. Even in the late 1990s when the airplane was conceived, some in the industry viewed the aircraft as folly because market dynamics were already changing.

Some believed Airbus simply had “747-envy,” and wanted a competing product.

It wasn’t that simple.

Long after the fact, I was told by an Airbus officer that one driving force in launching the A380 was that Boeing was selling the 747 to airlines a later downsizing the order to the 777, which competed with the A340. Without the ability to do the same, Airbus was losing sales.

You can take this at face value or not, but that’s one of the reasons given for the program.

Leahy’s retirement

As Leahy aged, and after he had several serious health issues that hit the press, speculation occasionally arose when he will retire. I always thought John would stay until he was carried out feet first. He just loved the hunt, the victory and skunking Boeing too much to call it quits before then.

But as one gets closer to the end than to the beginning,* priorities do shift. And I think they’ve shifted for John. Word on the street is Leahy will likely retire by the end of next year.

*With credit for this phrasing to Alec Guinness in Bridge on the River Kwai.

Kiran Rao
Kiran Rao, EVP Marketing and Strategy, Airbus. Airbus photo via Google images.

Kiran Rao, EVP Marketing and Strategy, Airbus. Airbus photo via Google images.

His presumed successor, Kiran Rao, is a Leahy protégé, having served with Leahy at Airbus North America. In recent years, his public profile has been elevated. He is a speaker every year at the Airbus Innovation Days, the international media briefing in advance of the Farnborough and Paris air shows.

Rao’s wit is every bit as quick as Leahy’s, but his style is far more subdued. He’s had key roles in conceiving the A320neo and A330neo. The former was publicly derided by Boeing officials. They got their comeuppance when the A320neo became the fastest selling commercial airliner ever and rocked Boeing back on its heels when it easily overtook the 737 in sales.

Unusually low fuel prices stalled sales of the A330neo. Fuel inevitably will go back up and early A330s are nearing retirement age. With selling prices as much as $40m less than the somewhat more efficient 787, the A330neo’s day may be yet to come.

Odds and Ends

Boeing 757 Scimitar: Aviation Partners Boeing and United Airlines are installing the first Scimitar for the Boeing 757. We had details about this way back in April 2015. The Boeing 767 is next.

Skip this movie: A new movie, the USS Indianapolis: Men of Courage, isn’t even worth the $9.99 Comcast charges On Demand, let along what you’d pay in a movie

This PBY Catalina was to be used for the movie USS Indianapolis: Men of Courage. It was one of the only airworthy PBYs. It was destroyed, Photo via Google images.

This PBY Catalina was to be used for the movie USS Indianapolis: Men of Courage. It was one of the only airworthy PBYs. It was destroyed, Photo via Google images.

theatre. Based on the true, tragic story of the sinking of the ship in World War II and attacks by sharks, the movie is replete with technical errors (not the least of which is the Indianapolis sailing at night in enemy waters with its running lights on and using the WW II submarine diving klaxon instead of the “bong, bong, bong” for general quarters). Nicolas Cage, the only “name” star, is so wooden the term “actor” doesn’t apply.

The movie’s CGIs are poor. The greatest claim to fame is one of the last airworthy PBY Catalinas was destroyed during the making of the movie.

Reaction to Trump’s election: In my column at Forbes, I write about the reaction to the election of Donald Trump to the presidency and what he might do about the US ExIm Bank. Readers of LNC know that I don’t think much of Trump. But he’s going to be my president. I hope for success for all Americans and our international allies.

 

120 Comments on “Pontifications: Leahy’s retirement from Airbus

  1. Scott

    I appreciate your restrained comment re Trump. Now it is fact then it really is the case that we have to make the best of it. You never know, perhaps he will become presidential whilst in office and grow into the job. there again democracy may not be all it is cracked up to be

    • Scott,

      I feel you re: Donald Trump. The less said the better off we will be. Just sit tight, tighten your seatbelts, and hand the “f” on. It might be a long, bumpy, and at times, terrifying ride.

      We can only hope for the best and start fighting now for a better future.

      Re: Rao: seems like the only way to go. I wonder if he’ll have the same style of smack talk that Leahy had in buckets?

  2. “Leahy, with his US perspective, continually push Airbus designers to think beyond their European roots and come up with long-range aircraft to compete with Boeing’s dominance in this sector.”

    After WW2 Europe was divided in two: East and West. Even Germany was cut in half. Today it is a vast continent of more than 500 million people. So it took a long time for Europeans to start thinking big; and in the meantime many British (Trident) and French (Mercure) aircraft designs failed because they had a tendency to produce airplanes with short ranges that would easily cover the then limited European territory. It took vision, and courage to a certain extent, for Airbus to bring a US sales person to Toulouse. To this day Leahy does not speak a word of French, except for bonjour (he reportedly goes out shopping with his wife who does the talking for him). But he was welcomed because the Europeans were willing to learn and had ambition. Today Bombardier is doing the same thing under Bellemare, who understands the value of hiring the best from the US and Europe. Still, Leahy himself needed vision to understand the potential of Airbus and be willing to move to southern France to realize his own ambitions. The beauty of this deal is that it brought together American savoir-faire with European savoir-vivre.

  3. Scott, funny how you described Leahy above. What other brash New Yorker comes immediately to mind after your recap of Leahy’s personality? LOL. PS. Did you have a mental “burp” with “American North America” above ?

  4. Scott: I have been thinking about whose President Trump is.

    Firstly he is The President Elect and will be the President of the United States. And to the best of my ability I will respect that.

