Consultant to Boeing: cut dividends, invest in new airplane

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.

This is what aviation consultant Richard Aboulafia of The Teal Group predicted today at the annual conference of the Pacific Northwest Aerospace Alliance in Lynnwood (WA).

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.

Long-time critic

Richard Aboulafia

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.

A321neo killer—and to be killed

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.

75 Comments on “Consultant to Boeing: cut dividends, invest in new airplane

  1. I assume Boeing had a huge wad of cash stored overseas that they repatriated when the tax dropped from 35% to 8%.
    Did they follow the lead of many other companies and just give that money to their shareholders or are they using it to design a new airplane?

  2. A 200-250 seat twin aisle with similar efficiency as a single aisle using same materials, engines is not possible.

    Engines better than PW1000/LEAP mk2 / 40k lbs won’t exist in 2026.

    Take those as a starting points. Stop Groupthink, wasting Time.

    • I am not sure it is totally impossible, you can maybe don’t do that much technology wise quickly, Boeings Sugar Projects still has a decade of devellopment ahead of it, but manufacturing /assembly you can design it to be mainly built by robots. Airbus agrees that the A320-series were not designed for robots and they work really hard to get more done by robots.
      Having a brand new plane designed you can get the efficiency leap the T-Ford had over European hand built cars at the time of the same Technology level.
      The US historically has designed Products that can be quickly and cheaply produced in huge volumes.

  3. Sadly the fuselage needs a rethink. The latest Pegasus runway excursion with the aircraft splitting into 3 I it’s not as rare as it should be . Neither the airframe nor the control systems are 21st century. I loved the noisy, Smoky, 737-100. But time to rethink.

    • Not excursion…it was a end of runway overshoot at speed and down a steep bank. The still photos don’t give the same picture as the video, and excursion is pr spin for a crash.

    • Depends. If they’re paid partly in shares, and they can get the company to borrow money so as to pay a dividend, they’re better off which, from their point of view, is very logical indeed. Especially if they can flog those shares before it becomes necessary to pay off the loans.

  4. I was surprised at the time that the borrowing to pay dividends didn’t generate complete scorn across the board. Although I suppose it is somewhat along the lines of the way GE became seen as a banking/financing business with jet engines etc. as sidelines, and that didn’t generate complete scorn.

    Re the 30%, is this a very general guesstimate he’s made or did he substantiate the close ballpark, or specific number, with some calculations?

    • Dunno. But at a very real working level right now, Boeing has 0% share. Airbus are delivering A32*’s and being paid for them. Boeing aren’t delivering any MAXs at all.

      The long term trend is downwards. Once upon a time, back in the 1980s, Boeing domianted with the 737. Now they don’t, and it’s been a constant erosion of market share ever since the A320 came into the market. 30% is simply a minor extension to that trend over the next 5 years.

      So yes, Boeing need an A321neo killer just to stay in the game. The problem is that Airbus can more or less make their A321neo backlog as long as they like – it’s just a matter of taking the orders after all. That gives Airbus an extraordinary amount of time to see what Boeing are doing, and then respond to that (whatever it is) with something just a little bit better. Boeing are then back to square one.

      So what Boeing really, really need is something better than whatever it is that Airbus could ever build. From a pure technology point of view, it’s hard to see what that can be. Boeing can do CF. So can Airbus, etc.

      Furthermore, Boeing’s failure to respond to the A320 30 years ago is probably now going to be a major disaster for them. Had they bitten the bullet and ditched the 737 in the 1990s, replaced it with something featuring a modern FBW cockpit, they’d have had a cockpit that truly could be carried forward for a very long time. Just like Airbus have.

      But Boeing didn’t do that. Hence the eventual conversion pain to something new is going to be severe for airlines and pilots alike. E.g. is it cheaper to pay an expensive senior pilot whilst they’re converting, or do you fire them and replace them with a freshly trained rookie?

