Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
Farnborough, Day 1: Orders, Price Calculator and other stuff
McNerney rejects “price war.” A quote from a Financial Times story (see below).
He rejected suggestions that a price war had broken out between Airbus and Boeing over the A320 Neo and 737 Max but confirmed the US manufacturer would woo some airline customers of its European rival.
Courtesy of Aspire Aviation, here is a summary of orders through Day 1:
Airbus
|
Date |
Customer |
Quantity |
Model |
Remarks |
|
9th July |
Arkia Israel Airlines |
4 |
A321neo |
Agreement |
Boeing
|
Date |
Customer |
Quantity |
Model |
Remarks |
|
9th July |
Air Lease Corp (ALC) |
60 |
737 MAX 8 |
Reconfirmation rights for 25 more |
|
9th July |
Air Lease Corp (ALC) |
15 |
737 MAX 9 |
|
Pratt & Whitney
|
Date |
Customer |
Quantity |
Model |
Remarks |
|
9th July |
IndiGo |
300 |
PW1100G-JM |
|
|
9th July |
CIT |
60 |
PW1100G-JM |
|
|
9th July |
Cebu Pacific |
60 |
PW1100G-JM |
For 30 firm A321neos |
|
9th July |
Norwegian Air Shuttle (NAS) |
100 |
PW1100G-JM |
MoU |
CFM
|
Date |
Customer |
Quantity |
Model |
Remarks |
|
9th July |
Air Lease Corp (ALC) |
150 |
CFM Leap-1B |
|
Embraer
|
Date |
Customer |
Quantity |
Model |
Remarks |
|
9th July |
Hebei Airlines |
5 |
E-190s |
Booked in Q2 backlog |
Reuters put together a handy-dandy thing to calculate airplane prices easily. These are list prices, of course.
Some stories of note:
United to announce big MAX order July 12
AirInsight is posting daily news and videos.
The Financial Times of London has a piece with Boeing’s Jim McNerney. (Free but limited registration required.) Here’s a relevant quote.
Boeing announced the 737 Max in August last year and Mr McNerney said that “in retrospect” the US manufacturer should have made its decision to proceed with a revamped version of its narrow-body workhorse, rather than a brand new aircraft, “six to nine months” earlier.
Farnborough underway with CFM press conference
Tweets from Saturday’s CFM press conference:
Bernie Baldwin @BernieBaldwin
#FARN12 #FIA12 @CFM_engines Part commonality between LEAP-1A and LEAP-1B very little.
CFM: 737 Max Leap-1B engine core has 10-stage 22:1 pressure ratio in the HPC. 1st 5 stages are blisks. Plans 5-stage LPT. #FIA12
Bernie Baldwin @BernieBaldwin
#FARN12 #FIA12 @CFM_engines doesn’t see a commercial use of open rotor technology in the thrust range where CFM sits now until about 2030.
Another shot from @CFM_engines: Each Leap-powered A320neo will have $3-$4M net present value advantage on 15yr term against A320neo w/PW1200
Bernie Baldwin @BernieBaldwin
#FARN12, #FIA12 @CFM_engines LEAP-1A/1C design freeze took place on 28 June 2012, drawings now being released. -1B freeze will be mid 2013.
Interesting: @CFM_engines predicts Leap-1A will beat PW1200 on MX by 50h/yr on A320neo. Also 4 fewer “fill-ups”. #FARN12 #FIA12
Looks like @CFM_engines expects CFM56 production to phase out completely by 2019, meaning no more A320neos & 737NGs. #FIA12 #FARN12
Here is a full story from The Wall Street Journal. Author Jon Ostrower also posted the following image on his Facebook account:
The mid-size, twin-aisle battle
The mid-size twin-aisle battle
While a plethora of new entrants are nipping at the heels of Airbus and Boeing in the single-aisle market, the battle in the twin-aisle segment is strictly between the two behemoths.
The two OEMs differ on the size of the market by a wide margin. Airbus, in its 2011 20-year Global Market Outlook, the most recent available, forecasts a need for 6,525 twin-aisle airplanes: 4,518 “small” twin aisles and 1,907 “large” twin-aisles. Boeing, which does not publicly distinguish this segment, forecast a need for 7,950 twin-aisles. This is in the 200-400 seat segment (Airbus uses 210-400 for its forecast).
Given their methodology differences in the total market forecast, both nonetheless come to the same market share—24%–of the mid-size, twin-aisle segment.
The line-up is:
Boeing’s twin-aisle product strategy provides better segment coverage than Airbus
Boeing’s airplane strategy has shifted its focus to twin-aisle aircraft with the decision to proceed with the 737 MAX, says Nicole Piasecki, vice president of Business Development & Strategic Integration for Boeing Commercial Airplanes.