    But he will never be my president. He does not reflect the integrity and ethics of my father and mother and those ideals they instilled in me by example not mouth I hold dear. I may not be in their leagues but I do my best.

  5. I have to say that destroying an iconic aircraft is small change in our current distress, what a terrible thing to do.

    Goes with the current climate.

    • It’s a shame, but it wasn’t the last airworthy example. Wikipedia lists nine airworthy PBYs and 11 more Canadian Vickers-built ones.

      • Frankly they should be put in prison. I hope they rot in hell.

        I flew those as a kid (South Eastern Alaska passenger flights post WWII)_

        Great aircraft and a key to the Allied victories in booth the Pacific and Atlantic as a scout and sub hunter.

    • I believe the Catalina was destroyed as a result of an engine failure while transiting to the shooting location, not as a result of any action by the fimmmakers. Could have happened during any charter of the aircraft.

  6. Leahy and Trump have a lot in common, a love-him-or-hate-him kind of guy, with a take-no-prisoners approach, and an acerbic personality.

    On 60 Minutes last night Trump backpedaled on essentially EVERY campaign promise he made, so who knows what his policies will be, on ExIm or anything else.

    • And today Bannon is his chief something or the other.

      He has no policies nor any integrity.

      I can’t turn around and see this country put back 60 years.

      There is a minimum of decorum and decency that at its heart makes a democracy work.

    • Exim is a long long way down the list of things to worry about with a president like that.

    • RE: Trump backpedaling.

      He’s already said in depositions that exaggerating (to the point of making material misstatements) is marketing in his eyes and permissible if it allows him to seal the deal. That was baked into the cake from the beginning. Woe is the voter that relied on Trump’s promises.

      Looking at his business history, his statements have never been reliable. Trump has always been able to choose which of his promises he gets to keep and he’ll litigate to death the ones he doesn’t.

      The more I heard from him, the less I knew about him. Either he will be a fine president because he will follow the pole numbers because he needs adulation; or he will be awful because his instincts are to (by any means necessary) get a lopsided deal in his favor with a disposable counter party. ‘Winning a deal’ does not mix well when you have only one Congress and one China.

      It does concern me that he has practically no observable long-term business relationships outside of his family and that he never put together a policy platform because he never paid his policy advisers and they quit. That points to a someone who is a top-down manager and those people often don’t have a clue about how their own operation runs.

  7. “…one driving force in launching the A380 was that Boeing was selling the 747 to airlines a later downsizing the order to the 777, which competed with the A340. Without the ability to do the same, Airbus was losing sales.”

    This argument doesn’t make sense. You spend $25 billion to develop and airplane, which you don’t intend to sell, but downsize the order to another plane?

    • I think the so called logic is that they had an incomplete product line and if they want to sell something below it they needed the top too.

      I don’t buy it.

      I think it was LAE (large aircraft envy) and they felt diminished by not having as big an aircraft as Boeing.

      They then wrapped it up in a great hullaballoo of marketing BS while telling the4smles that the 747 was a killer setter for Boeing and they would do the same.

      At that time there was only the 747 that could do it, it was a regulated market. All were on the same level playing field.

      When the A380 came out, there were three wide bodies (4 counting the A340) and it was a whole different world and they let LAE drive them on ego not reality.

      Don’t get me wrong, Boeing certainly pulled similar stuff out when the 787 was rolled out the door, but its got solid sales, it was the execution that killed them.

    • “This argument doesn’t make sense.”

      I totally agree with you. But perhaps the one I am about to make doesn’t make sense either, but it goes as follow. Airbus needed to make a statement to the world: WE ARE AS GOOD AS BOEING. It can certainly be argued that it wasn’t a sound decision, that it made ne economic sense, that the market had moved in a different direction, etc. But they made their point and in the process they gained the respect they deserved. Phil Condit did not believe Jean Pierson when he told him they were going to do it. So it had for immediate consequence to send Boeing into a panic mode, and that is when they started to behave strangely; like proposing a MoM aircraft that actually increased fuel burn! And then replacing it by what was trumpeted as the greatest invention after the wheel, but quickly became a bigger nightmare than the A380 was supposed to be for Boeing.

      • Bigger nightmare than the A380?

        At least the 787 is a sales success. The A380 is a market failure, AND a program execution failure.

        • “At least the 787 is a sales success.”

          You don’t define a sales success by the number of items you sold but by the profit you made on each one of them. From this perspective the 787 is a financial disaster. Not taking into account R&D, the Dreamliner is already 30B in the hole. And it will take a very long time for Boeing to make a profit, if ever. It’s more or less the same for Airbus with the A380. Airbus needs to build four A380 per month to be cash-flow positive, and that’s impossible. Boeing needs to build fourteen 787 per month to be cash-flow positive, and that’s improbable. The difference here is that Airbus earned its prestige with the A380 while Boeing lost its reputation with the Dreamliner. And in both cases it was well deserved.

          • Airbus earned its prestige with the A380? That’s as ridiculous as saying Boeing earned their prestige with the 787.

            I’d say Airbus earned their prestige with successes like the A320, A330, and A350.

            Also, I don’t believe Boeing needs to build 14 787’s a month to be cash flow positive. I believe they are already cash flow positive on a production cost basis.

          • “Also, I don’t believe Boeing needs to build 14 787’s a month to be cash flow positive. I believe they are already cash flow positive on a production cost basis.”

            Boeing is not Airbus. So that is the accounting metric that does not count.

