Leeham News and Analysis
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757, 737-900ER/9 MAX, A321 replacement should be the next new airplane
The Boeing 757 doesn’t have a true replacement. The Airbus 321neo and Boeing 737-9 fall short. The 9 MAX doesn’t measure up to the A321neo. Boeing has to move toward a program to replace the 757 and the 737-9.
With the launch of the Boeing 777X a given, what’s next in aircraft development?
John Leahy, COO-Customers of Airbus, gave a tantalizing hint at the ISTAT conference last week in Barcelona, Spain, when he said the OEM was studying a stretch of the 350-seat A350-1000 to fill the gap between it and the 525 A380 and to compete with the 400-seat 777-9. But then he tried to reel it back, saying there was “no story here,” according to Aviation Week.
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- KING5 (NBC Seattle) has this report about the 757 replacement.
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Then Boeing’s own Joe Ozimek, who heads sales for the 737 MAX, asked the lessor’s panel which aircraft do they want and CIT Aerospace president Jeff Knittel said a replacement for the Boeing 757, Tweeted AFM magazine.
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This is what we think will be the next big project.
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We reported in March 2012 that Boeing continued studies-dubbed the New Airplane Study, or NAS-of a replacement for the 757 even after launching the 737 MAX program and billing the 737-9 as the 757’s replacement.
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Except that it isn’t. Far from it.
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The 737-9 doesn’t have the range, the field performance or the payload of the 757. Neither does the Airbus A321neo, although it is much better than the 737-9.
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Entry-into-service for what we will dub the 757R is envisioned for 2025-2027, leaning toward the former.
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During the media briefings in advance of the Paris Air Show, Boeing acknowledged it saw a market for the 757 replacement. Although 1,049 757s were built in its production run ending in 2003, a solid sales effort for its era, we believe the market is far larger when you consider the general up-gauging that’s been happening and the sales of the A321ceo/neo and the 737-900/900ER/9. Through September, there have been 1,861 A321 family sales and 766 of the largest 737 family siblings sold. Combined with the 757 sales, this totals 3,676 programs sales for all three airplanes, excluding future sales.
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|
Aircraft |
757-200 |
757-300 |
A321ceo |
A321neo |
737-900 |
737-900ER |
737-9 |
|
Sales |
994 |
55 |
1377 |
484 |
52 |
530 |
184 |
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Although Boeing claims the 737-9 is a replacement for the 757, for some 80% of the missions, and while Boeing claims the 737-9 is better than the A321neo, sales figures tell the story. Furthermore, airlines we talk to universally tell us the A321neo is more capable than the 737-9.
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The combined sales figures demonstrate that Boeing is trailing badly in the 180-220 seat single-aisle sector, with a mere 29% share of the market and even worse with the 737-9 at just 27.5% of re-engined competition. To recapture this market, Boeing has to proceed with a new airplane.
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We believe a 2025 EIS means activity will begin to truly ramp up for decision-making as early as 2017. Eight years now is becoming the norm for new airplane development lead time.
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Development of the true 737 replacement will then flow out of development of the 757R. The first 737 MAX EIS, for the -8, is slated for July 2017. The -9 follows in 2018 and the -7 in 2019, assuming the only two customers (Southwest Airlines and WestJet) don’t swap these for larger models or proceed with another solution entirely.
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We believe the MAX, coming two years behind the Airbus neo family, will have a shorter production life than the neo, especially with the poor-selling and poorer-performing -9. A 10-11 year production run is probably a reasonable expectation.
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Airbus and Boeing each have said they expect a replacement for today’s single-aisle airplanes around 2030. We believe this may be advanced a few years to as early as 2027.
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The question is, which company goes first? We think Boeing has the greater need and greater motivation. We believe Boeing will be first off the mark.
Odds and Ends: Supply chain demands; Southwest hints?; Retrospective on A320/737 replacements
Supply chain demands: Earlier this week, we talked about the prospect of production wars as Airbus and Boeing ramp up over the next five years, combined with the new entrants and the new offerings from Bombardier and Embraer.
We noted that this will mean opportunity and risk for the supply chain. Ryan Murphy from Salem Partners has a long analysis the starts with the finishing sector but which goes beyond this to discuss the broader implications. It makes for an interesting read.
Southwest: Hints of things to come? Yesterday we wrote about Southwest Airlines and the demise of the Wright Amendment that restricts travel from Dallas Love Field. We suggested several routes that Southwest would launch from Love once the Amendment passes into history.
Here’s a display Southwest erected on its countdown to the end of the Wright Amendment. We think it hints at things to come. Going clockwise: Chicago, New York and Charlotte seem to be where the airplanes are going. Then Los Angeles and Salt Lake City seem to be implied destinations. But the last one? Boise, or some other obscure city?
Or are we reading too much into the placement of these airplanes?
