Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Teamsters, Boeing have a new contract April 29, 2025
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
A380 has “Lite” versions, too
The announcement by Airbus that it will offer Lite versions of the A330 and A350 families caused a much larger stir than we would have thought.
As we previously noted, Boeing will offer a Lite version of the 777-8, and this news was greeted with a yawn.
Airbus offers the A380 in Lite versions. So we still are perplexed about all the questions raised by some, and the high-profile media attention, the A330/350 announcement garnered.
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Dropping EADS for Airbus Group
The move to drop the acronym EADS for Airbus Group is being made out by some media to be a major step that better positions Airbus to compete with Boeing. This is a stretch.
The name change simply reflects reality: Airbus is the dominate member of the company. It also does away with the acronym, which many people mispronounced as “eeeds” rather than how it was supposed to be said (E-A-D-S, like I-B-M) that reflects an awkward name, European Aeronautic Defense and Space, a name so awkward it doesn’t readily appear on the EADS website.
A name change has really been thought about for years. On one trip to Toulouse, in 2009, we had a discussion then with Airbus personnel and the topic came up. We favored the Airbus name for the enterprise then–not that our opinion had anything to do with the action four years later :-).
More significant is the continued direction by CEO Tom Enders to move away from the government influence that first was instrumental in the growth of the enterprise but then became an albatross with jobs and prestige programs trumping business decisions (think A400M engine, the A380 [the product of 747 envy] and assembly locations). The volatile topic of government subsidies, necessary in the beginning and conceptually little different than the early days of US defense and commercial aviation, evolved into “reimbursable launch aid” that is unnecessary for a company like Airbus and which remains a target of international controversy when politics arise.
We welcome the change and the continued evolution of Airbus into a true commercial enterprise. Tom Enders will leave a legacy that will make him one of the most significant figures in global aerospace.
Meantime, EADS today announced its first half financial results.
Analyzing the Airbus plan to offer A350, A330 “Regional” aircraft
Note: The Blog by Javier takes an analytical look at the 20 year forecasts for the twin-engine, twin-aisle aircraft here.
Airbus will offer “Regional” versions of the A330-200/300 and the A350-900 that will reduced the Maximum Take Off Weight (MTOW), engine thrust ratings and range to better match most routes flown by airlines that don’t need the 8,500nm range and weights.
We revealed earlier that Boeing is planning a lighter weight 777-8, reducing the planned 9,400nm range to 8,500nm to more closely match the A350-900’s weight and specification. While the 777-8 “Lite” has substantially longer range and weight than the “A350-900R,” the concepts bring airplanes to the market that are more closely aligned with airline realities than with maximum performance.
The A330 originally was designed as a “regional” airliner, with ranges in the area of 4,000-5,000 miles. Since the airplanes entered service in the early 1990s, Airbus has undertaken a number of Performance Improvement Packages, bringing the A330-200 to a range of 7,200 miles and the A330-300 to around 6,000 miles. But Airbus also says that a majority of the flights of the aircraft are 2,000nm or less—“regional” service within Asia, Europe and the Middle East.
We live in Seattle and most of our international travel is to Europe. Most of this service was operated with the A330/340 and the Boeing 747-400; no Boeing 777s are used to Europe. Over the years, as Airbus improved the A330-300, carriers began using this sub-type for the first time on the routes, reflecting the range improvements in the aircraft. The A330 series is also now used across the Pacific from Seattle as range improved.
But the PIPs made the A330s “more” airplane than most airlines needed, and this is what is driving Airbus to return to the aircraft’s roots, so-to-speak.
The A350-900’s 8,500nm range is far more than is needed for many routes, as is the similar range of the Boeing 787-8 and 787-9, and is one reason Boeing settled on 7,000nm for the 787-10. At one time, Boeing planned a larger wing for the 787-10 to maintain the 8,500nm range of the smaller sisters, but more than a year ago said that airliners didn’t need or want the range. Initially Boeing planned a 6,750nm range but at the urging of Steven Udvar-Hazy, CEO of Air Lease Corp, and some key Middle East carriers, the range crept up slightly.
John Leahy, COO-Customers of Airbus, is quoted extensively in this Aviation Week article. An Airbus spokesman told us, “We have the A330 workhorse today. We’re looking at A330 as a regional optimized spec[ification] today and its part of a larger strategy. [The A350 and A330] aircraft will be the same physical hardware.
