Exclusive: Boeing shifts 118 777 orders to “iffy” under accounting rule; 191 firm orders remain

By Scott Hamilton and Vincent Valery

Feb. 1, 2021, © Leeham News: There are now just 191 firm orders for the Boeing 777X.

Boeing last week reclassified 118 777X orders from firm to iffy (LNA’s term) due to the accounting rule called ASC 606. There were 17 iffy 777 orders before last week. The ASC total is now 135. After the adjustments, Boeing confirmed to LNA there are 191 firm orders for the X, down from 309 previously.

ASC 606 essentially requires contracts with customers that may be unable to take delivery due to their financial condition. Alternatively, an order can receive such classification if the seller has strong reasons to believe the transaction won’t materialize, despite the customer’s ability to pay.

Source: Boeing

Delayed EIS

With an entry into service delayed by almost four years, several 777X customers may have informed Boeing of their intention to cancel their orders without penalties. As a result, Boeing had to reclassify those orders while negotiations are ongoing for potential conversion.

Longstanding 777X struggles

The reclassifications do not bode well for the 777X program. Sales stalled at a peak of about 350 orders. Cancellations brought the backlog down to 309. About a third of these were iffy by LNA’s analysis before last week’s ASC adjustment.

There are only eight identified customers for the 777X.

Source: Boeing. Click on image to enlage.

Etihad Airways last year made it clear it doesn’t want its order delivered. The financially-ailing airline began a major fleet readjustment. An order for Airbus A350s was rejected. The carrier is downsizing its fleet and operations. These actions began pre-COVID.

Other customers dragged down by the pandemic

Cathay Pacific Airways deferred its entire order until 2025 and beyond. Market intelligence indicates the carrier wants to cancel this order in favor of Boeing 787s. No confirmation has been forthcoming from Cathay, which is financially struggling due to China’s crackdown on democracy demonstrations and COVID. Hong Kong Airport will also receive a third runway by 2025, which will diminish the need for an aircraft of the 777X size.

Singapore Airlines is under COVID pressure, and Singapore Airport will receive another runway by the mid 2020s. However, the carrier did not indicate it was considering changes to its 777X order. Neither Lufthansa indicated so far that it wished to convert or cancel its 777X order.

All Nippon Airways recently retired two 777-300ERs that entered service in 2005. Therefore, the carrier won’t want more large aircraft for the foreseeable future. Since the carrier is the largest Dreamliner operator, a conversion of the 777X order to 787s (or outright cancellation) is a distinct possibility.

Before this adjustment

 Below are the outstanding 777 Classic orders as of Dec. 31, 2020.

Source: Boeing. Click on image to enlarge.

Before this update, Boeing flagged 17 777 orders as iffy. LNA’s analysis suggests that they belonged to the following customers:

We now look at alternative scenarios for the airlines behind the 777X reclassification.

Two less likely scenarios

One scenario would involve Emirates entirely walking away from all or part of its 115-strong 777X order. Tim Clark, the president of Emirates, publicly complained about the engines and the delays. He is known to want to swap between 50-70 orders for more 787s. The delays incurred so far probably trigger the option to cancel orders without penalty. Cancellation is believed to be based on a plane-by-plane basis after a 12 month delay, not the entire order in a block.

Since other customers, notably Etihad, have expressed a stronger desire to cancel their orders, this scenario is the least likely.

Excluding orders for Emirates, Qatar Airways, and British Airways, the total orderbook is 116. The customers are All Nippon Airways (20), Cathay Pacific (21), Etihad (25), Lufthansa (20), Singapore Airlines (20), and the unidentified one (10). LNA believes that the three carriers listed first are the least likely to entirely cancel their 777X orders, due to their size (Emirates and Qatar) and operations at congested airports (British Airways).

This scenario, which would be grim for the 777X program, isn’t much more likely than the first. It would be hard to envision two customers, Lufthansa and Singapore Airlines, canceling their orders without any public notice beforehand.

The most plausible scenario

LNA believes that the orders from Cathay Pacific, Etihad, and the unidentified customer are the most likely to have been reclassified as ASC 606 by Boeing. The total of those five orders is 56. That leaves 62 orders for the other airlines.

