Leeham News and Analysis
There's more to real news than a news release.
Odds and Ends: Airbus’ 5th quarter; 777X RFP responses
Airbus’ 5th quarter: John Leahy, COO-Customers of Airbus, is so well known for announcing a whole bunch of orders at the company’s annual review press conference (January 13 this time) that Boeing dubbed it the “5th quarter,” and the quip has stuck. Aeroturbopower has a wrap up of how many orders could be announced at the 5th quarter.
Boeing, IAM Meet: Dominic Gates of The Seattle Times reports that Boeing and the IAM met for the first time since the 2-1 vote rejection November 13 of the contract offer in connection with the 777X site selection.
777X responses to RFP: The following news articles try to detail some of the responses by states to Boeing’s 777X site selection RFP:
California and another California
Missouri: The county votes to add $1.8bn in tax breaks to the State’s $1.7bn.
Washington: The State adds Spokane to the list of alternative sites, according to Glenn Farley at KING5 (NBC, Seattle). (No link available.)
New York Times: Losing 777X would start a death spiral for WA State.
On Tuesday, the day the RFPs were due to Boeing, the Washington Congressional delegation released a letter to Boeing CEO Jim McNerney urging that the 777X be assembled in the state. The letter is below the jump.
This follows an Open Letter to Boeing on December 6 from Snohomish County officials (Everett is in this county), published in The Everett Herald.
Audacity and hypocrisy: the Boeing 777X RFP
We received an email from a Reader, who works for Boeing, about the details that emerged last week of Boeing’s Request for Proposals for the site location for the 777X:
I went to your site today to see what you had on the leaked RFI, and I have to say the whining by your crowd of Airbus fanboys is just astounding. Given all of the support given to Airbus for the A380, with Hamburg filling in a protected wildlife sanctuary, giving billions of euros of infrastructure. Changing laws so they could snatch land for Airbus. The hypocrisy just makes me puke. Not one of your posters, nor you, even bother to look at what the over guys got. Nope, just bad, evil Boeing. You could do better, you know.
We replied to this Reader that shortly after the details emerged and we posted links to the newspapers that had them, our power went down for the next 16 hours. When it was restored, we had moved on to other things. The email prompted us to go back, look at the comments and ponder the Reader’s premise. Here is what we came up with:
Airbus, engine OEMs make the case for A340 future
Airbus held a summit December 4 for stakeholders in the A340 to explain how there continues to be life after production ended and despite being a four-engined airplane in a two-engine world.
Key to the future of this out-of-production airliner is increasing the capacity of the A340-600 to an exit-limited 475 seats and for Rolls-Royce to alter its Total Care engine maintenance Power-by-the-Hour terms and conditions to reduce costs.
Airlines, financiers, appraisers and the engine makers were invited by John Leahy, chief operating officer-Customers of Airbus. Engine providers CFM International, Rolls-Royce, Lufthansa Airlines and Hi Fly, a small European airline, made presentations in addition to Airbus.
Airbus produced 246 A340-200/300s and 131 A340-500/600s; 227 and 131 respectively are in operation or parked.
|
Status |
A340-200 |
A340-300 |
A340-500 |
A340-600 |
|
In Service |
19 |
175 |
20 |
90 |
|
Stored |
6 |
27 |
14 |
7 |
Airbus guaranteed the residual value on an unknown number, and has strong motivation to see these airplanes continue in service, according to one person familiar with the situation.
Could Boeing face new NLRB complaint over 777X site search?
Could Boeing face a new complaint with the National Labor Relations Board, this time over where the 777X assembly site will be placed? A Cornell University labor professor thinks it possible.
The union-backed publication In These Times wrote on November 25 that Boeing’s shopping the assembly site around following the rejection of a contract offer by IAM 751 November 13 is reminiscent of the 2009 decision to locate the second 787 assembly line in South Carolina in the aftermath of a 57-day751 strike in 2008. The 751 District filed a complaint with the NLRB that that decision was an illegal retaliation and the staff agreed, filing a formal complaint against Boeing and demanding that the assembly line be relocated to Everett (WA). The complaint was dismissed in 2011 when 751 and Boeing agreed to locate the 737 MAX line in Renton (WA) in exchange for a four year extension of the 2008 contract. The secret negotiations took place a year before the 2008 contract was to expire.