“In both cases there is a slight engine derate, optimizing capacity and payloads for regional routes. We aren’t permanently changing hardware. There will be a software change.”
The spokesman said “Airbus has products that will be at least as cost effective as anything Boeing puts out.”
A key part of this will be the lower capital cost/lease rate than the 787 family. Our assessment is that if capital costs were the same, the 787 would have a significant economic advantage. We further believe that the price-point difference has to be significantly lower for Airbus to have an economic advantage. With the A330 family, which has been amortized in the production system for years, there is considerable pricing flexibility but as fuel prices rise, Airbus will have greater challenges to offset the economic disadvantage with capital costs. The new A350’s economics are, according to our analysis, competitive but the lighter-weight 787s make the economic advantages of the larger-capacity A350-900 (to the 787-9) challenging.
|
Aircraft |
Today’s MTOW (Tonnes) |
Regional MTOW (Tonnes) |
Today’s Thrust (Lbs) |
Regional’s Thrust (Lbs) |
|
A330-200 |
242 |
205 |
64,000-68,000 |
|
|
A330-300 |
240 |
205 |
70,000 |
64,000-68,000 |
|
A350-900 |
268 |
250 |
84,000 |
75,000 |
Flights for the A330 will be up to six hours and up to eight for the A350-900. The lower MTOW will reduce landing fees.
“Operating flexibility full range can easily be restored with software and paperwork back to full range, so can go back to maximum flexibility if customer wants it,” Airbus says.
The changes for the Regional are all done via software and FADEC (the engine software) changes, or as Boeing’s Mike Bair said with respect to the 777-8 “Lite,” it amounts to “papering” the weight.
This permits the operator the flexibility of re-papering the weight to return to a long-range, maximum weight/payload aircraft.
Airbus views the competitive line up thusly:
- A330-200 vs 787-8
- A330-300 vs 787-9
- A350-900 vs 787-10
Because Airbus is focused on the A350-900 at this point, the spokesman said he has no information about offering a Regional aircraft for the A350-800 and -1000 sub-types.
The spokesman says the economics shape up this way:
- The economics of the A330-200 at standard max MTOW is 4% lower than 788 per trip;
- The A330-300 has 6.5% DOC vs 789; and
- The A350-900 has 4% COC per trip vs 781.
Note the distinction between Direct Operating Costs (DOC) and Cash Operating Costs (COC) Airbus claims.
We’ve asked Airbus for the assumptions that go into these figures; if we get them, we will update this post. Key to the assumptions are the fuel cost and lease rates. In 2011, Airbus used a fuel assumption of $2.50 per gallon, a range of 2,000nm and lease rates of $900,000/mo and $1.2m/mo for the A330-300 and the 787-9 in arguing the A333 contributed a net $113,000/mo to revenue more than the 789. We challenged the assumption of $2.50 fuel as unrealistic, unaware as we were of anywhere fuel could be purchased for this price. We also know that lessors were charging $1m/mo for the A333, which essentially made the calculation advanced by Airbus at $2.50 fuel a break-even proposition and a net negative to the 789 at $3.50 fuel.
Thus the assumptions used in reaching the above calculations are critical to know.
Airbus is emphasizing the greater passenger seat comfort in coach in its airplanes vs the narrower 787: 18 inches vs 17 inches in nine abreast.
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Boeing 787-9. Boeing photo
Odds and Ends: More on the A380; KC-30 boom still a problem
More on the A380: Bloomberg News has this story on Airbus’ efforts to increase sales of the A380, focusing on selling it with increased seating.
KC-30 Boom: Airbus Military still has problems with the refueling boom on its KC-30, some two years after delivery to Australia. Long-time Readers will recall that Airbus’ inexperience with designing the book was one key criticism by Boeing in the interminable KC-X tanker competition.
Airbus exec outlines goals for Washington State supply chain effort
Washington State suppliers who want to do business with Airbus don’t have to open new shops in Alabama or elsewhere globally to support the European company, its top supply official in the US said last week.
We sat down with David L. Williams, vice president of procurement for Airbus Americas, following presentations of the first Airbus Suppliers Fair in this state, in a conversation in which he outlined Airbus’ goals to increase the State’s supplier business with Airbus. The fair was the culmination of more than three years of efforts by the Pacific Northwest Aerospace Alliance (PNAA), the Washington State Department of Commerce and this writer to arrange a fair.
