By the Leeham News staff
April 28, 2020, © Leeham News: The Coronavirus not only decimates the airline industry.
It’s going to completely upend the product strategies of Airbus, Boeing and Embraer.
Boeing is most immediately affected.
The grounding of the 737 MAX indefinitely delayed a decision on whether to launch the New Midmarket Airplane (NMA). This is the twin-aisle, 220-270 seat, 4,500nm-5,000nm range airplane that was conceived as far back as the early 2000s. The version then was slightly smaller in all respects and called the New Light Twin (NLT).
The NLT was favored by Boeing officials as the successor to the 737NG. But the development debacle of the 787, which also delay the 747-8, cost Boeing the chance to move ahead with the NLT.
Then, Airbus forced Boeing’s hand in July 2011 by being poised to win a huge order from American Airlines for the A320 family, including the neo. This prompted Boeing to launch the re-engined 737, which became the MAX. The NLT was shelved.
It reemerged as talk began in 2012 for a 757 replacement. By February 2015, LNA noted the NLT moved beyond a 757 replacement to become a “225, 5,000” mile 767 replacement. (We were the first media to do so.)
Since then, through the early days of what was thought would be a short MAX grounding, Boeing tried to close the business case for the NMA.
A single aisle design continued to lurk in the background. After David Calhoun became CEO of Boeing in January this year, he put the NMA on hold pending a full review. The NLT and a Future Small Airplane (a single aisle) was part of this. So was Embraer.
Embraer engineers were to have a major part of any new airplane design. Key components were to be built by EMB as well. All this is out the window.
The prospect of re-engining the 767 resurfaced (767RE). A new wing was also pondered (767RE-RW).
Now, with Coronavirus, all this is off the table for now. LNA is told product development has stopped and the PD workgroups disbanded, except for what might be termed skeleton crews. Money has been cut off as Boeing fights for survival.
Airbus CEO Guillaume Faury last week, in a message to employees, said Airbus’ survival is at stake. All discretionary spending is suspended. Further research, in partnership with Rolls-Royce, into a hybrid electric airplane (AirbusX) is canceled.
Before the virus crisis, Airbus focused on “decarbonization” airplane projects for the 2030 decade. Still, it has designs ready to respond to Boeing’s NMA or FSA should one be needed.
All of this is put on hold now.
What happened to the designers? Will Boeing also lay them off? Without them, new designers are going to make all mistakes again as they learn to design new airframe.
Ironically, now might be the best time to progress the hybrid electric airplane (AirbusX) .
the one that Bjorn has written about that does not work?
Or is this the magical Unicorn one that defies the laws of physics? (not to mention low oil prices which are what drives this sort of thing in the real world)
“.. in partnership with Rolls-Royce, into a hybrid electric airplane (AirbusX) is canceled.”
Lots of talk here in Germany to prefer green solution projects for getting monetary help from the state to restart the economy.
( resulting mixed “clapping” and “pronouncements of despair” )
IMu it is a reasonably good idea. If we sink money in large gobs we should not sink it into propping up things with no future. Better to spend further energy in redirecting jobs from overcome to futureproof. ( Very much IMHO what the US botched in a massive way in the past. Here coal mining has been going out for quite a while now without massive social disruption. compare to the rust belt.)
Why is this new hard coal power station, the largest in the country opening….I presume the coal will be imported from mines in Poland to make it look good
The Datteln 4 powerplant is finshed and you can switch it on immediately. If you switch off older, less efficient coal power plants, with same capacity, at the same time, the overall CO2 exhaust will drop immediately – without any additional investment.
Of cause it would be better to replace these old coal power plants by renewable energy sources – but these needs to be planed and build, which will take years until the CO2 exhaust drops.
With the Greens this is a religious “virginity” thing. They’d prefer this new plant never go on the grid. ( they ignore that the equivalent power generation will keep on running as much dirtier lignite plants.
Kind of a pissing contest to frustrate the investors in the Datteln Plant. ( which another German “2 decades in the making by way of green partisan warfare” project.)
Uwe, in the interests of truth & fairness, coal in the US has been in steep decline for some time, and will continue to be. 22% reduction last year and 36% this year. Replaced with either renewable or gas turbine plants. Those used to be reserved for peaking but natural gas is cheap enough now for them to be used as baseline.
