Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
HOTR: Tuesday’s Boeing announcement may give indication of A350 future at United
By the Leeham News Team
Dec. 9, 2022, © Leeham News: The engine selection on a big Boeing 787 to be announced Tuesday may be the most definitive signal yet of what United Airlines will do with its oft-deferred Airbus A350 order.
United is considered certain at some point to cancel its orders for 45 A350s. This order has been deferred several times. The new order to be announced Tuesday for up to 100 or more Boeing 787s adds to the more than 60 already in the fleet. United clearly doesn’t need a large fleet of 787s and a smaller fleet of A350s.
But canceling the Airbus order is not without some cost. It’s believed that penalties to Airbus are manageable. These also may be mitigated by an order for A321neos. This can solve Airbus’s concerns. But it does nothing for Rolls-Royce, which provides the engines for the A350s.
Rolls is not an engine supplier for the A321neo. United’s swapping the A350 for the A321 means Rolls loses that future business. What’s the mitigation for Rolls?
United may split the engine order for the 787 between incumbent GE Aerospace and Rolls. If the engine selection is announced Tuesday and the order is split, this will be the clearest indication yet that the A350 order will be history. United and Boeing scheduled a press conference at the 787 production and assembly plant in Charleston (SC).
A350 future
It would be gauche to announce anything about the A350 during the Boeing press conference. But LNA is told that at the very least, the A350 order will be deferred again by United. Deliveries currently begin in 2027 and continue through 2030. (Canceling the order will free up A350 slots for other customers, it should be noted.)
Swapping the A350 for the A321 is problematic. Airbus is sold out at a production rate of 65/mo through 2028. Even boosting the rate to 75/mo doesn’t help. The lines are still sold out through 2028. Only by boosting the rate to 83/mo—something Airbus is studying—do a few slots open in 2027 and a few more in 2028. Not until 2029 do an appreciable number of production slots open.
Lessors have available airplanes, but this source doesn’t help Airbus since these are already sold positions.
United has 181 Airbus A319s and A320s in service. There are 70 A321neos and 50 A321XLRs on order. United also has 329 Boeing 737 NGs in service. There are 350 737 MAX 8/9/10s on order (and 69 in service). The totals are 510 older generation A319/320/737s in service and 470 new generation A320 and 737 families on order.
There are also 61 Boeing 757s in service, for which the MAX 10 and A321N/XLR are best suited as successors. Net, there are 571 older single-aisle airplanes needing replacement and 470 new generation aircraft on order. This leaves a need for another 100 airplanes just for replacement; growth comes on top.
MAXes may be part of announcement
Tuesday’s Boeing announcement may include an order for more MAXes. The MAX 8 and MAX 9 are better suited to replace A319s, A320s, and 737-800/900s than the A321N (though the latter could be put on growth routes).
Don’t look for any announcements on the Airbus side on Tuesday. But, as noted, if an engine selection is announced Tuesday, a mix of GE and Rolls will signal the future of the A350. It should be noted that an engine selection announcement doesn’t have to be made on Tuesday. But even an absence will hint about the future of the A350.
How did you (and everyone else, it has to be said) get A320 production rates predictions so wrong?
S-U-P-P-L-Y C-H-A-I-N
Same underlying problem at most manufacturing corporations worldwide.
Supply chain is taking longer to recover than expected.
First Airbus is spinning the A320 series production rate by declaring any A320 that gets its wings is delivered.
And Airbus is in denial as to the true rate which we can calculate at the end of the year but last check I believe it was 40 a month.
Its not a supply chain issue when you put out false statements, its a credibility issue.
There is nothing wrong with simply saying supply chain is affecting us worse than we thought and update the data accordingly.
599 total deliveries in 2022 as of today.
And they start revenue service upon delivery — you can check it on Planespotters.
Any other spins?
TransWorld said, on December 9, 2022:
“First Airbus is spinning the A320 series production rate by declaring any A320 that gets its wings is delivered.
And Airbus is in denial as to the true rate..”
Can you support those claims with links, or quotes from Airbus? No, *of course* you can’t: more empty hot air from that commenter. By the way- did that commenter see my link and quote
regarding the MITRE report on the 737MAX in the other thread? If not, here it is again:
Dominic Gates, reporting for the Seattle Times on 7 June 2022:
“..The independent report from the MITRE Corp., a federally funded research organization, concludes that >> exemption from the crew-alerting standard contributed to the two MAX crashes << that killed 346 people, and also influenced Boeing to suppress information about the new flight control software on the MAX — known as the Maneuvering Characteristics Augmentation System, or MCAS — that was the main cause of the crashes.."
https://www.seattletimes.com/business/boeing-aerospace/as-boeing-pushes-for-exemption-for-max-10-report-to-faa-critiques-737-crew-alerting-system/
There is quite a bit more background on the 737MAX’s unusual exemption from modern crew alerting requirements in this 2019 article by Dominic Gates, including specifics of three crashes exacerbated by the 737MAX’s lack of a modern alert system:
“..Boeing then documented the 737’s safety record during the previous 10 years. Between 2002 and 2011, >> it identified three fatal accidents where a deficiency in the flight-crew-alerting system had played a role in the tragedy. << These were:
Helios Airways flight 522 in 2005. Flying at 34,000 feet near Athens, Greece, the crew misinterpreted a horn that sounded to warn of a cabin depressurization, interpreting it as a false and irrelevant alert about the plane’s take-off configuration. The horn sounds were identical for these two distinct alerts. The pilots passed out from lack of oxygen and the plane continued flying in a straight line on autopilot, shadowed by a Greek jet fighter impotent to help. All 121 people on board died when the airliner ran out of fuel and crashed.
Following the accident, Boeing installed a light on the 737’s pilot display to distinguish a depressurization from the other alert.
Turkish Airlines flight 1951 in 2009. On approach into Amsterdam, a single radio altimeter fed an incorrect low altitude reading to the autothrottle, which duly retarded the engines for landing. The pilots, busy with some checklists, failed to notice until too late a visual alert about the airspeed dropping too low. The plane crashed well short of the runway. Nine people, including three Boeing engineers who were on board by chance, were killed.
Following the accident, Boeing added an extra aural alert — a computerized voice warning — for low airspeed.
Aeroflot-Nord flight 821 in 2008. Flying through clouds at night in central Russia, the pilot lost spatial awareness as the plane banked dangerously left, activating a BANK ANGLE artificial voice alert. Confused, the captain turned the yoke the wrong way, rolling hard left and worsening the bank angle. The jet flipped upside down. All 88 people on board died in the crash…"
https://www.seattletimes.com/business/boeing-aerospace/boeing-pushed-faa-to-arelax-737-max-certification-requirements-for-crew-alerts/
Lol. Customers have to agree to take delivery on that exact date! What does Airbus spin??
OTOH it seems our commentator is the one spinning hot air, with no substance.
That commenter has a particular M.O. that’s easy enough to discern. He / it should be back tomorrow, for one example.
😉
Any idea what slot dates BA will be able to give UA for the 787s?
Sold out through 2026 at 5/mo. Boeing is talking about 10/mo (though we’re unaware of target date), in which case there are plenty of slots.
2026 seems correct Scott.
At the same time, United’s “historic announcement” would be that on this date the Chicago airline would have 1 Century. (1926-2026) and would receive the first 787-ER !
Otherwise what would be a historical event on this date?
https://en.m.wikipedia.org/wiki/United_Airlines
Thanks
Boeing can talk out the side of their mouth all they want about rate increases. The FAA must approve any and all rate increases, and includes any rate increases on the mad max. The devil is in the details with shared quality defects data/QMS data.
The data shared must include quality info and escapes from the supply chain.
It’s all part of their approved SMS program.
Planespotters isn’t showing much evidence of 5/mo at present: it’s more like 2/mo from the line and 4/mo from inventory.
What I know is EK’s 787s are unlikely to be delivered any time soon (delivery from 2023 per contract).
I think most airlines chose A350s to replace aging 777-200ER fleets.
Specially on Asian flights, JAL, SQ, AF, BA, DL, CX etc..
That’s what United is planning, according to United. Not downsizing to 787s on Asia markets.
https://avgeekery.com/united-firms-up-boeing-777-200-replacement-plan-with-airbus-a350-900/
That makes sense. Thanks for the link, and now I’ll go look at the current A350 order total. Wasn’t there recent talk of AB increasing its production rate, too?
Heh, they’ve already delivered 509 A350s since the first one
circa 2014, with a backlog of 410, if WPedia’s numbers are accurate. Sounds OK to me.