Odds and Ends: 787 software; Hazy on 777X; 787 reliability; A340 lemon; 777X won’t be built in WA: MO politician; Chinese war games
787 software: Aviation Week reports that continuing software issues bedevil the Boeing 787.
AvWeek also takes a closer look at Japan Airlines’ decision to take the 787 off certain routes due to the icing issues of the GEnx engines. Most incidents occurred on the 747-8 but one happened on the 787. The 747-8 also uses the GEnx engine.
Hazy on 777X: Steve Udvar-Hazy, CEO of Air Lease Corp and one of the most influential people in commercial aviation, offered his assessment of the 777X specifications in an interview with Aviation Week. He also commented on the future of the A350-800 and the prospect of an A350-1100.
787 reliability: Aviation Week also reports about Boeing’s efforts to improve the reliability of the 787.
A340 Lemon: Bloomberg News, tipped by our select e-newletter distribution yesterday, wrote this story about an Airbus summit to discuss the future of the A340 family in the secondary market. We’ll publish our e-newsletter for general readership with an expanded version next Monday in this column.
Boeing will nix WA for 777X: So says a Missouri politician. KOMO TV (ABC Seattle) ran a piece yesterday in which a Missouri politician said all indications they’ve had from Boeing is that the 777X won’t be built in Washington State. The clip is not on the KOMO website, however, but we saw it while watching the news.
Pacific War Games: “War is Boring,” a blog, ran a war game involving the current Chinese action declaring a defense identification zone in airspace between China and Japan. We’ve no clue over the quality of this blogger or the war game, but we were reminded that the Pentagon had war game scenarios that were important in the KC-X competition. This was one reason the Northrop Grumman-EADS KC-330 MRTT won the competition (later overturned)–because of the vast distances involved in the Pacific and the assumption that China may be successful in a conflict of what’s called Anti-Access, Access Denied (A2AD) that would have isolated US bases in Guam and Japan. The USAF concluded the EADS KC-330’s longer range vs Boeing’s KC-767, greater loiter time and greater refueling capacity was important to the selection.
Airbus, Boeing production backlogs stretch to late this decade, early next decade
Airbus and Boeing production backlogs stretch to late this decade and into the beginning of next decade for most of their commercial aircraft, based on today’s production rates.
We previously wrote about the waning sales of the 777 Classic and the A330. Some mainstream media subsequently examined 777 Classic sales but not the A330 sales.
Both OEMs will be challenged to meet intended production timelines for select currently in-production models.
- Airbus and Boeing officials each said they plan to build the A320ceo and 737NG families two years into the entry-into-service of the A320neo and 737 MAX families. Airbus’ ceo backlog appears to meet this desire, but the 737NG currently has a backlog that only matches the 2017 EIS of the 737 MAX.
- Airbus says it plans to produce the A330 into the 2020 decade (most statements suggest until about 2022).
- Boeing has a 2020 EIS for the new 777X program, but the backlog of the 777 Classic currently extends only to 2017.
- The USAF wants replacements for its 747-200 presidential fleet in 2021 but Boeing’s backlog for the 747-8 only extends to 2017.
The following chart is based on current backlogs reported by Airbus and Boeing in respective data charts; and it is based on the current production rates of each program. For the new airplane programs, the chart assumes the current production rate and does not take into account the stepped ramp-up for the A320neo, the 737 MAX, the A350 XWB or the 777X. For the latter two, production rates are assumed at the A350’s announce plan of 10/mo and the 777 Classic rate of 8.3/mo. The 787 rate is assumed at 10/mo, although the rate is not quite there yet.