Emirates previously threatened to cancel a portion of its 777X order or do more conversions to Dreamliners. After converting a portion of its original 777X order to the 787-9, Emirates still envisioned taking 777-9 deliveries over the 2021-23 period. LNA believes that the other 62 orders reclassified as ASC 606 are Emirates’, representing almost half of the carrier’s total 777X order for 115 units.

Conclusion

Claudius said in Shakespeare’s Hamlet: “When sorrows come, they come not single spies, but in battalions”. This sentence comes to mind when reflecting on last week’s news surrounding the 777X program.

60 Comments on “Exclusive: Boeing shifts 118 777 orders to “iffy” under accounting rule; 191 firm orders remain

  1. You have to wonder if Cathay even continues to exist inf a few years.

    Its now just one more airline in China that is not yet fully under the thumb. They could likely not be taking anything including 787s (and China thumb is on any US Aircraft ow as well).

    Equally while China can build that 3rd runway, Hong Kong is now done as a financial center. All the other Chinese entities will take that business and Hong Kong offers noting special now its stripped of its position. Less than another Chinese city but a subversive one.

    The knives are coming out to dismember Honk Kong by the ones with the political connections.

    • It seems that the attributes that made Hong Kong what it is are gone now that the PRC has dismantled all pretense of independence or even recognition of the British passports held by a large percentage of residents.

      it seems likely that this is the end of Hong Kong as a major international hub of anything, there is no land for manufacturing, there is no economic advantage for banking or trade, there is no geographic advantage over nearby PRC cities for trade, the tech industry will be inside the great firewall.

      that said, I don’t see how an airline like Cathay who’s business is built around Hong Kong can remain a major player without dramatic transformation.

      • While the last few years in Hong Kong have eroded the political independence of the people living there, the trend of Hong Kong waning as a major international hub and particularly for China has already been happening for the last two decades. Simply put, where at the time of the handover in 1997 the GDP of Hong Kong was around 18% of PRC GDP if accounted for in the same bloc the same comparison yields a less than 3% GDP contribution today. This is a consequence of the further development of Special Economic Zones such as Shenzhen, Guangzhou, Shanghai, etc, but also a concerted effort by CCP to minimize Hong Kong to enable it’s “absorption” into PRC politically. A sad reality of the current trajectory for Hong Kong

  2. This is tragic reading. At what point is this just another total loss airframe like the A380? I used to love flying in the (9 abreast) 777. Was hoping that the X would return us to comfort in economy.

    • It funny how 200 orders would be considered a good thing at one time.

      If it has a future its at a very low production rate.

      The delay really changed nothing as the world was shifting.

      How low can production go? With some 777F and this, 2 a month?

      Would airline consider the 300ER still due to commonality and lower fuel prices just not meriting the 777-9?

      • Boeing filed SEC disclosure yesterday as it goes to the market to refinance its two-year term loan drew down at the onset of covid outbreak.

        It raises the question if CEO Calhoun was misleading investors last week when he painted a picture that everything moving according to plan and nothing to see here?

        Is he lying or is he a fool? Why Boeing keeps a “fool” in charge of the Company?

      • Oh btw no Max 10 until 2023 as Boeing delays deliveries by two years.

        Drip, drip, drip …..

      • At a production rate of 2 per month, it’s not a viable business venture anymore, it’s a “work program”!

    • > I used to love flying in the (9 abreast) 777.

      Boeing managed to make the 777x cabin a few inches wider at shoulder hight by narrowing the frames. Clearly this was done to make 10-abreast a more comfortable option and I fully expect 10-abreast will be the predominant configuration in economy.

  3. Well Boeing’s CEO Calhoun is saying the B77X is going to be a “huge money maker” in the future. As long as there are “blue chip” companies keeping their orders then IMHO there will be good chances of future orders down the line.

    Even EK, which is downsizing will need a considerable amount of B77W-sized planes. Many A380’s are leaving the fleet now and by 6-7 years, many more A380s will have left the fleet. EK’s B77W+A380 eventual fleet retirement should ensure probably 100 Boeing 77X planes.

    To be honest, who knows. COVID-19 has really put a dent in a lot of plans.

