Nov. 6, 2019, © Leeham News: “It’s not easy to compare the performance of the two companies,” says Guillaume Faury, the CEO of Airbus, when the inevitable comparisons between his company and Boeing are made.
The context was talking about advanced manufacturing, discussed in Part 1 of this interview.
“I don’t think we are behind on digital. I think they might have gained more preparation on the future of production systems. We are catching up big time if not ahead in some important places. I think we will know who’s first when the next generation of airplanes is launched. These will be the first ones with digital design and manufacturing. There’s not a single plane today which is full DDMS.”
The issue is key to the next new airplane produced by Airbus or Boeing.
Boeing’s prospective New Midmarket Airplane (NMA) is already a casualty of the 737 MAX crisis. Boeing put off deciding whether to launch the airplane until after the MAX is back in the air and deliveries resumed.
The NMA may become a permanent casualty, LNA revealed Oct. 21.
Advanced manufacturing elements are being used on the 737, 767/KC-46A, 777 Classic and 777X and 787. The NMA would be the first Boeing Commercial Airplanes jet to converge all advanced manufacturing technologies. On the Defense side, the T-X trainer, now called the T-7 Red Hawk, and the MQ-25 drone are the first Boeing products to combine these elements into one platform.
But with doubts now hanging over the future of the NMA and the prospect a new Future Small Airplane (single-aisle) may be launched first, Faury and Airbus must sit back and wait.
“We have our views on product strategy,” he said. “We don’t like to strategize too much publicly.”
Once the MAX is back in service, Faury says Boeing “will have a choice to make.” With a backlog of nearly 5,000 737s, this is where Faury sees the demand.
“I don’t see the market as expecting a new plane,” Faury said. “They expect the right level of production, short term, of the right plane at the right time and with the right quality.
“What I am suggesting here is from my perspective, the 737 and the A320 families are in the market for quite a long time.”
Faury predicts the next generation of single aisle “will be a very different plane.”
“Are the technologies ready for this new wave, this new generation, of single-aisle planes?” Faury asks rhetorically. “I think they are not. It’s not just about digital and production systems. It’s about environment and de-carbonization.”
Faury said the competition will be “very interesting. It will be tough” preparing for the future of the next single aisle. “I would not be comfortable having to decide now to launch an FSA.”
Regardless of any new-design airplane, the certification process now is a question mark as a result of the MAX crisis.
Before the grounding, regulatory agencies largely reciprocated certification. There might have been differences here and there, but if the FAA certified the airplane, Europe’s EASA followed suit and vice versa. Other agencies generally followed the lead of these two.
But with the FAA’s reputation and processes in tatters, and EASA, Transport Canada, China’s CAAC and others saying they will do their own reviews before re-certifying the MAX, the question becomes obvious:
Will the certification process be upended for new airplanes?
Boeing has the 737-7, 737-10 and 777X certifications between now and 2021. Airbus has the certification of the A330-800 in 2020 and, in 2023, the A321XLR facing it.
Will reciprocity prevail or will something new be required?
“I think I was one of the first ones to be clear we need strong alignment and cooperation with agencies around the world, especially between the FAA and EASA,” Faury said.
“I believe one of the reasons why this industry is so safe is because there is an international standard and the authorities have been working together and recognizing each other. This is a very difficult situation to manage. I think they continue to cooperate, this is what I hear, even if there are differences on timing on how to bring the plane back to service,” he said.
“Once this is done, I want to believe they will be back together and the international cooperation that has prevailed so far will prevail again.”
With the MAX grounding about to enter its eighth month, orders were down year-to-date through the Oct. 18 interview with Faury. (Since then Spirit Airlines and Indigo Airlines announced agreements for 400 A320 family airplanes.)
Many believed the industry finally is in a down cycle. Some believed the MAX crisis caused a pause awaiting return to service before engaging in a competitive bakeoff.
Faury distinguished the single-aisle market from the twin-aisle sector.
He said there is still “very strong demand” for single-aisle airplanes.
“Yes, there is some wait-and-see attitude in the market, as well. But I don’t see reasons to believe we are in a down cycle.”
Widebodies are different, he said. “These are for international flight and there are a lot of international tensions. There is a bit of uncertainly on the speed of market growth for international flights. By the way, we see single-aisle growth to be very fast. The widebody is growing at a slower pace. There is a bit of oversupply compared to demand. Even if the demand is very strong, we are at the historical peak of supply.”
The Trump Administration imposed tariffs Oct. 21 on Airbus airplanes imported into the US at 10% of the purchase price.
American Airlines, Delta Air Lines, JetBlue, Frontier Airlines and Spirit Airlines are the biggest US operators and customers of Airbus. All except Delta have only A320neos coming; Delta also has A330neos and A350s.
Each opposed tariffs and each doesn’t want to be the one to pay them.
Faury, not surprisingly, declined to say who pays: the customer or Airbus.
“By definition, the tariffs are import duties, so they are legally to be paid by customers, by airlines,” he said. “But we are working very closely with our airline partners to see how we manage this situation. It’s working in progress.”
Lessors leasing to non-US airlines don’t pay tariffs.
Boeing wanted 100% tariffs, paid by Airbus.
“It is our perception Boeing is the only US company pushing for tariffs,” Faury said.