Leeham News and Analysis
There's more to real news than a news release.
Replacing the 747-400
Replacing the venerable Boeing 747-400s remaining in passenger service is a prime objective of Boeing and of Airbus. The business case for their respective 747-8Is and A380s rests in large part on this approach, though for Airbus the A380 business case also rests on passenger traffic doubling every 15 years and restricted airport slots.
Replacing the 747-400, in fact, doesn’t leave a lot of room. There are just 306 passenger models remaining in service, including VIPs and government uses, according to data provided Leeham News. There are another 23 747-400C (Combis) remaining in service.
Data at July 2013.
Fully 42 747-400 passenger models are in storage. Many 744 “Ps” have been converted to cargo airplanes, supplementing new-build 747-400Fs (above). The 744Ps in storage and in service are obvious candidates for conversion to freighters, and there are a number of 744Fs in storage ready to return to service when the slow-moving global cargo demand recovers–which has proved to be a maddening slow process.
Date as of July 2013
Airbus has been more successful selling its A380 to 747-400 operators than Boeing has in selling its 747-8I. Airbus has likewise been more successful at selling the aircraft to non-747-400 operators, though the customer quality in several cases was dodgy. Kingfisher Airlines has collapsed and it’s unlikely Hong Kong Airlines will take delivery of the A380, openly talking about swapping these orders for smaller aircraft.
And therein lies the rub.
Sources: Airbus, Boeing, Ascend at July 2013
Update: Typo on the Lufthansa remaining orders for A380s: 7, not 17.
China’s closed airspace hasn’t changed much in 20 years
China’s military continues to so control–and close airspace–in China that delays are rampant, this AP story reports. We’re reminded on the era when we were doing business in China, going there nine times in a 4 1/2 year period from December 1988-mid 1993.
Visiting a number of airlines there, one of which was operated by the military, along with CAAC, CASC and the McDonnell Douglas Shanghai factory, we were struck by the low aircraft utilization: only six or seven hours. Western standards were 10 or more. Even then, we were told, the military control of the skies was a key factor. The low utilization rate then clearly contributed to the need to buy more airplanes to meet traffic growth than was necessary. We haven’t seen any data on today’s utilization rate, but we have to believe this nexus remains.
Flying Chinese carriers then was pretty alarming at times. A ramp worker smoked while refueling a plane, with the refueling connection spraying fuel on the ramp. Carry-on baggage was in the aisle on take off. A person was in the lav on take off. We’ve read some stories in recent years that suggest not much has changed.
Back then, getting into China had limited options. We flew to Tokyo and pretty much had to take Air China into Beijing. A direct air route would go over Korea. We couldn’t go through North Korean air space and apparently flying over South Korean to China was then forbidden, so we had to route south around the Korean peninsula, adding a great deal of time to the flight.
The McDonnell Douglas Shanghai factory was primitive even by standards of the day then, well before robotics and moving production lines. The factory was producing one MD-80 a month and the planes were essentially hand-built. This antecedent might be why the MD-80-looking ARJ21 is having such difficulty. The factory drew so much power that parts of Shanghai went brown-out or black-out during the day, an issue presumably long-since overcome in the Shanghai power grid.
The MD-80 plant was supposed to be MDC’s “in” to gain market share. While selling something like 40 MD-80s/90s (if memory serves) to China via this plant, the venture clearly was a failure and the Chinese used the operation to learn a bit about commercial aviation. Embraer had an ERJ plant in China for the same purpose, and likewise came up short of its goal while the Chinese benefited more. The Airbus plant in Tianjin seems to have been more successful, but we don’t think it’s coincidence that the COMAC C919 looks a lot like the A320.
Odds and Ends: Boeing’s secret 777X plan; Airbus wins big with British Airways parent
Secret 777X Plan: The Seattle Times reports that Boeing has some secret planning underway for assembly options for the 777X. This involves increasing the automation on the assembly (and thereby reducing manpower) and increasing the production rate to 10 or 12 a month, according to Dominic Gates’ story. This rate is still below the ultimate target of 13/mo Airbus has in mind for the A350, up from the announced 10/mo. And Airbus is considering yet a second assembly line for the A350, though it is unclear if Line 2 would be for the incremental 3/mo to 13 or more than 13.
The increased automation described by The Times, and the manpower-automation trade off, sounds very similar conceptually to the robotic process Boeing uses to paint 777 wings. In pre-Paris Air Show briefings, Boeing addressed the manpower issue. What jobs were lost to painting were shifted elsewhere as production of the 777 ramped up to the current 8.3/mo. According to The Times article, increased production of the entire 777X line would offset jobs lost to automation.
IAG goes with Airbus: In another huge order, assuming all options are exercised, Airbus scored a big win with the parent of British Airways, Iberia and Spain’s Vueling (an LCC), IAG, for up to 220 A320ceo/neos. Bloomberg has the details.
Odds and Ends: SuperJet 100; cell phones on airplanes; 787 real-time monitoring; Crikey
SuperJet 100: This airplane, which is basically the old Dornier 728 jet design, was supposed to be Russia’s leap to western standards. It hasn’t worked out that way, according to this article.
Cell Phones on Airplanes: There continues a debate over whether cell phones really have to be turned off for take-off and landing. This finally explains the technical issues of the cell phone and other electronic devices.
787 Real Time Monitoring: NPR (the national public radio in the US) has this report about Boeing’s real-time monitoring of the worldwide 787 operations.
Crikey: The ever-direct (and cranky) Ben Sandilands weighs in on the Airbus-Boeing advertising tiff.
Boeing: ExIm needed so we can do R&D, not finance planes; how about dropping stock buybacks instead?
The Puget Sound Business Journal reports that a Boeing exec says the US Export-Import Bank is necessary to help finance Boeing aircraft so free cash flow can go toward R&D rather than financing customer orders.
Hmm. We think all the billions of dollars going to stock buybacks to pump “shareholder value” (aka the McDonnell Family and Harry Stonecipher) might be better spent on R&D.
Sarcasm aside, we agree with Boeing that the ExIm is needed. Republicans (who claim to be for business) continue to target ExIm funding as corporate welfare. True, ExIm is often characterized as “Boeing’s bank” since most funds support Boeing airplanes. But as we have opined several times before, the European Credit Agencies fund Airbus and if the ExIm is shut down, then Airbus gains a major advantage.