Source: Dallas Morning News
Our thoughts:
Retrospective: We were looking at previous posts for some specific information and in the process re-read one about replacing the Airbus A320 and Boeing 737. The post dates from 2009. In light of subsequent events, it makes for interesting re-reading. We discuss the internal views of Airbus and Boeing about replacement or re-engining their aircraft and the engines from Pratt & Whitney and GE Aviation/CFM. We also touch on Boeing leaning toward not replacing the 777.
Retrospective, Part 2: Airchive has a nice set of historical looks at the development of the Boeing factory at Everett: Part One and Part Two.
Odds and Ends: Embraer reports weak quarter; MRJ FTV #1 assembly; JAL, ANA politics
Embraer’s Third Quarter: Embraer delivered fewer commercial airplanes in the third quarter than had been expected. The maker of E-Jets and the E-Jet E2 re-engined versions due beginning in 2018 listed its deliveries and backlog in its press release. Analysts expects 22 E-Jets would be delivered in the quarter. But the backlog is up 44% year-over-year, largely on the strength of the launch of the E2 (150 orders, 100 of which are for the smallest E-175 E2 and 25 each for the E-190/195 E2), and orders from Republic Airways Holdings and SkyWest Airlines for the current generation of E-Jets. The E-175 remains to most frequently-ordered airplane.
Although Embraer is expanding the size of the E-195-E2 by up to 12 seats, orders have been few. The E-190 has proved a better-selling model than the E-195.
Source: Embraer
Officials expect to have a healthy fourth quarter delivery stream.
Mitsubishi MRJ: Assembly for the first Mitsubishi MRJ Flight Test Vehicle (to borrow Bombardier’s term for the CSeries) is underway. The first delivery was originally planned for this year; it’s now planned for 2017, four years late. This rivals Boeing’s 787 and exceeds the Airbus A350 and as yet the CSeries.
JAL, ANA Politics: Reuters has an analysis about the suspicion politics may have been involved in the decision by Japan Airlines to buy the Airbus A350 and the pending order by ANA of an Airbus or Boeing airplane.
Odds and Ends: ANA, Airbus and Boeing; Era of the jumbo jet; Repo wars
ANA to stay with Boeing? After losing Japan Airlines to Airbus, analysts are split over whether ANA will also defect. Some say JAL’s order will give ANA cover to defect. Others say JAL’s order will increase the pressure on ANA to stay with Boeing. The Seattle Times this story. Our take: compare this with what happened following American Airlines’ order with Airbus. The Delta Air Lines competition was next, and Boeing was determined not to lose that competition–and it didn’t. Market talk says Boeing’s price to Delta was 10%-15% below Airbus’ offer, though this has never been confirmed. We understand there were other considerations besides costs. Regardless, both sides are going to go all-out to win.
SuperJumbo Era: The Financial Times has a story about whether the era of the super-jumbo (the Airbus A380 and the Boeing 747-8) is over (free registration required). Bloomberg has a story about the Boeing 777X being a jumbo killer.
Repo Wars: Here’s an departure from our usual coverage–tactics used to repossess an airplane from a delinquent airline. A decade ago, we were involved in a similar situation, planning the repossession of a Boeing 767-300ER from a South American airline. The lessor obtained a court order while we did some behind-the-scenes plotting to “arrest” the airplane at Miami. It was at the gate, full of passengers when the sheriff served the pilot with the court papers. Secrecy was imperative, as the story linked above references. Once the airplane was seized, the airline rescheduled a second 767 to stay on domestic service so the lessor couldn’t seize that airplane, too.
Low Cost Carriers dominate Top 10 single aisle customers at Airbus, Boeing
Low Cost Carriers (LCCs) dominate the backlog of the Top 10 single-aisle customers for Airbus and Boeing, data from the two OEMs show through August.
The importance of LCCs to the OEM backlogs has been increasing during the past decade, as has been the shift over the past 20 years from a dominance by US airlines to non-US carriers.
The backlog of LCCs today demonstrates the shift toward this sector as well as the shift toward non-US airlines.
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Boeing 737 (All Models) |
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Airbus A320 (All Models) |
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1 |
Southwest |
317 |
18% |
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1 |
Air Asia |
351 |
21% |
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2 |
Lion Air |
313 |
17% |
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2 |
Lion Air |
234 |
14% |
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3 |
American |
187 |
10% |
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3 |
Indigo |
196 |
11% |
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4 |
Ryanair |
175 |
10% |
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4 |
ILFC |
165 |
10% |
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5 |
United |
172 |
10% |
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5 |
Lufthansa |
146 |
9% |
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6 |
Norwegian |
162 |
9% |
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6 |
easyJet |
145 |
8% |
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7 |
Air Lease |
151 |
8% |
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7 |
American |
130 |
8% |
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8 |
GECAS |
120 |
7% |
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8 |
Qantas |
129 |
8% |
|
9 |
Delta |
100 |
6% |
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9 |
Spirit |
115 |
7% |
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10 |
GOL |
99 |
6% |
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10 |
Norwegian |
100 |
6% |
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August 2013 |
1,796 |
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August 2013 |
1,711 |
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LCC Total |
1,066 |
59% |
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LCC Total |
1,141 |
67% |
Sources: Airbus, Boeing
For Boeing, 59% of the Top 10 single-aisle order backlog is with LCCs–more than 1,000 737NGs and MAXes. Over at Airbus, the dominance of LCCs is even greater: 67% for all A320 family members, including ceos and neos.