      Or is it cheaper to swap the entire airline’s fleet over to Airbus and tap into the enormous labour market that already knows them? If Airbus up their production rate again, I fear we’ll one day be looking back at Boeing 30% market share as a distant memory and at their dominance of the 1980s, 1990s as a fabled myth of yore.

  5. It’s a continuation of the stable dividend policy Boeing has pursued for many years. Boeing has held to that policy consistently for 80 years.

    Their first 2020 dividend will be soon, it will likely be a decrease, and there will not likely be another increase for some time, until things improve. Still, I think Boeing will hold to the stable policy as long as they can. It might be they will decide to change their policy if things don’t improve. That will be up to the board.

    I also think investment in a new aircraft is not so much a matter of capability, as it is uncertainty. The timescale is long enough, and the investment large enough, that a miss is very costly. So they will want to be sure they have a very marketable design. The trend continues towards smaller aircraft but that might toggle back eventually. It’s hard to predict and you don’t want to be on the wrong side of that toggle.

    As an engineer, I would like to see a major “moonshot” design step forward, but there are lots of reasons that might not be wise.

    • They have the ‘bases covered’ at 10 and 9 across seating and the latest move is to cover the 4 across. Thats all bases covered !
      no wonder the 7 across seating doesnt look so attractive.

    • @rob your contributions are generally calm well written and very cool headed

      but here a little too much so – the fact that dividends have always been paid does not mean they should always continue to be, doubly so since it appears that the situation has taken a radical turn, has dis improved dramatically enough to re question this as other traditions must always be questioned

      “I also think investment in a new aircraft is not so much a matter of capability, as it is uncertainty”

      I guess you mean that (the process) of launching a new plane is not so much down to technical or engineering or financial capability as it is of management being capable of judging an uncertain future

      Your statement is very open ended

      Leave aside the thought that a large part of the uncertainty of this future is the result of failed anticipations past, previous bad decisions regarding planes etc and spending income on dividends rather than….

      The capability of any management is seen in their capacity and success to initiate programs that work in the present and into the future, that – in this sense – can define the future

      What you are in fact saying when you leave so open this uncertainty is that BA management have failed in the past as well as in the present and will fail in the future

      But you say this in the most discreet of all possible ways

      After all, despite uncertainty, or perhaps because of, just about everyone still makes the decision to cross the road, even chickens do

      • Even more weird is that economic growth has been more sustained than even the boom years post war and unemployment is at ultra low levels yet the Federal Reserve has returned to QE or it’s more usual name ‘printing money’. They aren’t calling it either of those things .
        The real reason isn’t all those economic parameters but the Great God of Wall Street must be appeased no matter what. Boeing is doing the same, as they play a major part in the Temple of 💰 money , the Pontifex Maximus, which is far more important than mere a builder of Aluminium and carbon things that fly.

        • Printing money is more devious and mind blindingly perverse than when the treasury of most governments issued money in proportion to economic growth (say from a new railway or petrol powered threshing and tillage) and population growth via the simple and sensible expedient of Government spending. Money is now issued via the Federal Reserve Bank but it is then on leant at below inflation rate to commercial banks from whom the same governors were once employed and earned shares from. They on lend it to the average sucker at above inflation rate. This system has helped eliminate the importance of saving in favour of credit. Further in order to allow for the repayment of interest more currency must be issued which thereby is inflationary. The US petro dollar is created by the US Saudi deal which guarantees Saudi Defense and Intelligence security in return for the Saudis only accept US dollars for their oil from any country. This turns the US dollar into a military backed fiat currency. Ever other nation needs it to buy oil. Every one of those nations must earn US dollars by selling Swiss watches, cars, tourism or women. It will be interesting to see what the Paris accords “decarbonisation” pledges do to the petro dollar. At the moment US dollars can be issued because it is not only a currency for the American people but the entire world. Things don’t turn out well for those who challenge this.

      • Gerrard, I was pointing out Boeing’s rational for having and wanting to continue the stable policy, not necessarily the wisdom of it.

        Some commenters here seem to not understand why a company would choose a stable policy, or why they wouldn’t necessarily want to change it. If the company has sufficient resources to ride through a tough time, then it’s better to stay than to abandon.