    How will a post-COVID-19 recovery be? We don’t know of that either. Maybe we’ll get a better handle of things by summer of 2022 where it will basically be 1 year post-COVID-19 (assuming the vast majority of people will be immunized and there isn’t a resurgence of a mutated form of COVID-19).

    My guess is COVID-19 is here to stay and there will need to be periodic vaccinations. Hopefully I’m wrong.

  4. As regards the remaining “firm” orders:
    – Lufthansa continues to lose 1 million euros every 2 hours, with the international travel situation in Germany worsening (due to new variants).
    – Singapore Airlines has essentially no revenue. The state of Singapore just this week announced that foreign traveler entries into Singapore were down 95% in 2020. Singapore has also suspended various reciprocal “fast entry” arrangements with other countries.
    – HongKong is now experiencing lockdowns for the first time in the pandemic. Cathay is on its last legs.
    – If Emirates has rights to cancel 777X orders outright, then why would it convert them to 787s? If it acquires Etihad, it will pick up 40 of them.

    Further order loss sounds more like a question of “when” rather than “if”…

    • I expect further loss orders as well – at least for the time being. If the B77X can prove its merits in a few years then I expect sales to eventually pick up.

      I don’t see Emirates acquiring Etihad, the main rulers of the UAE are from Abu Dhabi which means while Etihad no longer has the “grandiose” dreams of being “EK part II”, it will exist in some sort of function.

      Yes, right now COVID-19 is a problem, however I’m hoping it won’t be in 2023 when these planes start to get delivered.

  5. Every day there’s shcoking news about the B777x,
    an airplane dead on arrival.

    Sometimes karma is a Boeing….

    I’m not sure which scenario it is, and if all of the orders in doubt will be canceled.
    But it’s clear that customers don’t want this plane, as there was absolutely no complaint about delays at all. In opposite, the customers seemed to be happy about not having to take these planes.

    For the customers:
    Ethiad is imo the single most airline that won’t take any. So that should be 25 gone.
    Next one should be Cathay – they have plenty of B777, A330 and A350, they get the addition of HK airlines. They will have enough planes and no money.
    If they can get out, they will. The question is, if they switch – to B789/ X maybe, or if they cancel. So another 21 off.

    ANA and BA should be very firm, though ANA might switch to B787 in case.
    Both have slot restrictions and will face high demand.
    SIA should be a fairly safe order, though they might be good with the huge A350 fleet.
    LH is somewhat questionable. They will take the B779 for sure, as it comes with the new business class, but will they take all of them?
    They are about to retire their MD11 freighters and might be interested in swapping B777x orders into B777f or B787. They have also ordered B789 recently, maybe something has been involved with that order. The LH CEO Spohr has spoken about too many B777x on order and not enough A350.
    The undefined one, that’s a cancel.

    This leaves Qatar and Emirates.
    Emirates is the clear case.
    They do want the plane, but not as many as before.
    Corona could really harm the business in long term, which would make it difficult to fill large planes.
    The good news for Boeing is, they will take more B787, probably B789.

    Qatar i really don’t know. I always thought that 60 B777x is a lot for an airline that size. Especially with that many A350, more specific A35k on order, and no considerable A380 fleet to replace. Also they add a lot of B789 the next few years.
    Adding 50 B779 to Qatars fleet would add a lot of capacity. Unneeded capacity.
    The delivery was planned from 2024 on,
    so I could see them delaying or switching to B789s.

    Overall the outlook for Boeing is horrible.
    They have about 200 planes on order, that’s about Airbus A330neo order.
    Only Airbus has a 2bn. ticket on it, and Boeing now has a 13bn. $ ticket on it.
    That’s 65 Mio. per frame alone for dev. cost.

    The B777x has not seen any order for years now, and we know how that turned out for the A380.
    Also, the technology used will be over a decade old, when it enters service.
    The engine technology is en par with the B787, A330neo and A350.
    At least A350 and B787 will see a re-engine end of this decade.
    Leaving the B777x in the A380 position against the B787.

    I’m not sure, if Boeing is not better of stopping the B777x right now, convert the sales to B787, and not spending another 5-6bn. on a plane nobody wants.

  6. 777X is just the wrong plane at this time. Once demand comes back it can still sell well (even though i said that about the A380, too).