As we reported last week, Asia’s LCC, Lion Air has more firm orders for single-aisle aircraft than any other customer: 547. Lion Air is said to be planning to place an order as early as year end for a “double-digit” number of Bombardier CSeries. The next closest: the USA’s Southwest Airlines, at 317 737s, and American Airlines, with a combined 317 from Airbus and Boeing.
Europe‘s Norwegian has a combined 262 single-aisles on order from the two OEMs.
The dominance of LCCs in the backlogs reflect the changing nature of the airline industry, both in terms of service demand but also with the increasing growth in developing nations, with major growth coming out of Asia–the domain of Lion Air and AirAsia.
It also reflects the strategy of flipping aircraft around the end of the maintenance holidays in six or seven years after delivery, which may be a decent strategy for the airline but one which hazards lease rates and residual values and a potential imbalance of supply-and-demand at that sixth or seventh year. With a much greater reliance on LCCs than Boeing, Airbus’ A320s are most at risk on the RVs and lease rates.
Airbus sequence shift of A350s coming, reports customer. Airbus says ‘no’
Airbus will likely shift the sequence of the entry-into-service of the A350, a customer tells us. Other sources report the same, with another customer calling the prospect of a shift “inevitable.”
A tantalizing clue may have come from Airbus CEO Fabrice Bregier. In Airbus’ own video of Bregier talking about his first ride on the A350, he remarks at 3:10 into the video that the next effort is for “the development of the next member of the family, the -1000.” The subtitles alter this to the next “challenge,” but Bregier’s words can clearly be heard. The Youtube post is below, which is the same as the video on the Airbus website.
[youtube=http://www.youtube.com/watch?v=J6yX-1ESX88&w=420&h=315]
Right now, only one A350-800 is scheduled for delivery in September 2016 (to lessor ILFC), according to one data base, with several more following in 2017–when the more popular A350-1000 is scheduled to enter service.
But Airbus’ media relations department says no re-sequence has been made.
“No change in sequence A350-900 EIS H2 2014, A350-800 EIS mid-2016 and A350-1000 mid-2017,” says a spokesperson.
“The video you refer to was intended first and foremost for internal audiences, and Fabrice was referring to the development effort for the -1000 being the next priority as the -800 is a shrink so less effort than the -1000.”
The -800 is a straight-forward derivative of the -900, with several frames removed from the fuselage. The -1000 has some changes to the wing and a slightly different engine fan diameter than the baseline -900.
Analyzing A350 backlog: special to Leeham News and Comment
Special to Leeham News and Comment:
Vinay Bhaskara of Aspire Aviation has provided the following analysis of the A350 XWB sales, on a variety of metrics, exclusively to us.
Analyzing the A350 Backlog
With the recent order for 31 A350s from Japan Airlines, we thought it would be instructive to take a look at the A350’s backlog. To date, the A350 has won 759 orders from 39 different customers (we are excluding Kingfisher Airlines in India and its order for five A350-800s – Kingfisher has been shut down for more than a year now, and it’s chances of re-starting appear bleak).
After slow sales in 2011 and 2012, 2013 has been an excellent rebound year for the A350, its second best behind 2007, with 182 orders to date. We expect South African Airways to place its delayed order for the A350s by the end of the year, and there are several upcoming fleet replacement decisions, most notably at ANA and Qantas, in which the A350 is a major player. The chart below shows A350 orders by year since it launched:
Digging further into the backlog, the following two charts discuss the geographic breakdown of the A350’s orders. Asia and the Middle East currently account for more than 55% of the program’s orders, and it has made limited inroads in the Americas relative to the 787.
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Odds and Ends: ANA to be battle royale; Boeing’s top salesman; Delta and the A380
All Nippon Airways Wide-Body Battle: Having lost a bombshell order to Airbus at Japan Airlines, the focus in Japan now turns to ANA, reports Reuters. Will Boeing shift work from Japan? Reuters has this story.
Boeing’s Top Salesman: Jon Ostrower has a very interesting and candid story about Boeing’s top airplane salesman, John Wojick, and the 787 program. Via Google News in a new Wall Street Journal format, it looks like it’s not behind the paywall.
Delta and the A380: Delta Air Lines flies the Boeing 747-400 but it doesn’t look like it will fly the Airbus A380. See this story by Motley Fool.