Issues with coal are mainly in the developing world now, with China as the major contributor. Bjorn’s chart in his last Corner makes this clear.
You missed or did not understand ( intentionally?):
“Here coal mining has been going out for quite a while now without massive social disruption. ”
China is on a much better footing towards cleaner energy.
( And even their coal plants are “modern” not ~WWII leftovers.)
Germany has struggled with dependence on coal and the disruption it causes, as well as the US. China is already facing this problem too. Japan is also extending reliance on coal, like Germany, in response to nuclear plant closures.
Coal was still 30% of electrical production in Germany as of last year (US slightly ahead at 23%). Some German mines have closed but imports have risen, and villages have been razed, with peoples lives completely overturned, for the lowest quality dirty brown coal. Of the top 10 polluting plants in Europe, 7 are in Germany.
Germany wants to change this, but change is just as hard and disruptive for Germans as Americans.
@Rob and @Uwe. Thanks for the links. I wouldn’t regard Germany’s substantial transition to wind/solar/biogas as a success. It is extremely expensive power. Today no one will starve in a modern economy from such impacts as increased power cost or loss of industry sectors from carbon taxes however it just impacts life in other equally sad ways. It prevents or delays family formation into the infertile years of life, forces more saving or career building, reduces the birth rate substantially. It’s a slow societal death in a way, the frog being slowly boiled analogy.
I note that had Germany not shut down half its nuclear power it could now have eliminated 2/3rds of the remaining coal fired power station. A gradual build of nuclear would have eliminated it completely.
There really is not such a thing as ‘dirty brown coal’. The emissions have been eliminated for decades. No sulphur, no NOX, no particulates. The ‘dirty’ coal moniker is just negative propaganda unless you consider CO2 dirty.
My own country has the usual tax incentives and subsides for green power. As a result we have gravitated towards wind, solar and peaking gas turbine plant. From the point of view of emissions reductions the construction of combined cycle power stations, which now achieved 64% efficiency, would have reduced emissions dramatically. Such plants produce 1/3rd the CO2 emissions of coal.
Unfortunately peaking plants are relatively inefficient and very inefficient due to the inefficiencies in startup/stop. Ireland found it had generated 12% of its power from wind but reduced emissions only 3% due to these factors,
A solution of combined cycle power plant with max 20% renewables was the most effective solution, about 75% reduction compared to coal and without cost increases but scuttled by the distortion caused by incentives.
In aviation we must watch out for the same erroneous development, the single solution obsession with virginity solutions.
EMB doesn’t build major components of it’s E series planes, they are built by Triumph in Everett and Arlington TX and Duocomum along with other major structures suppliers like Daher, Korean Aero and so on.
If they aren’t building their own planes just assembling them , how can they build Boeings?
Yes and similar with their systems from Honeywell and similar suppliers. Still you have the engineering management to make sure it works together and that it can be certified. Letting suppliers like Collins (Hamilton Sundstrand), Honeywell, Thales and Liebherr design whole systems and locking up the aftermarket for themselves is a 2 edged sword, they can integrate all their latest boxes to a modern system and after some SB’s be pretty reliable and smart but they can rob the aircraft operators on the aftermarket at will.
” How can they build Boeings?”
Same way they ( and Airbus does, BBD did ) do it now?
Create a good framework design, properly partitioned with well defined interfaces.
Up front distribute, manage and supervise parts design and manufacture.
Collect parts from all over the world and assemble them in a well managed fashion.
Respecting your own workforce and your cooperative partners including their workforce helps immensely.
There is a difference to design all the boxes and their complete logic vs. letting a supplier design and build the whole ATA system and just give the system logic back to the aircraft builder, hence only the system designer know the detailed box to box communication and logic and only they can replace single boxes.
Embraer is now producing their own flight control laws and software. They are doing these for E2, and they have even produced their own Autoland software. High level systems integration is all Embraer as well. All this with a very small team compared to Boeing and Airbus. That’s what jumped Boeing’s eye.
I have always seen the NMA as a paper bird. Maybe an interesting concept to keep engineers busy, or maybe a way to check out what else you could do with CFRP. But maybe also an attempt at setting a trap for Airbus or something. Anyway, never a real product. So that’s done for.