        That said, Boeing has also increased the dividend steadily, and that is less defensible when things are going badly or investment is needed. That’s why I think the dividend may go down now, we’ll know shortly.

        As far as uncertainty, I meant the ability to market the aircraft at the end of the development cycle. It’s a complex game, as competitors will see your design well ahead of production, and try to counter it. So you need to be sure that you are well enough ahead to ensure orders, but not so far ahead as to destroy profits with excessive development costs. And if the market changes in the meantime, that is also a risk.

        The best solution is to lead the market with innovation, but that also carries risk if the market chooses not to follow, or if the follow-behind hurdles are not high for the competition.

        The military achieves innovation with concurrency, so huge development costs for something like the F-35 can be accommodated. Lockheed could never innovate at that level without extensive government support. A commercial enterprise with for-profit customers can’t really do that. So innovation carries more risk for them. And risk translates into uncertainty about decisions.

        • @Rob

          It is not called the sporty game for nothing. Ignoring the military developments Boeing is in a position where it must redefine its capability. You suggest that uncertainty in the future limits it ability to decide upon a design and that is true, the issue is that there is always uncertainty about the future.

          You could argue that Boeing is approaching the position of Airbus many years ago on the original A320 investment. At the time Airbus partners were looking to get volumes up above 800 in order to cover the launch aid. It was a shot in the dark in a congested space against two/three successful incumbents. High risk and massive uncertainty, a bit of a flow for 5+ years but eventually the underlying cash cow of the whole Airbus entity.

          What Boeing needs to do is stop the rot. The MAX is a dead end development wise and as such Boeing must put in place plans for replacement in whatever form. Perhaps they sit the aircraft on top of the A321. They will spend heavily to do so but it gives product leadership they sorely lack at present and critically a future. It will cost a lot but allows a whole new approach to robotics/ manufacturing that will drive down the equilibrium unit cost. It may address the current weaknesses of the A321, it may introduce at the very least ultra high aspect ratio wings and a hing to fit into existing C slots etc etc

          Most fundamentally the ‘do nothing’ option is not the status quo but instead a steady erosion of market share until the MAX is of no significance.

          • Airbus was brave on the A320, however they benefitted from the Mirage 2000 FBW system and understood they had to be more high tech to be noticed. They benfitted by McDonell Douglas more or less killing itself by not improving especially wing designs and Airbus could use the same suppliers on many components. It was highly political back then and Lufthansa had lots of good advice for Airbus how to design the A320 without repeating the misstakes on the initial A300. Airbus understood that like German industry you have to refine the product constantly by pouring in money to improve its performance and reliability.

        • Dear Rob

          Thank you for your reply, but – in reality you did not ‘point out Boeing’s rational’ – (which I take to mean explain) – vis-à-vis their dividend policy : instead you stated that BA had pursued such a policy for a long time and wished to do so because it is a stable policy

          I interpret this to mean that you say that they do so because they do so – but why they do so is left unsaid : it is hard to suppose that in times when everything else, or nearly, that the company does shows signs or results of immense instability that maintaining this aspect of the company’s actions stable will correct for that

          It may be easier to understand why a company re invests most of it’s profits in R&D and new products, than why it pays large dividends and, apparently, devotes much less income to R&D and new products : but nonetheless there may be very good reasons

          Indeed BA dividend policy may be rational or it may not be, or may have been, but may no longer be, and so on

          I take all your points about the uncertainties and difficulties of this industry, on the other hand BA has only one competitor, you refer to competitors plural, and there exists, as far as I know, a duopoly which to a very large extent is in the interests of both competitors to maintain in some rough equilibrium, if only to exclude another entering the business

          Within a duopoly the risks and uncertainties are much reduced, surely, helped by a common regulatory structure which further disciplines and ensures a commonality of conformity

          Crossing the road at a red light signal on a crossing zone uncrowded with many others all trying to cross at the same time, with only one well known car in sight….

          • Gerrard, the “stable policy” is the formal name of the dividend practice, it’s not determined by me.