The airbus a*** licking in this comment section is so embarrassing. That article was from over 5 years ago. Get over it please
What it Rogers, You can make your point without being gross.
Hamilton
I am usure how an article that lists *deliveries through the present year* could be “from over 5 years ago”:
https://en.wikipedia.org/wiki/List_of_Airbus_A350_orders_and_deliveries
BBO are busy (and defensive!) these days. It’s all understandable, though; they have so little to work with..
😉
He is referring to the article Keesje linked to, which was written in September 2017. Keesje strangely omits that two years later in December 2019 United deferred the A350s by 7 years from 2020 to 2027.
He was referring, I think, to @keesje’s link, but — like many others here — didn’t make proper use of the nested reply functionality…
To correct myself- deferred 5 years from 2022 to 2027
Not you. Keesje’s link. Which you maybe did not notice was from 5 years ago
UA changed -1000s for -900 because Boeing offered them a last of the line 77W deal to keep open the 777 line that UA couldn’t refuse. Those were delivered from 2017. Everybody knows, but concludes UA doesn’t want A350s. Wishfull thinking if you ask me.
Hmmmm
Airline-Primary hubs
JAL-NRT, HND
SQ-SIN
AF-CDG
BA-LHR
CX-HKG
DL- JFK, SEA, BOS (ish), ATL, DTW, MSP, SLC, LAX (ish)
UA-EWR, IAD, ORD, IAH, DEN, SFO, LAX(ish)
I see two outliers…it seems like some airlines may have more hubs to route traffic through and may be better suited to using smaller aircraft. One of those airlines is currently fully committed to Airbus widebodies, meaning if they want something with more range than a A339 they have no choice but opt for a A350.
Hello keesje,
Re: “I see two outliers…it seems like some airlines may have more hubs to route traffic through …”
Conspicuously missing from your list of airlines and hubs is American Airlines, which has the world’s largest mainline aircraft fleet (911 mainline aircraft plus 582 regional partner aircraft), and ranks #1 or #2 in the world by revenue, passengers carried per year, and passenger miles flown.
Like Delta and United, the other 2 airlines in the US Big 3, American has more hubs than you can count on the fingers of one hand, as listed below. Given that the area of the US (3,797,000 sq miles) is 15 times larger than the next largest home base country of the airlines on your list (France at 248,573 miles); I don’t find this very surprising.
Charlotte
Chicago
Dallas – Fort Worth
Los Angeles
Miami
New York
Philadelphia
Phoenix
Washington D.C.
For US nationwide network carries, it is the rule, rather than the exception that they have more than 5 hubs. If an airline doesn’t have hubs across the US, then it won’t be a nationwide US carrier. When I lived near Seattle, Alaska Airlines often had convenient itineraries out of its Seattle hub to places that I needed to go. When I later lived in Alabama for a few years, I kept trying to use some Alaska frequent flyer miles that I had saved up, but they ended up lapsing without being used because every time I tried to book on Alaska, the itinerary involved flying 2,000 miles from Huntsville or Birmingham in Alabama to Alaska’s US West Coast Seattle hub, to catch a connecting flight back to somewhere that was in the US Midwest or East coast. Connections through Delta’s Atlanta hub (150 miles away) or American’s Charlotte hub (330 miles away) were much more convenient, and I always ended up paying for a more convenient Delta or American itinerary rather than flying for free on an Alaska itinerary that turned a regional trip into a transcontinental trip.
American’s mainline fleet of 911 aircraft is just about the same size as the combined fleets of all the non US airlines in your list. Delta and United are not far behind American in mainline fleet size (i.e. 886 and 841 aircraft respectively). See below, fleet size data is from Wikipedia.
Airline / Fleet Size
JAL / 153
Singapore / 148
Air France / 205
British Airways / 253
Cathay Pacific / 172
TOTAL of Above / 931
According to Wikipedia, American currently operates the following all Boeing widebody fleet.
Type / Number in Fleet
777-200ER / 47
777-300ER / 20
787-8 / 35 (5 on order)
787-9 / 22 (30 on order)
TOTAL / 124 (35 on order)
Out of the US Big 3, American and United have all Boeing wide body fleets, and Delta currently has a mix of Boeing and Airbus wide bodies and seems headed, as you pointed out, toward an all Airbus wide body fleet.
“Given that the area of the US (3,797,000 sq miles) is 15 times larger than the next largest home base country of the airlines on your list”
This is incorrect: Cathay has its home base in China, and China is approximately the same size as the USA.
Hello Bryce,
Re: “This is incorrect: Cathay has its home base in China, and China is approximately the same size as the USA.”
I still think of Cathay Pacific as being the flag carrier of Hong Kong, which has an area of 430 square miles. I’ll leave it to politicians, international law experts, and the residents of Hong Kong and Mainland China as to whether Hong Kong, as a Special Administrative Region of China, is actually a part of China. Would you consider Hong Kong to have been part of the UK and Cathay Pacific to have been a British flag carrier before Hong Kong became a Chinese SAR? Do you consider US territories Puerto Rico, Guam, and US Virgin Islands to a part of the United States? As far as I, and I believe most US residents are concerned, they are US territories, which is different from being a part of the United States. They are certainly not counted as one of the 50 US Sates, and do not like US states, send voting members to the House or Senate, or vote in US Presidential elections.
“Cathay Pacific Airways Limited (CPA), more widely known as Cathay Pacific (Chinese: 國泰航空; Jyutping: gwok3 taai3 hong4 hung1), is the flag carrier of Hong Kong, with its head office and main hub located at Hong Kong International Airport.”
https://en.wikipedia.org/wiki/Cathay_Pacific
“At present, there are two SARs established according to the Constitution, namely the Hong Kong SAR and the Macau SAR, former British and Portuguese dependencies, respectively,[8] transferred to China in 1997 and 1999, respectively, pursuant to the Sino-British Joint Declaration of 1984 and the Sino-Portuguese Joint Declaration of 1987. Pursuant to their Joint Declarations, which are binding inter-state treaties registered with the United Nations, and their Basic laws, the Chinese SARs “shall enjoy a high degree of autonomy”.[9] Generally, the two SARs are not considered to constitute a part of Mainland China, by both SAR and mainland Chinese authorities.”
https://en.wikipedia.org/wiki/Special_administrative_regions_of_China
As you point out mainland China approaches the area of the United States (3,705,407 vs. 3,797,000 sq miles). Some of mainland China’s larger airlines, like the US big 3, operate several hubs, I think for the same reason, i.e. a country 15 times larger than one with one hub, needs multiple hubs to efficiently connect destinations across the country.
One example of a mainline Chinese airline with multiple hubs is China Southern which according to Wikipedia, has the following six hubs.
Guangzhou Baiyun International Airport
Beijing Daxing International Airport
Chongqing Jiangbei International Airport
Shanghai Pudong International Airport
Shenzhen Bao’an International Airport
Ürümqi Diwopu International Airport
@AP_Robert
JFK airport — an important hub — is on Long Island, with an area of 1400 square miles. The State of New York, which includes Long Island, enjoys a certain autonomy, in that it can pass its own state laws — but that doesn’t mean that it’s not also in the United States.
The full name of Hong Kong is “Hong Kong Special Autonomous Region of the Peoples Republic of China”. The island is part of China, regardless of its limited administrative autonomy. We all just have to adjust to the reality on the ground — regardless of the past involvement of the UK.
I do agree with you that Cathay is currently somewhat of an oddball in that it only has one hub — though this is obviously a relic of the past administrative status of Hong Kong. That having been said, Hong Kong is still an important financial center, which might justify the continued existence of the one-hub airline. In view of Cathay’s financial malaise, however, one can speculate as to whether it has any real future. Personally, I get the impression that the Chinese will let the airline bleed away, as it is also an oddball with regard to its ownership structure, and may be perceived as a symbol of colonialism.
@AP_Robert
“Would you consider Hong Kong to have been part of the UK and Cathay Pacific to have been a British flag carrier before Hong Kong became a Chinese SAR?”
Hi. I believe for many decades Cathay aircraft had the Union Jack on the tails.
https://www.flickr.com/photos/48073612@N04/49901018188
https://commons.m.wikimedia.org/wiki/File:VR-HOO_B747-467_Cathay_Pacific_MAN_12MAY95_(6582245433).jpg
“Do you consider US territories Puerto Rico, Guam, and US Virgin Islands to a part of the United States?”