Regrading a new single aisle, not being able to develop that now is one of the biggest problems that I see now for Boeing. It is understandable that they are fighting for their life, but stopping all R&D is suicide.
As Tuan already mentioned, what are they going to do with their engineering force? I had always thought that to be the heart and soul of an aircraft manufacturer. Lay them all off and hope they’ll still be available in 2-3 years?
The situation at Airbus is not half as bad as at Boeing. Skipping this very experimental hybrid plane was probably easy after all of them have read the recent series by Björn. 🙂
Other than that I see Airbus going ahead with their current projects like the A320 XLR, cost reduction of the A220, and A350neo. And they are well advised to do so, because all these planes are going to win substantial market share as soon as market recover.
“I have always seen the NMA as a paper bird. ”
yes. IMU its main purpose was to act as foundation for FUD: Super airframe just around the corner. you’ll be stuck with your shitty NEO, CSeries, .. if you buy now and not from us. 🙂
One of Boeings problems might be Chicago where Seattle probably wanted to redo the 737MAX much more but Boeing Chicago plugged in AA, DAL, SWA and UAL network and figured out they could fly +95% of the 737-800 routes with the 737-10 at lower seat mile cost, that was all that was needed. The versitality of the A321neo and its derivatives A321LR, XLR and eventually the A322neo (when the PWA/MTU PW1135G+ becomes available) was not appreciated.
Boeing could make their own A322 or get all engineers onto the Boeing/NASA Sugar aircraft (Trussed braced wing aircraft) and finish up its analysis, component testing and robotic manufacturing. USAF/US Army might first have to order it as a troop carrier.
Boeing Commercial Aircraft is all in Seattle, Chicago is a tiny facility by Boeing standards with around 700 people, mostly in Treasury functions for a company which had 150,000 across the world. There are more Boeing employees in Utah than in Illinois.
“newest in B. Bullshit Bingo: Trussed wing, super efficient.”
I don’t really see a transport class large airplane with a trussed wing.
The truss moves dynamic structural load bearing demand out to the wazoo. No flex. Stiff as a Victorian lady. 🙂
( IMU load distribution and the resultant forces in the nexus are an engineers nightmare.)
“product development has stopped and the PD workgroups disbanded, except for what might be termed skeleton crews. Money has been cut off as Boeing fights for survival.”
what does survival mean if you are not able to develop a new product?
full crews had problems :
– either developping a new frame: 787
-or updating an existing one proved hazardous (MAX)
so can anybody imagine “skeleton crews” can developp and certify a new commercial frame.
i just do not believe this…
firing manufacturing engineers is very dangerous in the long term
but massively firing plane designers is plain suicide…
And Rob was trying to convince us Boeing has rational managers?
Now pie in the sky hybrid and open rotor, yea, you put that on the shelf.
But when you have not only the A321 gap but the A220 gap and are going down in flames in the future? As noted by flying frog, insane.
Years back in the worst downturn prior to the 2008 debacle, one of the major engine companies found an area that cried for investigation. They had to wait months because their test cells were all allocated to testing new and improved products.
They were looking ahead and made the sacrifices needed to ensure they had viable current and superior new products for the recovery.
They still are one of the biggest players in the field.
I have noted in the past that aircraft are not like autos. You can’t just crank up production. Sales in short and even mid term are not market share when the other guy is production as many and selling them as you are.
But, with a downturn and drop demand? Now airlines can get short term what they want and while the MAX will not be wholesale dropped, its going to put Boeing in the 20-30% of single aisles and locked in.
In short Airbus will beat Boeing to a pulp with no more than the improved A320 (A321) as well as the superior A220 that can be stretched to replace a MAX 8 or an A320.
I don’t see BCA recovering from this. They have killed the future of the single most critial segment. Not pie in the sky stuff but the core.
While I agree that Boeing is in a dire situation, I don’t believe that the market share will fall that much in the short to medium turn. While airlines would have the option to get A320s in the short(er) term from Airbus, they simply don’t want to get new aircraft.