            And yes, it got that name because it provides stability, both for shareholders and for the company as a whole. It’s practiced by many companies. I’ve explained why in a previous post, and also why once established, it’s better to keep it in place if possible.

            The arguments I made for risk stand whether competition is singular or plural. The point is, you need to consider carefully what to do, and have a solid plan going forward. Boeing is trying to do that.

            Someone mentioned Nokia in this thread, I think Blackberry is equally relevant. Neither thought the market would shift to the touch interface as it did, and those were fatal mistakes. So there is risk in both innovation and lack of innovation.

            I think if Boeing can come forward with a design that innovates enough to be ahead, but not so much that the market won’t follow, or to break itself financially, that is the way forward. Hopefully they will find the sweet spot, we’ll have to see.

            It’s becoming more difficult because most improvements of the existing designs have already been wrung out. We’re down to incremental 5% to 10% improvements. So at some point the design will have to jump forward.

            Is that time now? I don’t know. I personally would like to see this from Boeing. But it doesn’t seem like Calhoun is thinking along those lines. So most likely they will go after the 10%.

      • Boeing maybe does calculations on how much their main shareholders have borrowed to own Boeing shares, if Boeing dividen drops they might need to sell to pay the banks and that can trigger a share price drop and a larger part of its insitutional stockowners to get into trouble with its banks pushing Boeing stock way down.
        Can you borrow for an interest way below the divident it is like having your own moneypress and the stock price is not that important, more like icing on the cake.

        • NOKIAN and BLACKBERRY died because they did NOT innovate. Leadership happy to milk past success and pay dividends, when they were actually market leaders.
          Doing nothing = game over.

        • @Rob : Dear Rob

          Thank you for your post, extremely interesting, and unlike some others posting I appreciate the expression of a contrary point of view, extremely polite, very well informed with regard to the facts, & with a distinct tone, you are the other half of the de facto blog duopoly

          To give a practice a ‘title’ which appears self justifying is a predictable tactic, it seeks to avoid justification or explanation, hopes to acquire a false certification, such a title is not a formal accreditation

          It is of course reasonable that companies pay a dividend, and this can assume regularity on which all concerned come to rely, but not reasonable that this policy is practiced to the expense of general company stability credibility and investment in new products

          As to market risk, I think there is great difference between a duopoly and an open market in which there are many competitors

          Every market contains risk, but risk, with all due respect, is not like a stable dividend policy, risk fluctuates incessantly, comes in all shapes and sizes, an open market is the practice and definition of risk, engineering a duopoly is one effective way of reducing risk, bribery another, subsidies…etc

          All companies take the risk that another (re-) invents a new product which sweeps away all competitors, Ford, Apple, yet this stimulates the overall market and newly acquired dominance seldom lasts

          Incremental improvements is what bureaucracies or dividend holders look for : or comfortable duopolies

          It is hard to imagine a future harder still to invent it without considerable effort and investment and above all dissatisfaction with incremental improvement –

          – generally speaking the practice of industry and it’s evolution have until now depended on both, breakthrough and increment, – but everyone prefers a breakthrough

          In my opinion it looks like the market now needs a breakthrough, there are political pressures, China Russia, associated commercial pressures from newcomer states massive investment in production, there are social, climate change, & there are practical or logical – a product, system, and regulation invented and fostered, mostly, in a small number of European countries and the US, has recently expanded worldwide

          An anecdote – immigrants (illegal) into central africa from the north used until very recently to arrive by the old slaving routes, cross porous borders by foot, pirated in by sea in tiny boats, or hidden under tomatoes etc in trucks, now they come in on the plane, think nothing of it

    • @Rob

      “It’s a continuation of the stable dividend policy Boeing has pursued for many years.”

      And it is said. There is not, and wasn’t a time ago also, a healthy financial basis to maintain this tradition. Shares above all – bad economics for company.

  6. @HarryM: “Sadly the fuselage needs a rethink. The latest Pegasus runway excursion with the aircraft splitting into 3 I it’s not as rare as it should be.”

