Jan. 29, 2019, © Leeham News: Boeing should forego the New Midmarket Aircraft and instead create a new single aisle airplane targeting the Airbus A321, former Airbus COO-Customers John Leahy said.
Leahy, who was Airbus’ top salesman for more than two decades and the opponent Boeing loved to hate, said Boeing is pursuing the wrong market with the NMA.
Leahy made his remarks at the Airfinance Journal Dublin Conference last week.
Leahy followed aviation consultant and economist Adam Pilarski of Avitas, who doubted the need and demand for the NMA (as do many others). Pilarski predicted Boeing will proceed with the program.
The former Airbus executive also believes there is insufficient demand to support an NMA. But he, too, believes Boeing will proceed. But it shouldn’t pursue the NMA, he says.
“If Boeing were to ask my opinion, which it hasn’t,” he said, “I would tell them I don’t think there is a business case for that. I think they will probably do it because Seattle (Boeing Commercial headquarters) is determined to do it. I think they’ve got some people who want to sell something. They need an answer to the A321.
“If they want to build something, I would advise them to put their money into building a single-aisle airplane and then that could roll over to replace the 737 MAX in the middle of the next decade,” Leahy said. “They could out maybe five years ahead of Airbus with a new airplane, probably around 2030.”
Leahy said Boeing’s determination to do the airplane was indicated as a “a key, the size of the market keeps going up.”
Initially Boeing officials said the Middle of the Market demand was only about 1,000 over 20 years. Then it became 2,000, then 4,000, then 5,000, before settling back to between 4,000 and 5,000.
Airbus, the engine OEMs, key suppliers and LNA see the market between 2,000 and 2,500.
A difference is the “addressable market” vs. “market demand.” Boeing’s figures are the “addressable market.” LNA examined this difference here.
“I think Boeing internally probably sees the market at about 2,500,” Leahy said. “When you’re coming up with numbers like [4,000 to 5,000], you’re just trying to make a business case work.”
Pilarski declined to make his own market demand forecast, saying he is analyzing this now.
Leahy said the lower demand means Boeing won’t be able to sell the NMA at the price customers say they want—between $65m and $75m.
“If they are determined to get this airplane out at the right price point, I think it’s going to be very, very difficult,” he said. “I don’t think the business case works, unless you put services and support in.”
Leahy says that “light twins” in the same 4,500-5,000 mile range were tried—and were unsuccessful sellers.
Only 249 Boeing 767-200/ERs were sold, compared with 687 767-300/ERs (and 38 767-400s). There were 255 A310s sold, compared with 508 A300s. (Freighters excluded from all numbers.)
“Airlines want to simplify their fleets,” Leahy said. “The idea that I’ve got this beautiful, light twin in this market that might work for United Airlines of American Airlines, they want an airplane that does the short- and medium-range as well as the long range.