This is part of a Beyond Boeing aerospace strategy we outlined in October 2009 before the Governor’s Aerospace Summit in Spokane (WA), a plan adopted by Gov. Christine Gregoire and the Commerce Department. Spurred by Boeing’s pending decision to put the second 787 assembly line in South Carolina and a clear strategy by Boeing to compete future airplane programs and supporting work outside Washington, it was obvious the State had to move Beyond Boeing in order to maintain a healthy and growing aerospace industry.
It’s been gratifying to see Commerce, Gregoire and her successor Gov. Jay Inslee ramp up efforts to broaden Washington’s aerospace reliance on Boeing to a more global view.
Washington is Airbus’ No. 2 US supplier by companies count and No. 6 by dollar volume, and it’s within a few hundred thousand dollars of becoming #5. Williams told us that Airbus uses around 25 Tier 1 suppliers in Washington and many more Tier 2 and 3 suppliers.
“Washington State is a huge aerospace hub, so for us as we look at the opportunities, as we look at the suppliers, the technologies of interest and the R&T (research and technology) office, clearly Washington State is going to be one of those strong focuses,” Williams told us. “We’ve come here every year, six or seven times, at the annual PNAA conference. We were at the Aerospace Defense and Suppliers Summit last year and we’re here today.
“I think I’ve been a bit more to Washington State than to any other part of the country.”
Airbus has a goal of doubling its US dollar-based cost structure to mitigate against the Euro-Dollar exchange rate.
“[We] have the plan to increase the spend to $20bn. When I first came here, it was $10bn,” Williams says. The creation of the A320 family final assembly line in Mobile (AL) is part of this plan, but it hardly stops there. And while Mobile will become an aerospace cluster supporting the FAL, suppliers don’t have to locate there.
“There is a need for certain supplier requirements around the FAL…but there isn’t a need for the machine shop to be 50 yards away, there isn’t a need for the composites to be on site. The vision is there will be an aerospace park providing the needs of the final assembly line, and if suppliers are looking to open up a shop in Alabama, it is an option but it certainly isn’t a necessity,” Williams told us. “We wouldn’t expect to, and we’re not telling suppliers, that if you want to do business with Airbus you have to be in Alabama. We’re looking for suppliers in Washington State who can support the business globally.”
What kind of suppliers is Airbus looking for on its sojourn to Washington?
“Areas of interest changes over time,” Williams says. “Areas of opportunities could be a whole new program, it could be a neo program, it could be the end of a contract, it could be the natural end of a contract or it could be brought to a halt because of poor performance. So far we have been focusing on machining very strongly. We can look at composite. We’ve been doing some work around super-plastic forming. More recently we’ve been looking at…aerostructures supplies. Maybe not the huge aerostructures assemblies like Spirit Aerosystems on the A350, but significant aerostructures suppliers who could add value to the supply chain. We looked for commodities.”
Dual sourcing—a topic of some sensitivity to Boeing’s labor unions and to Washington State, who want all the jobs and companies that go with production—is an emerging goal of Airbus.
“As the [production] rates go up, we’ve come to the realization that, No. 1, the single source policy we’ve had maybe needs to be re-thinked, particularly on the single-aisle, obviously. No. 2, the dollarization drive is still huge,” Williams says. “We’ve still got some room to go globally to get to where we want to be. No. 3 is a final assembly line that brings in the opportunity for more local suppliers to support that final assembly line. Why not, if they are going to support rate four into Alabama, or a rate four into China or 10 into Europe? You get your dual sourcing and there is a geographic logic to it as well. You take the risk out of it and you get the dollarization as well. You get the three legs of the strategy.”
Airbus Americas Chairman Allan McArtor raised the prospect of opening an engineering center in Washington State within 10 years. This is good news for Boeing engineers and IT personnel who have been laid off by Boeing as the Chicago-based company moves some of these jobs out of Washington to non-union locations. Airbus has taken advantage of Boeing’s similar actions in Wichita (KS), and has a growing engineer center there. But the bad news is, don’t expect an Airbus engineering center here any time in the immediate future.
“There aren’t any plans I’m aware of to move in sooner than later,” Williams said.
A380 struggles despite Doric order at Paris Air Show
The surprise MOU announced at the Paris Air Show by specialty firm Doric Leasing for 20 Airbus A380s does little to build confidence in the aircraft’s long-term sales prospects.
