Leeham News and Analysis
There's more to real news than a news release.
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.
Photo by Scott Hamilton
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.
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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.
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 Douglas 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.
Replacing Air Force One: will 747-8 production remain open, or can 777-300ER become AF One?
Bloomberg has this story about the prospect of replacing Air Force One “early in the next decade.” Aviation Week has this story as well. The Aviation Week story links to the Dayton Business Journal, and reports that the USAF wants a commercial derivative, four-engine airplane for delivery in 2021 or later. This description, of course, says “Boeing 747-8” without saying so.
The assumption is that Boeing will provide the 747-8I (Airbus already said it will not bid the A380), but the timing could make it problematic. At August 31, there was a backlog of just 53 8Is and 8Fs, or 30 months at the current production rate of 1.75 per month–to 2016. Boeing has had several dry spells for orders. The 8I isn’t selling well at all and the cargo market hasn’t recovered yet, suppressing sales for the 8F. How does Boeing keep the 747-8 production going until delivery of Air Force One replacements “early next decade”?
Boeing has a couple of 8I campaigns we’ve heard about, hoping for orders this year. These include British Airways and Lufthansa Airlines and a third airline we haven’t yet identified. Lufthansa is expected to announce a wide body order any day now. The publicly acknowledged competition has been between the Airbus A350 and a combination of the Boeing 787-10 and the yet-to-be-launched Boeing 777X. But the 787-10 entry-into-service is planned for 2018 and the 777-9X in around 2020, followed a year later by the 777-8X. Airbus is believed to have delivery slots earlier that either Boeing airplane.
So what would entice Lufthansa to buy Boeing with the later delivery slots? According to our market intelligence, Boeing has offered LH the 747-8I at steep discounts to serve as an interim airplane. This not only would keep LH in the Boeing camp but would help keep the 747-8 production line open. An order from the second of the three airlines would also be needed in this scenario to keep the line open. These orders would also enable Boeing to avoid another write-off for the 747-8 program, our market intelligence says.
But does Air Force One have to be a four-engine airplane? The Secret Service reportedly demanded such when seeking a replacement for the Boeing 707, but according to Wikipedia, the USAF specified a plane with at least three engines and 6,000 mile range. Air Force Ones (there are two of them). When the RFP for the new AF One was issued, in 1985, twin-engine, long haul airplanes with ETOPS were still early in their service, eliminating the prospect for the twin-engine Boeing 767. The Secret Service was said to want more than two engines for safety.
But today, twin-engine ETOPS airplanes and the engines are incredibly reliable. The Boeing 777-300ER has a dispatch reliability second to none as far as we can tell and the GE90 engines that power it are superb. Could the Secret Service and USAF accept a 777-300ER bid? (We doubt the Secret Service or the USAF would accept the new, unproven 9X as Air Force One.)
The 777 certainly doesn’t have the panache of the 747, but operationally there certainly is nothing wrong with the airplane and engines and there is no question about the line being open to 2020 or even somewhat beyond.
The Air Force also needs to replace the 747-200 that serves as the flying command post for the President and the top military brass. This is the white 747 that was spotted over Washington (DC) on 9/11/2001, the day America came under airborne attack by Al Qaeda. But the news articles don’t mention replacing this aircraft.