    The fuselage is the main advantage de 737 holds over the A320, for the 737 fuselage is lighter than the A320’s. That is because the A320 fuselage was designed 20 years later and because of the new regulations it had to be more robust in order to withstand this type of crash so that the probabilities of injury and death were reduced. That explains why the A320 fuselage is heavier than the 737’s.

    Therefore the 737 benefits from a grand-father clause that allows it to be still manufactured today with a lighter and less robust fuselage than the A320’s. And if you add to this a deficient manufacturing process that allows defective parts to be installed (see following video) it makes for a vey weak fuselage indeed and this has been clearly shown in several crashes of the 737-800.

    https://www.youtube.com/watch?v=vWxxtzBTxGU&t=11s

    • The B737 also benefits from the double ovoid fuselage which reduces frontal area and maybe weight a little as well as Airbuses decision to provide the space for LD3-45 and LD3-46 Unit Load Devices (containers).

    • It was far more than a ‘runway excursion’. When you see it on video the plane overshoots the end of the runway at speed and runs down a steep bank. That sort of accident is far more damaging than a typical US ‘excursion’ where they run off the concrete onto the grass and stay on the level ground.

      • The current case in Istanbul doesn’t include a deep bank. Very similar to the case in Iran but MD-80’s fuselage was intact even after reaching the nearby highway. The 737 in its current length is not stable enough.

        737-800: breaks in 3 parts
        737-9: breaks in 4 parts
        737-10: breaks in 5 parts

        “It’s not a bug. It’s a feature.”

        • MHalblaub, this is not true, the aircraft descended some 70 feet at over 60 knots, and the video shows it disappearing immediately from view as it goes over the edge. The embankment leads to the sea and is a significant drop, about 300 feet.

          • There is no sea around this airport. There are streets on both ends of the runway. The drop down to the street is about 20 m or 60 feet.

            The elevation of the airport is 95 m or 312 feet but that is for the center of the runway. At the very end of the runway just 85 m and the highway is at over 60 m.

            The situation is very similar to this one:
            https://en.wikipedia.org/wiki/Air_France_Flight_358

            The fuselage was intact right after the accident. The picture looks incredible but all passengers survived.

          • Thanks for the correction, I had the sea part wrong, I was citing from an article that discussed two similar accidents in Istanbul.

            I looked into the topology around the AF358 crash at Toronto airport. An earlier crash in 1978 also ended up in the ravine, and was fatal. Afterwards they cleared and graded the ravine slope, it’s described in Wikipedia as a gentle grassy slope leading to the creek, and the A340 stopped intact, just in front of the water. Also there is no perimeter wall, although the A340 did take out some landing lights which damaged the fuselage.

            So still quite a bit different than the flight 2193 incident. The initial slope at Gokcen must be quite steep, as the 40-foot tail disappears from view as soon as the aircraft goes over.

        • In this case here it is interesting to note that separation did not happen at the pickle fork fuselage discontinuity
          but further forward and aft. ( also took me a while to grasp that the cockpit section rested inverted.)

    • Normand, actually all transport aircraft are subject to the same regulations for crashworthiness. When those regulations are advanced, they cover all newly constructed aircraft.

      The FAA maintains a drop test facility where the 737 and other fuselages are subjected to crash loads at the required survivable descent rate of 30 ft/s, or about 36 g’s. This is nearly 10 times the regulatory requirement for aircraft ultimate strength.

      It’s expected that the aircraft structure may fail at these loads. Failure can be an important energy & impact absorption mechanism, and the undersides of all fuselages are designed with this in mind. But the failure should be in a manner that allows for survivability.

      Flight 2193 went over a 70 foot embankment at more than 60 knots, after running through an antenna array, the perimeter wall, and other impediments. So the impact velocity would have been more than 30 ft/s, not including stripping of the landing gear and the other allisions. It came to rest 600 feet beyond the end of the runway.

      • There are the regulations, and then there’s the choice of the SLF.