According to Wikipedia:
“The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country in North America. It consists of 50 states, a federal district, five major unincorporated territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico and U.S. Virgin Islands), nine Minor Outlying Islands, and 326 Indian reservations.”
What matters is what’s in the law, how Americans think probably is less relevant.
Bryce
Although Hong Kong is part of China (One country), Cathay is definitely not a Mainland carrier. It simply doesn’t compete with other airlines in Mainland China on equal footing. There are quite a few reasons that demonstrate that:
– The Civil Aviation Department (CAD) in Mainland and Hong Kong are different, and each have their own, separate registry and approvals, etc.
– Cathay does not have local traffic rights for the Mainland. It can’t operate domestic flights within Mainland China. I even believe (but don’t know for a fact) that it can’t operate to any airport within Mainland China it wants. Destinations need to be approved by the Mainland
– Hong Kong has its own border control and travel to/from Hong Kong and Mainland China are separate and independent. Visa regulations to enter Hong Kong and Mainland China are (very) different and are not comparable to traveling within a “normal” country (i.e. the US that was mentioned)
While CPA used to feed a lot of its routes with passengers from the Mainland, it is anything but a domestic airline in China. For the purpose of comparison, I do believe Cathay can be looked at as a separate entity.
@Matth
Hi. I may not be as update with changes after covid, but I believe one of the major sources of passengers of CX comes from the Greater Bay Area (well by one estimate close to 100 m population)
@Pedro
Certainly in the longer term that should be some source.
However, there are two other major hubs (CAN, SZX) that will compete with HKG.
And it certainly first needs an open border in Mainland before CX can take advantage of that population.
Apparently before covid, many from China went through Hong Kong Airport to overseas.
At the airport, there are/were ferry transfer/coaches/limo service to and from China.
https://www.hongkongairport.com/en/transport/mainland-connection/ferry-transfer.page
From CX:
“While Guangzhou does have its own international airport, HKIA serves considerably more international destinations and also boasts greater flight frequencies. This allows travellers to pick a flight that best suits their schedule and avoids layovers. A quick comparison of 2019 data shows why HKIA is a preferred option for many travellers from the Chinese mainland. […]
Number of destinations served: CAN: 100 (mostly domestic) vs HKIA: 220
Frequency of flights to London:
CAN: 1x to 2x daily vs HKIA: 8x to 10x daily
https://www.cathaypacific.com/cx/en_CA/inspiration/hong-kong/travel-guangzhou-hong-kong-international-airport.html
AP_Robert, I didn’t do the post about hubs. AA has not been traditionally a big player on the Pacific. Delta (NWA), United, JAL and ANA used to be / are. The UA A350s are about replacing 777-200ERs on the Pacific. AA having the biggest domestic fleet doesn’t seem very relevant.
“If an airline doesn’t have hubs across the US, then it won’t be a nationwide US carrier.”
Really? How about WN??
Hello Perdro,
Re: “If an airline doesn’t have hubs across the US, then it won’t be a nationwide US carrier.”
“Really? How about WN??”
Southwest does have more of a point to point emphasis than the US Big 3, and has more emphasis on and does better at non-stop shuttle service on busy air corridors than the US Big 3, but the Southwest of today does indeed have multiple hubs, specifically the following, where it does continuous hubbing rather than the bank hubbing of the US Big 3.
Atlanta (ATL), Baltimore/Washington (BWI), Chicago Midway (MDW), Denver (DEN), Houston Hobby (HOU), Nashville (BNA), Oakland (OAK), Phoenix (PHX) and St. Louis (STL)
If you don’t want to take my word for it, maybe you will believe Andrew Watterson, Southwest’s Current Chief Operating Officer. Below is an excerpt from a November 2020 Points Guy post titled “Does Southwest Airlines have hubs? Yes, but don’t call them that”, at the link after the excerpt.
“Take away all of the Albany-Las Vegas or Richmond-Orlando flights and Southwest has hubs buttressing it’s route map.
Atlanta (ATL), Baltimore/Washington (BWI), Chicago Midway (MDW), Denver (DEN), Houston Hobby (HOU), Nashville (BNA), Oakland (OAK), Phoenix (PHX) and St. Louis (STL) are the airline’s major connecting airports, according to a presentation by Southwest commercial chief Andrew Watterson in October. Baltimore, Chicago, Denver, Houston and Phoenix are also the carrier’s busiest averaging more than 100 daily departures since the COVID crisis began.
Say hello to your Southwest hubs.
“It’s not a hub like [Dallas/Fort Worth] is a hub for American [Airlines],” Watterson told TPG in an exclusive interview. “We don’t schedule the whole thing for connectivity in banks… There’ll be a time of day in these big cities where it’ll be scheduled for connectivity, which is what a hub is. The rest of the day is not scheduled for connectivity — connectivity happens but it’s just a big city.”
“Whether or not he calls them hubs, Watterson said offering connectivity is beneficial. Citing Virginia’s Norfolk (ORF) as an example, he explained how Southwest can attract more flyers to its daily flight to Orlando by also offering connections over Baltimore. Offering both a nonstop and connecting flight option expands its appeal to travelers, and creates more flexibility within the its own operation.”
https://thepointsguy.com/news/does-southwest-airlines-have-hubs/
If you don’t want to believe me or Mr. Watterson of Southwest, maybe you will believe Scott Hamilton. Below is an excerpt from a 6-20-14 post on this blog by Mr. Hamilton titled “Southwest sticks with continuous hub/point-to-point as core business strategy.” which can be found at the link after the excerpt
“American Airlines plans to shift from continuous hubbing at three of its major cities–an operational process where flights flow throughout the day–to return to traditional peak-and-valley hubbing. But Southwest Airlines, despite many significant changes to its business model over the years, will stick with continuous hubbing which has been at the core of its business model since the airline was founded in 1971.
After attending the American Leadership Council Wednesday in Dallas, we went across town on Thursday to talk with Gary Kelly, CEO of Southwest Airlines. One of the first things we asked him was about the American shift, which we wrote about yesterday.
Kelly prefers to call Southwest’s operations point-to-point rather than continuous hubbing, but it amounts to the same thing: disembark passengers and embark passengers as soon as the arriving ones are off and send the plane back out as quickly as possible. Turn times are short (more about this later), and aircraft and personnel utilization are high.”
https://leehamnews.com/2014/06/20/southwest-sticks-with-continuous-hubpoint-to-point-as-core-business-strategy/
In order for Southwest to grow from a small niche airline offering low cost shuttle service on the busiest air corridors, like Houston to Dallas to San Antonio, and San Francisco to Los Angeles; that could get you to large cities on busy corridors but nowhere else, into to an airline that could get you to a number of large and medium city combinations rivaling the US Big 3, it had to develop some system of efficiently moving passengers from one point to point flight to another. If you have 10 different non-stop flights, you serve 10 city pairs. If you arrange to have each of your 10 non-stop routes connect to each other, you are now serving many dozens of city pairs, and you greatly expand your customer base. Your expenses per passenger will increase over what they would be if just did non stop flights on the busiest routes with no connections (for instance, you will have to hire more baggage handling staff to sort out bags to connecting flights rather than sending them all to the baggage claim), but if you don’t make the jump to hubbing, your growth will be limited because there are only a small number of very busy air corridors.
Have you flown on Southwest recently? The days of the 10 minute turn and multi stop itineraries where you stayed on the plane at enroute stops are long gone.
United is not going to split engine orders on the 787.
Why would you go with a costlier engine with a worse fuel burn and higher overhaul costs?
Add in the illogical of the Trent Ten has nothing in common with the A350 engine other than it says RR (I guess you save on stencils when you paint it?)
I will happily eat my words though clearly I won’t have to! (grin)
“Why would you go with a costlier engine with a worse fuel burn and higher overhaul costs?”
To prevent having to pay high contract cancellation penalties to RR (for a canceled Trent/A350 order).
I fully agree. I don’t see it. They are not going to order all those 787s to slap an RR engine on half of them. An engine they have no experience with and also limits one of major selling points of the 787 family and that is the ability to switch engines between variants (obviously of the same engine OEM) but if you split it, that splits the commonality too.
Moreover, the RR Trent is just not really it to be honest. Even TAP is very unhappy with the 330neo
Hi, is there a link to the TAP issues for their unhappiness?
@Gerard Nagle
Here you go: https://aviationsourcenews.com/airline/tap-airbus-a330neo-engine-performance-not-up-to-scratch-says-ceo/
I also know DL has privately expressed disappointment with the Trent 7000’s on wing time with Airbus/RR. They are happy with the Trent XWB. Not deal breaker because they believe T7000 will eventually get there, but still needs some fine tuning.
