Jan. 23, 2017, © Leeham Co.: The global economy is softening and airlines are deferring airplanes, but we don’t see Airbus or Boeing trimming aircraft production for their single-aisle airplanes.
Over-sales and rising fuel prices support today’s A320 and 737 production rates and the increased rates previously announced by Airbus and Boeing.
While oil prices are low compared with the pre-Great Recession levels, Embraer’s John Slattery noted that fuel costs went up more than 48% last year alone. Fuel now costs more than $50/bbl. West Texas Intermediate Crude was selling at $51.08 Thursday, off $1.40. There will be ups and downs, but the trend is up.
Slattery, the president of Embraer Commercial airplanes, believes “fuel efficient fleets will become more critical in the coming years,” he wrote in a Tweet Jan. 7.
Airbus and Boeing previously announced rate increases to 60/mo for the A320 and 57/mo for the 737, both by the end of the decade. The backlogs support these numbers despite some shifting around through deferrals.
Over-sales (meaning double booking delivery slots) by both companies are done with the expectation that some airlines will defer or even cancel airplanes.
Airbus’ John Leahy, the chief operating officer-customers, nevertheless complains he doesn’t have any delivery positions available until 2021. He wants to push production beyond 60/mo.
Boeing, which market intelligence tells LNC has pretty much used up its over-sales margin, is in a battle to retain market share. This is why it’s likely to proceed with the 737-10 MAX to answer the shellacking it’s getting from the Airbus A321neo vs. the MAX 9. Airbus sold about 1,200 A321neos. Boeing sold about 290 MAX 9s that have been identified. LNC believes this number is somewhat more than 400 after allocating the Lion Air order along the lines of its 737-800/900 fleet.
We don’t believe Boeing will cancel plans to boost production rates.
Orders peaked two years ago, but with low fuel prices and backlogs extending to 2020 and beyond, this is a normal part of the cycle. The order dip will get worse before it gets better.
With fuel prices coming back up, and as Airbus and Boeing burn off the backlog, we see an upswing in orders next year or in 2019, barring some extraordinary global event.
For Boeing, the bigger threat is President Trump enacting some policy that will prompt the Chinese to retaliate against Boeing. About one-quarter of Boeing’s 737 backlog goes to China. Trump’s rhetoric to date already casts a cloud over these.
Low oil prices prompted some airlines to shop for used aircraft, notably Southwest and United. In fact, UAL’s CFO Andrew Levy noted on the earnings call last week that this shopping spree continues. United is leasing more than 20 Airbus A319ceos from the used airplane market.
Levy didn’t specify what airplanes UAL is looking for.
“We will now retire all 20 remaining 747s by year end, but there is no change to capacity or CapEx as a result to the earlier retirement timeline,” Levy said. “Our 14 new 777 300ERs, two of which we accepted in December of 2016, and the remaining, which will become in the first half of 2017, will essentially backfill the 747 capacity interrupts.
“As we retire in our fleet needs and explore how best to achieve them, we were actively seeking opportunities in the used aircraft market,” he said. “Our fleet review is work in progress and we will update you later this year when we have some of them in this year.”
Another reason LNC sees Boeing sticking to its 737 production rate increases (again, barring some global or Trump catastrophe), is the need for cash flow to support the stock price and meet commitments to shareholders to buybacks and healthy dividends.
Those who predict Boeing will not implement the higher rates completely miss this priority set by CEO Dennis Muilenburg and the Board of Directors.
Declining production rates on the 777 Classic will bite into the cash flow. The 737 rates must rise to offset this.
Bernstein Research noted this requirement in its earnings preview note issued last week.
“We see Boeing as a strong investment opportunity for 2017, with rising free cash flow through 2020, driven mostly by the 787 program and the 737 production ramp, which more than offset 777 declines. Free cash flow has historically driven Boeing’s share price,” Bernstein’s Doug Harned wrote.
“Demand for commercial airplanes remains strong for narrow-bodies (737) and new technology widebodies (787), from continued traffic growth and replacement,” Harned wrote. “At current backlog levels, we see the drop in 2016 book-to-bill to 0.9 as immaterial.”
With regards to 787 cash flow, I believe the average unit price is starting to come up pretty significantly. In part because the first 4-800 frames were sold at bargain prices, as Jon Ostrower and others reported at the time, and also because the mix of -8 to -9 variants is more favorable; “a richer mix” as CFO Greg Smith likes to put it. Therefore I think the 787 can relatively shortly become a bright light in terms of cash flow, notwithstanding its inventory of deferred costs.