        You pay your money, and you make your choice. If you perceive one aircraft is more robust than another in a crash, you have the option of travelling on an airline that uses that aircraft, and avoiding where possible airlines that use the other make.

        It’s a personal choice, if you have to put your family on a flight, you weigh the risks.

        The majority of the travelling public haven’t got any idea what aircraft they are flying on. We will have to wait until the MAX is back in the air to see if there is any measurable passenger avoidance.

        Ryan Air have already said they won’t swap passengers to different flights if they wish to avoid the MAX, with their scheduling they may not know what aircraft is going to operate a particular flight until quite close to departure. I’m interested to see that Southwest have a different approach, and I’m very interested to see how they manage it.

        • I’m not really interested in crash worthiness or ditching ability, it’s unlikely to make much difference.Crash avoidance is another matter.

          • Yes of course not crashing is the best option.

            Consider Sully trying to land a 737 in the Hudson instead of an A320… due to the FBW on the 320, he could concentrate on keeping the wings level, and ignore stalling, as the aircraft was doing that for him. The fuselage staying intact after ditching was useful. As they say in the USA YMMV.

            I thought I saw recently that the P-8A had a thicker fuselage skin, does anyone know a) it that is the case, and b) why ? Would it be service life, additional load etc ?

          • JakDak, regarding the P8, it is because it’s a maritime patrol aircraft. This means it spends its time at low altitudes getting buffeting all the time, and some salt spray for good measure. It leads to a lot of airframe stress. A normal airliner flown that way would fall to bits pretty quickly.

          • benign crash behavior is a design objective.
            for a good reason.
            Workings are more visible in road accidents though.
            Traffic death here in Germany have gone from 25,000/a in the mid 70ties down to ~3,200/a in the last couple of years while overall mileage has grown massively.
            Accidents as such haven’t seen a similar reduction.
            passive safety is a Good Thing (TM).

          • By the way, I think Sully did indeed make some mistakes on that “landing.” He failed to throw the “ditch switch.” But the A320 forgave him.

          • I heard he forgot the ditch switch too, but also that it wouldn’t have made much difference. The fuselage got ripped open anyway, and there’s no switch big enough to stop the water coming in then. But yes, the A320 looked after them and, so it seems, he knew exactly how it would do so.

  7. Boeing’s Wall street strategy seems to pay off: share has been defying gravity for quite some time!…
    but analysts will wake up sooner or later…
    as is written above, market share -and profitability- will be low in the vital SA market for many years.
    and the WB market is getting weaker by the day.
    deffered cost recovery by 787 is very doubtful as production declines.
    14 to 12 to 10 then very probably 8 and not 12 as official wishful thinking.
    777X will be late, certification will be painful and costly,and nobody sees production rate above 4 per month in coming years
    large WB market is now shared with a strong 350 competitor.
    where will future Boeing cash cows be?
    how deep will the share fall when analysts wake up and do their job eventually?

    • Index funds …
      Boeing shares are about 10-12% of the Dow Jones index of Industrial companies.
      Index funds buy and hold shares to reflect the index, not the company performance or market chatter.

  8. etc
    As Yogi Berra said (pls correct me) “The more I practice the luckier I get”.

    BAs inability to offer something as basic as a common cockpit across their offering says it all.

    Boeing needs new, inspired C-level leadership, with a grip on reality (not their own PR), and a long term plan

    Without a plan diminishing market share will continue. Maybe 10-15 yrs but oblivion inevitable.

    Now is a good time to ask for if the team that got BA into the sh** is capable of getting it out. Accepted wisdom is not.

    • The missing piece of the post above..
      Boeing risks being a slo-mo NOKIA.

      Nokia had total mobile market domination, and a product roadmap that included iPhone type devices but C-level team were ignorant/incompetent and failed to execute. The rest is history.

      Unless BA develop a thought out product roadmap (looking forward 10-20 yrs) they are destined to being a bit player with ever diminishing market share.

      AB didn’t get lucky. They had a plan.

