Leeham News and Analysis
There's more to real news than a news release.
Odds and Ends: A330neo decision could be near; KC-46A; Countdown to Superbowl; A400M
A330neo decision: Aviation Week reports that a decision to proceed with the Airbus A330neo could be “imminent.” The report also discusses the advocacy by Tim Clark, COO of Emirates Airlines, to re-engine the Airbus A380. As with the Reuters and Bloomberg articles we previously linked, the Aviation Week piece also confirms much of what we were the first news outlet to report in December. We have a launch in 2014 rather than 2015 reported in Aviation Week, although we both have a decision to proceed for this year. Aviation Week and Bloomberg report that the decision could come as early as March.
Aviation Week confirms our report that Pratt & Whitney would be unlikely to bid on the project because the short time lime precludes development of the big engine version of the Geared Turbo Fan.
KC-46A at ‘high risk’ for delay: A US government report suggests the Boeing KC-46A tanker is at ‘high risk’ of a six month delay.
These are not unusual for military programs, nor, it seems, is it any longer unusual for new or derivative aircraft programs. Boeing believes the program is on time, but even if a six or 12 month delay does emerge, by today’s standards, this indeed is “on time.”
Countdown to Super Bowl: Boeing painted a Boeing 747-8F test plane in the Seattle Seahawks livery and this week “skywrote” the number 12 on a flight. The Seahawks play the Denver Broncos Sunday in New Jersey for the Super Bowl. The number “12” represents “the 12th man,” of the collective Seahawks fan base.
We think it would be super for the 747 to overfly the game Sunday, the ultimate 12th man appearance. Alas, Boeing says there are no plans to do so.
A400M: Cool picture. No other words needed.
Odds and Ends: A330neo; The 12th Man; Boeing’s earnings
Clearing the air on the A330neo, again: Bloomberg News has an extensive story on the prospective development of the A330neo. Following a report from Reuters, these two news articles basically confirm everything we reported in December.
The 12th Man: The Seattle Seahawks, which plays in the Super Bowl Sunday against the Denver Broncos, is well known within the National Football League for its “12th Man.” This is the fan base which has set records for being the loudest fans in football, at a record 137db. They’ve also been recorded on the Richter Scale for their stomping at the Seahawks’ Century Link Field (that’s a local phone company, and the name is routinely shortened to “the Clink”).
Boeing is a corp0rate sponsor of the Seahawks and rolled out its 747-8F house test plane in a new Seahawks livery.
Boeing’s earnings: Boeing reported its 2013 earnings and while they were a record profit, the forecast disappointed and the stock took a major hit Wednesday. The Seattle Times has the recap.
Odds and Ends: ATR presses parent Airbus for 90 seat go-ahead; Stratoliner; 777 model
ATR presses Airbus: ATR, the world’s leading maker of turbo-prop airliners, is pressing Airbus Group to green-light its proposed 90-seat, clearn-sheet turbo-prop, Bloomberg News reports.
Airbus Group owns 50% of ATR; Alenia owns the other 50%. ATR’s CEO wants to change this legal structure, reports The Wall Street Journal.
According to the news reports, Airbus is concerned about the diversion of engineering resources. Maybe this is why. Airbus is studying a “mega-twin” concept, reports Aviation Week. Of particular note is the reference that Airbus doesn’t plan to launch a new airplane in the next 10 years. We think these plans are going to have to change when Boeing launches a replacement for the 757, followed by the 737RS, which we have for the end of this decade.
But let’s get back to ATR.
Bombardier, the world’s #2 turbo-prop airliner producer, launched a high-density, 86-seat version of its venerable Q400 last year. China is going forward with a 90-seat turbo-prop and India is also interested in joining the fray.
ATR currently holds a 59% share of the future orders, options and Letters of Intents backlog.
Bombardier made some significant progress last year, signing large LOIs with Russia for 100 and with China. These should be converted to firm orders this year, but even so, ATR has a lopsided market lead.
Boeing Stratoliner: Boeing has a short profile of the B307 Stratoliner, the first pressurized airliner. It’s the 75th anniversary of this important airliner. The last surviving example is on display at the Steven Udvar-Hazy Museum at Washington Dulles Airport.
Boeing 777 model: It’s been over the Internet already but in case you’ve missed this, a 1/60th, highly detailed model of the Boeing 777 was carved out of manila folders. This is an amazing piece of artistry.
British Air’s exit from dedicated cargo fuels doubt over 747-8F future
The decision by British Airways to exit the dedicated freighter business by returning three Boeing 747-8Fs to ACMI operator Atlas Air demonstrates the continued weakness of the global air freight market.