@JohnB is correct, but we see a risk of cutting production from 12/mo to 10/mo as early as 2020. Boeing is burning off the 787 backlog; sales of the 787 haven’t seen anywhere near a 1:1 book:bill since 2013.
I would say except for 2013 the 787 orders were to low since 2009. On average Boeing sold just 36 aircraft since 2009 including the order peak in 2013. For the current production rate just 3 months work.
Hi! I was wondering if CFM ever got the fuel burn issue on the Leap-1A and Leap-1B resolved. Have you heard anything?
From Airturbopower I understood they won’t produce standard production engines until the end of this year, so there is still a bit of a wait to hear airlines singing the engines praise.
Still, no word at all suggests excellent PR or things are going well
When you are out there in the Salesman’s clothes, you realise the attraction of short delivery slots for the prospective Customer to gob the angler’s bait … do not expect the Salesman to come home with a signed contract every week as long as the next free slots are somewhere back beyond 2021/22 … better send off the Salesman fishing rainbow trouts in the Rocky Mountain rivers ?
I think what is missed sometimes is the sales teams provide the linkage between the engineers and the customer. So sales is also product definition. I put B787s failure to kill the A330 on a disconnect somewhere in this part. I guess Leahy or his sucessors are hard at work defining the A360 etc, in the same way Randy Tinseth is trying to figure out what can be delivered, afforded, and that customers want.
Where are the Iranian planes coming from?
The first A320 delivered to Iran Air was originally build for Avianca. Therefore deferred slots by other costumers and empty slots for e.g. A330 and 777.
Bernstein Research: “We see Boeing as a strong investment opportunity for 2017, with rising free cash flow through 2020, driven mostly by the 787 program and the 737 production ramp, which more than offset 777 declines. Free cash flow has historically driven Boeing’s share price. Demand for commercial airplanes remains strong for narrow-bodies (737) and new technology widebodies (787), from continued traffic growth and replacement.”
When I read this I wonder if we live on the same planet. Speaking of Planet Earth, she is in turmoil right now. Article 50 will soon be triggered to officialize Brexit and a New Administration in Washington is bringing uncertainty to a scale never seen since World War Two.
I can understand why Airbus and Boeing may need to increase production. Airbus wants to make room for new orders and Boeing wants more cash to compensate for other programmes. These two agendas are perfectly rational and the incombent’s respective positions have both been clear. In any given period of time it would still be a very serious decision to make. But because production rates are already at extremely high levels, much higher in fact than at any time before, and when we add to this the recent political shakeup in the UK and USA, among other things, to increase production rate at this stage makes it not only a highly risky proposition but perhaps also a foolish one.
In 2016 we have witnessed a sharp decline in orders and I don’t see why the coming years would be any better. Yes oil prices are higher now and will likely remain so for some time. But to have any meaningful impact on new aircraft orders oil prices would have to be much higher and stay there for a prolong period of time. Old Oil wants to keep it there because it brings badly needed cash, while New Oil wants it to be higher because it’s own production costs are much higher. But I think the war is over now and we have probably reached equilibrium.
Because of the unprecedented backlogs at A&B there are already many new fuel efficient airplanes coming in the market every day and I see no need to increase the output right now.
I guess oil will hang between 60 and 80 in the long run. Any higher and not only new oil but renewables become profitable. Legislation enforcing a carbon tax is the only thing on the horizon which might change that. Not in the USA though.
Perhaps we could rephrase this as “alternative facts” in an alternative reality, where Boeing doesn’t have $30 billion in deferred production costs that they’ve accumulated building the first 500 787s — and not taking into account, of course, the $20 billion, additional, written off as 787 R&D costs.
the key issue here is the FCF metric, we all know the accounting implications of the B787 debacle but the market looks forward and says that cash is sunk and factored into the price in the past. I am surprised to see that the big cash cow FCF is replaced by the new programmes but as has been pointed out on this forum in the past the B787 is turning the corner in this respect and the B737 will soon become become cash at a very high rate. the one big cloud is the maintaining of those production rates in the medium term, to 2020 they are good with relatively minor additional orders
AFAIK, the $30 billion is spent, but not accounted for. If, say, Boeing would be left with no choice today but to take a 30 billion dollar write down on the 500 787s that have been manufactured, their stock would tank.
