Leeham News and Analysis
There's more to real news than a news release.
Future for the 777, A330 as 777X nears launch, A350 nears EIS
With the launch of the Boeing 777X expected to be approved this month by the Boeing Board of Directors, followed by the public launch at the Dubai Air Show next month, the future sales of the in-production 777 will be closely watched by the industry as well as by Boeing itself.
It is conventional wisdom that sales will fall off as entry-into-service nears for the 777-9X, said to be “late this decade” by Boeing but more likely 2020 or even 2021, according to customers.
Sales of the Airbus A320ceo and Boeing 737NG families have, so far, held up surprisingly well despite the launch in 2010 of the A320neo and in 2011 of the 737 MAX families. Most of the neo and MAX orders have been combined with the current generation aircraft. This has been viewed as a way to keep the production lines full in advance of the EIS of the new airplanes.
Further, Airbus and Boeing plan an overlap of production of the two generations of about two years. This contrasts with Boeing’s decision to cease production of the 737-300/400/500 concurrent with the launch of production of the 737NG, a move Boeing today says was an arbitrary choice.
Boeing plans to begin building the MAX on a third line in its primary Renton (WA) factory before phasing out the NG. Airbus hasn’t specified how it plans to integrate the production of the ceo and neo.
What will happen for the current Airbus A330 and Boeing 777 lines as the A350 and 777X come on line?
Odds and Ends: Airbus to rethink A380 strategy, says Reuters; Boeing B-29
A380 Strategy: Airbus may rethink the near-term strategy of the A380, with an eye toward reducing production rates, reports Reuters. Earlier this week, Boeing announced a rate reduction for the 747-8. Very Large Aircraft (VLA) continue to be a tough sell. YTD, Airbus has net orders of minus three for its VLA, although a Memorandum of Understanding for 20 was signed at the Paris Air Show and is expected to be firmed up by year end and possibly at the Dubai Air Show next month.
Still, the VLA market is very tough. Boeing sold five 747-8s this year and had cancellations of five. Airbus hasn’t met its annual sales target for the A380 for a couple of years.
787-9 Video: In a change of pace, enjoy this video that is nothing but a relaxing visual.
[youtube=http://www.youtube.com/watch?v=eUZmTzPyR-A&w=560&h=315]
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Boeing B-29: Here’s a sight not seen much anymore: take off and landing of a B-29. As interesting as this is, the weather and the photography is pretty cool, too.
[youtube=http://www.youtube.com/watch?v=3-r8p97vPt0&w=560&h=315]
Odds and Ends: Repairing the Ethiopian 787; more on A350-1000 stretch; new RR engine study
Ethiopian 787: Dominic Gates at The Seattle Times has a detailed story about how Boeing is repairing the Ethiopian Airlines 787 damaged by a fire at London Heathrow Airport earlier this year. Boeing doesn’t comment for the story–nor for any others–but Gates’ detail in his piece makes for quite interesting reading.
Stretching the A350-1000: More on this topic from Aviation Week. Aside from the technical considerations for the airframe, Rolls-Royce would need to bump up the thrust of the engine to around 104,000 lbs, we’re told. Also: there is the matter of production. Airbus is considering a second production line for the A350, but no decision has been made.
Rolls-Royce studies new engines: Rolls-Royce is studying a new line of engines, according to this Bloomberg article.
Is tide ready to turn for CSeries?
CS100 first flight, September 16, 2013. Photo via Seattle Times.
Is the tide ready to turn for the Bombardier CSeries?
Following a nine month delay, the CS100 Flight Test Vehicle #1 took to the air September 16. It’s flown only twice since and has been undergoing ground vibration tests and more software upgrades. BBD is pretty mum about the testing program, which causes speculation about whether some issue emerged during the three flight tests. But we’re told by a source familiar with the program, but who is not with BBD, that BBD is being conservative in its pace, counting on the fact that it will eventually have seven FTVs to bring entry-into-service on time. A few Canadian aerospace analysts think EIS will slip to 1Q2015.
Then there are the orders, just 177 firm, which is more than those for the Airbus A319neo and the Boeing 737-7 MAX combined, but which the market perceives as low and a slow-selling program. Bombardier points out that the firm sales are about on par with other new airplane programs at this stage, but the market–dazzled by the thousands of orders placed for the NEO and MAX–won’t make these distinctions.
