Leeham News and Analysis
There's more to real news than a news release.
We’re back, looking at the WTO’s ruling on Airbus case
While we were gone, the WTO issued its ruling on the Airbus case, which was appealed by both sides.
There’s been plenty post-ruling analyses written already, and since we’re nearly a week later, we’re not going to add much to it except to point you to Aspire Aviation’s analysis and say this: Both sides won some and both sides lost some in this case. The USTR failed to achieve its top goal, and that is to have the WTO rule launch aid illegal, so blocking aid to Airbus to make the A350 XWB was a failure.
Flightblogger has a very good take on how both sides “spin” the final appeal report. The Wall Street Journal has a balanced view on who won and who didn’t.
This is a major defeat for the US–and for Boeing.
Government subsidies for healthy companies
Two news items caught our eye this morning.
The first was the financial reporting for EADS today. Although EADS reported a small loss on foreign exchange and financing costs, the company increased its cash position. This came under criticism in Germany for the bailout of the A400M program.
Boeing’s clarity provided at BCC meeting
Update, May 11: UBS had Boeing’s Mike Bair, the head of the 737 future program, for presentations yesterday and issued its report. Much of the UBS report is similar to the Credit Suisse and Buckingham information captured below; here’s some of the new stuff.
- While still not taking a re-engined 737 off the table entirely, it was clear from our discussion that BA’s preference remains an all new NB for initial delivery in 2019-20. While no major announcement is expected in Paris, BA anticipates material selection in 2012 (metal vs. composite), followed by component selection strategy
(make vs. buy) in 2013 and official program launch in 2013-14, assuming a launch order is in place. BA envisions an eventual production rate of 60-70/month, which it sees as high enough to justify a dual source strategy for some major components. - While still not taking a re-engined 737 off the table entirely, it was clear during our discussion that Boeing’s preference remains an all new narrowbody with initial delivery in 2019-20.
- Boeing does not expect to make a major announcement at the Paris Airshow. It commented that it would expect a launch decision on a potential new aircraft to come roughly five-six years ahead of first delivery, putting program launch in the 2013-14 timeframe,
assuming a launch customer is in place by then. - Boeing commented that it would take a defection by a current 737 customer to get it to think more seriously about re-engining. Boeing sees this as unlikely and noted that Easyjet is the only 737 operator ever to defect to A320 and that it took very aggressive pricing by Airbus to achieve that outcome.
Our comment on the last point: Bair is wrong, of course: United and Frontier were two 737 customers to defect and Air Berlin also bought A320s; we believe there were more but don’t recall specifically.
Original Post:
In what is the clearest picture yet of Boeing’s intentions for program development, Boeing Capital Corp. officials met May 3 with aerospace analysts and financial types in one of BCC’s periodic meetings. What emerged from the meeting is a clear understanding of Boeing’s current thinking for the current 737 line and the New Airplane, which for this report we will identify as the 7X7.
This report is based on conversations with participants of the meeting, subsequent analyst reports that were issued and presentations to the group by Boeing.
The WSJ on Steve Hazy
We’re still on hiatus, but we could not resist this piece of art from the Wall Street Journal illustrating Steven Udvar-Hazy’s return to the public stock market today for his Air Lease Corp.
The Wall Street Journal article is, at the moment, for paid subscribers only but here is an LA Times article that gives some background.
Separately, Aspire Aviation has a good analysis of the COMAC C919 and its competitive threat to Boeing and Airbus.
Going on hiatus
Due do a number of special projects with near-term deadlines, this column will be a hiatus for a while. In the meantime, please see our affiliate, AirInsight, for commentary and news.
Advancing NEO puts pressure on Boeing
Here’s the last of three stories on the Boeing 737, the A320neo and the new Boeing airplane.
Boeing’s message changes on 737NG v A320neo
Here’s an article we did on changing messaging at Boeing about the 737 and the A320neo.
| Date: | 11/04/2011 10:07 |
| Source: | Commercial Aviation Online |
| Location: | Seattle |
| By: | Scott Hamilton |
Boeing’s messaging on the 737 against the Airbus A320neo has changed subtly in recent weeks. Does this signal a slight shift in Boeing’s intentions whether to proceed with a new airplane in the 737/757 class?
Boeing dismisses the business case for the A320neo, until recently saying the 737-800NG has only a 2-3% cash operating cost deficit today versus the projected NEO economics. By the time the A320neo entered service what was originally announced as Spring 2016, Boeing officials were confident that they could improve the economics of the 737-800 by at least that amount, retaining a fleet advantage of one engine type and a lighter airplane.
But Boeing’s message has shifted slightly.
Odds and Ends: Entertaining recap on Leahy and NEO
1. Entertaining look at Leahy and A320neo
Max Kingsley-Jones, editor of Airline Business, has this amusing take on Airbus COO John Leahy and Leahy’s view of his latest toy, the A320neo.
Last week we received a couple of inquiries and comments about the investment Airbus has made in the NEO and whether this will be worth it. Figures publicly issued by Airbus were that the investment in NEO is about $1.5bn.
What is not discussed but which is widely known within insider circles is that the engine makers, Pratt & Whitney and CFM, are footing most of the bill. We don’t know the split between the engine OEMs and Airbus, but we understand the engine share is not insignificant. Thus, the actual financial risk to Airbus is, by R&D standards, pretty small. We remarked to one who inquired that NEO will probably have one of the best ROIs for Airbus of any program.
Aviation Week’s Robert Wall has this story about the NEO, emerging from the Airbus 320neo briefing last week.
Reports from the Airbus neo event
Our partner at AirInsight, Addison Schonland, has posted additional reports from his attendance to the Airbus neo event April 5.
Tom Williams, EVP briefing.
John Leahy’s briefing. This is different than the one-on-one interview Addison had.
Keeping the A320 in production to 2030 decade.