Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- A350-1000 or 777-9? Part 3 April 25, 2024
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
Odds and Ends: Boeing’s next twin-aisle strategy; Lion Air/Airbus: you read it here first
Boeing’s next twin-aisle strategy: Aspire Aviation has this long article looking at when Boeing will launch the 787-10 and 777X.
Our thoughts on the topic: We are hearing EIS for the 787-10, as Aspire reports, will be 2018 or beyond and that EIS for the 777X will likely be 2020 or beyond. As always, the situation is fluid and things could change. Aspire’s projection of a formal 787-10 launch in June is timed, probably not so coincidentally, for the Paris Air Show. (Unlike the boring Farnborough Air Show, Paris already is shaping up as a prospectively exciting show. Bombardier announced first flight of the CSeries is now expected in June [before, during or after the Show?] and Airbus would like to fly the A350 before the show–something that will likely be a challenge.)
We know Boeing continues to wait as long as it can in hopes Airbus will commit to a final design of the A350-1000 before launching the 777X, but time may be running out unless Boeing is willing to extend the gap between EIS of the -1000 and EIS of the 777X.
A 2018 or later EIS of the 787-10 means Boeing will avoid the EIS of two airplanes (the MAX and the -10) simultaneously, which could be a lesson-learned from the 787/747-8 programs. Readers may recall that Jim Albaugh, former CEO of Boeing Commercial Airplanes, said Boeing would avoid this in the future after experiencing the problems of the two programs.
Perhaps, and this is speculation, extending the time between EIS of the 787-10 and the 777X is partly driven by the same concern.
Given program history, at least some Wall Street analysts we’ve talked with are already raising the prospect that the 737 MAX EIS (4Q2017) might slip. Why? They are concerned about the broadening design creep as well as development of the CFM LEAP-1B. Can they point to anything concrete? Not yet. Chalk the conversation up to Boeing’s poor performance on the 787 and 747-8 programs and the fact that there are still industrial issues with the 787 suppliers, according to the chatter.
You read it here first: Aviation Week reports Lion Air is considering Airbus A320s to supplement its Boeing 737 fleet. We reported this on September 24.
Comparing the 747-8I and the A380 after the advertising battle commenced
Notation: Aeroturbopower weighs in on the controversy with his usual data-driven analysis.
With the commencement of the advertising battle between Boeing and Airbus, it is useful to make some additional comparisons prepared by AirInsight.
Here is the offending Boeing ad that set off the ad wars. It’s a two-page spread and sorry, we couldn’t scan it into one advert. Click each image to englarge.
From AirInsight:
The 747-8I and A380 are quite different aircraft, and while some view them as direct competitors, they are more properly lone players in different segments of the VLA market. Nonetheless, an airline will likely evaluate both aircraft as it maps its growth strategy, and two carriers, Lufthansa and Korean Air, have chosen to fly both aircraft types for different route structures. Each of those airlines have indicated that the 747-8I fills a gap between their 300 seat aircraft and 525 seat A380 aircraft, and will deploy the aircraft appropriately to traffic demand and traffic growth in different markets.
While the two aircraft are quite different, they are still compared to each other and both aircraft mile and seat mile economics. Of course, in comparing these aircraft, seating configurations make quite a difference, and the two aircraft manufacturers utilize markedly different assumptions in that regard. Boeing indicates that standard 3-class seating configuration for its 747-8I is 467 seats, but Lufthansa is currently using 362 in its aircraft, compared with 334 in a 747-400, and 526 for its A380. Each of these layouts is oriented heavily towards premium class seating, an essential element for many carriers these days.
New battle breaks out between Airbus and Boeing–in advertising
A new battle has broken out between Airbus and Boeing, this time with a sharp (and perhaps unprecedented) advertisement by Airbus accusing Boeing of outright lying.
(Click to enlarge.)
We don’t remember ever seeing this direct assault by one of the Big Two OEMs on the other. We certainly recall advertisements in the debate over two engines (Boeing 777) vs four (A340)–but to call the competitor a liar like this? It’s new territory, at least in print.
Airbus has been calling Boeing a liar in conferences for its representations for years.
As regular readers of this column know, we’ve been especially skeptical of Boeing claims, based on conversations we’ve had with airlines that have analyzed the aircraft involved, and in some cases those which operate both fleet types. The neutral arbiters–these customers–universally tell us Boeing claims are exaggerated and that the costs between the two OEM’s narrow-body aircraft are about equal. The costs between the Boeing 747-8I and the A380 are also exaggerated by Boeing, these companies tell us.
Furthermore, we’ve cast doubt on Boeing’s reliance of US DOT Form 41 data (which in itself is distorted and unreliable) and a study in Europe that looks at data from 2006-2009, data that is clearly out of date.
At the same time, we’ve taken Airbus to task over its parameters in concluding the A330-300 is a better airplane economically than the forthcoming 787-9.
At ISTAT Europe in September, an official from Virgin Atlantic publicly challenged Boeing’s Randy Tinseth over economic data Tinseth presented comparing Boeing and Airbus aircraft. Tinseth, according to those present, merely responded that he stood by the numbers.
Bloomberg has this story on the controversy. Reuters has this story.