Thanks for the link Whynot, appreciate it.
Didn’t realise the Trent 7000 was such an underperforming unit.
Just to make clear everything I have heard has been mostly in regards to reliability. Things like fuel burn meet expectations. Presumably since the Trent 7000 is essentially just a bleed air version of the Trent 1000 TEN that engine is also facing the same reliability challenges.
There is a noteworthy quote in that link:
“[Could] some things be improved? Yes. But I think that all manufacturers are challenged by supply chain [issues] with parts everywhere”.
The Trent 10 is a derivative of the Trent 1000 though it has enough new parts to be a new engine (75%)
But, how can the Trent 7000 which is a follow up to the Trent 10 not meet its fuel burn when they knew how bad it was on the 787 in the Trent 10 form (save engine but bleed air). They knew what the SFC was and dummed it down so it did meet the spec (like Airbus had a choice?)
On the 787 it never met the spec and GE not only met it (yes it took work) but exceeded it by a bit.
The only way a 3 spool pays for itself is if it has enough better SFC to pay for the heavier weight, more complex system (reliability) and overcomes the higher overhaul costs (it no longer does, the Trent 211 did)
That is why ANA and NZ have dropped it and its a harder decision for others to dump it when they are setup for it.
So far no one has swapped engine MFGs though if they did it, they would swap to the GE but then you can’t sell a Trent 1000 or Ten to save your soul.
Now its a hoot to see the Trent as having better short flight SFC (hmmm, claim to fame is longer flights on 3 spool).
XWB? Haven’t heard anything negative about it. There are also two versions that are not all that common to each other which annoys people who have to deal with that area.
Does Delta experience the same issue? Why (not)???
I agree.
He would be very surprised by a choice of two engine sources which would make use more complicated in the longer term
This does not make sense.
(!) Maybe in an ultimate case, it’s the price to pay because there is a dispute out there
The importance of scale!
Our commentator never have to eat his words because of his persistent of denial.
“United is not going to split engine orders on the 787.”
Well, who said this??
“United has all the data at its finger tips as well as what its plans are, they are not stupid. They may work out a different system you or I would but if it and their personal suit their system and it works, that is the bottom line.”
🤣🤣🤣
Has an airline ever sold their commitments to a lessor? Is this usually not allowed on aircraft contacts, or is there not a market for it?
@Matthew: There have been cases in which a bankrupt airline in Chapter 11 sold their OEM contracts, but it’s rare. More common is that concurrent with the completed purchase by an airline from an OEM is an immediate sale/leaseback to a lessor.
@Leeham Team:
Do you see any logic in replacing Uniteds B772ER (51 in international config) with A359?
That would be a one for one replacement range and size wise.
The B78T does not have the same range- payload capabilities but i don`t know Uniteds network enough to judge this.
The B789 can do these routes, but will be smaller than the 276 seats United has in the B772ER.
I see a chance for United replacing it`s B763ER (37) + B764ER (16) + B772 (19) + some B772ER where they don`t need the range (10) with B787 mix.
Especially the B78T will offer fantastic CASM coast2coast and transatlantic.
That`s a significant order of 80+ B787.
But it would still leave some space for the A359 on routes where they need range.
I don`t see any sense for Airbus to swap the orders to A321neo versions. United has ordered those. A350 orders are way more important than A320neo orders.
Airbus is sold out in near & middle future, the suppliers don`t want a rate increas to 75 already, so we are talking slots at the end of the decade.
Airbus is far better off if United takes the 45 A359, and that`s not a small fleet at all.
United will look at a WB fleet of 150 B787 + 45 A359 and 22 B77W – that`s huge.
Airbus wants its most modern jet with an airline like United, and if they want to ramp up the A350 rate to the pre covid planed 10 per month, they need this sales. Airbus has some 400 A350 in backlog, that`s not a lot.
Sash:
That statement is a position phrased as a question.
What makes sense to us (A350) for United (and I agree, I think it does to replace the 777s) is not necessarily how they see it.
I have long wondered about Alaska Airlines as there is a ridiculous number of flight per 24 hour period going to Seattle (about 1500 air miles)
It seems like a 767 would change that, only two pilots vs about 6 for 3 x 737 flights. AK does not see it that way and it may well be that only ANC to SEA justifies a 767 and the rest of the routes no.
So what United is looking at as far as what fits them, shrug.
I do know you see statement for Qantas that they are replacing 747 with 787.
Makes no sense to me but I am not in charge nor know all Qantas factors they use to calculate that.
@Transworld
Downgauging would make sense for Quantas if their yields are under pressure. Its more profitable to fly a smaller arcraft with high yields than a larger one with low yields.
Hello Sash,
Re:”The B78T does not have the same range- payload capabilities but i don`t know Uniteds network enough to judge this.”
According to Flight Aware screen captures I made on Monday 12-5-22, on that day at 1:37 PM US Mountain Time, United Airlines had 21 777-200’s and 777-200EER’s in the air. I have listed these flights below in order of increasing straight line distance of each route in statue miles according to Web Flyer’s mileage calculator.
UAL 1985, Chicago to Denver, 885 miles
UAL 473, Chicago to Houston, 926 miles
UAL 2090, San Francisco to Houston, 1,630 miles
UAL 1655, Los Angeles to Washington, DC, 2,280 miles
UAL 1273, San Francisco to Kahului, 2,340 miles
UAL 372, Honolulu to San Francisco, 2,390 miles
UAL 2032, San Francisco to Washington, DC, 2,410 miles
UAL 1158, Los Angeles to Honolulu, 2,550 miles
UAL 1237, Newark to San Francisco, 2,560 miles
UAL 1546, San Francisco to Newark, 2,560 miles
UAL 1736, Denver to Kahului, 3,300 miles
UAL 384, Denver to Honolulu, 3,360 miles
UAL 253, Houston to Honolulu, 3,890 miles
UAL 933, Frankfurt to Washington, DC, 4,070 miles
UAL 202, Chicago to Kahului, 4,180 miles
UAL 107, Munich to Washington DC, 4,250 miles
UAL 875, San Francisco to Tokyo, 5,150 miles
UAL 47, Frankfurt to Houston, 5,220 miles
UAL 927, Frankfurt to San Francisco, 5,680 miles
UAL 195, Munich to San Francisco, 5,860 miles
UAL 7, Houston to Tokyo, 6,630 miles
The average length of all these flights is 3,434 miles.
Following is a breakdown of these flights by 1,000 mile increments.
0 to 1,000 miles: 2 flights
1,000 to 2,000 miles: 1 flight
2,000 to 3,000 miles: 7 flights
3,000 to 4,000 miles: 3 flights
4,000 to 5,000 miles: 3 flights
5,000 to 6,000 miles: 4 flights
6,000 to 7,000 miles: 1 flight
Below are the ranges according to Wikipedia of the 767 and 777 models currently flown by United, and those of currently in production current generation wide body aircraft, listed from shortest to longest range. While one might need to reduce the Wikipedia ranges somewhat for real world reserves and headwinds, all of the above listed United 777-200 and 777-200ER flights are within the range capability of all the current generation widebodies, with the possible exception of Houston to Tokyo for a non ER 787-10.
777-200: 5,240 nm = 6,026 sm
767-400ER: 5,625 nm = 6,469 sm
767-300ER: 5,980 nm = 6,877 sm
787-10: 6,430 nm = 7,394 sm
777-200ER: 7,065 nm = 8,125 sm
A330-900: 7,200 nm = 8,280 sm
787-8: 7,355 nm = 8,458 sm
777-300ER: 7,370 nm = 8,475 sm
787-9: 7,635 nm = 8,780 sm
A350-900: 8,100 nm = 9,315 sm
A330-800: 8,150 nm = 9,372 sm
A350-100: 8,700 nm = 10,005 sm
So I guess airlines buy aircraft only based on what they need “today”? Never look into the future, right??
@Ap_robert:
That`s a good starting point.
Though you would need to see payload – range diagrams to understand that a bit better.
It`s one thing for the range, but the usable range with payload, for this you would also need a better idea about Uniteds network and demand.
The B78T offers fantastic economics on shorter long haul routes. Typical B767 routes, East Coast to West & Central Europe.
SIA is using its B78T inner Asia, works well for them.
But how much demand does United see and how many routes do they have where the B78T will not do it on regular base?
Like San Francisco – FRA. Or Newark – Japan / China / SIN etc.
