Leeham News and Analysis
There's more to real news than a news release.
Boeing reveals some MAX details, at last
Boeing has, at long last, revealed some details about the 737 MAX, most of which have long been talked about in various media. Boeing is further testing new wingtip designs–with or without winglets? And while readers cite this articlein our previous post linking AirInsight about winglets in an effort to discredit the conclusions, the last paragraph is noteworthy:
For the forward-fit market, LaMoria sees a “very healthy” business for Boeing 737s for the “next 5-6 years”, but there is no guarantee the company will select APB blended winglets for the GE Leap-1B-powered 737 Max, set for entry into service 2017. “We have a lot of long-lead future-oriented plans in place in hopes of working with Boeing for many years to come,” says LaMoria. “But Max is still an open question.”
Separately, see this Aeroturbopower article.
Odds and Ends: ExIm Bank, 777X, Winglets, 737 MAX
ExIm Bank: The fight between Delta Air Lines and the ExIm Bank continues.
As readers know, Delta is behind the move to block ExIm Bank financings of wide-body airplanes to international customers. We’ve a link to a Wall Street Journal article that gives another take on the controversy, so we won’t repeat the details here (which we’ve written about on several occasions).
Then last week, ExIm approved a guarantee with the Brazilian airline GOL for CFM 56 engines on Boeing 737NGs, with a proviso that GOL send the engines to Delta TechOps (a subsidiary of DAL) for maintenance. This caused quite the kerfuffle, as noted in the Politico article (also linked below).
Finally (actually not, but it is for today’s post), there is an editorial in the Washington Post that Delta really likes and sent on to us. That link is also below.
- ExIm Bank: WSJ Article. Politico article. Washington Post Editorial.
Readers know that we think the effort to block the ExIm Bank is stupid. Delta takes pains to say it is not against the Bank, only against funding international wide-body sales that compete with US international air carriers (and most specifically, Delta).
We understand Delta’s position but largely disagree with it. Delta does have a point when healthy carriers like Emirates Airlines use below-market rate ExIm funding. But Delta is off the mark when it comes to objecting to the concept that ExIm supports funding to foreign companies that are financially unable to commercial lending without the government guarantee. This is precisely why ExIm was created in 1934–to boost US sales to these companies.
Nearly $12bn in Boeing airplane sales (most equipped with GE Engines) were backed by ExIm guarantees last year and it will probably be a similar number this year. It’s anybody’s guess how many of these sales would not have happened had ExIm not stepped up.
We fully concur that it makes little sense for carriers like Emirates to qualify for ExIm. And international parties agreed last year to set market rates for ExIm services (replacing below-market rates), beginning January 2013. Delta remains skeptical that this solves the problem and that it will take years to see the results. It’s correct on the latter point and cynical on the former.
Odds and Ends: 777-9X will create new class of airplane
Boeing 777X: The 777-8X, said to be a replacement for the 777-200, is really sized closer to the 777-300 and the 777-9X is a new class of airplane. See this story for details.
A330neo: It’s a story that won’t die: talk of re-engining the A330. But does it make sense? AirInsight completed a short report in which economics of the A330, the A330neo, the A350, the 787 and the 777 are evaluated. The results indicate that while the A330neo will have a major gain in fuel performance, and in fact will be almost equal to the 787-8 with substantially more seats for revenue opportunities, it still falls short of the 787-9 and the A350.
The A330neo, suggested by AirAsia, would mimic the minimum-change A320neo and thus be different in scope than the original A350 proposal, which was a re-engined, new-wing, new system version of the A330 (much as the 777X will be compared with the 777). Airbus says it’s not interested in the A330neo “for now” but consultant Michel Merluzeau predicted at a conference organized by the Pacific Northwest Aerospace Alliance that Airbus will eventually proceed with the airplane.
But are the gains good enough to make sense to proceed with the project? The report is offered for sale for a modest $99.
WTO, Airbus and Boeing: It’s another story that won’t die (and do we wish it would): The US vs the EU on the illegal subsidies to Airbus. The US has stepped up its pressure to have the EU decide that the assertions by the EU that it has complied with the WTO findings are inadequate. The US wants to impose $7bn-$10bn in sanctions annually. The EU says the US is full of it.
MAX v NEO: Guy Norris at Aviation Week did his own analysis of the fluff Airbus and Boeing put out about the MAX and NEO fuel efficiency. Just goes to show you can’t believe either party. That’s why we like to rely on the analysis of the customer. Lufthansa has analyzed the MAX and NEO and told us last year (and again at ISTAT last month) it concludes there is only a two percent difference (in Boeing’s favor) between MAX and NEO, which LH said both times simply retains today’s status quo between the two OEMs. (This also throws cold water on Boeing’s claim that the NG is 8% more efficient than today’s A320.)