          • Uwe: Boeing is not Airbus. So that is the accounting metric that does not count.

            Do you have some factual information on this subject, as opposed to snark?

            I understand that they are cash positive on each 787 delivery at a production rate of 10/month. But I’m open to new information.

          • It doesn’t make much sense to continue when you are neither able to inform yourself nor willing to accept information and explanation from others.

            Currently the 787 appears to be bring in cash equivalent++ to production cost. @12 per month. But program accounting has also loaded each produced 787 with projected profit distributed over the accounting block ( this is the basic concept of program accounting ).
            AFAIU this then still increases deferred cost.
            When the accumulated “deferred cost” item starts to shrink turnaround will be reached.
            Remaining: recoup the full valley of deferred cost with the remaining backlog inside the accounting block.
            An impossibility as far as I can tell. ( Javier Irastorza had this worked out a year or two ago on his blog.)

          • Currently the 787 appears to be bring in cash equivalent++ to production cost. @12 per month.

            The original post I questioned put the 787 cash equivalent++ to production cost. @14 per month.

            A little probing on my part quickly got that down to 12 per month. I feel like at a bazaar, negotiating the price of a rug. “Will you take 10?”

            Is it any wonder why I’m unwilling to accept information and explanation from others, when it’s based on totally made up numbers?

          • IMHO you better recurse through the thread and go over who said what in relation to cost and frames per month.

            AFAIK only hard fact around is Boeing from ~beginning of this years:
            On a per frame basis and the current 12/month rate we have passed brake even on a production cost basis.
            ( not the relevant metric for Boeing bookkeeping as published, but anyway.)

          • IMHO you better recurse through the thread and go over who said what in relation to cost and frames per month.

            I’m well aware of who said what. Norman made the claim that the 787 needed 14/month to be cashflow positive, and then you jumped in, to muddy the waters.

            AFAIK only hard fact around is Boeing from ~beginning of this years:
            On a per frame basis and the current 12/month rate we have passed brake even on a production cost basis.

            Do you have a link for that? I find it’s always better to see the actual source material, rather than rely on someone paraphrasing it.

          • could you point out Norman’s reference please?

            afaics and only item I could find in the posts is that Norman wrote 12 ..14 …

            Boeing info: There is Boeing’s news stream and obviously google. you never appear to be happy with links from posters.

          • could you point out Norman’s reference please? …afaics and only item I could find in the posts is that Norman wrote 12 ..14 …

            Normand: “Boeing needs to build fourteen 787 per month to be cash-flow positive, and that’s improbable.”

            Apparently, you didn’t look very hard.

            “AFAIK only hard fact around is Boeing from ~beginning of this years:
            On a per frame basis and the current 12/month rate we have passed brake even on a production cost basis.”

            Where did you get this “hard fact”? You tell me to go to Boeing’s news feed and to use Google to find it.

            Sorry, it’s not my job to do your research for you, in order to prove the accuracy of what you post. The burden of proof is on you.

          • “On a per frame basis and the current 12/month rate we have passed brake even on a production cost basis.”

            When I said that Boeing needs to go to 14/month to be cash-flow positive I based my assessment in part on that Boeing statement. As I have expounded in a previous post, I believe that 12/month is the zone where Boeing stops bleeding cash and where it probably starts to make a bit of money on each frame; that is what I called the neutral zone. But that may not be sufficient for the programme to be “appreciably” cash-flow positive. Technically it might be, and I won’t argue with you on that. But I think Boeing needs to go to 14/month to generate enough cash to start to decrease the forward loss in any significant numbers. I would be willing to settle for somewhere between 12 and 14 per month, but the closer to 14/month the faster the forward loss will be eliminated. We have to keep in mind that this represents a huge amount of money, and that 1300 aircraft is also a big block. We don’t know much other than what Boeing says. So we have to speculate on that and try to interpret what it means. That’s what I have done and I came to a different conclusion than you.

          • I think the most honest answer was when you said,

            It is not accurate though and I cannot substantiate anything.

            I’ll go with that.

        • Ah, Mr Blackadder Shaw.

          First you reduce everything to super simplistic “black” and “white”.
          Than you add the “blacks” for judgement … and perfectly fit your prejudices.

          I see the same simplistic access to Mr. Leahy’s “value”.
          ( not only by Mr. Shaw.)

          In reality thing are much more finely grained and, surprise, do not have a single path causal chain.

          Real achievements ( the good and the ugly ones ) invably are a team work result.

          • This from the guy who introduces a gratuitous insult to Randy Tinseth into the conversation.

  8. Leahy: for an American he has a rather British sense of humour.

    Compare to a guy like Randy Tinseth who never ever can be wrong in his own words.

  9. I think Leahy would be a good guy at the races.
    Jetblue, Air Asia and Indigo, airlines Boeing would not take seriously, but they have been winners for Airbus.
    I think he has shown a flair for understanding markets and exploiting it.
    Maybe A380 has not been going as planned, but maybe its day will come.

    • If it’s day comes, more than 20 years after it entered service, it was a major miscalculation on the part of Leahy.

  10. Even before the recent press revelations, I always thought Kiran Rao would be a top candidate to replace Leahy. He’s been very visible in the press and is not unlike Leahy in some of his qualities. As to Leahy, it would be a well deserved retirement, but I hope he continues to have some presence in the Airbus world, perhaps even through social media.

  11. I think explaining everything Airbus as some kind of responds to Boeing is a very American way of keeping peerceptions under control.

    They sold 10.000 airraft to Airlines that had a choice.