If you know that, you can judge if it makes sense for United to drop the A359, and fly the longer routes that the B78T cant make with a smaller B789 and maybe leave a bit of business on the table.
Then the`ll have a super simple fleet of B787s and their well fitting B77w.
The B789 is a great plane, after all, and if United doesn`t need the size of the A359, then there`s not much sense to take them.
Still, loosing United as a A350 customer would hurt Airbus a lot.
Sash:
I don’t think that a loss of A350 to United would hurt Airbus. Sting a bit but hurt, no.
The 787 does Narita to Boston with JAL as I recall. I do agree the range and PAX count are a factor. The famous Singapore to NY flight with 170 some odd passengers and an A350-900 is a case in point.
So load factor for the route as well as the ability to price the tickets high enough to make a profit play into that.
We see flights of 200 miles with A320/737 but also longer jumps and the fleet flexibility that you may fly it trans continental afterwards.
People think of it as a P-51 vs a FW-190 and its not. the P-51 is the visible from for a system and how an aircraft not only fits in that system but how the system was setup and how its run (Delta being an example of using older airplanes serving shorter routes with full paid non scope pilots)
South West has its system (as AP Pointed out) Ak Airlines has its system, American etc. Each is run differently and sometimes dramatically so.
As I pointed out Qantas is replacing 747s with 787s. I believe there is more frequency and some picking up of cities that were not departure points (AP likely follows it much better).
So if Qantas can shift from a 747 size to a 787 and still make it work with a change in system? United can make it work.
You have major cost reduction in not having another aircraft which duplicates a 777 in the case of the A350 so you have to maintain the 777 while you add in the A350 and its many years before the last 777 is gone.
Its not that there is a right or wrong to it, its a reality of several approaches work.
And competition wise its a System vs a System.
For sure would a loss of 45 A359 orders hurt Airbus. Notably.
That`s not a small order.
I dont really get the conclusion of your post,
but if you replace 45 B772ER with 45 A359 and the rest of your WBs with B787 while you keep your B77W,
you have a very clean and streamlined fleet.
45 WBs is not a small fleet at all, the additional cost for a fleet of that size would not be dramatic, especially if you won`t spread the fleet over many hubs.
United will have done it`s analysis on it, checked demand, network, slots, routes, etc. factors that i can`t judge. Would have been nice to hear from someone with more insights, but it`s quiet obvious Leeham thinks that order will be cancled.
“As I pointed out Qantas is replacing 747s with 787s.”
Not really true as I pointed out in my reply below.
@TW
FYI
For a premium-heavy airline like SIA, it’s “regular” A350-900 is configured for a total of 250 passengers or so. Forget your cattle-cart.
Sash:
Mostly its that United made or makes its decisions based on how they think, not how we think.
A transition to A350 replacing 777s would be costly. You can only intake so many a year and you have to get the infrastructure in place first. Mechanics trained, Simulator, Pilots and the Flight Attendance.
They you have to maintain the same with 777 until the last one is gone, easily 5-10 years.
I don’t see how Airbus is hurt, they clearly expect it and they are doing really well in the A320 series.
The A350 is doing well and while not the sales numbers of the 787, its a bigger aircraft and as you scale, you sell less. In all the years the 747 was made I think 1500 sales and that was through 4 major model changes
@TW
Don’t you know?? 😂😂😂
“United has all the data at its finger tips as well as what its plans are, they are not stupid. They may work out a different system you or I would but if it and their personal suit their system and it works, that is the bottom line.”
Another very good report from the Leeham team. Thank you.
It appears that United will concurrently be announcing a new Polaris business class on Tuesday:
“These new planes will come with the same economy and premium economy seats United currently uses on their Boeing 787-10 aircraft, however business class with be a new seat – ‘next generation Polaris’ – which offers suites with doors – as noted by aviation watchdog JonNYC.”
Suites with doors are becoming a new norm.
In this regard, it should be noted that Qatar airways had to modify its original QSuite product to fit within the narrower fuselage of a 787, resulting in a “compromised” product:
– HeadForPoints: “Let’s be honest – the new 787-9 seat is NOT Qsuite. Whilst it does have fully closing doors – a trend that Delta launched with its Delta One suite in 2016 and which Qatar followed up with the Qsuite in 2017 – the new seat is, fundamentally, an off-the-shelf seat.
This original Qsuite, on the other hand, is a fully-bespoke seat that allows for a number of innovations no other seat on the market has, including the ability to turn a pair of seats into a double bed.”
https://viewfromthewing.com/united-will-announce-a-boeing-787-order-on-tuesday-theyll-come-with-a-new-business-class-suite/
@Bryce
Back in April, UA made a big deal announcing its B764 were finally starting to be update with …. wait Polaris seats. The first one, a “prototype” finally completed around October 2022. The rest was expected to be completed by summer 2023 or so.
https://www.google.com/amp/s/thepointsguy.com/news/united-airlines-polaris-retrofit-update/amp/
================================
-> “During its Q3 2022 financial update, the carrier [United] also indicated that “Boeing notified United that three Boeing 787 aircraft scheduled for delivery in 2022 and 15 Boeing 737 MAX aircraft scheduled for delivery in 2023, all as shown in the table above, are now expected to deliver in 2023 and 2024, respectively.”
https://www.google.com/amp/s/skift.com/2017/10/20/united-airlines-struggles-with-polaris-class-messaging-as-seat-retrofits-lag/amp/
https://crankyflier.com/2017/10/19/polaris-when-united-cried-wolf/
Not that long ago, “United expects to begin operating […] the Max 10s […] in *early 2023*
According to this:
-> […] no major changes expected to the interiors, at least for now. Initial deliveries keep the current Polaris and Premium Plus offerings.”
https://mobile.twitter.com/WandrMe/status/1602635751862181895
And then there’s this:
FG: “Boeing rolls out plan to hike deliveries to 800 jets within several years”
https://www.flightglobal.com/airframers/boeing-rolls-out-plan-to-hike-deliveries-to-800-jets-within-several-years/150809.article
Logical that the company *wants* this, because current delivery rates aren’t generating enough earnings to adequately overcome fixed costs: when margins are low, you need higher volumes to generate profit.
Next question is: can the company actually *achieve* this, in view of various hurdles that it faces, e.g. with regard to QC, FAA sign-off, brain drain, certification, etc. — not to mention supply chain misery.
From that article:
“..Boeing has struggled to meet its 737 delivery goals this year, handing over 277 of the narrowbodies through September.
One week ago, the company slashed, for the third time this year, its full-year 2022 delivery estimate, citing supply trouble and lack of 737 Max shipments to Chinese airlines.
It now anticipates 375 737 deliveries this year, down from a “low 400s” prediction in July, down from 500 in January.
Boeing also anticipates delivering 70-80 787s in 2023, which would be a massive ramp considering Boeing offloaded just nine of the widebodies this year through September. The company restarted 787 shipments in August following a pause due to manufacturing defects that lasted most of the preceding 20 months..”
Wow. BA cited a “lack of 737 Max shipments to Chinese airlines”? For months, BA has been making a lot of noises about remarketing those 737 in storage?? Some commentators even went as far as predicting a “bidding war”!! 🤣
Let cold hard reality sinks in. 😀
Yeah, “lack of 737MAX shipments” makes it sound like some kind of oversight or mixup.
“Oops, we forgot about those silly ol’ MAXes.. we had to give ’em away, but at least they’ll be gone.”
https://www.flightglobal.com/airframers/can-boeing-clear-its-way-to-a-brighter-future/150971.article
“..Executives also see a path for Boeing by 2025 or 2026 to be delivering about 800 aircraft and generating $100 billion in revenue annually. That would return Boeing – which reported revenue of $62 billion in 2021 – to its stature in 2018, when it posted $101 billion in revenue and delivered 806 aircraft.
“I want nothing more than to return money to you,” chief financial officer Brian West told investors.
To hit 800 annual deliveries, Boeing aims to produce 50 737s, four 777s and 10 787s each month..”
We’ll see how it goes. “..Aims to..” is nice wordsmithing, though. 😉
Looks like Boeing going to get 150 737Max order from Air India
https://simpleflying.com/air-india-150-boeing-737-max-order/
50 firm; 100 options.
And the figure of 50 apparently has to do with this:
“The decisive factor in Air India’s decision was the immidiate availability of 737 MAX aircraft. Indeed, Boeing promised the carrier immediate delivery of 50 white-tails orginally meant to go to China Southern”
So its a negative sale on the books? take off China orders and add new order for less to Air India?
