737NG vs A320neo: an interesting chess game

Update, Dec. 13: FlightGlobal has this interview with Ryanair and its critique of the NEO.

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The (London) Financial Times has this interview with Boeing Commercial Airplanes CEO Jim Albaugh in which he says there is no compelling reason now to re-engine the 737.

Boeing believes the newly announced Airbus A320neo family merely brings the legacy A320 family to parity with the 737 or at most provides only a 3%-4% direct operating cost advantage to the NEO which can be matched by yet more refinements to the 737.

Airbus refutes Boeing’s conclusions but won’t release its own numbers, regarding them as proprietary. But in a new study, The Business Case for the Bombardier CSeries, by AirInsight,  with which we are affiliated, AirInsight’s independent analysis concludes the NEO generally has at best a slight advantage over the 737-700 and 737-800–but nothing to shout about.

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Lessors, banks in blistering critique of Airbus NEO

Our colleagues at Commercial Aviation Online put together the story below on lessor and banker reaction to the Airbus A320neo announcement December 1.

We knew–and previously referenced here–reluctance on the part of these groups to the NEO concept, but even we were stunned by the blistering response toward Airbus.

This is reprinted with permission.

Lessor and banks react to Airbus neo programme

Date: 06/12/2010 11:35
Source: Commercial Aviation Online
Location: London

The launch of the Airbus neo programme on 1 December with plans for a 2016 entry into service for the initial model has generated a lot of talk in the aviation finance community, particularly concerning the impact on residual values.

CAO spoke to lessors and bankers about the move and here’s what they had to say:

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A350 begins fuselage construction, refines program management

Airbus has begun construction of the A350 fuselage.

Airbus photo, rendering

Airbus also announced refinements in the A350 program management to provide more accountability and coordination. This article describes it in Aviation Week, by Robert Wall.

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EADS will likely win tanker, says Boeing consultant

Update, Dec. 9, 5:00 AM PST:

Politico has this profile on Loren Thompson.

Flight Global reports Brazil may select the KC-45 to replace its Boeing KC-137 (KC-135).

Update, 5:00 PM PST: Dominic Gates now has his story on this topic here.

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George Talbot of The Mobile Press Register posted this story today in which Loren Thompson, an aerospace defense analyst who has done work for Boeing, says Boeing has concluded EADS is going to win the KC-X tanker competition.

In Talbot’s article, Thompson once again advances the Boeing line about WTO and Airbus’ illegal subsidies as evidence of a USAF “bias toward EADS.”

There is just one problem with this line of allegation with respect to the WTO issue:

US law doesn’t allow the USAF to take the WTO panel finding into account, and Thompson, Boeing and its Congressional supporters know it.

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Airbus NEO won’t kill CSeries: New study

Airbus’ A320 NEO won’t kill the Bombardier CSeries, a new study concludes, issued today by AirInsight.

The study, “The Business Case for the Bombardier CSeries,” which we co-authored, is discussed on the AirInsight blog.

The study began as an update to AirInsight’s report in December 2009 on the prospect of re-engining the Airbus A320 and Boeing 737 families. As Airbus COO-Customers John Leahy repeatedly asserted that to re-engine the A320 would kill the business case for the CSeries, AirInsight broadened its update into a full, in-depth study. AirInsight concluded that the business case for the CSeries is sound.

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USAF, EADS need to come forward with full details

The USAF and EADS need to come forward with full details to fully explain the latest cock-up (a British term, not an obscene one) in which the Air Force mistakenly sent EADS and Boeing proprietary information about the other company’s KC-X submission.

EADS, the Air Force and Boeing say that when EADS and Boeing discovered the error, the companies began a procedure that has been in place for years to seal up the files and computers and to notify the USAF of the error. The Air Force initially said, in essence, “no harm, no foul.” But then in classic Wikileaks fashion, information dribbled out bit-by-bit that there was more to the story than the Air Force–and EADS–let on.

At a press conference–which we were at–EADS North America CEO Sean O’Keefe gave a detailed response to questions about the matter. But within days, it was charged by Lexington Institute’s Loren Thompson that EADS had actually opened the proprietary file but Boeing had not. He did not cite sources for his information, and his close ties to Boeing immediately raised the suspicion that Boeing leaked this information to him.

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A320neo EIS 2016-17

Airbus has confirmed to us the planned EIS of the A320neo family. The company initially announced only that the A320neo would enter service in the Spring of 2016. A spokesman confirmed our estimates of the family’s EIS:

A320 EIS: Spring 2016

A321 EIS: 4Q2016

A319 EIS: Spring 2017

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It’s official: A320 NEO launched, 2016 EIS

Update, December 1, 0530 PST:

Aviation Week has an interesting piece on what will Boeing do.

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Here is the Airbus press release:

Airbus offers new fuel saving engine options for A320 Family
1 December 2010

Airbus has decided to offer for its best-selling A320 Family new fuel saving engines as an option.  Airlines have the choice between CFM International’s LEAP-X engine and Pratt & Whitney’s PurePower PW1100G engine.  Known as the A320neo, this new engine option also incorporates fuel-saving large wing tip devices called Sharklets. Airbus will start deliveries of the A320neo Family in spring 2016.

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Airbus to green light NEO

Update: AirInsight has a couple of posts assessing the impact of NEO.

Bloomberg News just moved this story:

Airbus Said to Plan New A320 Engine Option to Fend Off Rivals

2010-11-30 20:50:43.24 GMT

By Andrea Rothman
Nov. 30 (Bloomberg) — Airbus SAS plans to offer its A320 series of aircraft with an option of more fuel-efficient engines to help defend its position in the single-aisle jet market, said a person familiar with the decision.
The company received backing from parent European Aeronautic, Defense & Space Co. at a meeting today and may announce the decision as early as tomorrow, said the person, who spoke on condition of anonymity because the plan has not yet been made public. Airbus, based in Toulouse, France, would offer the A320 with two new engine options, the person said.
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Laying the groundwork for a Boeing appeal on KC-X

Update, Dec. 1: George Talbot of The Mobile Press-Register has this interesting interview with Michael Wynne, a former top defense department procurement official, who suggests a solution to the KC-X quandary.

Also, at 12:50pm PST: Bloomberg has this story with Boeing BDS CEO Dennis Muilenberg weighing in. It seems the USAF has more ‘splainin’ to do.

Update, Nov. 30, 8PM PST: The New York Times confirms EADS opened Boeing data, Boeing did not; Boeing threatens protest.

Dominic Gates at The Seattle Times has this report.

Original Post:

In what is a wholly transparent move, Boeing is beginning to lay the groundwork for an appeal in the event EADS wins the KC-X contract.

Loren Thompson of the Lexington Institute, published a commentary yesterday (we only saw it today) entitled “Tanker flap reflects pattern of bias.” In it he makes several allegations, the most serious of which is that EADS read the proprietary document mistakenly sent by the USAF to EADS about Boeing performance data of the KC-767 but Boeing did not read the EADS document and data sent to Boeing by USAF. Thompson does not disclose how he knows this.

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