The stock market has probably already written some of it off fore them
Alternative facts, I had hoped that it wouldn’t be be quite as obvious that the US has allowed itself to be taken over by an idiot and his mates. Don’t worry about Boeing and LM ,they’ll walk all over him.
I know, I know, off subject. It’s just hard to stay calm, sit back and let the girls do the fighting.
Alternative fact: “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive”
Boeing should be very concerned when China confronts the reality of an unhinged Donald Trump presidency.
“.. unhinged Donald Trump presidency.”
Remember Bush43 the uneducated HONK ?
Like Reagan and Bush43 Trump is a front.
Different set of interest groups than Ms. Clinton.
But they do have plans. each maybe their own but objectives probably are rather synergistic.
Entertaining outlook in a terrible way. ( Clinton would not have been of lesser entertainment value, only different.)
Of course aircraft mfg’s are going to cite a need for new/fuel efficient aircraft. I don’t see that impact being felt really in the commodity market though.
The ad hominem attacks on politicians aside, global markets haven’t been very disrupted by Brexit nor US politics. Trump’s cabinet seems to be jam packed with investment bankers so I don’t see a great propensity to drive market panic.
Future negotiations will undoubtedly have an impact on trade/commercial agreements, though, most especially with Iran. I’ve read previously that the Boeing Iran deal is pretty speculative in reality anyway.
Finally, I’m not sure what “alternate reality” is needed for a casual observer to see the 737 line as a cash cow. Boeing predicts about 6 trillion dollars worth of airplane deliveries over the next 20 years, and probably ‘assumes’ they’ll get their “fair share,” despite an economic downturn the past few years (as pertains to orders, anyway). Joyful predictions of their demise, often read on this site’s comments, perhaps are premature.
I have been thinking about the Max 10. Might there be a special low density niche there. Asians are significantly smaller on average and LCC passengers can be easily discouraged from taking to much luggage. I suppose that the answer to that one is behind the paywall.
Let me ask you a loaded questions.
Who drove the Prime Montage Debacle?
Yep, them thar same Billionaires we have running operations now.
So yes we have a lot to fear. They are nothing but short term gain and no integrity.
They are happy to burn the house down if they can escape wit the silver and jewelry first.
Well, again, I guess we could discuss past debacles, but it wouldn’t likely be constructive here. My position incidentally, TW, is just that the government created it through greed masked by “ideology” that claimed to want more poor/minority home owners. Government policy certainly is primarily responsible for said disaster. Here’s a brief response to the leftist (Barnie Frank) assertions about this sordid chapter;
“Trump’s cabinet seems to be jam packed with investment bankers”.
In an “alternative reality”, Drumpf’s cabinet will have the best interest of the poor white working class who voted for them at heart. They always did. That’s how they became billionaires in the first place
Back in the real world, it’s a fact that Drumpf’s cabinet is worth more than the bottom third of all American households combined. They will probably do nothing to fulfil Drumpf’s promise of helping working-class Americans. The very people who bought into his blunt, populist Message about “unrigging the system” will very likely be the ones to suffer its betrayal.
I’d guess that in an “alternative reality”, post 2020, the 737 MAX will win back the market share that’s been lost to the A32Xneo and that the MAX-10 will trump the A321neo.
Back in the real world, it’s quite probable that the current 40 – 60 split in the single aisle market share might change to the worse for Boeing, going forward.
I only wish to note that the name calling I don’t understand.
I’m not sure the 737 will be 40 or 45, or 50 percent market share, over the next 10 years of production (past that I think it is likely Boeing is selling something else). I’d note that the top income bracket has seemed, for some time now, to lean blue in the US, but again that’s not really what this blog is about so I’ll defer from further discussion. We did just have an election that could impact major trade deals, I’d respectfully agree. I think both sides (politically, as HRC and DJT seemed to during the campaign) would agree we want trade agreements to work advantageously for the US. I’m not sure TPP for instance accomplishes that (and it’s in the news today), but I don’t see how that impacts Boeing sales, frankly.
Anyway, about the rich we can also hope that there is more of a split than in the past, ideologically.
All: Although I was guilty of labeling Trump (while still a candidate) “Doofus,” he’s now president so just as I wouldn’t allow disparaging names for Obama, I have to ask all to refrain from disparaging names for now-President Trump.