    • Everything in this world is defined by its relation to something else, often its opposite. The Chicago Cubs did not win the World Series against the odds, they won it against the Cleveland Indians. Capitalism is defined against Socialism. The Republicans are defined against the Democrats. In any movie the Bad Guys are defined against the Good Guys. Day is defined by Night. Poverty is defined against abondance. You need the positive to define the negative. Women are the opposite of men, and that’s why we love them (I talk for myself). So Airbus had to measure itself against the best of the best, which was Boeing, who quietly eliminated each and every rival because of its exceptional talent and extraordinary competence. I mentioned baseball, but take any sport and there is always two teams or two individuals that are facing each other. And that’s what makes the Dog Fight between Airbus and Boeing so interesting. I am sorry, but the Americans don’t have a monopoly on chauvinism and patriotism. And as a European you should be proud that the Americans finally took notice. For they don’t often do that. So take it as an honour.

    • I can’t remember how many times you made the argument that 747’s would be replaced by A380’s.

      So you were happy with the storyline of the A380 as a response to the 747, when it suited you.

  12. “He’s brusque. He has a quick, biting wit”

    Yes Leahy has always been full of wit!

  13. @ Rick Shaw/Geo

    John Leahy was the talisman and the brain’s behind the most successful period that Airbus has had. He achieved the breakthrough that took the company from being a player to be of equal stature in the commercial market. He dragged Airbus to 50+% of market share from a base of around 20%, something massively difficult to do. All the criticism that is heaped upon him is a reflection of the grudging respect of Boeing inclined peoples. I am sure he has made mistakes and is abrasive, what else do you expect, but at the end of the day he made a difference and as such should be highly respected for that.

    • Leahy seems to have bought good product definition to Airbus. To me that is what Boeing is missing now. A350XWB hit the nail on the head and the A32oNEO is another good example of defining a product that is affordable and sought after. Hard to tell with the A330NEO as the whole widebody segment is not selling now, but Airbus´ capital exposure is minimal so I think it will be okay for them even if only a couple of hundred are ever sold. In comparison the B748 should never have been offered, though it sounded logical to do do another version of such a great aircraft. B788 is a commercial flop, everybody loves them but not at a price Boeing can afford to make them at, while the 777-X is selling as slowly as the much criticised A380, and won´t be much cheaper to do. Both companies are technically capable, the difference seems to be in their product choices. Normand often points to the lack of strategic product planning at Boeing, I think we can include that in a definition problem, one which Leahy was instrumental in avoiding on the Atlantic side of the water.

      • “Over the next four years you might find Trump becomming a one term president and Elizabeth Warren being too conservative to suceed him.”

        Hi Martin, I think she would be the perfect successor of Donald Trump, because like him she is a bankruptcy expert. 🙂 More seriously, I see her very well in the role of the first female US President. She might be “too conservative”, but nevertheless she is also a very humane person. I have a deep admiration for her.

      • “…points to the lack of strategic product planning at Boeing, I think we can include that in a definition problem, one which Leahy was instrumental in avoiding on the Atlantic side of the water.”

        You think the A380 decision is an example of good strategic planning?

        • Everybody makes mistakes, just pointing out that in the last 15 years Airbus seems to be making fewer.

  14. Vis a vis this LAE issue.

    So according to some, Airbus developed the A380 not based on any sort of business case or market study, but merely because they had a case of Large Aircraft Envy.

    The reason for this apparent judgement being that all, except Airbus, saw the end of the VLA Segment of the market coming to an end.

    If that is the situation, please explain to me why Boeing then went ahead with the 747-8?
    Did they change their minds about the end of the VLA Segment?
    Maybe they thought it would be something fun to do?

    I know that some will claim that Boeing thought it could “kill” the A380 with such a move.
    That would beg two questions:
    1. IF the market was so bad, why would Boeing feel the need to kill it?
    2. Why would Boeing need or want to invest so much money for a market killing exercise?

    I get the impression Boeing was, at least up until the launch of the 747-8, privately seeing the market similarly to Airbus but was publicly stating they saw a soft and declining market. Otherwise it doesn’t make any sense to launch the 747-8. If they truly thought the market was so bad at the time, they would have, at the very least, strictly capped the 747-8 development Budget.

    There is no doubt the A380 is not selling the way Airbus had estimated and hoped. They obviously misread the market. But I think it a bit silly and/or naive to claim they developed it out of a case of envy.

    • “But I think it a bit silly and/or naive to claim they developed it out of a case of envy.”

      Nobody berates an established looser.

      Sulfur and Brimstone talk is invariably spent in proportion to the perceived threat.

      Over time even excessive PR activity ( especially when cloaked as Astro Turfing ) will succumb to reality.

    • I think the received wisdom of the A380 was based on two tenets. Firstly the difficulty competing against Boeing if the top end was dominated by the B747. Not having a contender in that bracket maybe they did not see what Boeing saw as more and more of their negotiations were moving to the B777. By the time the B773ER had shot the B744 out of the water the die was already cast on the A380. Secondly the much touted concept of hub overcrowding needing ever larger aircraft upon which the jury is still out.

      Planning forward does require some ‘shot in the dark’ theories and maybe Airbus got this wrong. Strangely, at vast cost, it got Airbus into the game in a way that without it they would always have been looking up at the big Boeing offerings. The A380 will top 300 sales over pretty much the same time period as the B747 did and still offers a capability when/if the market moves towards it. it certainly gives Airbus kudos when the nicest/biggest/baddest aircraft to fly in is one of theirs. Nothing else comes close

        • I think you complained of snark further up the tread Mr Shaw. Perhaps you haven’t had the opportunity to grace an A380 in your travels. It makes everything else quite humdrum. Yet again a thread descends into A380 meltdown, aren’t we all better than that??