An interesting question you pose, DP.
In a nutshell, yes.
Just like every other whitetail re-sale, in essence.
Advantage for BA is that dormant whales are removed from parking lots — where they took up space, were slowly corroding, and were leeching cash.
Usually getting whitetails off is great.
They bound a lot of capital, and you basically make a huge cashflow + profit when you shift your “half products” into sales.
That will help Boeing a lot financially. And if the chinese airlines want new Maxes, i`m sure Boeing will build them some.
@ Sash
You’re forgetting:
– Huge costs involved in de-mothballing stored frames.
– Costs involved in refurbishing interiors.
– Reduced sale price for a frame that’s now 3-4 years old instead of new.
There’s little to no profit being made on stored 737s.
It’s a labor intensive exercise to deliver stored white tails with significant cost. How come posters still only see the cash inflow, but fail to realize the cost involved?? 🤔
It’s cash they wouldn’t otherwise have! At this point in time it’s a big win…
@ SamW
Yeah, it’s cash — but it’s nowhere near enough cash.
Don’t forget BA also have to refund previous customer[s]’ progress payment/deposit (40% give or take). At the end of the day, how much “net” cash would BA receive??
Regarding BA’s promise of “immediate” availability/delivery:
In Nov 2021 Akasa ordered 72 MAX, expecting first delivery in April
– https://simpleflying.com/akasa-air-launch-delayed/
– https://simpleflying.com/akasa-air-launch-delay/#:~:text=Akasa%20Air%20was%20expecting%20to,delivery%20by%20mid%2DJune%202022
-> “Akasa Air was expecting to receive the Boeing 737 MAX 8 in April, but that has now been delayed until June/July.
Akasa Air co-founder and CEO, Vinay Dube said: “We expect our first aircraft delivery by mid-June 2022.
There is an expression, I believe, – “It ain’t over till the fat lady sings”! It isn’t so very long ago since there were predictions of an “imminent” AI order for 50 or so A350s, and so far this has failed to materialise.
LNA wrote an article on the potential AI A350 order a few days ago…
…. and has it (or any of the other predicted large orders) been confirmed yet?
Are you in a hurry…?
Why don’t you ask @Scott directly?? He can tell you.
So the A350 is dead at united ,short term it will be a win for United operating the 787 but long term i wonder about the relationship between United and Airbus , will Airbus ever take United seriously ?
An even bigger win for United will probably be the pricing on the 787s: it’s likely that AB kept lowering the A350 price, forcing BA to match.
Of course, BA can also play that same trick on AB — but AB’s finances can cope with thin margins here and there, whereas BA’s finances can’t.
I love the rampant speculation based on no facts.
What I can say is that Airbus was incensed Boeing priced the 787 below the A330NEO and got the Hawaaian order.
An A350 is bigger than a 787 and of course its going to cost more.
Boeing is cutting United a good deal and that is what Airbus used to do.
“… speculation based on no facts.”
Hmm … interesting. I wonder when self-reflection would happen … food for thought.
“Boeing is cutting United a good deal”
BA no longer has the financial luxury to be able to cut customers “a good deal” — that’s the whole point.
@Bryce Did you forgot about program accounting for the 87?
This order will bring Boeing above their block, they can price very agressive becuase the cost that they have accounted down to the block will now spread on more models.
Boeing will likley sell close to 2000 B787, which is a huge bonus over their accounting block.
@ Sash
I fear you may be misinterpreting how the programing block works.
Going forward, this is a simple matter of manufacturing cost (C) per frame versus selling price (S) per frame — regardless of development costs, writedowns, etc. The difference S-C is the margin.
– I read sources that estimate that a 787-9 costs about $110M to manufacture: that’s what BA pays suppliers for parts, what it pays employees for labor, and what it pays in utilities, insurance, rent, etc., for its manufacturing facilities (per produced frame).
– List price of a 787-9 is $292M. After a standard industry discount of 55%, this reduces to $131M. I strongly suspect that current sales of 787s are going for much better pricing than the standard discount — particularly in situations in which AB is co-bidding the price down. So, let’s take 60%, which gets us down to $117M.
– This gives S-C = $7M.
– $7M x 100 units gives a margin of just $700M on the entire United order. Does that sound like a lot? Well, it’s about enough to cover BA’s loan interest repayments for a single fiscal quarter.
@Sash
One other point that the others haven’t mentioned, but certainly also affects Boeing’s program accounting. Their assumption on average cost per aircraft was certainly based on high production rates (12 per month or so). At the current much lower rate, the previous assumptions are probably no long valid, thus the program costs should go up…
That’s why BA is eager to “talk” about raising rate to 10 or so per month. Year end is approaching, BA is looking for quick fix from it magic program accounting black box.
The “gush” of new orders will also no doubt as a bandaid helps to improve BA’s FCF at year end.
I’d highly doubt Boeing Corporation sells many airplanes below cost. First of all the airplane business is a Duopoly. Price is one factor, but so are delivery slots, engines, service contracts,… Etc. Didn’t DAL order 321s so they could MRO the GTF? Where else are airlines going to get planes? Russia, China? Space X? They don’t hire guys to run Boeing and Airbus to give away many freebe’s.
@ SamW
When you have junk in the parking lot that isn’t selling, you have to drop price.
BCA had 112 deliveries in Q3 but it had a large operating loss, without one-off writedowns. What does that tell you?
Cash? What cash??
BA has to cut back repeatedly on its delivery target for 2022, from an initial 500, to 400 and finally below 400 now 🤔
I think it’s Deal who admitted that it takes as many labor hour to deliver a NB jet from storage as BA assembles a new one!
@SamW
Remember under BA’s program accounting, the cost of aircraft is NOT the same as how much BA is incurring right now to build one. It’s a magic black box that generates as much profit as BA “wishes”, it basically is “trust me” even though over the years, BA repeatedly wrote off program cost that is deemed irrevocable as the program approached its final closing. Profit? Record now. Losses? Yeah, but years later.
https://leehamnews.com/2019/11/05/boeing-charges-costs-nearly-35bn-since-1996/
@Sash
Don’t take Bryce’s word for it. This is directly from the most recent 10-Q.
https://s2.q4cdn.com/661678649/files/doc_financials/2022/q3/962fae41-f060-4359-8ef2-342d90be7c40.pdf
“During the fourth quarter of 2021, we determined that estimated costs to complete the 787 program plus costs already included in 787 inventory exceeded estimated revenues from the program. The resulting reach-forward loss of $3,460 was recorded as a reduction to deferred production costs. At September 30, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 787 program: deferred production costs of $11,868 and $11,693, $1,946 and $1,907 of supplier advances, and $1,795 and $1,815 of unamortized tooling and other non-recurring costs. At September 30, 2022, $9,015 of 787 deferred production costs, unamortized tooling and other non recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $4,648 is expected to be recovered from units included in the program accounting quantity that represent expected future orders. We expensed abnormal production costs of $925 during the nine months ended September 30, 2022.”
Emphasis on:
” $4,648 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.”
An order from UA would be some money needed to cover ~$4.7 billion is the deferred production balance. Money already spent. Money still costing them interest.
@Frank
I guess it’d take more than an order from UA, it needs execution by BA to successfully ramp up [easier said than done based on recent experience of 737 MAX] production rate to 10-12/ mth
@SamW
‘I’d highly doubt Boeing Corporation sells many airplanes below cost.”
Can you explain how this happened?
-> Boeing haemorrhaged cash in the third quarter of 2022, posting $3.3 billion in losses primarily in the company’s defence business.
Paper thin profit margin leaves little room for any error – repeated delays of the MAX 7/10 could easily turn what’s expected to be a small profit into losses, on top of that RM/labor costs are rapidly rising …
British Airways got put into Airbus’s “Don’t answer the calls” list. Same might happen to United.
I’m interested in the long term, and who will be there in the long run. Right now it looks like Airbus has the advantage over Boeing, having a less troublesome product line up, an order book as fat as can be, and far more money at its disposal for product development. That might just possibly translate into Boeing becoming really badly uncompetitive, where buying a Boeing is just not an option.
If that point is reached, there’s going to be an ugly transitional period where Boeing are sinking whilst Airbus are annointed Kings of the industry but are unable to supply all of Boeing’s former customers. It’s during this phase, should it come to pass, that loyal Airbus customers can expect to be looked after and quarrelsome, troublesome timewasters can expect to go to the back of the queue.