But it’s possible the tide is ready to turn for the CSeries. Here’s why.
- Potential customers have been waiting for the first flight and to see whether the program will be more or less on time with the new, implied schedule emanating from first flight. We believe a few more months have to pass before any conclusions are drawn on this score.
- Likewise, a few months have to pass before Bombardier and Pratt & Whitney will know whether the economic promises will in fact be achieved.
- There are some key sales campaigns for which decisions should be made in the coming months, both this year and into next, that if BBD wins will serve to build significant momentum.
- Airbus is running out of delivery slots for the entire A320 family. The VivaAerobus order announced October 21 includes deliveries beginning next year. The backlog goes to 2019-2020, and while John Leahy, COO-Customers, is adept at finding slots through juggling the skyline, there simply aren’t too many left mid-term. Bombardier is sold out into 2016 and is a better position to offer deliveries in quantity. This makes it difficult for Leahy to “buy” a deal, which he has done on several occasions, to under-price CSeries to a point where BBD can’t play in the sandbox.
- Boeing remains more focused on the 737-8/9 than on the 737-7, leaving BBD to largely fight its war against the diminishing Airbus and the forthcoming Embraer E-190/195 E2, the latter with a planned EIS of 2018, a good three years after CS100 enters service.
It will likely be next year before solid trends are noticeable. BBD retains its goal of reaching 300 firm orders and 20-30 customers by EIS, at least a year from now. We think this is easily achievable.
Update, Oct. 22: The Iraq-Business News reports that the government has approved the purchase of five CS300s at $40m each.
A350 program update: EIS date set (sort of); ambiguity over -800; talk of a -1000 stretch
Airbus provided a program update Monday to the international media. Here are links to initial stories.
Airchive: Airbus sees shift toward 250-300 seat aircraft. Airchive reproduces some of the illustrations Airbus presented. Airchive reports the planned EIS for September 2014 (as does the headline Aviation Week article below) but adds that EIS could slide to November or December. (We have it for early 2015.)
Aviation Week: September 2014 EIS targeted.
Bloomberg: Airbus will eventually seek certification with lithium batteries.
Bloomberg’s story has a couple of important points:
- While multiple -800 customers have moved to the longer A350-900, Airbus still has outstanding orders for 89 units and will build the plane if customers want it, Evrard said. He gave no indication when production of the -800 versions may begin. (Emphasis added.)
- Evrard said stretching the A350-1000 by adding panels to make the fuselage longer for additional passengers would be perfectly feasible from a technical point of view.“Stretching further is possible, there are no show-stoppers, but today it’s still in the pre-concept phase” he said.
On the first point, we previously reported that a change in production sequence was likely coming. An Airbus spokesperson denied it, but the comments above at the briefing certainly infer otherwise.
On the second point, Evrard’s comments about stretching the -1000 are, in our view, significant. We reported last night in our interview with Airbus Americas Chairman Allan McArtor that Airbus was looking at this hypothetical, though no internal proposal had been made. Still, it’s clear to us that Airbus is giving solid consideration and we predict that eventually will proceed.
The Airchive report of a market shift toward the 250-300 aircraft is also significant. With continued trends toward upgauging, this will soon shift to 300-350 and then to 350-400. The corollary is that the Very Large Aircraft sector continues to shrink.
Odds and Ends: Middle East carriers high on 777X; Airbus’ Japan ambitions; Low fare airlines
Boeing 777X: Reuters has this article on negotiations between Boeing and Etihad Airlines for the new 777X. Reuters reports that up to 30 777Xs could be ordered, along with a follow-on order for the 787. Emirates Airlines is expected to order between 75-100 777X. Qatar Airways will almost certainly place a 777X at some point.
The Boeing Board of Directors is expected to give the go-ahead for the 777X this month, with a public launch at the Dubai Air Show next month. Emirates is widely anticipated to place its order there, though its president, Tim Clark, has been quoted in the press that it’s possible he won’t be ready by the air show. Because this air show is in Dubai and the home base for Emirates, it’s quite possible the Etihad and potential Qatar orders would come outside the air show.
Lufthansa Airlines has already ordered the 777X, subject to formal program launch.