Boeing is counting on the global freight market to improve this year, and with it, sales of the 747-8F. We’re not so sanguine.
Even if the global freight market improves, we are skeptical that Boeing will see much in the way of orders to boost this faltering program. There remain a large number of 747-400Fs in the desert that can be recalled to service at a cost a lot less than a new-build 747-8F will cost. Likewise, there are still a fair number of 747-400 passenger aircraft in service and in storage ready for conversion.
We recognize that the 747-8F is more fuel efficient and maintenance is less than the 744s, but the much higher capital cost demands high utilization and risks greater financial impacts if the airplane has to be parked during a downturn.
Boeing’s 777F is smaller, less costly and uses less fuel than the 747-8F. While it also carries less, it can be argued that the 777F is “right-sizing” aircraft for the changing market conditions. But Boeing is struggling even with this model. The company sold just one nine 777Fs since late 2011.
Boeing plans a 777-8F, but this will not enter service until well after the 747-8 program is likely terminated.
Airbus hasn’t had much success for its new-build A330-200F. Some customers proved to be unable to take delivery, while another—Intrepid Aviation—changed its entire order of 20 for the passenger version and up-gauging these to the A330-300 in almost all cases. The cost-benefit analysis by some concluded the price of the new-build A330F was too high for the benefit gained through economic efficiencies and payload. Airbus announced a small sale at the Dubai Air Show, but otherwise has seen a steady decline in the backlog over and above deliveries.
Aside from the continued economic weakness and a surplus of available used equipment, the belly cargo-carrying capability of the Boeing 777-300ER and the Airbus A330 enables shippers to take advantage of these aircraft for many flights. Interestingly, when Boeing prepared to ship all the equipment and repair components around the global for its 787 battery repairs, it used belly-freight capacity, not dedicated main-deck freighters.
The proliferation of 777s, A330s and the forthcoming A350 and the 777X may well further spell the demise of the 747-8F as nothing more than a niche aircraft based largely on sales already completed. We certainly expect to see a few more sales, but nothing consequential.
Odds and Ends: CSeries timeline; KC-46A roll-out; China’s new airplane
CSeries timeline: Bombardier last week announced a third delay in the CSeries program, this time for as much as a year.
This probably should have been expected. BBD originally planned a five year period between program launch and entry-into-service. As we saw with the Boeing 787, launched with a four year timeline, even five years was too ambitious.
CSeries Timeline. Leeham Co Chart
The EIS period for the 787 turned out to be the standard seven years, almost eight–and even then, the EIS was anything but smooth.
Airbus’ launch-to-EIS for the final A350 version is somewhat more than eight years. Even though BBD is a sub-contractor on the 787 program and said it benefited from lessons learned, it’s clear officials were far too ambitious.
KC-46A roll-out: Boeing’s first tanker for the USAF based on the 767-200ER will roll out this summer. The Everett Herald has this story. The airplane is a somewhat revised 767-200ER called the 767-2C. In addition to upgrades with the airframe, the Pratt & Whitney PW4000 engines will have upgrades which improve fuel consumption.
China’s new airplane: China isn’t just developing the ARJ21, C919 and some military airplanes. It’s also developing the world’s largest amphibian.
Boeing notified supply chain: prepare for 52 737s per month
In a letter dated January 3, Kent Fisher, vice president of supplier management, set the date for going to 47/mo in July 2017. The year had previously been announced by Boeing. Fisher continued that demand is “sufficient” to take the “protection rate” to 52/mo “later in the decade.”
“Protection rate” means the Boeing and the suppliers need to protect the ability to increase to the desired rate in terms of tooling, machinery, parts, and their own suppliers. This notification isn’t as firm as announcing an actual production rate increase, but it’s pretty close.
Airbus, meanwhile, continues with construction of its Mobile (AL) plant, with a target operational date of next year. Initial production will be 2/mo, ramping up to 4/mo. The plant has the capacity of 8/mo. This means Airbus increases production of the A320 family to 44 in late 2015 or early 2016, then 46 later in 2016 and 48 to 50 thereafter.
The Airbus and Boeing production rates dwarf those of Bombardier, which is challenging the Big Two OEMs at the lower end of the 100-220 seat sector with the 110-145 seat CSeries, and Embraer, which produces the 100-122 seat E-190/195 E1 today and which is offering the 132 seat E-195 E2 for delivery beginning in 2018.