Wow, you are awake, Scott. I actually wondered if you were away from this blog, or just willing/going to let 30 or 40 anti-Trump blog comments accumulate before you’d “step in” with the obligatory “out of bounds/off topic” moderator comment. Do some of us now get to take some retroactive, rhetorical shots at the “disappearing to Palm Springs in the dead of night” O-man to help “balance things out”?
“I’m not sure the 737 will be 40 or 45, or 50 percent market share, over the next 10 years of production (past that I think it is likely Boeing is selling something else).”
With the decline in 777 Production, it looks like the 737 MAX and the 767 will be Boeing’s only profitable programmes going forward (i.e. at least until the mid 2020s). However, Boeing has apparently been dropping its prices on the 737NG, 737MAX and the 777 in order to try to lure customers away from Airbus. The benefit should be higher market share, which doesn’t seem to be the case, and it comes at a cost — namely, lower margins per unit. This is risky business because, once prices drop, it can be hard to raise them unless Boeing regains enough market share to muscle out the A32Xneo, A330neo and A350.
Boeing’s managers may hope that higher volumes will compensate for revenues lost, but higher volumes on, for example, the 787 is not sustainable when they’re so far off achieving a reasonable book-to-bill ratio. On single aisles , Boeing is seemingly desperate to offer a product that can compete with the A321neo — an aircraft that provides a high pricing power for Airbus. Specifically, as market share increases on the A32Xneo, Airbus is likely to have a higher profit margin than Boeing on single aisles, a declining purchases-to-sales ratio (i.e. how much you spend vs. how much you sell), a decline in marketing costs as a percentage of sales, higher quality, and a higher priced product. In short, the medium-term outlook for Boeing doesn’t look very good, IMO.
I have always questioned the standard Boeing line that Airbus was dumping their products cheap and destroying the market through unfair competition. I am now thinking the same the other way. The selling of aircraft to generate profits is both a science and an art given the need to generate significant volumes to get down the curve. I was re-reading bits of ‘the sporty game’ over the festive break (avoiding the inlaws) and I don’t think much has changed
Supporting Boeing’s share of the market is the likelyhood that airlines worldwide need an effective duopoly to retain bargaining power w/both OEMs. If China really dumped B and tried to replace its B orders w/A orders they would have to pay a high price for aircraft far in the future.
Still Boeing’s future after the current backlog dose not look so great unless they invest more in new and updated product and less in stock buybacks and overpaid (mis)management.
Alternate realities are always a nice plot for science fiction movies.
Alternate realities or alternate universes are a misconception of quantum mechanics like Murray Gell-Mann mentioned several decades ago.
“Alternate realities” are a thing of perception. 🙂
They all happen in the same “Real World(TM)”
in parallel and using the same actors …
I look at this on a slip side.
Air Asia has goobers of orders from Airbus, so does Lion with both Airbus and Boeing.
Add in Norwegians that has buckets full of orders in single aisle from both.
I don’t see any of those growing into those orders.
Lion I believe has a lease operations.
So who do they compete with when they can’t use those aircraft?
Dump them and take a loss or knock out other lessors with under cost leases?
It makes me highly suspicious of current rates let alone future increase.
Add in current world volatility and that really looks iffy in this area let alone the other impacts.
Those order probably will founder with that business plan.
There is a difference if an airframer bets on both horses
or each airframer bets in “his” horse in a regional race.
With prevalent political meddling the second setup can turn into an unsavory dish for either Airbus or Boeing.
Trumps posturing cold be a hint here.
A Boeing executive referred to the A350-900 as a one trick pony. The shoe is on the other foot. The 787-9 is superb, but nothing else. Airbus sales are limited by production, Boeing isn’t. Boeing are achieving sales because Airbus can’t deliver. Please don’t quote me the 777X. They were sold at a discount and nobody is following
Boeing can’t sell an airline at a profit
“Airbus sales are limited by production, Boeing isn’t. Boeing are achieving sales because Airbus can’t deliver. Please don’t quote me the 777X. They were sold at a discount and nobody is following”
Sure looks that way. Airbus should be making tons of money lately. Does someone have the numbers on Airbus profit margin for its commercial airplanes sales?
This doesn’t address the profit margin(only Airbus really knows( per se but it does break down and estimate the sales and delivery values in 2016..