– First of all, the airlines can’t afford to invest big time in new planes
– Oil prices will most likely be low for some time, so flying older birds is not that much of a disadvantage
– Cash is king. You will hold on to that what you have
– Airbus is reducing the production rate, so that limits the available production slots as well
– Used (or almost new) aircraft will be on the market in troves, providing ample opportunity for airlines that really need additional aircraft. Cheap leases or purchase options will be readily available, for both 737 NG/MAX and A320s
And given the much reduced demand, Airbus won’t be investing in an A220-500 and compete head on with its own A320. I fear, that this crisis has also put an end to the A220 line for a long time, and if an A220-500 will ever be developed, then probably only once the A220 is getting new engines.
So, Boeing might lose one or two additional orders, but the market share won’t drop that dramatically.
More factually and accurately, as Scott mentioned, Boeing invested in the MAX as their next step, followed by 777x, and the NMA was never really crystallized, and still is not. The market was unsettled and is even more so now.
I suspect Boeing will continue the review and reassessment of next development that was started when Calhoun came in, and is even more relevant and needed now. That is relatively inexpensive. Until that is accurately assessed, there can’t be engineering development of a new aircraft.
In the meantime I think Boeing will continue low-rate production and use the time to focus on build quality, which has been a problem area for them, as they have filled the airplane programs manager role, which had been vacant. The MAX compliance and modifications will also be a major focus.
I also think once certified, the MAX will be used preferably by airlines that own them, as travel begins to recover.
You don’t have a product without research, development and engineering work.
You also don’t need people if you kill that like they are.
The logic in the post is completely refuted by all the moves Boeing has made in the past and its future decisions reflecdt that. Management is looking no further than the end of their noses (or ensuring the golden parachutes) and foisting off the future to the next CEO, not caring what condition the company is in.
Airbus will beat them hollow. Clearly some like SW will continue with the MAX (for now) but I would not bet on all of them eyeballing A321 that Boeing can’t match and the A220 that Boeing has nothign for.
When you have not future product, then your customers go elsewhere and in this case can.
Those airlines that can will split or even switch and no one is going to bet their future on Boeing with zero product in the pipeline.
Your forecast is dire in the extreme. I guess we will see what time brings. I don’t believe Boeing is stopping their assessment of new products, nor that they would do so in order to milk the company dry for the benefit of management.
Airbus also has no new products apart from development of their existing series. The reason for that is the same as Boeing, uncertainty about the future. They are in better shape because the critical A320 series is earlier in the development cycle.
Boeing will have to answer with a clean sheet, as the 737 has reached the end of the cycle. But I think they will be cautious given the market uncertainty. They may now be looking at smaller designs as the next breakout aircraft, with the ability to scale up. They have the upper end covered currently.
The airlines won’t wait for cautious Boeing to make up there minds in an uncertain new environment, fixing their current MAX, 777X and NMA challenges. Boeing would simply miss the 2020-2030 train.
They are second best. That harsh reality has to sink in in Seattle, Chicago and Washington. Even after AA, Delta, United, Jetblue told them for years.
There is IMO only 1 solution. Government props up $15Billion, cleans out the Boeing top & rewrites strategy. The current top proved for 10 years they were not up top the job of long term sustainment of a strategic US industry.
I think the airlines will wait now, until their business recovers, which will be gradual. It may be 5 years or more until the orders really get rolling again. At that time, they will look at what Airbus and Boeing are offering, which will be different than it is today.
In the meantime fuel costs will be lower for awhile as well. Airlines will look to their smaller platforms which will better meet demand. The MAX will be part of that, once certified again. If costs remain low, the larger platforms may also become viable more quickly as traffic rebuilds.
I agree @keesje. I think even faithful to Boeing airlines are tired of being deceived by Boeing – MAX continues debacle, NMA/FSA leaks and dis_leaks. Reality proves more and more that Boeing is not in stagnation, is sinking as a technology company, and time to leave Boeing is coming soon. Airbus has now plenty of empty slots of proven modernized aircrafts, which can be developed and more modernized in the future. So this is a time to think it over for airlines.
A: “Government props up Boeing with $15Billion”
B: “clean out the Boeing top & rewrite strategy”
If “A” happens there will be no “B”.
If not “A” then there will probably be no “B”oeing either. The “B” of chance could happen afterwards.
IMU a rethink will not happen.
The US is already preparing litigation towards China. There can’t be a local cause for the/any crisis.