In a way, the entire fight is silly. No airline or lessor will buy Airbus or Boeing aircraft based on these sort of claims. The airlines run their own economic analysis and the lessors are more concerned about lease rates and residual values. The entire conference and advertising effort is for consumption by uninformed journalists, financiers and aviation geeks. Those who actually understand the nuances tend to dismiss the claims of either manufacturer (as we do) and run our own analysis or rely on the airlines and lessors for impartial information.
The market has spoken. Airbus currently has sold about 1,400-1,500 A320neos to Boeing’s 1,000 737 MAXes. Airbus also, in recent years, has sold more current-generation A320s than Boeing has sold 737NGs. For the Very Large Aircraft, Airbus has an 86% market share of passenger airplanes.
These statistics tell more than anything Airbus or Boeing manipulate.
Odds and Ends: A320 Sharklet tests better than forecast; Emirates and A350-1000
Airbus PhotoOdds and Ends: Bernstein: no 777X before 2020; Alaska, Frontier and Competition; A380 repair costs; Boeing labor challenges
No 777X before 2020: Bernstein Research, in a note issued today, says it doesn’t see delivery of the Boeing 777X before 2020. Also: on a recently completed trip to Asia, Bernstein wrote this:
There’s clearly huge demand for the 787. There was a lot of excitement about it, but Boeing was heavily promoting the 747-8, for which the company is certainly seeking more orders, with few orders for the passenger version and the air freight market being very weak. To date, the majority of orders for that airplane have been freighter orders. This is a relatively small program, but we think it is the most difficult within Boeing’s portfolio right now. …[Y]ou’re probably not going to see the growth that Boeing had once hoped for there. That’s certainly how we have been making assumptions, as well.
Alaska, Frontier and Competition: The Centre for Asia Pacific Aviation has this analysis about Alaska and Frontier airlines, which aside from being a little geographically-challenged, is one of CAPA’s usual well-researched and thought-0ut looks at airlines. (In fairness, CAPA often strays from the Asia-Pacific, but we couldn’t resist the quip.) CAPA now actually calls itself Centre for Aviation.
A380 Repair Costs: Aviation Week has this article detailing the costs to Emirates Airlines for repairs to the Airbus A380 wing bracket cracks.
Boeing Labor Challenges: Boeing seems headed for war again with labor unions. Here’s an article from The Everett Herald with several links within it; one from MyNorthwest.com about SPEEA; and one from The Seattle Times about SPEEA.
Cargolux and Qatar: We posted some news about Cargolux and Qatar yesterday; The Seattle Times has this piece about the threat to the Boeing 747-8F from Cargolux’s problems.
Odds and Ends: Air France v Rolls-Royce for A350; Virgin America rejigs; Last A340s sold; Heading South with SPEEA
Air France v Rollsr-Royce: The saga continues-see this Bloomberg story. We understand there is more to it than just maintenance. Rolls wants AF to order the Trent 1000 for the 787 order, too.
Virgin America: This airline, headquartered in San Francisco, has been an airline in search of a business plan. Its operations don’t have a niche and didn’t fill a void (like jetBlue created and filled at NY-JFK). It’s lost hundreds of millions of dollars. And, finally, the losses have caught up. Bloomberg has this story about aircraft order deferrals and cancellations. The deferrals are Airbus A320neos (note to Alabama: VA was going to take the first neos from the new Airbus Mobile plant in 2016).
Virgin is seeking to restructure aircraft leases, according to two industry sources. Failing to do so could lead to a Chapter 11 filing, the sources say.
Last A340s Sold: The remaining two Airbus A340-500s, originally destined for ailing Kingfisher Airlines, have been sold.
SPEEA and Boeing: Things appear to be heading south with SPEEA. This could affect Boeing’s year-end push to deliver as many as 50 787s as well as the other 7-Series.
EU caves on ETS, for now–but says it didn’t really cave
The European Union caved in on implementing the carbon trading scheme known as ETS that would have taxed international airlines flying into Europe.
The EU claimed it didn’t really cave to international pressure (Financial Times, free registration required) but clearly it did. China was the first country to tell its airlines not to pay. This was followed by counties in the Middle East, India and the US Senate. But we’re going to give credit to China, not only as the leader but a country which adeptly uses its strength in ordering-or not-aircraft from Airbus or Boeing as political tools.
China put on hold ordering $14bn worth of Airbuses, notably 35 A330s. Airbus froze production rates pending this order–which means a loss of jobs.
As countries protesting the unilateral ETS scheme noted, such taxation should come from international agreements through the airline organization ICAO.
What is so annoying about the ETS scheme is that the taxes would go into the countries’ general fund and not be applied to environmental improvements.
Airbus, Boeing under price pressure
The Wall Street Journal has two articles about Airbus and Boeing being under price pressure. There is a third article by the WSJ about Airbus wanting its suppliers to consolidate.
The two companies have accused each other of engaging in a price was in the single-aisle category. Airbus also is dropping prices on the A330 vis-a-vis the 787, as we reported following an Airbus presentation last May at its Innovation Days in which it illustrated a $900,000 lease rate for the A330-300 vs a $1.2m rate for the 787-9. The A330 had a slightly higher list price than the 787-9 and the time (Boeing since has raised its list price and is now higher).