This really ought to be what keeps fleet buyers awake at night; the prospect that one of these 2 suppliers finally curls up and dies, because being beholden to the wrong one could kill an airline. Right now we have a string of articles from Leeham News talking about Boeing and how they’re abandoning developments until at least the next decade. The idea of Boeing quitting the business may seem ridiculous, preposterous; but, of the two, they’re the ones moving towards exiting the business, not expanding their share of it.
p.s. there now seems to be two commentators called “Matthew”!
Matthew:
Its an interesting point and with no competition Airbus can pick and choose and the pricing goes away on new contracts.
And yes, Boeing could work its way out of the LCA business. With Calhoun in charge its like throwing a block of cement to a drowning victim.
The 787 will sell for at least another 15 years. 737 will sell in the 40% range for a long time unless Airbus ups the ante with a new wing (why would they upset the apple cart as they slowing strangle Boeing Single Aisle)
777X is unknown but its not going to sell in the same numbers the 787 does nor what the 777 sold (Airbus had no real competition for the 777)
Calhoun will be gone at some point and we have to see if its a pillage CEO or someone like Mullaley that cared a lot.
Difference was that Calhoun just works to pad his pocket, Mullaley clearly had a passion for his job.
I think Airbus (right or wrong) believes the A350-900/-1000 is the best aircraft for long heavy Asia flights.
Airlines that see this differently can buy 787-9s and 777-9s. Or even 787-10s (leaving cargo on the ramp).
Same goes for United Airlines.
> and 777-9s.
Maybe.
Didn’t Tim Clark say in a recent interview that he was expecting an update on the GE9X engine problems on Dec. 8?
That was 2 days ago.
Doubtless, we’ll be hearing more soon…
> Doubtless, we’ll be hearing more soon… <
I wonder if the language will be as obscure as in the last 777X-related communication- hopefully not.
https://epsilonaviation.files.wordpress.com/2019/06/payloadrange_midsizewidebody.jpg?w=1000
Very informative graphic 👍
And not relevant as it does not give seat counts let alone fuel burn per pax to get there.
….and it does not list the weight variants used. The image updated with the new production standard for the a350, and the mtow increase for the 787-10 would not only look nicer, but start to have value
The graph gives payload. The 787-10 is very efficient transatlantic & transcon (& Japan). So maybe UA wants some more. But not very suitable for replacing 777-200ERs. For replacing 767-300ERs? It’s a capacity jump..
keesje:
As I pointed out, you can change the system and still get the returns you want.
United has all the data at its finger tips as well as what its plans are, they are not stupid. They may work out a different system you or I would but if it and their personal suit their system and it works, that is the bottom line.
Back to Qantas. Huge capacity change and they are replacing 747s with 787s. They think it works. Time will tell of course. But they have a plan and United has a plan.
Reality check:
“Qantas announced […] that its traditional 747 service to Los Angeles will be replaced by both the *Airbus A380* and the 787-9.
To counter its brain drain, BA is recruiting overseas — with a big focus on India:
“Ditching Russia, Boeing pursues talent in India, Brazil, Poland, Ukraine”
“Boeing Commercial Airplanes projects employing more than 1,100 engineers in Bangalore and Chennai this year. Adding other Boeing divisions, the company said it expects to have a total of more than 4,000 engineers there by year-end.”
““In total, we will hire approximately 9,000 engineers across both our domestic and international engineering sites by the end of this year,” Boeing said.
“That hiring must counter not only the loss of the engineering center in Moscow but also a brain drain this fall of hundreds of highly experienced U.S. engineers who retired early to avoid a hit to their pension payout.”
“Bill Dugovich — spokesperson for Boeing’s white-collar union, the Society of Professional Engineering Employees in Aerospace — is not mollified.
““All these engineering centers have jobs that were at one time jobs in the U.S.,” Dugovich said. “It’s always a concern when the company shuns U.S. engineers and moves work elsewhere.””
https://www.columbian.com/news/2022/dec/10/ditching-russia-boeing-pursues-talent-in-india-brazil-poland-ukraine/
MIGA!!
How effective is it to “counter brain drain”? Seriously???
*** WOW ***
There’s now expanding “news” on the Air India order — similar to what LNA reported a few days ago, but with some additions:
“Exclusive-Air India Nears Historic Order For Up To 500 Jets”
“The orders include as many as 400 narrow-body jets and 100 or more wide-bodies, including dozens of Airbus A350s and Boeing 787s and 777s, they said, speaking on condition of anonymity as finishing touches are placed on the mammoth deal in coming days.
“Such a deal could top $100 billion dollars at list prices, including any options, and rank among the biggest by a single airline in volume terms, overshadowing a combined order for 460 Airbus and Boeing jets from American Airlines over a decade ago.”
https://www.ibtimes.com/exclusive-air-india-nears-historic-order-500-jets-3645922
Who is going to do the financing for Air India purchase $50 billion USD? I doubt the Tata group will be direct buying all the aircraft Maybe a group of lessors like Avolon, and AirCap?
The Tata Group had revenue of $128B in 2020-2021.
Apart from that, the Indian Government may get involved with attractive loans — to name but one possibility.
According to Bloomberg, SIA is going to inject $600 million or so over next couple years for its 25% stake and it’s reported that Tata is also looking for billions of loans for working capital.
One needs to look at India airport infrastructure for expansion. For a population of 1.4 billion they only have “6 “real” tier 1 airports Their second and third airports will not supply Air India domestic growth (it will take decades to build the infrastructure with red tape within regions for development). India focus will be on rail development for mass transit So Air India is going to almost double the country fleet while they only have 121 (17%) aircraft themselves? Sounds like a PR job to raise capital. Indigo has 291 aircraft which is 40% of the country airline fleet
https://www.worlddata.info/asia/india/airports.php
https://pib.gov.in/PressReleasePage.aspx?PRID=1806617
http://www.knowindia.net/aviation7.html
Isn’t Air India predominantly portraying itself as an international carrier rather than a domestic airline?
Yes, but why 400 narrowbodies in the “order” with getting 737 Max repaints from China storage. They need to compete with India’s low cost carrier Indigo
When I spoke at a aerospace conference in Hyderabad in 2019, the new part of the airport was very nice The issue is they don’t have the infrastructure to and from the airport. This will be a issue for airport expansion within India, hence rail transport
There are loads of international (non-Indigo) routes that can be flown with 737s/320s: SE Asia, Gulf, Horn of Africa, Sri Lanka, Central Asia,…
What international flights are there to Agra (Taj Mahal)?
Look what international flights to Siem Reap (Cambodia) did for tourism there.
@Bryce
AI has to gain market share from the ME3. I believe that should be the priority.
> So Air India is going to almost double the country fleet while they only have 121 (17%) aircraft themselves? Sounds like a PR job to raise capital. <
I had similar thoughts.
"Extraordinary claims require extraordinary evidence."
-Somebody
Air India is going to consolidate and streamline operation: Air India, Air India Express, Air Asia India and Vista into Air India and a LCC.
Another tidbit relating to the rumored Air India order:
“One industry source said new Boeing 737 MAXs will most likely go to Air India Express, the company’s budget operator which could be renamed.”
https://www.reuters.com/business/aerospace-defense/air-india-nears-historic-order-up-500-jets-sources-2022-12-11/
Considering Air India Express has only 24 737 in their fleet, doesn’t seem to be a sound plan
So in your opinion only western airliners can order and operate with large aircraft orders..
No but for an airline (Air India) that had a troubled financial past and was purchased by the Tata from the India’s government for $2.4 billion USD Then Tata wants to go out “purchase” $50 billion USD ($100 billion list price) of aircraft seems a bid outrageous
https://www.bbc.com/news/world-asia-india-60150531
So you mean to say only profitable airlines should purchase aircraft?
@ DP
All the US “big three” have been in Chapter 11 in the past — and they’re spending big today.
@Turbojet
Do you know what’s the credit rating of Air India??
“The current market share of Air India in the domestic market is 10% and in international, it is 12%. The current fleet strength is 117.”
https://www.financialexpress.com/industry/air-india-targets-30-market-share-in-5-years/2718805/
This reminds me when I spoke at aviation conference in Hyderabad in 2019, the lead speaker (country’s leading expert) stated India’s goal was to produce a wing for western commercial aircraft. Enough said!
@DP
By combining all airlines owned by Tata, they already have like 23.4% market.
I’m baffled as to where the money (resources is a more accurate term, I think, because money can be digitially magicked into existence, but resources cannot) for all these new aircraft is coming from. Weren’t many of these entities *bailed out by taxpayers* since early 2020; if so, how exactly did they gain carte blanche for all these new aircraft orders?
