Leeham News and Analysis
There's more to real news than a news release.
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.
Odds and Ends: easyJet’s ‘neutral’ engine; Airbus, Boeing futures in Puget Sound
easyJet’s ‘neutral’ engine: We were amused at the Airbus photo release concerning easyJet firming up its orders for 100 A320neos, announced at the Paris Air Show. In the past, aviation geeks scrutinized the photos to see what engines were depicted to gain a clue if an engine order wasn’t announced with the airframe order. With the easyJet photo release, Airbus entitled it, Airbus “A320neo easyJet Neutral engines.”
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Airbus in Puget Sound: Next week the Pacific Northwest Aerospace Alliance and the Washington Department of Commerce are hosting the first Airbus suppliers fair here in the State.
- This is something near to our heart. We’ve been working on getting Airbus here for a suppliers fair since 2009 as part of the “Beyond Boeing” strategy we outlined in an October 2009 speech at a conference in Spokane (WA). When we began consulting to the Washington Department of Commerce the following year, Commerce (which previously had expressed interest) also took up the cause. The whole thing fell apart at the height of the vitriolic USAF tanker competition, when the Washington Congressional delegation became so political about the affair. Since then, Commerce and the Pacific Northwest Aerospace Alliance took up the cause and next week is the culmination of this effort. According to the State, 40 percent of the Washington suppliers it surveyed already serve Airbus, and the State is the Number 2 supplier in the US to Airbus by company count. Airbus wants to increase its US dollar-based footprint and is even talking about opening an engineering center in Washington during the next 10 years.
- The Puget Sound Business Journal article linked above has several links within it with more background.
Boeing in Puget Sound: Meantime, the Puget Sound Business Journal has several articles about Boeing’s future here:
The South is Winning: Why Puget Sound keeps losing jobs
The South is Winning: New composites could hasten drift
The south is Winning: Could Washington become a Right-to-Work State?
- In this one, we note that the unions “saved Boeing’s ass” during the 747-8 and 787 debacles but if Washington wants to truly be competitive with the South, it needs to become a right-to-work state. Fat chance.
There is also this editorial comment from The Everett Herald.
Fuel burn A320 v 737
While on our SAS flight from Longyearbyen to Oslo, we browsed the SAS magazine airplane descriptions and it contained fuel burn per seat in litres for each fleet type.
SAS operates the 319/320/321 and 737-600/700/800. Seating is as follows:
A319: 141
737-700: 141
A320: 168
738: 186
SAS reports a mere 0.001 difference in fuel burn per seat per kilometer in litres in favor of Boeing in each case–despite the 738 having 18 more seats, in which case the difference could be expected to be much greater.
We found the data to be quite illuminating.
Fuel burn per seat per km, in litres:
A319: 0.033
737-700: 0.032
A320: 0.029
738: 0.028
Airbus comes up for air, responds to Boeing’s Form 41 reliance
Airbus came up for air from the Paris Air Show and provided this response on the DOT Form 41 debate. Readers can now compare closely Boeing’s response to our queries with the Airbus response and draw their own conclusions. As with Boeing, we print their verbatim replies to our questions.
DOT form 41 Maintenance cost comparison
Boeing uses F41 data of the period 2004 to 2011 to demonstrate lower maintenance cost of the 737NG compared to the A320. Without debating about the relevancy of F41 data for aircraft maintenance performance and the “correctness” of the data, let’s have a look at the reported F41 data from the point in time when the A320 entered the US market (1991).
We see why Boeing is focusing on the 2004 to 2011 period, the reported data are at the first glance favourable for the 737NG.
However, the NG entered in the market in 1998, seven year later than the A320, hence at any point in time the graph compares aircraft with at least a seven year age difference. Is this a “like for like” comparison?
Let’s just shift the 737NG curve to the left, starting in the same year than the A320, in 1991:
The picture does now look quite different, but money over time does not have the same value and this is in the above graph penalising the NG.
To be fair the reported cost data need to be harmonised respecting the economic conditions. Let’s put all reported data in year 1991 economic condition:
At the time A320 entered the US market barely any MRO capacity was in place. This has changed over the years and from a certain point in time MROs started to make money with performing maintenance work on the A320. Competition started to take place between the MRO’s, which impacted the pricing of maintenance work in reducing the money spent for the operators. For the NG the maintenance market condition has not been the same. Due to the derivative nature of the NG to the 737 Classic a wide MRO base has been proposing maintenance work on the NG right form the entry into service in 1998.
The graph below illustrates this effect in showing the evolution of independent MROs in the US market.
Another fact leads to lower maintenance cost for the A320 compared to the NG. It is the solid structure, which has been fully fatigue tested during the certification of the aircraft. An advantage the NG does not have, because again due to the derivative nature of the NG compared to the Classic, no full fatigue test has been performed and certification of the airframe has been obtain by “grandfather rights”.
Some quotes from leading MRO’s illustrate the well maturing structure of the A320:
Conclusion:
· Instead of focusing on the “sweat spot” for the NG, data of the entire reporting period must be compared
· Comparing different fleet ages is not leading the sensible results
· Market forces e.g. competition have an impact on maintenance cost
The A320 airframe is better maturing than the NG and improvements on the A320 are showing tangible results.