Boeing 44 Billion
Airbus 46 Billion
Boeing 61 Billion
Airbus 46 Billion
Of course this doesn’t count military income.
You have hit the nail on the head re current performance. Boeing has generated massively more sales by value in an industry with a substantial fixed cost base.
Unfortunately current financial performance is normally a poor predictor of the future. But historically Boeing profitability has consistently outstripped Airbus in most profitability measures over the past 20 years, even if program accounting is NOT used.
Is Airbus buying the future? Maybe
For the 2011-2020 decade, A320 to 737 deliveries will average 52% to 48%. About 5500 A320s and 5000 737s. Next decade could be 7500 mostly A321s and 5000 737s which would be 3 to 2, the 60 to 40 ratio. If Boeing wants to counter the A321, they will launch a new single aisle or small MoM, hopefully by the end of 2018.
Boeing are kidding themselves if they think Airbus will not be trying to match production of the A320neo with 737-8 production output. Assuming that half of future A32Xneo deliveries will be A321neos/A321LRs, Airbus would be looking at a market share approaching 70 percent on single aisles, further increasing the profit margins.
Any Boeing MOM should easily be countered by a much cheaper re-winged A321 and larger A322 that would allow Airbus to price their product significantly lower than the competition, while maintaining profitability. In fact, an A322 should be able to enter the market much sooner than an all new Boeing single aisle MOM — providing first mover advantage for Airbus.
The kodak moment, let’s hang on to wet film just a little bit longer. The timing is critical but I think these decisions will be almost as difficult for Airbus. The longer they leave it the more dangerous replacing the supply chain becomes. A feathered replacement is going to be much safer.
To be able to continue producing relatively unchanged A32Xs for possibly as long as half a century will be a massive advantage for Airbus going forward. All current A32X operators will have few, or any incentives to change to a more expensive Boeing single aisle MOM, when the option is to add an upgraded and significantly cheaper A321neo, or a slightly larger derivative aircraft, that will only be incrementally more costly — e.g. no need for additional investment in simulators, ground support equipment, etc.
Assuming a revolution in both propulsion and airframe technologies coming online by the early 2030s — caused partly by increased funding worldwide for aerospace research and development in new and innovative low carbon technologies, thanks to a global consensus (minus the US) that the threat of anthropogenic climate change will require proactive extraordinary measures — would mean that a Boeing single aisle MOM that would enter into service in, say, 2025, would be in danger of having too short a production life. It could be obsoleted just 10 years after EIS.
What is entirely different now, than what was the case when Boeing launched the 737MAX, is that new aircraft architectures and technologies are starting to emerge as a credible alternative to today’s fossil-fuel-powered aircraft. Perhaps, that’s one of the reasons why Boeing is seemingly hesitant to launch a MOM now. Meanwhile, Airbus will be milking the A32Xneo for all it’s worth.
Boeing doesn’t really get to decide, the customer does, as they found out with the Max. There will always be something better around the corner.
Ideally Boeing would allow carbon production technology to mature a bit, but I think that they are forced to go for the next best gate, which is a new generation of engines in the mid 2020s.
Launch next year for a realistic development schedule. Spiral development for the 737 replacement a couple of years later. Don’t forget Boeing was only a couple of years from pulling the trigger when they were forced into the Max. I have no doubt that work is already under way.
“Boeing was only a couple of years from pulling the trigger when they were forced into the Max. I have no doubt that work is already under way.”
IMJ, that window has closed.
@ Ted ” If Boeing wants to counter the A321, they will launch a new single aisle or small MoM, hopefully by the end of 2018.”
Launching NSA + MOM end 2018 implies freeze of design by 2020, ie validating mature technologies from the pipes vintage 2016 ?? What is it we have at hand these days … nothing really snazzy except IFEC. Gundof has explained graphene structures are not mature. Which means their newest feeder + MOM duo will not frogleap tweaked/PIP’ed A32X Series fresh delivered ex-fully amortised FAL s whereas the Boeing newbuilds are costing massive $$$$ non-recurrent capital. Doesn’t pan out …
Conclusion : 2018 is much too early, 2023/24 is more likely, ie EIS 2028/30
My personal strategy would be, small twin aisle Mom target EIS 2025, with CSeries tech formula. Replace 737-8 in 2035 with whatever is available then, single pilot? And I’m sticking with that.