    At this moment, of course, nobody needs a 777X. The most likely scenario is that the deliveries planned for 2021-mid 2024 are converted into “purchase rights” for a period post 2030. In reality, it is of course a cancellation. Remember, LH also originally had 20 orders plus 20 purchase rights for the 747-8i. Btw, Lufthansa usually communicates orders cancellations after they have done so, as it was the case with the 3 A380 cancellations.

    For me, the most shocking fact about this 777X mess is, that the 777X, that started as a stretch with a new wings, comes at 13bn – usually the price for a brand new plane. Even the A380 with all its mess came at a similar price and I think the A350 was even less expensive. Maybe this is – together with the “low risk” 737MAX programme – the end of Boeings master discipline, namely endless derivates of existing planes, which used to be true cash cows for them.

    • The A380 program was around a $25 billion dollar fiasco.

      That being said, the B77X program is a complete mess, especially given that it was announced back in 2013 and it being a derivative.

      • Jacobin, indeed you are right. Some things added to the 25 bn bill for the A380 are not exactly “development costs”, rather market introduction costs or later the wing-issue that added to the bill.

        But indeed, as you say it was more than 13bn.

        Along with the accounting bloc discussion, it is worth mentioning that the A380 started as an 11bn US$ programme that should have amortised after delivery of the 180th A380.

  7. The A350-k seems popular. All 777X customers (except ANA) have A350’s on order. EK, SQ and LH have A350-1000 conversion rights. Same for AF, DL, UA. Making it hard for Boeing to charge premiums.

    The A350-1000 has 14 customers, it’s big enough for 350 seats in 4 classes and is build way lighter than the 77-9. That’s not miraculously going away for direct operating costs. QF Sunrise selection of the A350k by QF was a clear signal.

    The 777x program seems beyond the point of no return. Even with the certification drama unfolding. But it’s (wing, engines, landing gear, OEW) seem really optimized for a 777-10 stretch version. Same mistake Airbus made on the A380(-900)?

    • A350-1000 is in no way shape or form currently a popular aircraft, it COULD be, but it is just currently not. it has not gotten a single firm order since EIS, or a repeat in-fact, CX has converted down to 350-900s TWICE. although QR converted up for a few frames . Every potential order you listed there are more far fetched than any other scenario. Don’t even try and pull that.

      Its been cancelled by airlines several times (emirates and united – on the 777-300ER – it was priced out by older technology)

      The only the a350-1000 beats the 777X on is weight. It will burn less fuel but they are still around the same so the savings will be small and irrelevant. From rumours on 777X data. The 777X beats the 35K on unit cost. Acquisition price is comparable, Boeing can negotiate airbus out of the market on the 777 replacement if it uses the 777X. (We saw it with BA’s last order).

      The A350-1000 is good don’t get me wrong, but lets not send a message that doesn’t exist. the order book stands at around 120 orders if you remove the iffy orders as LNA says.

      The a350-1000 has 14 customers many of them are weak and don’t have the bandwidth to operate that jet.

      AF will definitely buy it though.

      QF went for the 350 because it has the range/payload to do that route, if i were QF, thats what i would do. but even with their order it will still be behind the 777-9

      If i am honest, i see the 787-10 taking some replacements for 777-300ER frames as well as the A350-1000, as well as the 777-9.

      • Sorry, that is down the wrong lane.

        A35k didn’t sell well. I actually don’t know why. Maybe the wing would have needed a bit more, and the engine more thrust. RR is a limiting factor.

        But to say the B777x beats it on unit cost, lol. That’s an A380 argument.
        If you put 10 abreast in. If you can get it filled – regularly. Also in Nov. – March.
        You also noted a 6,5 bn. forward loss, right? That’s about 13 bn $ dev. and cert. cost, for 200 frames it’s about 65 million $ per frame.
        How should that compete?

        Qantas will buy the A35k ULR.

        The B78X is nowhere near the B77W in terms of range and capacity. It’s 6m shorter, has 100t less MTOW and about 4000km less range.
        It’s a very different airplane.

        At the moment every WB has a shaking backlog. How should it be different, it’s Corona and there are a lot of planes and not many flying.
        Of course, that will affect the airlines.
        BA is also a bad example, due to slot restrictions at LHR they are the only airlines really in need for the B779.
        And it will be interesting to see how it will do against the A35k.
        BA has options for both, and will order more.