Odds and Ends: 787 ramp up, ISTAT, Airbus, the price of oil in 1968
787 Ramp-Up: UBS Securities issued a research note Monday in which it reports that the 787 rate ramp-up to 10 per month–a goal Boeing’s to be by the end of 2013–has slipped to the first quarter of 2014.
- More from UBS: Supply chain ahead of Boeing: We believe the supply chain is still ahead of Boeing given significant rework and a high level of component deliveries in 2009-10, although a pick up is expected soon. We understand Boeing now plans to ramp from current 3.5/mo to 5/mo in Q4 (had been Q1), 7/mo in Q2 2013 (had been Q4 2012) and 10/mo in Q1 2014 (had been Q2 2013).
ISTAT: We’re at the annual ISTAT AGM in Phoenix and we’ll be reporting throughout the event odds and ends (adding to this post initially, separate posts later on). So come back often.
From ISTAT:
- 40% of Airbus 2011 deliveries were via lessors: 115 through direct sale to lessors, 95 via lessor purchase-leaseback
- Lessor sees overlapping production of 737 NG with MAX, A320neo with CEO due to limited availability of production slots because of massive early neo/MAX commitments.
- Congressional targeting Ex-Im Bank financing is short-sighted; cutting funding will harm Boeing, GE, Pratt & Whitney.
- Airbus has delivered 10 A330-200Fs, four operators now.
- Undercurrent buzz about 737MAX. Watch for developments in the next weeks and months.
- Airbus about to start final assembly line for A350.
- Flight tests of Trent XWB going well.
- Airbus now advertising A350-1000 at 369 passengers, up from 350.
From Twitter, via Phil LeBeau of CNBC: @Boeing says it has NOT changed its goal of building 10 Dreamliners per month by end of 2013.
Back to ISTAT:
- A321neo gains 600nm, A320neo gains 500nm.
- Average oil price 1968 non-inflation adjusted was $3.18bbl (that’s per barrel, not per gallon!).
- Airbus sold 448 A320ceo since launch of neo.
- Airbus competes 99% of the time against Boeing, not new entrants, for sales. Barriers to entry for a new aircraft type very high rather than changing fleet type.
Side trip to Ex-Im:
Take a read of this column on the Ex-Im Bank financing controversy.
Back to ISTAT:
Boeing….
- Mike Bair: We are in a march to put Airbus out of business in the twin-aisle space: 777 vs A340, 787 vs A330, 747-8 vs A380.
- 787-10 will have 50% lower operating costs than A340-600, Boeing’s Bair claims.
- 747-8I has turned out to be the darling of billionaires who have too much money–Bair.
- New revenue opportunities for long, thin routes validate the 787 like San Diego to Japan. Opening new markets and opportunities for customers.
- Boeing uses 162 seats in 737-800/8 vs A320ceo/neo 150 seat comparisons; Airbus uses 157 seats for the Boeing.
- Every engine/airframe combination has a sweet spot, a bucket’s flat area with 3-4 inches of fan diameter. In MAX’s case, this means the 68.4 inch fan is the sweet spot.
- Our intent is to build the MAX until the market decides it doesn’t want it any more.
Predictably, Airbus and Boeing claim victory in WTO appeals case
The report is now public and to no surprise, Airbus and Boeing (and the surrogates, the EU and US Trade Representatives) each claim victory.
This excerpt from a Bloomberg report neatly paints the picture.
World Trade Organization appellate judges sided with the U.S. over illegal government subsidies to Boeing Co., the U.S. Trade Representative’s Office said. Airbus SAS called the ruling a “sweeping loss” for Boeing.
AirInsight published the press releases of Airbus and Boeing.
The news services on the Internet haven’t yet posted a full range of reports (as of 0910PDT Monday). We’re not going to bother posting the statements of the warring parties, reflecting our disdain of the entire process in the first place. Readers may search Google News, Yahoo News, et al. and comment–but a reminder to be mindful of our Comment Rules.
WTO appeals panel upholds Boeing subsidy findings
Word is leaking out in advance of Monday’s public release of the appeal of a WTO finding that Boeing benefited from illegal subsidies that the appeals panel upheld the findings.
Additional reports: Here and here.
Boeing has previously said on several occasions that if the WTO found it received illegal subsidies, it would write a check. We’ll see what spin occurs next week on this point.
The European Union claims Airbus has now conformed with the WTO findings against it, a claim rejected by the US Trade Representative and Boeing.