Airbus in Japan: Having achieved a major breakthrough with a large order for the A350 from Japan Airlines, Airbus has set some ambitious goals to increase its market share in this country, reports Bloomberg News.
Low Fare Airlines: Images and myths surround low fare airlines. We’ve written many times in the past that the USA’s Southwest Airlines, which built its image since its founding in 1971 at the low fare airline, often isn’t any more. (In fact, we were years ahead of the mainstream media in discovering this.) You can usually get lower fares on the legacy airlines, though bag fees and change fees, if you have check bags or change your flight, destroy the savings. If you don’t have to do either, it’s usually cheaper to fly the legacy airline than Southwest.
In Europe, Ryanair is viewed as the cheapest airline to fly. The base fare is ridiculously low but fees are imposed for everything except using the loo, though CEO Michael O’Leary would like to charge for this, too. This article calculates that in fact Ryanair isn’t the cheapest way to travel. The article rates the top 20 low fare carriers and Ryanair comes in #4.
Airbus’ McArtor on VLA, 777X, 757 replacement and Airbus future products
Airbus Americas Chairman Allan McArtor.
Allan McArtor believes there will always be a market for the Very Large Aircraft (VLA), but he’s not surprised Boeing cut the production rate of the 747-8.
McArtor, who as chairman of Airbus Americas, is hardly an unbiased observer. He says the 747-8 Intercontinental is uneconomic and the market for the 747-8F is weak. But he also acknowledged that the dearth of sales for the Airbus A380 has been a challenge.
Airbus has forecast 1,200-1,300 VLA-Passenger deliveries over a 20 year period every year since 2000, while Boeing has steadily reduced its forecast to just 540 VLAPs in its current forecast. Airbus believes it will capture 50% of the market, based on its forecast. In fact, it currently is capturing between 86%-90% of the sales.
Each forecasts several hundred more VLA-Freighter deliveries during the next 20 years. Boeing currently holds a monopoly in the VLAF sector, but sales haven’t been on a pace to meet either company’s forecast, nor have sales of the A380 remotely maintained a pace that suggests Airbus will meet its own forecast, without dramatically adjusting both the total market and its market share expectations.
In an interview with Leeham News, McArtor maintained there will “always” be a demand for the VLA. He acknowledged that one can quibble with the forecast or the timing, but airport constraints and growing markets between key cities, such as London-Tokyo, London-New York, Paris-Tokyo or New York and similar segments, will demand a VLAP.
Airbus so far this year has has a net order for the A380 of minus three, but it signed a Memorandum of Understanding for 20 from specialty lessor Doric during the Paris Air Show. This is expected to be firmed up before the end of the year, potentially at the Dubai Air Show.
Boeing is also expected to make a splash at Dubai with the highly anticipated public launch of the 777X, with a large order from Emirates Airlines. The airplane, with a new composite wing, new engines, systems upgrades and cabin modifications, will come in a 350-seat 777-8 and a 407-seat 777-9. The 777-8 directly competes with the Airbus A350-1000. The 777-9 doesn’t have an Airbus competitor and at nominally 407 seats falls just within the VLA sector, which begins at 400 seats.
Odds and Ends: Repairs begin on Ethiopian 787; WTO appeals; CSeries update
Ethiopian 787: Remember that Boeing 787 fire at London Heathrow Airport some months back? It seems that Ethiopian Airlines, the owner, and Boeing, have finally reached agreement on how to fix the airplane–but nobody is saying how, according to Steve Wilhelm at the Puget Sound Business Journal.
WTO Airbus/Boeing: In case anyone was wondering what’s happened to the cross-appeals of the World Trade Organization findings that Airbus and Boeing received illegal subsidies, it seems the USA isn’t the only place where budget constraints have bollixed things up. The appeals are delayed by budget shortfalls at the WTO.
CSeries Update: In case you’ve been wondering about the Bombardier CSeries test program–the plane has flown only three times since first flight Sept. 16–BBD just posted this YouTube with an update.
[youtube=http://www.youtube.com/watch?v=JwkhQDDEgdw&w=420&h=315]
We understand that the long run of rainy weather in advance of the first flight (delayed by a week because of the weather) meant that some of the testing that had been expected in advance of the flight resumed after the flight.
Flight Global has this short story.