  8. I can see a cloud over the 777X programme and it is the 7M8. Boeing derivatives are now bad news and the 777X has never claimed to be anything but a child of the 77W.

    I did read somewhere recently that Lufthansa now only want this plane as a freighter if they want it at all which would suggest they really don’t want it.

    If the only real customers are to be BA, EK and QR Boeing would be better giving up now and thinking about new planes and re-establishing their reputation with something that will be reliable from day one – just like an Airbus.

    • I think the 777x shares the nose cone with the 77W. But still it’s certified by Boeing/FAA as just a 777 variant. A second look at that, by international authorities, is the main cause of the 4 years delay.

      • The whole 777X fuselage from tip to rear bulkhead is ‘carried over ‘ from the 777 series, with a small change to the internal ring frames.
        Anyway the fuselage did a full pressure test…remember as much is made of the ‘blowout’
        How is that ‘grandfathering’ of the fuselage structure ?

        How can Lufthansa swap delivery positions – its early planes have already been built !- with a model that hasnt even been announced ( or fully defined)
        Its stuff made up for a slow news day

  9. This tidbit from wiki:

    https://en.wikipedia.org/wiki/Boeing_777X#Orders

    On November 7, Lufthansa stated it had converted 14 orders into options, leaving six firm commitments, after having negotiated a change as part of its order for 20 787s.

    They quote AW&ST as the source:

    https://aviationweek.com/air-transport/will-europes-legacy-carriers-plans-help-weather-economic-downturn

    To put this all in perspective, Bombardier rolled out the C-Series for about $6 billion.

    “Once the partnership is finalized in the coming months, Airbus will become the majority shareholder of the C Series, which cost about US$6 billion to develop, without having to pay a single penny.”

    https://montrealgazette.com/business/airbuss-new-head-of-c-series-program-to-seek-supplier-cost-reductions#:~:text=Once%20the%20partnership%20is%20finalized,to%20pay%20a%20single%20penny.

    Bombardier approached BA to partner on the program and were rebuffed, only to hand it all to Airbus. Now they have to deal with the 777X mess which they just wrote down for $6.5 billion, with only 190 firm orders.

    I have direct knowledge of Boeing’s dealings with a partnered company who provides equipment crucial to the Max (and other programs) and the individual who deals with BA mgmt sums them up in one word:

    “Arrogant”

    The realities of customers, markets, financial obligations and actual industry needs have brought them down to earth. It is looking like none of their three programs in BCA will make a profit. Some have mentioned a $13 billion price tag to the 777X (for 190 orders), $20 billion+ to be made up on the 737 Max (~3300 orders) and some $17 billion in sunk costs to be made up on the 787 (~500 units).

    From their last filing:

    Total backlog of $363 billion, including more than 4,000 commercial airplanes

    https://s2.q4cdn.com/661678649/files/doc_financials/2020/q4/4Q20-Press-Release.pdf

    The 2018 banner year for Boeing, when they sold over 800 jets, yielded a margin of 13% for BCA. Best year and margin ever. If they could replicate that for the remainder of the current backlog at their optimistic estimate of $363 billion, you get a margin of some $47 billion. Losses total some $50 billion, so far.

    With production being strung out and cancellations mounting, fixed costs will only increase the per unit cost that must be allocated to each aircraft. Debt servicing will also drive up costs. Payments have to be made on that $63 billion they have borrowed. 2020 interest & debt expense was $2.156 billion.

    But hey look on the bright side. The stock is still trading around $200, Calhoun made his $7 million bonus for getting the Max re-certed in 2019 and the execs that are still there will have the pick of the better offices that were left vacant. Anyone seen Rob?

    • @Frank

      As per your previous comments – you snoop around and put together the pieces that Boeing on purpose leave scattered and hard to puzzle out

      The pension shortfall of 16B you do not mention- why not? Is this not relevant?

      Thanks for this

      • @Gerrard

        Please sir – I am trying not to pile on. Have a heart, you don’t want those c-suite boys to have to give up their Johnny Walker blue and green, and have to make do with Johnny Walker black in their liquor cabinets, do you???