The horsetrading in Congress over the EICAS deadline continues:
“Spending talks carry big Boeing implications”
“The FAA says it will pause Boeing’s ongoing certifications until the new equipment is installed or Congress intervenes. Having failed to get a three-year extension included as part of this year’s National Defense Authorization Act, Boeing is now targeting the appropriations bill as a vehicle, according to two industry officials who were granted anonymity to freely discuss pending legislation.
“DEMS DISAGREE: Democratic lawmakers from Boeing’s home state of Washington and House Transportation Committee ranking member Sam Graves (R-Mo.), who is likely to lead the committee next Congress, have called for an extension. But other Democrats, including outgoing T&I Chair Peter DeFazio (D-Ore.) and Sen. Richard Blumenthal (D-Conn.), said they think Boeing doesn’t merit a grace period.
““I am very unimpressed with the argument in favor of providing a delay and I’m unpersuaded they need it or deserve it,” Blumenthal said. “It was taken out of the NDAA, right? But I would say [its] chances are somewhat less than fifty-fifty.”
“THINK OF THE JOBS: But House Aviation Subcommittee Chair Rick Larsen (D-Wash.), whose district includes Boeing, said the extension should be included in any year-end continuing resolution or omnibus spending bill.
““The women and men make this airplane and live and work and go to school in my district and they’re the folks who are going to be on the short end of the stick if orders don’t get done,” he told POLITICO.”
https://www.politico.com/newsletters/weekly-transportation/2022/12/12/spending-talks-carry-big-boeing-implications-00073409
“..women and men..” is a nice touch.
The conditioning / softening-up never stops, these days.
https://mobile.twitter.com/mtmalinen/status/1602336686385631237
https://mobile.twitter.com/JavierBlas/status/1602292384208928772?cxt=HHwWiICyseSbvrwsAAAA
https://mobile.twitter.com/JavierBlas/status/1602351260254048263?cxt=HHwWjsC8jen-2LwsAAAA
https://mobile.twitter.com/TofMcGlade/status/1602266882299641856?cxt=HHwWgIC-rbDPsrwsAAAA
File under “amusing”:
‘Airbus Was Wrong, Delivery Target Tumbles’:
Dec. 11, 2022
” Airbus confirmed it would miss the delivery target, but this is what I expected since mid-2022. The best-case scenario is now 685-690 aircraft deliveries, up from our previous estimate based on slightly stronger-than-expected November deliveries.
Orders numbers for November were soft, but the European jet maker has a strong year, nonetheless. Airbus stock remains a buy on higher outputs next year and a strong product lineup..”
https://seekingalpha.com/article/4563818-airbus-was-wrong-delivery-target-tumbles
“Tumbles” is an interesting choice of words from Mister Bechai. 😉
It’ll be interesting to look at 2022 forecasts v deliveries for Airbus *and* Boeing at the end of the month.
@Bill7
What word that person used to describe BA’s 25% chop? 🤔
We are entering a post-truth society. 🙂
The spin’s getting thick, Pedro..
I won’t mention Boeing looking everywhere but at home for engineers. An American company should hire American engineers.
Assuming that there are American engineers who would want to work for BA 😏
If I had a dollar for every un- or under-employed USian engineer (“consultant” now, heh) I’ve known who’s been outsourced, I’d be rich.
‘Ditching Russia, Boeing’s engineer search intensifies in India, Brazil’ :https://www.seattletimes.com/business/boeing-aerospace/ditching-russia-boeings-engineer-search-intensifies-in-india-brazil/
cui bono?
BA: American in name … only.
We need the admin to have a better definition of “high quality” jobs!
https://mobile.twitter.com/WHCOS/status/1602646215094583299
-> Another day, another huge investment in US manufacturing — advanced production, high quality jobs in the USA:
375 or 500 (MAXes] delivered in 2022.. samey-same.
🙂
@ Bill7/Pedro
I currently count 605 deliveries, with a present total of 40 in the past 12 days.
AB production traditionally keeps working right through December (no holiday)…
Does that include A220??
Yes — which is a rather slow line at present.
I’d imagine you reall that Bechai hit piece, Bryce, but if not there’s some non-fluff down near the bottom.
> AB production traditionally keeps working right through December (no holiday)… <
If true, I'm sorry to hear that. Actually respecting and taking
time for holidays and traditions is one area that Europe has
been unlike the US, and I think that's important.
It’s voluntary, as far as I know — and very well paid.
Remember that there are various religions that don’t celebrate Christmas — no problem for them to continue working.
I was thinking more of the Solstice and New Year.
Collective down-time is a societal good.
I think Airbus needs to do a better job taxiing around their completed aircraft
https://simpleflying.com/collision-condors-first-airbus-a330neo-hits-a-building/
@Pedro I’ll provide the link for Air India’s credit rating judge it for yourself https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/AirIndiaLimited_August%2030,%202022_RR_300685.html
What’s the credit rating for India? Is it true that AI has a rating above the sovereign nation? Is it possible??
United’s a350 order pushed out to next decade… “If at all”. (Reuters)
The expression ‘s**t or get off the pot’ seems valid.
The UA 787 order is now formal:
“The pact includes 100 firm orders for the widebody model along with options to add another 100, the companies said Tuesday in a release. The airline expects to take delivery of the Dreamliners beginning in 2024.
“Along with the widebody order, United agreed to purchase another 56 Boeing 737 Max planes and exercised options for 44 of the workhorse narrowbody jet. Deliveries are expected between 2024 and 2028, it said.”
“Financial terms of the deal weren’t disclosed, and the companies didn’t specify the mix of variants of the Boeing planes United would take. Based on estimates by Bloomberg Intelligence of the value of the Max 8 and the 787-9, the firm portion of United’s order could be worth more than $17 billion.”
https://www.bnnbloomberg.ca/united-buys-100-boeing-dreamliners-in-bet-on-long-haul-rebound-1.1858553
The $17B figure is commensurate with (for example):
– The current “standard” market price of $125M for a 787-9 (58% discount);
– $45M (average) per MAX, which would represent a 65% discount on the MAX-10 / 63% discount on a MAX-8.
VERY meager margins!
I see a 100x 787 order, the A350 order is not cancelled, contrary what many expected. Because United thinks they are a “really great option” as 777 replacements.
Wow, so the order is 100+ 100 B787 and United hasn`t fixed the models yet.
Thats the biggest B787 order ever, on top they order more Max.
That`s the end for any A359 hopes in United colors.
Why should they take them, they have ordered 1-1 WB replacement for the whole upcoming fleet.
The 100 787 purchase rights, for open slots after 2030, are no more than that. PR hopes the press translates this into “200” and they’ll probably succeed.. but they are what they are.
https://boeing.mediaroom.com/2022-07-21-Boeing-and-Qatar-Airways-Finalize-Order-for-25-737-MAX-Airplanes
https://boeing.mediaroom.com/2019-06-18-International-Airlines-Group-Announces-Intent-to-Buy-200-Boeing-737-MAX-Airplanes
@ Pedro , do you work in the financial world , are business decisions solely based on credit ratings ? I don’t know what your problem is it seems either you are having a agenda to discredit Air India Or you don’t believe the credit rating done by CRISIL which is a S&P company.
Do you work in the financial world? Do you know the importance of credit rating?? Do you have a clue how it works??? 🤔
Back to the topic , many congratulations to Boeing and United , it’s a big and important win for boeing for 100 +100 787 widebody aircraft , i guess some folks here would not question United’s or the USA credit ratings..
Do you know what’s the credit rating of UA?? 🙂
The A350 order will likely not happen. United could have replaced those nasty 767’s with the A330 neo which is cheaper, as efficient, available, and certainly more reliable and better built than the 787 but they didn’t. They waited for the 787 quality problems “ get fixed”. United chooses to continue fly the 777-300 for a lot longer (excellent aircraft but now getting old ) which is significantly less efficient than the A350-1000. Clearly, they don’t want Airbus wide bodies a la Continental even when the timing and economics would make sense and that’s fine. What do you expect from a major US airline that saves money by still fying 767 and 757 while third world countries have already dropped those s decade ago?
@ Jose Marchena , It seems to me that Airbus trusts United that one day they will take delivery of the A350 while United trusts Boeing that they are willing boeing to make upto 95% of their mainline fleet.
Looks like the 787-8 might finally be fulfilling the objective of replacing the 767… That in itself might mean no mid market plane. Maybe United’s -8s will be built with that in mind.