Doric finances A380s for the airlines already operating them, such as Emirates and Singapore. There are several other special purpose companies that have also financed the behemoth, but no legacy operating lessor has ordered the airplane since International Lease Finance Corp. was a launch customer-and ILFC swapped these in favor of the more marketable A320 family.
The backlog, through June, of firm orders looks like this:
| Emirates | 55 |
| British | 12 |
| Etihad | 10 |
| Hong Kong Airways | 10 |
| Qatar | 10 |
| Qantas | 8 |
| Lufthansa | 7 |
| Asiana | 6 |
| Skymark | 6 |
| Virgin Atlantic | 6 |
| Kingfisher | 5 |
| Singapore | 5 |
| Air France | 4 |
| Korean Air | 4 |
| Transaero | 4 |
| Air Austral | 2 |
| Thai | 2 |
| VIP | 1 |
| 157 |
Source: Airbus, June 30, 2013
Virgin Atlantic continues to push out its A380 order, with entry-into-service now scheduled for 2018, and according to the Bloomberg article even this future date seems iffy.
Kingfisher’s order, of course, is as good as gone. So, probably, is the Hong Kong Airways order unless the Chinese government for some reason steps in and reassigns them to other carriers within China mainland. The government, as Readers will recall, previously curbed HKA’s growth.
One could argue about the quality of a couple of the other customers as well.
Airbus seeks to increase Washington State supply business; aims for 13 A350s/mo
It was the first time that Airbus specifically participated in an event in Washington State exclusively designed to mate the fierce rival to Boeing with suppliers in a meeting intended to increase business opportunities in Boeing’s back yard.
More than three years in the making, Airbus sent top supply chain officials to a suppliers fair organized by the Pacific Northwest Aerospace Alliance and the State Department of Commerce.
Before the event even started, one of the main arterials leading to the meeting was closed during the peak rush hour due to police activity. Wags suggested Boeing arranged the traffic disruption.
In fact, Boeing officials previously have said they support the idea that Washington’s supply chain sell to Airbus and other original equipment manufacturers–though they also admit they like the common suppliers to favor Boeing first. The cross-selling makes from stronger suppliers, Boeing says.
Boeing also had two people at the event listening in.
Here is an article from the Puget Sound Business Journal. We sat down with Airbus’ head of Americas procurement for Airbus and parent EADS for an exclusive interview, and we’ll have this report next week.
But one key piece of information to come out of the meeting that is critical to rival Boeing (as well as the supply chain) is that Airbus plans to produce the A350 at a rate of at least 13 per month. This confirms a long-reported rumor we’ve heard but which Airbus would never acknowledge. The confirmation came from presenter ElectroImpact, which is headquartered in Everett and has a major facility in Broughton, Wales, where it makes wings for the A380 and A350. The A350 facility was built with a capacity for 13 A350s per month.
Airbus has only acknowledged its production plans call for 10 per month within four years of entry-into-service (2H2014). Consideration to creating a second A350-1000 production line is underway and has been publicly promoted by John Leahy, COO Customers. No timeline for the decision has been specifically set, though it may come by year end.
Odds and Ends: Repairing the Ethiopian 787; the ELT theory
Repairing the 787: The prospect of repairing or writing off the 787 has gained fodder almost on the same level as speculation over the cause of the fire. There have been several articles, including this one yesterday in the Puget Sound Business Journal and this one today from a former NTSB member, writing in Forbes.
Throughout development of the 787, Boeing said repairing the composites was not something they were worried about. But most context related to ramp damage or other minor issues. Clearly, though, Boeing being Boeing, we are confident that engineering took a look at major fuselage damage potential.
In the extreme, Boeing can simply replace the entire aft end, which is depicted in this illustration.
Boeing famously replaced the nose section of a TWA 707 in 1969. The nose section of a BOAC 707 was undamaged and later grafted onto TWA 707-331 N776TW, which had been hijacked as flight 840. The nose was blown off in a Jordanian desert. The repaired aircraft flew for 10 years with TWA. The cost to repair was $4m, according to Wikipedia information (about $20m today).
Update, 9am PDT: Jon Proctor, in Reader Comments, says this BOAC angle is incorrect. He supplied the following photos that demonstrate the replacement nose was fresh from Boeing’s factory.
Jon Proctor photo.
Jon Proctor photo.
Qantas is famous for never having a hull loss, repairing damaged aircraft that others might scrap as beyond economical repair. The Airbus A380 involved in the high-profile QF34 engine explosion was out of service for a couple of years and cost something like $180m to fix, but it flies on today.