          • You’re right. I haven’t had the pleasure of riding on the A380, yet. I hear passengers LOVE it! Unfortunately, that doesn’t fill the order book.

          • Pax don´t count in a World where median wages have been shrinking for 10-30 years depending on where you live, but we are now at the point where poverty in the rich part of the World is making us politically unstable. Trump isn´t the only case. I can imagine that if real median wages don´t go up 10-15% in the USA over the next four years you might find Trump becomming a one term president and Elizabeth Warren being too conservative to suceed him. Anyway, an economic rebalancing is overdue and won´t favour intolerable seating conditions.

    • “If that is the situation, please explain to me why Boeing then went ahead with the 747-8?” The 747 had been in production for many years and the cost of the 747-8 project was low compared to a clean sheet design. Also the 747 freighter has no competition from Airbus. While not selling in large numbers, it has taken some sales from the A380 and for almost 50 years it is still in production.
      The A380 is a step too far, there comes a point when being larger becomes not practical. Apart from EK,who wants the A380? EK perhaps has peaked as profits are down and once the used A380’s hit the market,that will open up new concerns for the future of the A380. Just my 2 cents worth.

      • I think Boeing also got caught up in we have to match Airbus (sort of)

        Keeping in mind this is the mindless business era where its not about profits and losses but about ego.

        • I think it was a matter of not matching airbus,but building on the past success of the 747. The 747-400 had an EIS of 1989, so an updated version was a logical next step. Perhaps the delay of the EIS had hurt sales but with many 747’s still flying, a few 747-8’s may be ordered to replace some although the 777X appears to be the future of VLA market. 2 engines and a seat count of over 400. Still if air freight picks up, the 747-8F may still keep the line going for a few more years.

  15. No matter what one thinks of him, I am sure most will agree that it will be a bit quieter after Mr. Leahy retires.

  16. I think the “Large Aircraft Envy” stories come exclusively from an area where large, big and powerful is a cultural thing. Add some patriotism, exceptionalism and the “french” thing.

    Contrary to all hopes / expectations / predictions it actually flew, sold and will be around for decades replacing legendary home build product. Pushed by the “Arabs”

    More then some could/can bare.

    Realism / objectivity went way down the priority list from day 1.

    https://www.youtube.com/watch?v=_VPvKl6ezyc

    • There is a lot of truth in what you say here. The A380 appears to be an unbearable site for many inhabitants of that “area” you are talking about. It hurts their collective ego so much that some of them don’t even want to acknowledge that it brought a great deal of prestige to Airbus. This kind of negation applies not only to the largest aircraft ever designed by Airbus, but also to the smallest one, the A320. For the latter was never recognized by that community for what it was: a technological breakthrough. The Europeans had no rights to build the fastest commercial aircraft (Concorde), nor the biggest one (A380). And to add insult to injury they also built the most innovative (A320). They had no rights to do this to a country that had liberated them. And in large part with Boeing aircraft (B-17).

      In 1968, shortly before Apollo 8 circled the Moon, a consortium named Airbus International, which comprised three partners: Sud-Aviation, Hawker Siddeley Aviation, and Deutsche Airbus, ran an ad in Aviation Week. It was about a new aircraft called the A.300, which was equipped with Rolls-Royce RB 207 engines. The two-page advertisement was titled like this: This is the start of something big. Airbus as we know it today was created two years later. Another 35 years after that they would give us the A380 which, like this ad presciently foresaw, is indeed something big, in both senses of the word. For any objective observer that story is simply astonishing. But the most powerful country on earth is still in denial about it.

      http://aviationweek.com/site-files/aviationweek.com/files/uploads/2015/08/1968-Early%20Airbus%20Advertisement2.jpg

    • Contrary to all hopes / expectations / predictions it actually flew, sold and will be around for decades…

      I guess anything can be made a success, if you set the bar low enough.

  17. According to some scale of values (pretty common in the US), success in aeronautics is proportional to the number of sales. That’s why many people think that the A380 or Concorde are failures. That’s also why Leahy, in light of the number of Airbus sales since he works at Airbus, must be considered as being at the top of the ladder. The boss. Probably the boss of bosses. No matter what people thinks of his sense of humor or his controversial statements.

      • Only if you lack in self reflection/introspection.

        Then it realy tears your soul.

    • “According to some scale of values (pretty common in the US), …many people think that the A380 or Concorde are failures.”

      It’s true that in the US many things (and people) are measured by the money they make. Viewed like this the 787 is probably the largest failure in US history. Yet, like the Concorde and A380 it is a technical marvel. Vincent van Gogh lived in poverty all is life, often trading a painting for a meal; nevertheless today his paintings are worth more than what an early 787 was sold for. Which brings us back to the value we put on things (or on people). Each time I landed at Charles de Gaulle the first thing I would do was to look out in hope of seeing a Concorde taking-off. That was because I put great value in that aircraft. And today whenever I have the opportunity to see an A380 in the sky or at an airport I have to take a look and admire its majesty, like I invariably did in the early days of the 747. Had the latter been a commercial failure (like the 747-8 is today) it would still have great value in my mind. It is not necessary to be a European (I am not) to appreciate the value of the A380, or Airbus for that matter. Of course as a Canadian I am very proud of the C Series, but I still have a profound admiration for what Embraer has accomplished. It’s time for the Americans to stop acting like victims, or worse, like a bunch of losers.