        IIRC, on Dec 31 BA issued $3 billion in stock to the pension account, essentially funding the shortfall by passing the buck for the old guys, on to the shareholders – diluting the stock. 4 more moves like that should just about clean it all up!

        Interestingly – BA just today launched another bond issue for $13.8 billion to pay of it’s credit facility at 195 basis points over t-bills.

        https://seekingalpha.com/news/3657282-boeing-launches-another-bond-offering-to-help-repay-138b-loan

        Here’s the interesting thing, though; depending on how it’s done, Boeing may keep the facility in place, paying it off with bonds and having it there…you know, just in case. it would be kinda like you buying a house with a line of credit, then issuing bonds to pay off the line of credit, but keeping the LOC there, in case you needed more cashola.

        @Bryce

        Thanks.

        “…you better have the money to pay for all this.”

        How very old fashioned. The markets don’t care about that today. As long as people are willing to throw their money around, guys like Calhoun and his ilk will make out like bandits.

        Kick the can down the road, get paid while we can and let the next guy clean up the mess – when it’s not my problem anymore….

        • @Frank

          Thanks- and for the clear headed analysis of the current price for the Max

          Despite the happy talk from some these planes are going to be sold at O’L and LUV prices for the forseeable, after awhile BA needs to generate some cash , no? can not going on bond issuing into junk land

          Did you see that Muilenberg has set up SPAC to raise $270m to re play games he’s been paid to play

          As far as I can see a SPAC is the very essence of money for nothing

    • @ Frank
      Great collection of comments and insights — thanks!

      Reuters has an article on the HNA bankruptcy and it contains a quote that just as easily applies to the downfall of Boeing:
      “Fundamentally a bigger but very old story at play – if you expand your business by borrowing money…you better have the money to pay for all this.”

      Per your last question: he’s over on the 737MAX article, trying to do damage control — it’s not convenient for him when a pilot like Peter Lemme discusses multiple shortcomings/compromises/failures of the 737 program 😉

      • @Bryce, @Frank

        News in that BA is returning to the bond market to raise money to pay down debt! Just like….

        Last time they raised this possibility they quickly withdrew, as it was said their credit rating would go to junk

        Apparently BA now think they are in a better position

        https://seekingalpha.com/news/3657282-boeing-launches-another-bond-offering-to-help-repay-138b-loan?

        The comments of the person you discuss are not easily understood, except as a facsimile of the C suite mindset, hence allow some insight into what the corporate would like to convey

        • @ Gerrard
          Stunning! When a company starts to roll over debt like this, the end beckons.
          Here’s an article on this latest bond issue on Bloomberg. Note the following *shameful* clause:

          “The new debt offers additional protection to investors through what’s known as coupon steps, in which the interest rate increases by 25 basis points for each downgrade below investment grade. Boeing is rated one notch above junk at S&P Global Ratings and Fitch Ratings, while Moody’s Investors Service has it one level higher.”

          https://www.bloomberg.com/news/articles/2021-02-02/boeing-kicks-off-bond-offering-to-help-repay-13-8-billion-loan

          • “When a company starts to roll over debt like this, the end beckons.”
            Laughable

            bank debt might have higher interest rates and more conditions. Bonds may be a better form of the debt, but as its just changing higher interest debt for lower interest or longer term for same interest its no material change.
            Werent the same voices last week saying there was ‘No Way’ for Boeing to get back in the bond market after its $25 bill uptake last year.
            Its only a month into the year and they are proved wrong …as they are always are.

          • @Bryce

            This is correct – when you pump and dump you load up the company with debt, sell off assets, and leave naive ‘investors’ holding the can

            That’s why those planes are sold for cost or perhaps less than

          • @ DOU
            No, the same voices were saying last week that going back to the markets would entail a downgrade to junk status — which is evidently something that the bond buyers also foresee, hence the coupon step clause. A self-respecting company wouldn’t do this, because of the potential for damage associated with such a downgrade…but who ever said that B was self-respecting?

          • @Duke

            Nope – no complaints from me on the bond issue. The only question I have is will the revolver stay in place for Boeing to draw on, since the net effect is a wash?

            @Bryce @ Gerrard

            Yah, I was having this same discussion about Muilenberg elsewhere – why is he doing this? Did he burn through the $80 million already? Is it for ego? Is he bored sitting at home?