      • The best, most visionary product doesn’t always win! I always think of Apple and Microsoft in the 80s and 90s. Apple lost its visionary leader nearly 10 years ago. The iPhone continues to dominate, not because it is a better product but because it has a brilliant and somewhat nefarious marketing edge. I agree that Boeing needs to concentrate on engineering. It also once had an edge because of its reactionary technology which resisted new, untried technologies — a little too long. Yet, it also began to incorporate those technologies in newer planes in interesting, old-fashioned ways. Yet, it also suffered from market pressures and an obsession with stock price. It is telling that Airbus is still struggling on profitability issues with nearly state-of-the-art aircraft. The problem relates to a much bigger, global and cultural problem concerning profits, labor, markets and efficiency. Everyone wants to get rich and feels it’s a basic right. What is reasonable compensation for executives and a proper ratio of their pay to workers’ pay? How much should stocks return on their investments and constantly grow? Do we ask too much of corporations, which do what they do — make money — as the quality of the products they make often withers away in significance? Even China, right now, offers significant lessons in authoritative capitalism. Many thought it would be ideal for fighting the virus outbreak. But people are learning that such control over information undercuts some of the necessary transparency and flow of the information upward to resolve the crisis. They can make hospitals in a couple of weeks, but is that what they need?

  9. “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.”

    The NMA virus is still present in many heads.. If it can do 5000NM, it will be too heavy and expensive to compete in the <200 seats <2000NM segment, the bulk of the NB market. They would loose e.g. Southwest Airlines & Ryanair to Airbus.

    • Yes, two separate markets, the 500 to 3K nm market, and the 3K to 5K market. One for a 90t to 100t MTOW aircraft, one for a 120t to 130t aircraft.
      Which one to build first? Can they both be built with the same fuselage and wing? Perhaps the first with a 36m wide wing with split winglets, and the second with structural beef and folding tips to 41m.
      A fuselage of 14′ outside for a wide aisle long haul, 1-2-1 business, or 2-2-2 short haul, at 45m and 50m lengths short haul and 50m and 55m long haul. For short haul 33K geared engines with 81″ fans, for long haul 44K engines with 90″ fans.

      • “”A fuselage of 14′ outside for a wide aisle long haul, 1-2-1 business, or 2-2-2 short haul, at 45m and 50m lengths short haul and 50m and 55m long haul.””

        14′ = 4.26m and would provide less comfort than the MAX.

        If you like 2-2-2, why not use two A220-300 with 4-abreast?
        28 rows would give 112 seats good for 3800nm range each.
        You would need to beat 74t OEW and 140t MTOW.
        Even better with A220-500.
        Or use the E195E2.

        I think Boeing should do a new 767 cross section, but 2-2-2 makes less sense.

  10. @Rob: “Normand, actually all transport aircraft are subject to the same regulations for crashworthiness.”

    No they are not.

    The 737 has kept the same fuselage design it had 52 years ago when it was certified. A similar design would not be allowed today for a new aircraft model because the rules have changed in the interval. In fact the rules had already changed by the time the A320 was certified.

    Modern regulations require aircraft to be designed with better protection for passengers during a low velocity crash; i.e. the aircraft must stay in one piece for as long as possible.

    It is the so-called grand-father clause that allows the 737 to fly with a less robust fuselage than the A320’s, which gives the 737 an advantage in terms of weight.

    • Normand, this is not true. Please read the regulations and the exemptions that have been made for the 737. There are no exemptions for crashworthiness.

      The grandfathering rules have to do with certain exemptions as requested by the manufacturer, or as they apply retroactively to existing aircraft. But grandfathering is not assumed or assured or a given for older designs.

      Example, when the regulations added the 16 g dynamic requirement to the existing 9 g static seats, existing aircraft were not required to retrofit, but new aircraft coming off the line were required to have the new seats, which required a strengthening of the floor. Airbus, Boeing, doesn’t matter.

      After introduction, most safety-related changes are done with an AD which applies to all aircraft, and the change is also incorporated into manufacturing.

