By Scott Hamilton
Feb. 5, 2020, © Leeham News: Boeing is headed for a 30% market share unless it invests in a new airplane, and soon.
Aboulafia, who has been following Boeing for 30 years, implored the new CEO, David Calhoun, to redirect billions of dollars in shareholder dividends toward research and development instead.
Calhoun recently suspended 2 ½ year focus on the New Midmarket Aircraft to conduct a clean-sheet review of the next new airplane.
This has been widely interpreted as a move to kill the NMA. In reality, LNA understands, this is more about reassessing the market and what the airplane should ultimately be.
Aboulafia is a long-time critic of Boeing’s &D spending levels. Boeing’s recent moves to borrow $10.7bn and then pay out more than $6bn in dividends drew his scorn at the conference.
LNA also has criticized this. However, Calhoun rejected any suggestion to cut the dividend when asked on the Jan. 29 earnings calls with analysts and media.
Aboulafia noted that the A321neo currently outsells the 737 MAX 9 and MAX 10 by nearly 4:1. LNA previously noted that against the A320neo family, the MAX has a 43% market share. Against total 125-220 seat single-aisle market, the MAX market share is 39%. This sector includes the COMAC C919, Irkut MC-21, Airbus A220-300 and Embraer E195-E2.
Aboulafia noted the A321neo and long-range LR/XLR versions are killing the MAX 8/10. What Boeing needs, he said, is a single-aisle airplane that he described as similar in size to the Boeing 757-200/300 but with a 5,000nm range.
He called this an A321 killer. But he acknowledged Airbus could respond with another A321 version that has a new carbon wing, more powerful engines and more seats. This airplane, commonly called the A322, could be developed for one-third the cost and sold for millions less.
Aboulafia does not support development of an NMA, citing operating costs that are higher than today’s single-aisle airplanes. However, he compared today’s twin aisle airplanes to today’s single-aisle planes. The NMA concept aims for twin aisle costs equal to the A321neo.