            It’s just been a year since he was let go. Too early? Or was he convinced it was easy money?

          • The raise is a refi. BA is unable to raise fund for any new program. That’s why CEO Calhoun is busy *talking*. Talking is cheap, it’s also free on Zoom.

  10. Probably Boeing will be saved by the entity that launched it into commercial aviation by ordering in quick succession 2000 B47s, 800 KC135s and 740 B52s. The 727, 737 weren’t so hard after that.

    • …the difference being that back then, they could actually design and produce quality products on time and on budget. That is no longer the case.

  11. Next topic…. sketchy a330 neo orders.. how bout it..not exactly like the competition is in much better shape either when it comes to wide-bodies..
    36 firm still on the books for IranAir…. seriously ab….now a bogus undisclosed order for 50 more neos… ofcourse, they lose Air Asia.. would be final nail in 330 coffin..
    C’mon ab, clean up your bogus orders as well!!!

    • As regards Iran:
      Biden has indicated that he is willing to re-engage with Iran if it re-commits to abiding by the nuclear agreement. If that happens, then those A330neos will be on their way to Iran double pronto.

      Apart from that, a key difference between the A330neo and the 777X is that the former is certified and flying — with a low development pricetag. Moreover, it’s not in the unloved VLA category. And it’s *much* cheaper than a 777X.

      But sure, it would certainly be interesting if LNA did an item on shaky A330neo orders.

      • @TC: Iran nuclear deal is coming back. AB order is not going away. 😂😂

    • > C’mon ab, clean up your bogus orders as well!!!

      Airbus is not required to make these disclosures. So why would they. If you were running Airbus would you disclose strategically valuable information like that to your competitor?

      • Sure, that’s always been their policy, hold out on orders to the bitter end..they did it with the a380, ..it took the termination of the program ,to finally remove bogus orders from backlog.,.why would we expect otherwise on the bleak a330 backlog.!!

    • Calhoun said few 787 will be delivered this month. But Boeing talk means nothing, the MAX was announced to fly in June/July 2019 too.
      Calhoun is also only talking about roughness in the 787 fuselage joint, forgetting about the gap. If the gap can’t be fixed we might not see 787 deliveries this year, Boeing knows the issues for one year already.
      If the 787 is not on the market airlines will be happy to have a A330neo choice.
      Beside that, which sane airline would want the 787 when Boeing started QC nine years after EIS. The 787 issues we know might only be the beginning, everybody knows that Boeing is hiding as much as they can.
      Tim Clark wanted to change from 777X to 787, but Boeing didn’t agree, at a time when Boeing already knew that they can’t deliver 787.

    • The A330 story sure is an interesting one.

      I think Airbus is ok with producing ~5 a month this decade. They need to maintain a backlog of 3-4 years, including MRTT’s and freighters.

      A330 Deliveries peaked 2005-2015, so intensivation of the replacement cycles will start later this decade.

      https://en.wikipedia.org/wiki/Airbus_A330#Orders_and_deliveries

      I think Airbus won’t consider discontinuing the A330line before the middle of that cycle, probably launching NEO variants of the freighter and MRTT and maybe introducing an extra engine option.

      https://www.bloomberg.com/news/articles/2020-02-19/ge-tries-to-break-rolls-royce-grip-on-engines-for-airbus-jet

      Maybe also a KC-Y bid, for a locally build tanker, with GE and LM.
      https://www.defensenews.com/air/2018/12/05/lockheed-airbus-venture-ups-the-pressure-on-boeing-to-deliver-its-us-air-force-tankers/

      The A330 still refuses to go away.

    • Hello TC, Scott just published a podcast. As you point out, the order book is iffy.

  12. Another consideration. The A350Neo and perhaps any B787 Neo will likely be anywhere to anywhere aircraft. This may severely impact the middle eastern airline hub strategy and put further downward pressure on the demand for very large aircraft.

    Again, like in the narrow aisle market, Airbus seems better placed here. If they Neo’d the A350 creating variants capable of 9000+nm with a full load the 777x will really start looking like the A380.

    Boing could of course neo the B787 to good effect, and I think they should, but having just done the 777x, needing at least one and ideally two smaller aircraft I don’t see them doing it.