      • You don’t define a sales success by the number of items you sold but by the profit you made on each one of them.

        It’s true that in the US many things (and people) are measured by the money they make.

        You keep conflating sales success, with program program profitability. They are not the same.

        The 787 has over 1200 orders, and they will likely sell a lot more. That makes it a sales success. They botched the execution of the program, and that ruined the profitability. But still, they got the market forecast right.

        Airbus did not get the market forecast right with the A380, and they also messed up on program execution.

        While the 787 program may never recoup all its costs, it will come a lot closer than the A380 ever will.

        So, if according to you, the 787 is probably the largest failure in US history, because it’s not profitable, what does that make the A380?

        • If an aircraft has to make a profit then the daddy of them all the B707 was a failure as I believe it never got into the black over its extended life. It did however establish the foundations of a dominance still seen today. It is not always about money.

          The A380 systems were carried over in large part to the A350 and were a logical progression from A320 through A330/A340. This is not something we are seeing on the B787 moving through the B777x, a lot of the B787 appears currently to be a technological side road or even dead end.

          • …a lot of the B787 appears currently to be a technological side road or even dead end.

            Yet again a thread descends into B787 meltdown, aren’t we all better than that??

          • Understandable then that you were busy melting down the A380 in a range of previous posts as it provides much more for waxing poetical in the doom and gloom department. 🙂

          • Haha, not meant to be, is it or is it not? Time will tell, just thinking that a lot of the design solutions on the B787 appear almost too far ahead of their time. Boeing is paying a lot for that.

          • “Yet again a thread descends into B787 meltdown, aren’t we all better than that??”

            This question sure came from the right “contributor”!!!

          • Understandable then that you were busy melting down the A380 in a range of previous posts as it provides much more for waxing poetical in the doom and gloom department.

            More muddy water, more word salad.

  18. I think the A380 had first flight a few months delayed, certification pretty smooth and eis 19 months late. While cost overruns were in the 5-6 Billion ball park. Everybody was shocked / celebrated.
    The Dreamliner had yet to come. Redefining, requantifying what we feel is a cost “messed up execution” / delay / cost overrun.

    • It really doesn’t matter what you think, what matters are facts.

      Do you have any evidence to back up your “thought” that A380 program cost overruns were ONLY $5 to $6 billion?

  19. “You keep conflating sales success, with program profitability.”

    The 787 will never be profitable. Here is why. To my own estimate Boeing spent 15-20 billion on its design. We have to add another 30-35 billion already expended on the learning curve and accrued as a forward loss in the books. That is a total of approximately 50 billion dollars. According to Boeing’s own estimate in terms of sales potential, it would be nearly impossible to absorb that amount of money and start to make a profit over the entire programme. That being said, it is still possible for the 787 to generate liquidities for Boeing going forward. For there is a serious possibility that the programme will become cash-flow positive in the near future. Some argue that they are already there. But I doubt this. And it would be short-lived anyway, because of the deteriorating market conditions.

    We have to keep in mind that if the 787 was very popular at the start of the programme it was because Boeing sold them for a song, so confident were they in their avant-garde manufacturing processes. I don’t know how many exactly were sold below cost, but that is one of the reasons why there is such a big forward loss. My understanding is that the 787 will become cash-flow positive somewhere between 12-14 a month. Boeing was slowly getting there when the ballon started to deflate in the widebody market. So this output (12-14) is seriously challenged right now. That means for the time being the cash-flow will remain negative, or at best neutral. There is still a genuine possibility that the 787 will gain traction again in the future when the market will recover. But that may be quite far into the future.

    • My understanding is that the 787 will become cash-flow positive somewhere between 12-14 a month.

      Where did you get this understanding from? I’ve been doing a lot of Googling, and haven’t come up with anything recent.

      • I gained this understanding mainly over discussions we had in this blog. It is not accurate though and I cannot substantiate anything. No one can actually, because the exact cash-flow turnaround point is a closely guarded secret, and is spread over a very large block of aircraft. I don’t know if it is still negative or neutral, but I seriously doubt it would be positive. And if it were it would not be by much, and can only go down from here because current production rates are unsustainable in the present market environment. At this stage what is important to watch is the trend. It was looking good until recently, and that made me optimistic that the programme would soon to become cash-flow positive. But based on what has been discussed here and elsewhere, I started to change my view. I now believe that the programme will have to switch to a lower production rate than what is required to be cash-flow positive. That is not Boeing’s fault, but is due to fast deteriorating market conditions. It is very difficult for anyone, except for a privileged few (Scott?), to properly asses what is going on. So we have to speculate. And that is what I am doing.

    • Boeing was slowly getting there when the ballon started to deflate in the widebody market. So this output (12-14) is seriously challenged right now.

      At 12 month production they have more than a six year backlog.

      • Cycles are very long in aviation, especially with the kind of backlogs we see today. That’s why we have to look at trends. It is very costly to increase production rates, and is even more costly to reduce them. So A&B have to be very cautious about this.

        Yes, Boeing can maintain current production rates for sometime. But they are unsustainable over the long-term. This situation is particularly difficult to asses because there could be delays and cancellations. And I believe we are now entering a cycle where this is becoming increasingly possible, even probable. That means Boeing will have to monitor production rates very closely. But I would be extremely surprised if they were to increase them in the near future, which would in effect be necessary for the programme to become significantly cash-flow positive.

