Inslee proposes extending 787 tax credits for 777X, but they were ruled illegal in WTO case

Washington Gov. Jay Inslee has proposed extending the state tax credits to Boeing as an incentive to land the assembly of the 777X.

The Puget Sound Business Journal has this report.

The Seattle Times is a bit more detailed.

Here is the Governor’s speech (17 pages) with the details.

Inslee predicted quick approval by the State Legislature, which returns to session in January.

The tax breaks were those granted to Boeing to land the assembly of what was then known as the 7E7, later renamed the 787.

There is one little issue, however. The 787 tax breaks were found to be illegal under World Trade Organization rules in the highly contentious international trade dispute between Airbus (the European Union) and Boeing (the US Trade Representative) over illegal subsidies.

The WTO found Airbus and Boeing each received illegal subsidies or tax breaks, and Boeing’s from Washington State were among those found to be illegal.

The US and EU each appealed the respective WTO rulings.

We asked the director of the Governor’s Office of Aerospace about this. His reply:

“The case is still being adjudicated and they are still in effect. Until something changes, the industry is still benefiting.”

Odds and Ends: CSeries concludes second flight; Boeing’s impact on WA State

CSeries second flight: It was two weeks and one day to the second flight of the Bombardier CSeries, quite a bit longer than the Boeing 787-9 and the Airbus A350. The lengthier time was subject to a fair amount of scrutiny by some observers.

We’re told that Flight Test Vehicle 1 was under-going software upgrades. The fly-by-wire aircraft had taken aloft in direct law flight mode. Some of the delay to first flight had to do with software upgrades.

Bombardier collected some noise data on the second flight.

Boeing’s impact on WA State: A new study outlines the impact of the current Boeing 777 family to Washington State, and it’s pretty big. The study was commissioned by the State to understand what needs to be done to win the assembly site for the 777X. A bi-partisan Legislative panel has been appointed by Gov. Jay Inslee as part of this effort.

Other stuff:

  • Long-time readers will remember that we’ve had the opportunity to take a couple of trips on the Trident submarines Alabama and Maryland. Our interest in submarines remains keen. So when we came across an article about the plans for the successor to the Ohio class SSBN, we decided to include it today. The features talk about fly-by-wire control, video monitoring instead of the periscope and a host of other whiz-bang modern technology.
  • Airbus Military handed over the first A400M to France. If we thought the development period of commercial airliners is tough these days, the A400M may set new standards for a military program: 30 years, according to Reuters. With the plans to end Boeing’s C-17 production in 2015, we hear Boeing is developing a smaller cargo/troop transport that will compete with the A400M and be a replacement for the smaller Lockheed Martin C-130.

Odds and Ends: Contrary views of Mulally; Cathay considers 420-seat 777-9X; Long haul flight log; a walk in the park

Contrary views of Mulally: With increasing media speculation about the prospect of Alan Mulally returning to Seattle to take the helm of Microsoft, a company in need of strong and creative leadership, two interesting and contrary views of the former CEO of Boeing Commercial Airplanes emerged.

The first we’ll put up is from Steve Wilhelm at the Puget Sound Business Journal, who wrote this piece recalling Mulally. The second is an old Business Week article that is considerably less flattering.

Mulally was passed over to head The Boeing Co. twice. After the second time, he left to become CEO of Ford Motor Co., saving it from bankruptcy (rivals GM and Chrysler didn’t avoid this fate), and remaking it into a profitable entity.

Many at Boeing believe that had Mulally stayed, many of the problems that emerged from the 787 program would have been avoided. This is, of course, a matter of speculation, but there is no getting around that his successor, Scott Carson, as a finance expert and salesman, didn’t have the engineering background necessary to cope with the emerging debacle of the 787 and 747-8 programs.

Microsoft has been stagnant under the tepid leadership of Steve Ballmer. Mulally, at 67, is old by CEO standards, but he certainly would shake things up at the stodgy company.

A retrospective New York Times article talks with Mulally and looks at Boeing in May 2006. Four months later, Mulally was CEO of Ford.

Cathay considers 420-seat 777-9X: Cathay Pacific Airways is considering becoming a launch customer for the Boeing 777X, reports Aspire Aviation. The configuration considered is a 420-seat version. Aspire cites an internal CX newsletter.

We noted on September 10 that Air Canada is jamming in 458 seats in a Boeing 777-300ER. The 777-9X is somewhat larger so it’s obvious CX won’t be using a similar seat pitch or business/first class size as Air Canada. But at 420 seats, this, too, is solidly within the Very Large Aircraft sector. (Boeing insists the 777-9X is not a VLA, however.)