    • Anywhere to anywhere ?
      Not the case when you look at say the US continental market since the A320 and 737NG arrived allowing a city on any coast to almost any other city on the opposite coast. Anywhere in between the coasts is possible now.
      The result was the hubs were strengthened , apart from Southwest who do more point to point. The A220 has allowed the 110 seats to be ‘almost’ anywhere to anywhere. And Delta used them to fly from NYC to Texas hubs!

      Its very expensive to run say 3x per week 787 service for a year, I think you need something like $100 mill per year in revenue to cover costs. It rules out out most ‘anywhere to anywhere’ thinking on international routes that dont have a buzz or hook to get travellors thinking about it

      • > apart from Southwest who do more point to point

        And happen to have been one of the most profitable airlines for decades.

        • I sometimes wonder if @DoU is playing dumb or actually slow. Delta’s A220 flies between SEA and ATL connecting two major hubs.

          “Delta expects a double-digit economic benefit with the A220. It forecasts a 20% fuel burn reduction, in addition to the bump in premium seat revenue, as the new aircraft displaces 76-seat Bombardier CRJ900s on routes.

          A 20% improvement in economics is on the low end of what other airlines claim for the A220. JetBlue Airways, which ordered 60 A220-300s in July 2018, says fuel burn is roughly 40% lower than on its smaller Embraer 190s, while A220-100 launch operator Swiss has said cost savings on a per-seat basis are 25% better than its BAE Systems Avro RJ100s.”

    • maybe, but if all widebodies get neo/MAXized, probably the 787-10 also ousts the A350-900.

      • Perhaps, but the the 787 wing is undersized for the 787-10 which impacts its capabilities as an ultra-LR aircraft.

      • “”also””

        Here on LNA is a story from some years ago when Emirates ordered the 787-10. It’s great to read the comments with the knowlege we have now mmmhahaha

  13. Lufthansa order 34 777x according to their regulatory fillings. They then convert 14 to options. Boeing according to USA reporting laws only book 20 all along. Airbus fans on this forum have not told the truth and I don’t know why Mr Scott will not correct them.

    • I think we are back in an era, where you need to provide some back-up when doing accusations, ask Rudy Giuliani. Where have Airbus fans on this forum have not told the truth?

  14. China Update

    Interesting article on COMAC

    https://asiatimes.com/2021/02/chinas-jets-set-to-challenge-boeing-and-airbus/

    “The Pentagon is concerned about China’s “military-civil fusion development strategy” – an alarming business model similar to those of Boeing, Raytheon and other American companies that serve both military and civilian markets.

    “Military-Civil Fusion” has even become an American acronym, MCF, raising it to the level of official Washington, DC, claptrap.”

    « Cutting off COMAC is not recommended by Scott Kennedy, Senior Adviser and Trustee Chair in Chinese Business and Economics at CSIS (the Center for Strategic & International Studies in Washington), who plays down the competitive threat.

    According to Kennedy, “sanctions would hurt the US aerospace industry and ultimately American national security far more than they would harm China.” (csis.org, China’s COMAC: An Aerospace Minor Leaguer, December 7, 2020) »

    This view is confirmed by China’s reaction to semiconductor trade bans : investment in R&D and manufacturing, purchases up 20% from Sth Korea, Japan, etc

    https://www.caixinglobal.com/2021-02-03/china-stockpiles-chips-and-chipmaking-machines-to-resist-us-101659787.html

    • @ Gerrard
      Great article in Asia Times.
      Of particular merit/relevance is the following quote:

      “The sanctions forced Irkut to replace imported composite materials with equivalents made in Russia. This reinforces an often-made point that is usually ignored by the US government: sanctions make technically competent targets more competitive”

      Also pertinent:

      “Last year, with air traffic greatly reduced by Covid-19, China Eastern Airlines, China Southern Airlines and Air China postponed the delivery of more than 100 aircraft from Boeing and Airbus while continuing to receive deliveries from COMAC. Smaller Chinese airlines also took deliveries from COMAC.”

      Remember Sully’s words that the 737MAX is “not up to modern standards”.

  15. GE must feel some regret for not offering an A350 engine. They are stuck with a very expensive engine program with a pretty limited market. I guess the enjoyed the A380 experience

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