Feb. 16, 2017, © Leeham Co.: Last week’s order by Singapore Airlines for 20 Boeing 777-9s and 19 Boeing 787-10s immediately was viewed by some as the death
knell for the Airbus A380.
The 777-9 order would start the final spiral down for the A380, some contend.
This overstates the case and misunderstands the nature of the order.
The A380 is in trouble, there no doubt about that. The 777-9 is putting pressure on the A380. There’s no doubt about this, either. But the contention the Singapore 777-9 order sends the A380 on a death spiral is wild fantasy.
An Airbus official appears today at the annual conference of the Pacific Northwest Aerospace Alliance (PNAA) in Lynnwood (WA). Undoubtedly, he will maintain the party line that the future of the A380 is solid. This, too, overstates the case. There can be a future for the airplane, but some major decisions must be made.
First, it’s necessary to put the Singapore Airlines (SQ) order into context. This is done through public information and through LNC’s own market intelligence.
SQ really wanted a larger version of the 777-9, one that doesn’t exist: the 777-10. This concept is a 450-passenger airplane, compared with the 777-9’s 407-425 passengers, each in standard three-class configuration.
Against this desire, Airbus could only offer its own “paper” airplane, also one that does not exist: the A350-2000 (or 1100 or 8000, depending on what name was used at any given time). This is a 400-passenger concept (vs the A350-1000’s 365 passengers) intended to give Airbus a plane on a par with the 777-9, which currently is a sole-contender in the 400-425 seat sector.
Airbus doesn’t have a conceptual airplane in the 450-seat size—the A380 is it. Although the A380 is best used with 600 or more seats, some airlines today have far fewer than 500 seats.
This, of course, disadvantages the seat-mile economics of the A380. We’ll come back to this in a moment.
The prospective 777-10 would have better seat mile economics, but operating economics with the 777-9’s engines wouldn’t be significantly improved. But there are no engine advancements today to improve on the GE9X that will power the 777-9 to provide better operating economics.
Significantly, Bloomberg News reported that the Boeing deal includes the ability to switch the order to a Boeing model that isn’t in the market yet. This is an oblique reference, but clear to those of us who had knowledge of the behind-the-scenes discussions, to the 777-10
The 777-9 puts pressure on the A380. Its seat-mile economics are virtually the same as the larger airplane, without the risk of needing to fill the additional seats.
But the 777-9 is not the A380 killer some contend it is. The true risk to the A380 is the 777-10. This model is what Boeing believes will be the A380 killer, not the 777-9.
The challenge for Boeing is whether a market exists for a 450-passenger 777-10. GE Aviation faces the same challenge in deciding whether to develop an even more fuel-efficient engine than then GE9X to power the -10.
Boeing itself doesn’t help make this case.
It’s been denigrating the Very Large Aircraft (VLA) market size for years, ever since the launch of the 787, in its war of words vs Airbus’ forecast for the VLA sector.
Ever since Airbus launched the A380 in 2000, its 20-year forecast remained between 1,200-1,700 aircraft (including freighters). It figured it would capture half this market. (A lawsuit between Rolls-Royce and Pratt & Whitney revealed Airbus forecast a lifetime sales of 650 A380s.)
Seventeen years later, Airbus has sold fewer than 320 A380s and many of these orders are so soft—and some indefinitely deferred—as to be effectively canceled. Yet Airbus stubbornly sticks to a 20-year forecast of some 1,200 or more VLAs.
Boeing consistently reduced the number of VLAs in its forecast. Today, it’s 20-year forecast is slightly more than 500, including freighters.
This doesn’t leave much room for a business case for a 777-10.
(Despite the 777-9 nominally carrying 407-425 passengers in three class, above the 400-seat threshold for VLA, Boeing insists the 777-9 falls in the large, medium-twin aisle sector, not the VLA. The logic continues to escape us.)
Singapore hedged its bets: order the 777-9, for which a design is defined, against a paper airplane (the A350-2000) that hasn’t been launched, and maintain an option to up-gauge to the non-existent 777-10 should Boeing decide to proceed. And, oh, by the way, get a good deal on some more 787-10s to supplement those already ordered by SQ.
Airbus’ indecision on whether the launch the A350-2000 almost certainly didn’t help its case.
What is the future of the A380?
It’s tenuous, but it seems assured at least through 2023 following a recent decision to reduce production to 12/yr.
Note: LNC excludes all the “iffy” orders from this schedule, except those from Amedeo which appears to be on a path to be a financing source for Emirates Airline. If Amedeo is excluded, the backlog goes to 2022.
By the turn of the decade, Airbus really must decide whether to invest in proceeding with the A380neo. Today’s engines, including those on the A350—the assumed choice for an A380neo—by the mid-2020 decade will be approaching a 20-year old design. The 787 engines will be slightly older. Like the 777-10, an A380neo needs something that can really provide substantial operating economic advantages.
Airbus hopes that by the mid-2020 decade, airport congestion really will reach the point where A380s are needed. This has been the basic case for the A380 all along—but the proliferation of the 787, A350 and significantly improved range for the A330—undermined much of the business case for the A380.
Even if Airbus is finally proved right about airport congestion, by 2025 the A380 design will be 25 years old and the EIS approaching 20 years. As history showed with the Boeing 747, and the 777, 20-year old technology won’t cut it.
Airbus must proceed with an A380neo for this airplane to have a future—with or without a 777-10 nipping at its market sector. With the 777-10, Airbus faces a death knell for the A380. But it’s not the 777-9 as some suggest.