        The most important thing for Boeing right now is to stop bleeding cash on the 787 programme. And they are probably there right now. But if they make any profit it is nowhere near what is required to deal adequately with the enormous forward loss and the associated production block they use to make their projections. In short, if everything went well the programme would likely be saved. But things are not going as well in the markets as they were until recently. At the moment we are facing a huge amount of uncertainty.

        • Six years is a long time. The market may look very different then. Yes, there could be delays and cancellations, but there could be new orders. In fact, they got 117 new orders so far this year, not bad given your gloom and doom scenario.

          It is pretty much a given that Boeing is not going to increase 787 production to 14/month. But nowhere have I ever seen it written anywhere credible, that they need to build 14/month to be cashflow positive. Apparently, neither have you.

          The A380 faces the very same challenges, with a worse outlook: virtually no new orders, a dwindling backlog, many zombi orders in their backlog, a production cut to one plane a month. And yet you call it a success.

          As I said before, Boeing may not recoup their costs on the 787 program, but they’ll come a lot closer that Airbus ever will on their A380 program.

          • The essence of what I am trying to convey, and whiteout any doom and gloom whatsoever, which is not always the case with me, is that 12 a month is indeed a very good production rate for the 787 programme; because for the first time Boeing is no longer bleeding cash on the production line. But my assumption, and that’s all it is, an assumption, is that Boeing needs a little bit more than 12 a month to generate sufficient cash to start paying back, in any appreciable amount, the huge mortgage it has taken on the 787 programme. However, because of its still very large backlog Boeing might be able to cruise in neutral territory for a long while indeed. But it’s way too early to declare victory, and things might get worse before they really get better. My position should be good news for some Boeing partisans though, because there is a small degree of hope in my message.

            Because of all I have discussed so far in this thread I think we are now beyond doom & gloom. But there is still one big caveat. Because the 787 might remain in neutral territory for an extended period of time, at least that’s what I like to think, it means that it will not be able to contribute much, positively or negatively, to Boeing’s balance sheet. The reason why in my opinion this is important is that the 777 is about to enter a phase of diminishing returns. By that I mean that from now on Boeing will be spending more money than it makes on this programme. That leaves the highly successful 737 programme alone to pay the bills, the dividends, the share by-back, the R&D, etc. That’s fine when your’e young, but the 737 isn’t anymore. That doesn’t leave much room for Boeing to maneuver. What doesn’t help the situation is that the widebody market, and perhaps the whole commercial aircraft market, is entering hibernation.

            Here I go again. I had promised I would not evoke any doom & gloom scenario, but I can’t help it when I start talking about Boeing. 🙂

          • “It is not accurate though and I cannot substantiate anything…”

            On that, we can agree!

          • @ rick shaw

            When it comes to the eventual cost of the A380 program it is all shrouded in mystery and no one but a closeted bean counter within Airbus will really know. I think we can accept the original Airbus number as fact for the anticipated cost as this was well publicised at the time. Regarding Mr Aboulafia’s comment and estimate, he is a well known A380 doubter and I do not believe he has factual evidence to back it up. It could be correct or not. They certainly spent a lot and considerably more than expected.

          • I think we can accept the original Airbus number as fact for the anticipated cost as this was well publicised at the time.

            Which original Airbus number, published when?

            I would trust Aboulafia’s number a lot more than I would trust yours or keesje’s.

          • I am sure RA’s numbers are more correct than mine as I didn’t give you any number…… at the same time he is giving an approximation of the costs as he certainly does not know them. Ballpark he could be correct but beyond that just an informed guess.

            It is a sunk cost, just like the development costs on the B787 and the B748 and the A350 and the C100. Airbus have already written it off and moved on. You win some and you lose some.

            The main problem Airbus have with the A380 is not the past costs but the difficulty in getting the unit cost to breakeven. It is effectively hand built compared to the more efficient processes on other programmes. If there is one thing that will sink the programme it is that those unit costs will always be too high. Remember Willie Walsh from IAG saying that Airbus were asking crazy numbers for new A380s hence his interest in used examples. It all stems in my view from that unit cost being excessive.

      • at 12 MO they might have a 5 year backlog if all were delivered in the next five years but remember they originally sold them planning on 10 MO, so to keep 12 they need or needed to fill in an extra 24 airframes per year. I am not confident they have that, note they had near term slots for Norwegian last year with deliveries starting next year. So I am not sure they have sold 12MO even without considering deferrals.

        Somebody? when was EK originally planning to start taking the not yet ordered 359/781 ¨order¨, that might tell us a bit about when slots open on the 787 line.

  20. Scott,
    Permission, please, to use your phrasing exactly “___________ has a brilliant mind and… is imminently quotable.” Your description fits “Moi” perfectly.
    Not kidding, FLIGHT OF PASSAGE, friend.
    Thank you,
    Norman L Wherrett Jr

  21. @ Rick Shaw

    RS1: “It is not accurate though and I cannot substantiate anything…”
    On that, we can agree!

    RS2: I think the most honest answer was when you said,
    It is not accurate though and I cannot substantiate anything. I’ll go with that.

    Why did you have to repeat that? Is it because you have nothing to say, so you feel the need to repeat yourself? Besides, it’s unethical on your part. I am trying to be as honest as I possibly can and you say “the most honest”, like if the rest was less honest. I may not be right all the time, but I am always honest, to a fault; and to the same degree, not more or less. I wanted to have a frank and open discussion with you because I thought we coud learn something from each other. And that’s why I am here. But it takes two to tango.