As with the Air Canada -300ER, and as we have written many times, the -9X makes the 747-8I irrelevant and, in our view, represents the final nail in the coffin of the poor-selling 747-8I. The 9X in an Air Canada configuration probably would easily push 450 seats, becoming a clear threat to the Airbus A380. We think this is why Airbus began touting 11 abreast coach seating for the dual-deck airplane, adding 40 seats to the capacity. So far as we know, no airline has bought into this concept.

The VLA market was fragmenting already with the current generation of aircraft (777, A330, 787 and soon the A350). It will shrink further with the 777-9X.

Airbus had maintained a consistent 20-year forecast of about 1,200-1,300 VLA passenger models since it launched the A380 in 2000. Boeing has reduced its forecast to a mere 540 VLAPs. Airbus released its latest 20 year forecast on September 24 in a press conference in London that continues to predict the same number of VLAs over the next 20 years. We’re already 13 years into the original Airbus 20 year forecast for VLAs, and the figure hasn’t changed much since then (in fact, it’s gone up slightly).

As we wrote way back in July, the A380 continues to struggle.

Long Haul Flight Log: This is priceless. And accurate. Hat tip to Mary Kirby.

An Aside: We often take our Golden Retriever to Soaring Eagle Park in King County for a hike. One morning this week, we came across this scene of backlit morning sun, some fall colors and a spider web (center of the picture). This Blackberry photo doesn’t do the scene justice, but we thought we’d share this example of Mother Nature’s work anyway.

Spider Web

Photo by Scott Hamilton

NTSB issues report of Southwest Airlines fuselage tear incident; and other stuff

The National Transportation Safety Board issued its report of the 2011 in-flight fuselage rip in a Southwest Airlines Boeing 737-300. The flight made an emergency descent and landing at Yuma (AZ).

In other stuff:

  • CSeries Report: Bloomberg News has this video report interview with Bombardier’s Rob Dewar, who is in charge of the CSeries development.
  • Airbus: John Leahy is also interview by Bloomberg video, and offers a variety of views on traffic, the duopoly and emerging competitors. Note that Leahy makes a passing reference to the entry-into-service of the A350-900 at the “end” of 2014. This compares with information in the Ascend data base that the first delivery is scheduled for July 2014. In our post of EIS dates, we have the EIS in early 2015. It won’t take much for the EIS to slip from the end of next year to early the following year.
  • Gut bomb: We got such a kick out of this story that we had to include it. It’s about the Cinnabon, and it’s pure decadence.

Odds and Ends: RR, Airbus milestone; C919; first flight videos

Rolls-Royce, Airbus Milestone: Aviation Week reports that the two companies reached a design milestone for the engine on the A350-1000.

C919 nearing ‘critical’ stage: Flight Global reports that the COMAC C919, China’s bid to challenge Airbus and Boeing in the 150-210 seat sector, is nearing a critical design stage. COMAC also discusses some of the issues with its ARJ21 in the article.

First Flight Videos: No introductions needed.

[youtube=http://www.youtube.com/watch?v=eWtPA8v-xeQ&w=560&h=315]

[youtube=http://www.youtube.com/watch?v=y5SBzdG3upw&w=420&h=315]

[youtube=http://www.youtube.com/watch?v=r4HZRvwkiwk&w=420&h=315]

Airbus announces 68 A320s, A333 “Lite” at Chinese air show

Airbus loves air shows as platforms for announcements, and the current event in China is no exception.

Airbus announced orders for 68 A320ceos and neos and launched the A330-300 Lite program (though no orders yet). Reports suggest Airbus expects the first Lite orders from China, hence the location and announcement at the air show.

Zhejiang Long Airlines signed an MOU for 11 ceos and 9 neos. This is a start-up carrier.

Qingdao Airlines ordered five ceos and 18 neos.

BOC Aviation, the long-established leasing company owned by the Bank of China, placed an order for 12 neos and 13 ceos.

The A333 has a range of 3,000nm and will carry about 400 passengers. The weight is 200 tons and Airbus says it will burn 15% less fuel than the all-up, 6,100nm version. Aviation Week has some additional detail.

Separately, Bloomberg reports that Vietjet (Vietnam) will order up to 100 A320 family airplanes. The order could be announced today, Bloomberg says.

  • We’ve not commented on the Lufthansa Airlines order for Airbus A350-900s and Boeing 777-9s to any great extent because the deal was pretty straight-forward. But this Aviation Week article has a comment from the LH CEO saying it by-passed the 787-10 because its range (at 7,000nm) is to short. This is interesting in context of Boeing’s statements that the 787-10 will cover about 90% of the mission requirements of airlines. Just an observation.