A Google search of damaged aircraft that have been repaired and returned to service shows a long list of aircraft that suffered what appears to be far greater damage than the Ethiopian aircraft. The difference, of course, is that the other aircraft were metal and this is composite.
The cost will go beyond the fuselage crown and related structure. The interior, with smoke damage, is toast. Who knows at this stage what damage has been done to systems, either from the fire, the fire-fighting or the knock-on effects.
ELT: Yesterday’s news that the Electronic Locator Transmitter is being looked at as a possible cause of the Heathrow Airport 787 fire predictably created a flurry of media activity over the implications of this prospect. The Wall Street Journal broke the news and a media frenzy ensued. WSJ posted an update late yesterday. We accessed through our subscription; Readers may try Google News to see if it is passed the pay-wall today.
The New York Times has this piece on the ELT and the potential role it may have had in the fire, either as a source or a propagator.
Flight Global has a piece that puts some good perspective on this prospect.
Washington on the move for new aerospace business
Washington State is showing signs of some real life in a slow ramp up to gain new aerospace business.
For years, nay, for decades, state politicians took Boeing for granted. Boeing officials complained and complained and complained about the need for better education, for smoother permitting processes, an onerous business climate and more. Officials warned over and over that they might move operations out of the state if things didn’t change.
When Boeing decided to move its corporate headquarters from Seattle to Chicago–with no notice to state officials it was even contemplating a move–politicians were shocked and called it a wake-up call.
Nothing happened. Officials hit the snooze button, turned over and went back to sleep.
Ethiopian 787 fire: the day after
Update, 12n PDT: The British Air Accident Investigation Board has issued its first press release. No apparent connection to the APU or batteries, but otherwise a standard we’re-working-on-it statement.
Unrelated to Ethiopian: Fascinating animations of the Asiana Flt 214 crash.
Original Post:
The origin of the Ethiopian Airlines Boeing 787 fire remains unclear the day after the event.
The New York Times has a recap that’s the best we found early Saturday.
As could be expected, we received a lot of media calls asking about the impact to the 787, to Boeing and some even about aviation safety in general.
We urged media to be cautious about drawing conclusions, other than from the photos it certainly doesn’t appear to have any connection to the previous battery fires because of the location of the fire burn-through on the Ethiopian airplane. The batteries are located far away from the burn area.
The possibility of the fire originating in the aft crew rest area was debunked when The Wall Street Journal reported Ethiopian didn’t configure its 787s with a crew rest area in this location.
Other areas quickly circulating: the aft galley, the air conditioning unit (the Financial Times reported a problem with this aircraft’s AC unit, complete with sparks, had been observed eight hours previously), a general electrical system fault, human error of some kind, and more.
It’s all speculation at this stage. And none of it leads anywhere.
Boeing stock was off $8 in the immediate wake of the news and closed down $5. In after-hours trading it was up 3 cents. Wall Street clearly feared another battery fire at first. But as the day went on and initial facts became clear, analysts seemed unfazed.
We urge media to proceed cautiously in its reporting.
This will clearly be a test for Boeing’s Commercial Aviation Services unit, known as CAS. We reported for CNN how CAS prepared to fan out to install the batter fix and to repair the fire-damaged JAL 787. This fire damage is far worse, and it puts to the test not only CAS’s ability to repair this airplane but the entire Boeing claim that a composite fuselage can be repaired from major damage.
Being first is sometimes a bitch.
Boeing has paid dearly for being first with the innovations associated with the 787, both in design and in production. The entire industry will learn these lessons, and Airbus with the A350 isn’t far behind with its composite airplane. Although Airbus has taken a more conservative approach with the A350 in a number of areas, one has to wonder what unknown unknowns will lurk over this airplane.
Some people, including us, have been mildly critical of Boeing for not proceeding with new, composite airplanes to replace the 737 and the 777. Boeing says it wants to “harvest” the technologies of the 787 before taking the next step of all-new airplanes. Perhaps harvesting lessons learned is equally important.
Did Boeing try to do too much too soon with the 787? Perhaps. But this latest incident may be little more than some human-induced fire or something originating with a vendor-supplier component that has nothing to do with the design or the systems of the 787.
Still, it’s Boeing’s name on the side of the airplane and undoubtedly some segment of the flying public will see the headlines and avoid the airplane. The public relations damage is real and, having been in the communications business, we feel for Boeing’s Corp Com department.