Airbus’ factories are in Hamburg, Toulouse, Tianjin and from next year, Mobile. Hamburg and Toulouse are currently producing 38 A320 family members a month, weighted toward the latter, and Tianjin is at 4/mo. Tianjin and Mobile have the capacity of 8/mo each; we don’t know the total capacity of the Hamburg and Toulouse plants but are told these are at capacity; Airbus declined comment. This means Airbus has the capacity to go to 54 A320s/mo among the four plants after Mobile is fully operational.
Boeing has the capacity for 63 737s a month at its single Renton (WA) factory. Embraer has the capacity for 17 E-Jets a month. Bombardier plans a capacity of 20/mo for the CSeries.
Odds and Ends: CSeries EIS rescheduled, new deal announced; Airbus seeks unprecedented ETOPS rule
New CSeries EIS: Bombardier today announced a new delay in the entry-into-service of its CSeries, confirming what we reported Monday. BBD now says EIs will be in the “second half” of 2015, compared with the September 2014 planned EIS. We forecast a 6-9 month delay, so this now is a 9-15 month additional delay.
BBD’s statement: “The CS100 aircraft’s entry-into-service is now scheduled for the second half of 2015 and will be followed by the CS300 aircraft’s entry-into-service approximately six months afterwards.
“We are taking the required time to ensure a flawless entry-into-service. We are very pleased that no major design changes have been identified, this gives us confidence that we will meet our performance targets,” said Mike Arcamone, President, Bombardier Commercial Aircraft. “While the process has taken more time than we had expected, our suppliers are aligned with the program’s schedule and together, we will continue to work closely to move the program steadily forward. With the first flight of flight test vehicle 2 (FTV2) successfully completed on January 3, 2014, the CSeries aircraft program will continue to gain traction over the coming months.”
Below is what we published Monday.
We’re now looking at an 18-27 month delay for the originally planned EIS of December 2013.
Update: BBD tells us the the “software maturity” is behind the rescheduling. Basically, this means that all the various software systems have to completely and correctly talk to each other and avoid the issues that “have affected our competitors.” BBD declined to name the specific affected systems nor the suppliers, instead saying that this is a Bombardier “team” project and that the “team” is on board with the new timeline.
In addition, Bombardier and a Middle East airline announced an order for the CSeries.
Airbus seeks big ETOPS OK: The Wall Street Journal reports that Airbus is seeking regulatory approval for a 420 minute ETOPS for its A350. (Subscription may be required.) This means the airplane could fly seven hours on one engine if the other one fails. It opens trans-polar and trans-Antarctica route opportunities.
The Boeing 787 is restricted to 180 minute ETOPS. The Boeing 777 has 330 minute ETOPS.
Via Jon Ostrower, here’s an example of what works beyond 330 minute ETOPS.
Meanwhile, Boeing has begun high speed wind tunnel testing for the 777X.
Airbus v Boeing: The Seattle Times published a good graphic of the Airbus v Boeing order outcome for 2013.
Embraer continues and refines its strategy at the low-end of 100-149 seat sector
While Airbus and Boeing slug it out in the competition for the duopoly and Bombardier struggles to gain respect as an emerging mainline jetliner producer, Embraer continues and refines its strategy in the smaller-end of the jet market with its E-Jets, E-Jet “Plus” (our term) and the E-Jet E-2.
Source: Embraer, Reprinted with permission.
Embraer is broadening its offering from a maximum of 122 seats to a maximum of 132 and dropping its low-end E-170 from future variants. This brings the EMB family to 90-132 seats, following the decision to undertake an extreme makeover of the current E-175/190/195 line by adapting the Pratt & Whitney P1000 Geared Turbo Fan engine to a new wing design and upgrading a variety of systems in the E-Jet E2.
Source: Embraer. Reprinted with permission.
Airbus wins annual results, trails Boeing in deliveries
Airbus announced 1,619 gross orders for 2013–1,503 net orders–and a backlog of 5,559 aircraft. The company delivered 626 aircraft for the year. It ended the year with 51% of the market vs. Boeing.
Boeing won the delivery race but came in second in orders.
CEO Fabrice Bregier said that 10 years ago Airbus delivered only half the aircraft it did in 2013.
Bregier, at the annual press conference, says “re-engining [the A330] is always an option, but not only option,” reports Reuters. “[Airbus COO-Customers John] Leahy says Airbus could eventually add 1-2 rows to A350-800.”
Aviation Week reports the A350-800 EIS could be moved back a couple of years, also reporting it could be enlarged by two rows.
Bregier says A320 production could increase, reports say from the press conference. (We report in our e-mail distribution today what the production rates will be over the next few years–this will be published on this website next Monday.)