Busy decade ahead for new, derivative airplane EIS dates

The next decade will see an extraordinary number of new and derivative airplanes entering service, beginning next year with the Boeing 787-9 and ending in 2022 with what we believe will be a replacement for the Airbus A330.

Bombardier’s CS100 is currently planned to enter service in around September next year, 12 months after its first flight on September 16, 2013, but we think EIS will slip to early 2015. Bombardier seems to be laying the groundwork for this in statements that it will reassess the EIS date in a few months.

Beginning with the 787-9, there is a steady stream of EIS dates–and a couple of end-production dates of current generation airplanes.

This chart captures the airplanes and their dates. Most dates are based on firm announcements from the OEMs, but we’ve adjusted some based on market intelligence and our own estimates.

EIS Dates

.

The arrows to certain points within years are not necessarily representative of specific timelines within that year. OEMs generally are not too specific about and EIS date, preferring to say “first half” or “second half” or some derivative of ambiguity. The only specific that we’re aware of is Boeing’s revised EIS of the 737 MAX, from 4Q2017 to July 2017. Although the Ascend data base is quite specific, we’ve not attempted to be highly specific in this chart. (Have we been specific enough about all this?)

Readers will note that we have the ARJ21 arrow going to a question mark. This airplane is already seven years late, and supposedly it’s going to enter service next year, but we aren’t banking on this at all. COMAC/AVIC, producer of the ARJ21, has a dismal record of meeting target dates. Accordingly, although COMAC now says the EIS for the C919 is 2017, we’ve got this in 2018–and even this is likely generous.

Read more

Odds and Ends: Airbus 20 year forecast; Boeing in WA State; water bombing a fire; Rolls-Royce’ Classic Airliners

Airbus forecast: Airbus announced its 20 year forecast update today in London (Boeing’s update came in advance of the Paris Air Show in July). Here are links to the update:

Reuters, via Fox News

The Star of Malaysia

Airbus summary and news release

Global Market Forecast video and document.

Overall demand increased, according to the forecast. The demand for the Very Large Aircraft sector remains flat at 1,300, a figure which generally has varied very little since Airbus first began forecasting this sector. Boeing’s forecast is sharply lower. We basically agree with Boeing’s number but believe Airbus will have the lion’s share of this sector.

Boeing does not categorize its 406-seat 777-9X as a VLA even though at this capacity it falls within the sector’s long-standing definition of >400 seats.

Boeing in Washington State: KUOW, one of the public radio stations here in the Seattle area, has an, in-depth report on Boeing in Washington State and the challenges the state has in keeping Boeing here. The text is here, along with the broadcast.

Michel Merluzeau, of Kirkland (WA’s) G2 Solutions consultcy, says the center of aerospace has shifted to the US Southeast from Washington State. We’re not sure the “center” has shifted, yet, but it’s certainly tilting that direction.

Putting out a fire: With a hat-tip to JC Hall of Esterline for bringing this to our attention, this video clip needs no explanation.

[youtube=http://www.youtube.com/watch?v=tfdJeB9k5DY&w=560&h=315]

Rolls-Royce: Aviation Week has this story about the future of Rolls-Royce in commercial aviation now that its joint venture with Pratt & Whitney (International Aero Engines) is over.

Classic Airliners: Loads of photos here.

Lufthansa splits wide-body order between Airbus and Boeing

Lufthansa Airlines announced its long-expected wide-body order, for 59 Airbus A350-900s and Boeing 777-9Xs.

Airbus won a firm order for 25 with options for 25 more. Boeing’s press release didn’t disclose options.

This is a big win for both companies in a hard-fought contest. LH had long said it expected to buy only from one company, and the split order means neither OEM came away empty handed. But Boeing did not get an order for the 787-10, which was part of the package being offered to LH. Nor did it receive an order for the 747-8I, which it had hoped to obtain as well.

USAF considers scrapping KC-10 in sequester

KC-10 scrapping: The US Air Force is considering scrapping the KC-10 aerial tanker fleet as a result of budget cutbacks in the sequester, The Army Times reports. This is stunning news, considering the seven year battle to recapitalize the Boeing KC-135 tanker fleet.

There are 59 KC-10s, based on the McDonnell Douglas DC-10. McDonnell DouglasĀ  merged with Boeing in 1997.

Boeing one day hopes to develop a tanker based on the 777-200LRF to replace the KC-10 and we expect Airbus Military will offer the A330 MRTT or even a tanker based on the A350, but we certainly didn’t expect any prospect of retiring the KC-10 prematurely.