BCA has some critical tasks and choices ahead:
- Complete the design and get into production the 787-9;
- Launch the 787-10; and
- Decide what to do to enhance the 777 to compete with the Airbus A350-1000.
Although launching the 787-10 is considered by most to be a foregone conclusion, it hasn’t happened yet. And although Boeing has been showing some reasonably detailed concepts around about the 777-8X, a 350-passenger replacement for the 777-300ER, and the 777-9X, a 407 passenger aircraft, neither concept is firm—and, according to one airline fleet planner, it’s not even clear Boeing will do much more than simply re-engine the current 777-300ER.
Nonetheless, Piasecki showed a group of reporters the Boeing product planning in a pre-Farnborough Air Show briefing that clearly demonstrates Boeing has better market segment coverage than Airbus today or potentially in the future. (Click to enlarge.)
No plateau on 737NG: Boeing
“There is no plateau in interest on the 737NG,” says Boeing’s Beverly Wyse, VP and GM of the stalwart program.
“Even though there are a lot of challenges in the industry, the growth, particularly in the single aisle market in emerging markets and Low Cost Carriers, continues to give us a lot of confidence the demand is out there. Even with the struggles in Europe, there seems to be a little tension between replacement demand and growth demand. We don’t see any pullback in the demand on the 737 at our current production rates or a weakness in demand as we transition to the MAX.”
Wyse gave this assessment during a briefing to the media in advance of the Farnborough Air Show. The briefings were embargoed until July 5.
“Basically we are full all the way through to the middle of 2016. We do have some capacity left in 2016 and 2017 prior to the introduction of the MAX,” she said. “We do have some NGs out in 2018 but that capacity is filling up. We still have customers coming in for NG and MAX four or five or six years out.”
She predicted there will be a two-three year transition period of NG and MAX overlap, though she prefers two years. Wyse acknowledged that the 737-based BBJ and P-8A Poseidon could further extend production of the NG even if passenger models are discontinued.
Odds and Ends: Coverage on Airbus’ Mobile move and other thoughts
Randy Tinseth, VPO of Marketing for Boeing, is always fast with the quip–via Flight Global’s Twitter: “Market is about product, people and customers, not the address on your business card.”
Mobile Press-Register: general overview.
Reuters: Unions aren’t happy–but guess what, it’s US unions.
Chicago Tribune: Boeing’s home-town paper has this about Boeing losing a tactical edge–according to Airbus.
The Economist: Slaps Boeing and Airbus for their continued bickering over trade. Hear, hear.
Airbus-Mobile press conference
Fabrice Bregier, CEO: Customers were asking, why don’t you come closer to us? Currently more than 200 aircraft a year for US, Canada. Capacity for more than 400. Expect to build A320neo to at least 2030.
Christian Scherer, head of strategy: An assembly line is not just an assembly line but a whole compound. 116 acres of industrial complex. Seven buildings. Shipped to deep sea port of Mobile and trucked to the facility. From shipment to roll-out, about 2 1/2 months. Expansion beyond 116 acres possible. It is pretty much a carbon copy of Europe. Reducing industrial risk by copying it.
Q&A
Scherer: This is limited to A320. We have negotiated option for land expansion, but no plans for that now. Could have support facilities.
Bregier: This is a strategy move first. We considered that despite procuring $12bn from suppliers in US, we needed to be visible. There is a wave of replacement aircraft needed, and we have the right product in A320neo and producing this in America will be an advantage. Our lines in Europe are competitive [but are costed in Euros]. We avoid transporting suppliers, engines to Europe for reimport to US; these will go directly to Mobile.
Scherer: Proximity to a very, very large market and international footprint for the company are strategic drivers. It is as simple as that.
Airbus official: More than half the value of A320 already comes from America (driven mostly by engines).
Alan McArtor, Chairman Airbus Americas: Typically there is a halo affect that will attract suppliers to the region.
Bregier: Right now struggling to achieve rate 42 in October this year due to supply chain. We need to first stabilize supply chain. First deliveries here in 2016. We know that if we could deliver much more than 42 NEOs a month from 2016, there is a huge potential. It’s premature to say we’ll ramp up beyond 42 a month but with NEO there is huge potential.
Bregier: Already have 220 Airbus engineers in Mobile.
Scherer: Incentives in excess of $100m.
Bregier: Euro-dollar exchange rate not a consideration to a long-term investment. Unions: every9one prefers to have investments in-country but we have invested $14bn Euros in Europe, so it’s time to invest in the US.
McArtor: Having an industrial citizenship in the US can’t hurt for future DOD contracts. It’s not the reason we’re doing it right now but the answer to the potential is yes.
Scherer: There are no plans to convert passenger-to-cargo planes here. If and when [our other facilities] have exhausted their capacity, then it would make sense to consider here.
Separate from the press conference, we asked about CEO and NEO production: CEO will be assembled first at Mobile.