  11. Reader “Phil” has been banned from commenting on these pages.

    This action was taken for habitual violation of Reader Comment Rules prohibiting personal attacks on others. Phil was previously suspended for the same thing and more recently edited for the same violation.

    This “Phil” is not to be confused with another commenter who also used the screen name “Phil.” The second “Phil” effected a change to his screen name today (he is now “Philby”). With this change, this announcement is made.

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    Hamilton

  12. @Rob

    The 737 fuselage would not be certifiable today and an AD would be too limited in scope to take care of the required modifications. For the fuselage would need to be completely redesigned from nose to tail and would likely entail a new wing interface as well. That is where grandfathering comes into play.

    But this issue is nothing compared to what has been found on the MAX in terms of grandfathering since it was grounded (see link below to read the 19 page article that describes what the problems are).

    The reality is that the 737 is an old, antiquated and archaic design (trim wheels, control column, steel wires, dual systems, short gear, bulk cargo, narrow seats, etc.) that was very nice in its days but should have been replaced a long time ago. The 737’s potential having MAXed out with the NG variant.

    The fact is that the MAX has been grounded for nearly a year now and no one knows when, or if, it will fly again. For the 737 needs a lot more than a new fuselage. It needs a successor.

    https://drive.google.com/file/d/1XE1Lp36UQxBPCQobOpMYFdFFCueCR1z9/view

    • Normand, the 737 was certified recently and is about to be recertified again. So it will be certified today. That could not happen if your statements were true.

      You’re saying that recertification will only happen because of grandfathering, but that also is not true, at least from the standpoint of safety. The regulations do not permit an unsafe design, grandfathering or no. The 737 has passed the same structural & passenger safety regulations as other commercial aircraft of similar type.

      • “The regulations do not permit an unsafe design.”

        The 737 fuselage is not an unsafe design per se. It is simply less safe than more recent designs like the A320 which had to abide to more stringent regulations.

    • In the ET302 report the OEW of the MAX-8 is 47090 kg.
      No wonder Boeing isn’t showing it on its website.

      • OEW 737-800….:41,413 kg
        OEW A320-200.:42.600 kg
        OEW A320NEO. 44.300 kg

        OEW 47090 kg for the MAX-8 can’t be right..

        • 47090 kg on ET302 was for a 160 seat configuration and I think the cabin crew were 6 instead of min 4 needed. Could be that Ethiopian seats are heavier and could be that they have additional galleys, but I don’t think the report is wrong.

          Wikipedia shows an OEW of 45070 kg for the MAX-8 and describe 2900 kg more OEW than the 737-800 which don’t match 41413 / 45070 kg.

          EASA certified a min weight of 40300 kg for the A320neo but didn’t mention it for the MAX. I hope they mention it if they re-certify the MAX.

          • The 45070 kg OEW for the MAX-8 is mentioned in Boeing’s Airport Planning document for a 2-class 162 seat configuration shown in the document too.

  13. Reporting from Bloomberg and Reuters, based on statements by Dickson in London, has said that MAX certification flights could begin within a few weeks.

    He also said that the timing of RTS may be slightly different in different countries because they will undertake their own reviews, once certification is complete.

    Lastly that regulators are waiting a report and proposal from Boeing on the wiring issue, so still under investigation.

  14. Addendum on Boeing NSA.
    I noted in a cranfield report that their computational work suggests that the 777x folding wings ( increased aspect ratio) gives up to 5% greater efficiency . It’s not easy engineering they have been working on it for over 15 years,no doubt with patents.
    Clearly a new 2020 designed wing ( improved laminar flow etc) would further add efficiency (x%) related to present 1980’s designed wings.Furthermore a carbon composite wing weighs considerably less than a 1989’s metal wing.
    As for the rest of the ( new) aircraft it’s hard to tell but of course there will be further efficiencies.
    If Boeing can design an aircraft ( existing engines) in the 200-250 seat category that offers a 10% improvement on existing aircraft then it should be enough to force Airbus to follow suit.Which is what must happen if it is to be successful .
    If this is possible then I feel it’s the way they will go.

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