Oct. 22, 2018, © Leeham News: I was in New York City last week for a series of meetings. Here’s what “the street” is talking about. I make no judgment calls about whether the thoughts are on target or not.
As with many other events, Boeing’s prospective New Midmarket Airplane dominates conversation. Depending on who you talk to, the NMA program will either be launched, or it won’t be.
It will either have a composite fuselage or a metal fuselage.
There will be only a sole-source engine, most likely GE/CFM—or maybe not, because GE Corp is in such financial disarray it may either (1) not be able to fund the NMA engine or (2) GE Aviation will be sold off as GE Corp liquidates itself or (3) Safran and GE will divorce and Boeing will co-fund the engine development with Safran.
Rolls-Royce is in financial straits and Boeing “hates” Pratt & Whitney.
Or—despite the financial conditions of GE and Rolls, there’s plenty of credit line available to fund development of the NMA engine.
In other words, nobody knows anything definitive.
There is consensus that Boeing Global Services is now a crucial element of the NMA business case. LNC wrote about this Oct. 4.
There is also consensus in the disbelief in Boeing’s 20-year market forecast that the Middle of the Market sector is between 4,000 and 5,000 airplanes. The consensus is that it is closer to 2,000.
Some believe that Airbus’s oft-discussed A321LR and XLR will be “good enough” to encroach on the lower end of the demand to render the NMA business case (already dicey) infeasible.
There is universal consensus Airbus’ A330-800 is no answer to the upper end of the MOM sector vis-à-vis the NMA. But since the airplane costs Airbus virtually no incremental money to build (after all, it’s simply a shrink of the A330-900), don’t worry that this is nothing more than a niche airplane now.
People were talking that Airbus’ disarray in the executive ranks has paralyzed decision-making. While there remains doubt over whether the NMA will be built in the street buzz, there is general agreement that unless Airbus straightens out itself soon, Boeing will overtake Airbus for the next decade.
I happen to be among those who believe the NMA will be built and it will be part of a product strategy overhaul for Boeing’s line below the 787.
While I was in New York, news broke that financially strapped Etihad Airways is likely to cancel its large order for the A350. The carrier needs to shrink, the order was considered by some overkill in the first place and the 787 is already in the fleet. So, the A350s are expendable. Or so the talk goes.
There is universal agreement that the pilot unions for the US legacy airlines will not grant relief in the 2019/20 contract negotiations of the Scope Clause restricting the size and number of airplane regional partners can fly on their behalf.
This continues to render the Embraer E175-E2 and Mitsubishi MRJ90 unusable by US regional partners.
There was one suggestion, at an MRJ event/presentation, that the unions might negotiation a special dispensation for these two aircraft, but nobody really believes this.