In a huge multi trillion dollar market the A32X vs. 737 battle remains somewhere between 40-60 and 50-50. I don’t get all of the emotion about how Boeing is desperate and noncompetitive/profitable, at all. Or what these new “non fossil fuel architectures” are.
Someone’s going to be producing/supporting new 150-200-300 seat tubes/wings burning fossil fuels with each flight in 20 years. In days gone by, Airbus also has faced years/decades where the A320 was not winning 60% of narrow body sales, and they, too, persevered. Commercial sales will continue to be a growth market long term, despite the past few years.
“Or what these new “non fossil fuel architectures” are.”
I was talking about low carbon aircraft — non fossil fuel architectures would be for the long term.
As for Boeing being “desperate” — well, since Airbus launched the A320neo they don’t seem to have had a single aisle coherent strategy. First, they responded by saying that the A320neo merely caught up with the 737NG; 2nd, they had to launch the 737MAX programme on a whim in order to secure part of the large American Airlines order; 3rd, since the MAX launch, they’ve been claiming that the MAX is only behind the A320neo in orders because it was launched at a later time (7-8 months); 4th, they’re now going to launch a three frame stretch of the 737-9 with a modified MLG — a Hail Mary pass, if you will — in order to try to stop the runaway success of the A321neo.
In short, too many strategies means no strategy.
Let’s not discount Boeing too fast. Remember they flatfooted Airbus pretty hard moving from the Sonic-cruiser to the Dreamliner. It was a disrupter. The feeble initial A350 did not work. Airbus lost years. They did no believe. Fortunately for them, Boeing mismanaged (let’s be gentle) the B787 execution.
At the end, yes, Boeing is losing money on the 787 but they have a 500+ to 65 lead on actual, fielded, market share right now (i’ll leave aside the 767, 777, 330, etc.). Airbus is still struggling to ramp up. And the 787 is augmenting the lead every month still.
Ok, ok, Leahy then flatfooted Boeing (hard) on the A32x neo. No question. But most credit goes to the engine makers. Not the airframer. The 787 was an airframe innovation.
Boeing needs to do something. When under pressure, they have historically pretty delivered. It is perhaps harder this cycle but let’s see.
It’s great fun.
“The 787 was an airframe innovation.”
And after the smoke settled and the mirrors were broken what remained as a hard advantage: better engine sfc 🙂
Naively, i see the wing, the ‘all electric’ system, the ‘complete’ composite barrel subsection approach still as airframe innovations. All adopted by airbus (except the full barrel approach). Hence my opinion.
I have to say though that the electrical integration box fire a 787 suffered where the whole test aircraft lost power in mid-flight was a really nasty/scary episode. What would have happened to the program in case of a crash?
The successful deployment of the external emergency dynamo generator (forgot the exact name) and subsequent restart of the plane electrical system, then engines, etc. must have been a heart stopping event for the guys on board. Beautifully designed/executed.
After the facts, some ears in management must have been ringing — even more than usual! What a scare.
But boeing is 500+ to 65 a350… (err…62 or 64 for real) And this year, again, airbus is going to lose ground when we are told they’ll target about 80 ‘350 (heroics of 12/2017 included!) vs a 140-150 787.
Uhm, in which aircraft did Airbus adopt an “all electric” system?
I believe the answer to that is, none!
And aside from the wing being all composite, where is the innovation?
RAT = Ram Air Turbine is the name you are looking for.
They haven been used a few times already on other aircraft.
I have doubts we will ever see cylindrical barrel sections again for a fresh design.
The A380 started with a strong move into electrical actuation. a rather orthogonal setup arranged in 2H 2E, Systems crosslinked via the electric backup hydraulic actuators. ( 787 is 3H 2E but all H apparently go through the electric domain as added failure mode.
IMU the E conversion system on the 787 were introduced 1 or 2 generations too early. they are too complex and inefficient.
The innovastion driving market currently is renewables and automotive.
Much more demand and faster progress.
The E stuff on the 787 was added mostly for PR and not for making real sense.
Again: what user advantage does the 787 have and which details drive thhis?
What really was a useful step is disconnnecting passenger air supply from potentially lubricant contaminated bleed air.
Something really bothers me on the single isle 60-40 market share comments everyone quotes.
By the way, i agree it’s airbus 60% to boeing 40% right now. Fine. That’s not an ‘alternate fact’.
