Dec. 7, 2020, © Leeham News: “It’s really important that we stay in tune with the market dynamics, making the adjustments we need to do and not lose sight of the future. Which is absolutely we are not doing.”
Greg Smith, the of Enterprise Operations and chief financial officer for The Boeing Co., added, “We haven’t lost sight of the importance of making investments that are critical to the future of the business. So, when we think about future product strategy, we’re continuing to reprioritize and streamline our R&D investments to CapEx.
“When we were in pursuit around the NMA, we asked the team to step back and reassess the commercial development strategy and determine what family of aircraft to be needed for the future. And that team continues to work and they’re building off the work that we did on NMA.”
Smith made the remarks at last Friday’s Credit Suisse annual conference.
Smith amplified his response about a new product from Boeing Commercial Airplanes.
“Now, obviously, the environment has changed, with COVID in the dynamic marketplace and in the competitive landscape. We’ll continue to do that work and we’ll make the right call when we need to make it.
“But this is a portfolio that we feel good about and we’ve invested a lot in,” Smith said. “I think what it brings to the marketplace has been evident and it’s evident in the backlog. But we’re not losing sight of any other market opportunities we may have. And we want to position ourselves to win in those marketplaces.
“While all this is going on, the team is continuing to reassess the product development strategy and where opportunities may exist and in what timeframe those opportunities may or may not exist. And we’ll make the appropriate decisions based on that, but we’ll ultimately be informed by our customers.”
However, despite the public statements by Smith, CEO David Calhoun and others at Boeing, the market already has spoken about the product line up. The Airbus a321, whether the previous ceo or the current neo, greatly outsold the 737-900/900ER/MAX 9 and MAX 10. This was true well before the MAX grounding or the COVID pandemic.
Sales of the 777X have been stalled for years; the backlog is going in the opposite direction with cancellations. More are likely. This is also true, pre-dating COVID.
Boeing’s single-aisle market share was down to 39% pre-grounding, counting all airplanes offered in the 125-220-seat sector. Airbus had nearly 55% of this sector.
The 777-8 was down to about 35 orders. The 777-9, occupying the +400-seat sector all by itself, has only about a dozen customers and fewer than 300 orders, a number that is shrinking.
“We get asked often about the case for continuing the Boeing 777X,” said Robert Spingarn, the aerospace analyst for Credit Suisse. “Obviously right now, there’s not much demand for very large airplanes.” Does the early, COVID-prompted retirement of four-engine airplanes boost the case for the 777-9?
“I think it creates opportunity, certainly, because a lot of those aircraft weren’t planned to be permanently retired necessarily this year,” Smith said. “They’ve been accelerated. I think it does [create opportunity].
When you’re looking at a trade of retiring something a lot less efficient these are well-positioned products, intentionally positions by us in the investments we’ve made in them. So, I it could create some opportunities for us over the long term.”