Does 777X assembly site matter to airlines? Yes, up to a point; and a retrospective to 2009
As Boeing awaits responses to its Requests for Proposals from 15 sites around the US and possibly Japan, Washington State officials, company employees and other stakeholders fret that Boeing will choose someplace other than Everett (WA).
Everett has all the logical advantages: the 777 Classic is assembled here. There are vast, mature facilities here. There is an experienced workforce here. As we note in our previous post today, there are a lot of points to ponder when it comes to choosing a site.
But what about the airlines? Do they care where the airplane is assembled?
This isn’t entirely clear. Emirates Airlines and Qatar Airways said at the Dubai Air Show they want the airplane built at one location, in the US, not outsourced to a bunch of countries and industrial partners in the fashion of the Boeing 787–an industrial model that proved disastrous for Boeing and the customers.
But do they care whether the 777X is built at Everett, Boeing South Carolina or some other site? Emirates and Qatar didn’t say, at least publicly. Etihad Airlines, another launch customer for the 777X, hasn’t said anything publicly. The first customer for the X told us that what’s important to it is an accessible location for inspections–in other words, a location with good air service, which could be one-stop connecting service.
This would rule in any of the cities that have been mentioned publicly in Boeing’s RFP search. It would rule out a city like Moses Lake (WA), which has ambitions of becoming an aerospace cluster but which has no airline service. The closest major airport is Spokane (WA), a 90 minute drive. Sea-Tac International Airport is a three hour drive. Lufthansa seems unconcerned whether Everett or another site is the choice.
Lufthansa is also not a 787 customer, but officials are well aware of the issues and delays involved in the program. It seriously considered ordering the 787-10 but for route system operational requirements chose instead the Airbus A350-900. But for some 787 customers, assembly location does matter. We understand from our sources that some customers want their Dreamliners assembled in Everett, not Boeing South Carolina, where by most accounts slow production rates and quality control issues remain a challenge.
Retrospective to 2009
As we sort through the events surrounding the IAM 751, Boeing and the 777X, we went back and re-read some of the coverage from 2009 when Boeing put 787 Line 2 in Charleston. There are some similarities–notably Sen. Patty Murray’s involvement then and now–and a lot of differences. Here are links to our posts; be sure to click through to the links of newspaper coverage contained within our posts. Reading the stories linked have amazing relevance to recent events.
Boeing talks a sham: This story, in The Everett Herald, paints a much different picture than:
How South Carolina won the deal. Also: The click-through to The Everett Herald story from this link has a familiar ring to our “loyalty” post of November 21.
Back to today:
Stan Sorscher of SPEEA, the Boeing engineers’ union, has a guest column in The Huffington Post, taking Boeing to task (not a particular surprise) over the current site search and efforts to cut benefits with the IAM 751 “because they can.”
Danny Westneat, a columnist for The Seattle Times, wrote Sunday that perhaps Washington State should look beyond Boeing for aerospace. This isn’t new. We advocated this in October 2009 (just days before Boeing announced it would put the 787 Line 2 assembly in Charleston) at the Governor’s Aerospace Summit conference in Spokane (WA). Be sure to click on the link to the PPT presentation, too.
Odds and Ends: AirAsia on A330neo, A380; 777X specificiations; A380 engine PIPs
AirAsia on Airbus: AirAsia Group is one of Airbus’ largest customers, and its CEO Tony Fernandes is increasingly influential in the Asian sector. He’s also into car racing, often betting Virgin Group’s Richard Branson. This short interview details Fernandes’ view on the prospective A330neo–something Fernandes has been pushing for some time–and what he thinks Airbus should do with the A380.
Looking at the 777X: Aviation Week has a detailed look at the Boeing 777X “under the skin.” Fuel burn, engine thrust and general specifications are in the article. Aviation Week also has a series of videos from the Dubai Air Show here. Topics: 777X, Qatar Airways and A380 engines. On the latter, Emirates CEO Tim Clark suggests putting the new GE9X or Rolls-Royce Trent on the A380 to reduce fuel burn by 10%.