I do not buy this one second in terms of real, built, delivered, flown aircrafts. Paper backlog? Yes. Sure. Delivered?
Witness the matched ramp up plans. Where is the 60-40?
Do we really believe that with such a backlog airlines would not switch to get earlier slots should ‘poor boeing’ not be able to sell? Do we believe boeing sales would be be more agressive price-wise? That boeing would be even harder on suppliers to price right? That boeing will stop innovate too?
Can europe also scale production? Historically, it has not been too easy. They are more constant and long term planners. But the industrial base is also more constrained systemically.
The reality about who can build faster as part of a larger industrial base is not to be discounted. Even if we believe the A32xneo family is a bit better than the 737MAX one.
You still have to build them.
ps: I am discounting the chinese/soviet/japanese/canadian entrants. Will still be marginal in 5-10 years in this class of aircraft.
This gloom and doom about Boeing is going too far. iI am a share holder in EADSY and BA because together they they corner the market. I have access to analyst numbers i pay for and i will say it again. Airbus will not produce more aircraft come 2020 and that is what matter. When Mr. leahy retire Airbus will become more discipline in the ridiculous order intake.
I also find the Bernstein Research note particularly naive. No one has yet raised the number of airlines that have suffered a computer failure for 1 year. Is there nothing to be worried about by cyber attacks passed over in silence? And if it were true, how many travelers would be at a standstill, out of fear, simply? And how many deferred aircraft purchases?
I don’t think there’s any realistic chance that Boeing would prepare a 737 MAX replacement for EIS before 2030. That’s when the tech to make a bigger leap forward in efficiency is most likely to arrive. The 737 MAX is selling just fine for now.
As for the MOM, I am sure that the folks at Boeing are thinking hard about how Airbus will respond. I think there are several ways that Boeing could differentiate its product enough to compete effectively. (Whether it can do a better job of program management than it did on the 787 is another question entirely.)
1) Faster cruise speed. The whole A320/neo family has a Mach 0.78 cruise speed. If the MOM comes in at Mach 0.82-0.84, it will provide a meaningful productivity benefit vs. the A321LR. And it could bring a number of routes of 3,500-4,000 miles into range for a 2-person flight crew, rather than requiring an expensive extra pilot. (On many airlines that extra pilot would also be taking up a flat-bed seat that you could otherwise sell for $$$$.) If nothing else, this could require Airbus to make bigger modifications to increase the cruise speed of a competing aircraft.
2) Range: I’d expect a Boeing MOM to be able to comfortably fly at least 4,500 miles and perhaps 5,000. Nobody other than Airbus seems to think the A321LR can even fly 4,000 miles into headwinds. I’m no engineer, but I am skeptical about whether the A320 platform can be made into an efficient 5,000 mile-range plane. (The key word is efficient. Even the 737-700 can fly 5,000 miles if you don’t care about cost! https://www.travelcodex.com/2015/09/sas-cancels-houston-stavanger-flight-amid-falling-oil-prices/)
3) Twin aisle design: If the target market is flights of 3,500-4,500 (or even 5000) miles, that’s a long way to be going on a single-aisle plane. If the unit cost savings are great enough, airlines will make their customers suffer, but a twin-aisle MOM ought to have some pricing power relative to a single-aisle competitor.
4) Size: the A321neo/LR is a bit smaller than the 757-200, whatever Airbus says. I think a Boeing MOM would probably start in size around the 757-300/767-200 and have a larger version closer to the 767-300 in capacity. None of those planes really have direct replacements right now.
One other thing: Boeing isn’t going to build this thing on a whim. I doubt it will launch a MOM program without hundreds of order commitments. So I don’t see how Airbus can expect to have a second-mover advantage. By the time Boeing launches the MOM, it will be too late for Airbus to outflank it with an A322 because a bunch of major airlines will have already committed to the Boeing concept.
I assume that is a very good guess about what Boeing is trying hard to sell for the last year or so. Still we see nothing happening. Maybe the airlines just don’t bite?
Probably because all candidates have a fleet of cheap 767s and A330 serving this market just fine. So why should anyone commit to another paper plane.
What I don’t get is why BA is not reworking the 787-8 to reduce production cost. Anyone?