    • You wrote:
      Phil Condit did not believe Jean Pierson when he told him they were going to do it. So it had for immediate consequence to send Boeing into a panic mode, and that is when they started to behave strangely; like proposing a MoM aircraft that actually increased fuel burn! And then replacing it by what was trumpeted as the greatest invention after the wheel, but quickly became a bigger nightmare than the A380 was supposed to be for Boeing.

      You call that being honest to a fault? I call it flame bait, and it’s not even accurate. Boeing and Airbus worked on a VLA concept together. Why would Phil Condit not believe Airbus said they would proceed on their own? I believe Boeing wanted Airbus to do the A380, because they knew it would not be a success. When your main competitor is about to shoot themselves in the foot, what’s not to like?

      The A380 did not send Boeing into panic mode. If it had they would have responded immediately with something in the VLA segment. What concerned them was the loss of 767 orders to the A330. That was the segment of the market they needed to address.

      I would not call the Sonic Cruiser a MoM aircraft due to its long range. The sonic cruiser did not increase fuel burn on a per trip basis. It was supposed to burn the same amount of fuel per trip, due to the shorter flying time. It’s all moot because the Sonic Cruiser was never launched.

      It was actually Airbus that had a difficult time responding to the jet Boeing finally decided to launch the, 787. They first offered a derivative of the A330, sold 200 of them and then canceled it after losing several high profile sales campaigns. Then they went with many iterations of a clean sheet A350, finally settling on a CRFP fuselage, after deriding Boeing for their “plastic plane”.

      Later you say, the 787 was not a sales success, even though it has over 1,200 orders. Yes, Boeing botched the execution of the program, and it may never turn a profit. But no one can say they didn’t correctly identify the market.

      Then there was the sentence, ”Boeing needs to build fourteen 787 per month to be cash-flow positive, and that’s improbable.”

      You didn’t qualify as an opinion or offer any clue as to how you arrived at that figure, you just presented as a conclusory statement of fact.

      If you had just admitted from the beginning that you were speculating, and you couldn’t substantiate anything, that would have been honest to a fault. But that’s not what you did.

  22. One thought I had was with the leaving of JL, is he the last one to leave of those fingered (but not convicted) for the insider dealing scandal back in 2006. I always felt that that scandal was when Airbus ‘grew up’ as a corporation and started addressing some of the contradictions rife in its conception

    • They didn’t respond immediately.

      The first project they launched after the A380 was the 787. The 748 came later. FIVE years later.

      Do you have any proof it WAS a panic move?

      • So you imply the 747-8 launch wasn’t a panic move. They thought about it and launched their responds 5 years later, after the A380 flew.

        “I believe Boeing wanted Airbus to do the A380, because they knew it would not be a success. When your main competitor is about to shoot themselves in the foot, what’s not to like?”

        Shooting yourself in the foot?

        Not sure I can follow this strategy.

        • When you wait five years to respond, to me that doesn’t indicate a panic move.

          Shooting yourself in the foot is a figure of speech: “To cause oneself difficulty; to be the author of one’s own misfortune. I am a master at shooting myself in the foot. Again, he shot himself in the foot by saying too much to the press. The Chambers Dictionary has this pithy definition. (inf) to harm one’s own interests by ineptitude.”

          http://english.stackexchange.com/questions/137187/what-does-it-mean-to-shoot-oneself-in-the-foot

          • So maybe it was a well thought out, deliberate action to launch their own VLA, the Boeing 747-8i.

            That seems to have some distance from smartly letting your competitor shoot him in the foot.

            Maybe grabbing the gun after the act and pull the trigger on your own foot.

            “It was actually Airbus that had a difficult time responding to the jet Boeing finally decided to launch the, 787.”

            That’s correct. Although they have sold 1000 profitable A330’s since then, reducing the pain.

          • Of course, the 748 was a derivative, and cost only a fraction of what Airbus spent on the A380, reducing the pain.

          • 748 devel cost have never been divulged. ( but 748 is said to be in forward loss ( 74* or 748 only 🙂 under program accounting rules.
            Looking from the outside the impression is that it was a rather expensive process that continues to gobble money.
            ( program scope and associated problems shew yeast growth to no end.)

          • “Airbus reaction to 787”
            That was for a time dominated by “reactive floundering”.
            ( seems to be nigh impossible to counter a marketing marvel with rationality. Repeat performance: Trump vs. HRC )

            The swoop of Sapir-Whorfisms that enabled the sales campaign maimed the real product execution in its further path.
            The final solution was doing nothing to counter the 787
            but to insert the knife between 787 and 777 @ “heart height”.
            ( to leverage the domain specific vocabulary used by 787 backers.)

    • They were going to sell a lot of -8i, at least half of the -8s. They said so.

      Sometimes the forecasts are wrong. Airbus said they were going to sell 1,200 A380’s. And build a freighter too. They said so.

      • around 2000 the prediction was 1275 VLA from Airbus( B::330).
        … and expecting to take 50+% of that market.
        ~700 expected sales over 20 years.
        They have achieved about half of that in 15 years.
        They have long overachieved on B’s prediction.

        • around 2000 the prediction was 1275 VLA from Airbus( B::330).

          Now we are relying on 16 year-year old information. How marvelous!

          ~700 expected sales over 20 years.
          They have achieved about half of that in 15 years.

          Are you counting the zombie orders?

          • Sorry Mr. Shaw you are not working in way that would allow fruitful dialog. more like fruity.

            I give up.

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