A MOM a little bigger, a little faster and longer range than a 321LR or 322LR would would not have any equal and could demand a better margin. But the design would need to be low risk, low cost with an early EIS. An all new 757 size family using the 777X design features would do this. There are likely more sales potential in the smaller end that could fit in 320-737-757 size gates. Start with the smallest variant with an improved, bigger, higher thrust LEAP. Stretch as as higher thrust engines are available. The 3×3 configurations proposed by Leeham and Boeing have a larger diameter and could also be configured with 2x2x2 with 17″ and thin aisles for faster boarding.
I’m not sure 2x2x2 would be feasible and it wouldn’t make sense in any case. People who would have been stuck in the middle seat might be happy, but everybody else would have to suffer with narrow seats and narrow aisles for no reason.
Faster boarding isn’t much of an advantage for a plane that’s probably only going to turn one time a day.
@ JohnS : ” … a little bigger, a little faster and longer range than … ” ?
Here’s the ique. There’s Product Strategy … and there’s Sales Strategy. The first is to be used only to distract the prospective Customer away from a competitor’s product range if you see he’s getting out of control; the second is to get the Customer to sit down with you to read through the clausure of the Sales Contract you pulled ready out of your pocket.
Any Customer who gets involved in Product Strategy is virtually lost to the Salesman for a long, long period. The Salesman lives in a “Hic Et Nunc” world, ie selling the products slots flowing ‘here and now’ from your Employers various FALs. We here AvGeeks are primarily the VR alter ego Salesmen for Boeing vs Airbus.
So we should ask ourselves the question : what are the chances of Boeing getting the First Mover advantage for a MOM solution in the short term ? The answer probably is “With the MAX-10X, smallish or nil” ! Consequently, for Airbus there is no fire in the barn !” No need to retaliate. There’s fire in Boeing’s barn, yes ! That’s explains why they’re doing Product Strategy ! And Customers – who are familier with such strategy displacements – can call a Paper Tiger when they see one, no worry there …
So let’s get back to a ‘sales attitude’ : what is it we have at hand which is new, which makes sense for MOM operations and which are sourceable right from our FALs hence are sellable ‘here and now’ ?? That’s the 50 $ question …
Boeing, nor Airbus, can fend off the Canadians Chinese Russians Brazilians unless they grow their next gen narrow bodies w innovative technologies including carbon wings, frames, electric fbw, folding wings, laminar flow, speed and of course marginal size increases.
Again you’re talking about a multi trillion dollar market over just a couple of decades.
My personal thought is that once such a new MOM concept is put out in the market, it will either have 3×3 or 2x3x2, doing 6 across with 2 aisles does not make any sense. Everybody might be all happy with eliminating the middle seat but that is not why airlines buy aircraft and if you are going to go with twin aisle, you have to make it worth the effort in the cross section while allowing a proportional tube length for growth.
Time will tell though.
As to Boeing being in dire straits, I don’t quite believe that either. They may not be in a happy place, on top of the world and all that, but they aren’t withering away either.
My question for those that claim Airbus is all ready to react to whatever Boeing might do vis-a-vis a MOM is, Why don’t they just do it and take a jump on Boeing instead of reacting?
I mean if all of their options are so great, then they would be much better off by getting to market first with their A322, wouldn’t they? Assuming the A322 is the ultimate answer to whatever Boeing comes up with, according to some out there.
My belief is that Airbus does not have the ultimate solution to whatever Boeing could come up with, rather they have multiple potential options based on whatever Boeing comes out with but if they were to come out first, Boeing could jump over their release with something better. Basically a game of chicken and we will see who will move first.
Ma suspicion is that it will be Boeing but only when the engine technology reaches a certain advanced stage, which unfortunately seems to be some 7 or 8 years away.
Airbus says they see no need for innovation, because they “own the market”. Soon delivering 300+ A321 versions a year. While an A322 might not be “better” then an all new Boeing MoM, it will always be there 3-4 years earlier, cheaper and have full commonality with 6000 A320 flying around. I think that’s withholding Boeing at this stage. It might not fit Boeings MoM definition, it will be flying 3500-4000NM Atlantic missions with 180-200 seats.
Although Airbus said they “Own the Market”, I can’t find anywhere where they said that innovation is not a necessity.
Or…maybe they did. Maybe Airbus figures that Boeing’s last move is it’s last move and there is no reason to respond because they by attrition in the long run. But…I doubt it. Tomorrow, I figure that Airbus people wake up early in the morning and drink their coffee….and then they kick their dog and proceed to plot Boeing’s downfall.