Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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United nearing decision on refleeting
Update, November 12:
We’ve learned United is splitting the wide-body and narrow-body RFPs into two, now planning to make two purchases instead of one. The wide-body order will come first. Boeing has recently become aggressive with 787 offers and now this is a real competition between the 787 and A350. The narrow-body RFP will almost certainly slip to 2010.
Original Post:
United Airlines is nearing a decision on refleeting, replacing Boeing 747s, 777s 767s and 757s. Flight International has this detail. Flightglobal’s ACAS database shows United operates 25 747-400s, 34 767-300ERs, 19 777-200s, 33 777-200ERs and 94 757s.
This would be a huge order for Airbus or Boeing. United previously said it plans to stick with one supplier.
The original RFP drew hoots from the industry. United sought terms that were considered ridiculous by many, particularly given United’s own financial condition and the existing backlogs at Airbus and Boeing. Industry sources said UA wanted the winning manufacturer to buy the 767s and 757s at above market valuations and lease them back at below market rental rates; to finance 100% of the new airplanes; and require no down payment or progress payments.
Boeing “leaning” toward KC-767
Boeing is “leaning” toward offering the KC-767 to the US Air Force in the KC-X competition, an executive revealed at a conference in Everett (WA) today. Boeing previously has been coy about whether it will offer the KC-767, or a tanker based on the 777 or two separate bids, one for each airplane.
George Maffeo, Vice President of Supplier Manager for all the 7-Series commercial programs except the 787, told the annual Aerospace Conference of the British-American Business Council-Pacific Northwest that the tanker development team of Boeing’s Integrated Defense Systems (IDS) unit has moved over to Boeing Commercial Aircraft (BCA) to learn from their experiences to offer better technologies and cost efficiencies to beat the Northrop Grumman/EADS/Airbus KC-30.
“We want competition”
There is a competition underway for a military airplane in which the government is leaning toward a sole-source selection. The competition to the favored airplane company is advocating for a competition, saying the government will get a better price and a better airplane.
Boeing, Airbus advance
There actually was other news last week besides the corporate food fight over the KC-X tanker involving Boeing and Airbus.
787 Line 2
This article from South Carolina wonders whether the competition between Charleston and Everett is SC Gov. Mark Sanford’s “last stand” to save his job. Sanford, of course, was caught lying to his family and his constituency over where he disappeared (he said initially he was on a hike in the Appalachian mountains; turns out he was in Argentina with his mistress). Republicans and Democrats alike have called on Sanford to resign. He won’t, and the effort to persuade Boeing to locate 787 Line 2 to Charleston may be the Republican governor’s last chance to save his job, the news article speculates.
A320 upgrades on the way
Airbus has decided to proceed with a winglet program for the A320 family and will decide by the end of 2010 whether to re-engine the family. Also: CFM International is ready to advance its schedule for the LEAP-X program to meet a requirement by China’s Comac for the C919. This also opens the way to potentially re-engine the Boeing 737.
Below are stories we did for Commercial Aviation Online.
Airbus: A400M, Future funding
With tanker news dominating this week, there are a few Airbus items that haven’t received much attention: the A400M, future airplane program funding and the A350.
(Updated September 26.)
A400M
This disastrous program appears heading for some resolution. Aviation Week has this report. It looks like Airbus is headed toward a new agreement with the A400M customers (most of which are Airbus member-states) that will restructure the contract, terms and conditions in a program which has already cost Airbus billions of dollars in cost overruns. The program costs the company $100m a month, and it–along with the A380–has been a huge financial drag.
UBS estimated that the restructured contract could add 5bn Euros to the charges Airbus has already taken. We spoke with Airbus CEO Tom Enders earlier this month and he said the estimate is “completely unreasonable.” While he would not offer a “reasonable” number, published reports suggest a 3.5bn Euro figure.
The program has been a perfect example of political interference, notably on the engine selection at the start, which speaks more than ever why Airbus and EADS should divorce from ownership by the French and German governments.
The ever-candid Enders said the A400M should have stuck with the proposed Pratt & Whitney turbo prop rather than having a new design forged in Europe forced upon the airplane. “The choice was made under political pressure,” he said.
KC-X tanker DRFP released
Update, September 28: DOD Buzz reports Boeing is going to offer two bids, one each for the KC-767 and KC-777. Here is the link. We think this is a brilliant move.
Original Post:
Here is the link to the RFP. We’ll add information after we’ve read it, which will take all weekend. One thing we did find right away: the USAF is asking for field performance data on runways 6,000 ft to 15,000 ft. This means the Boeing 777 isn’t zapped on this criteria; the 2006 RFP required 7,000 ft. runways. The Systems Requirements document does include a 7,000 ft. runway requirement. SRD document pg. 26, 3.4.2.2.1.
On another requirement from the 2006 competition: spare engines had to be transportable in the C-130 cargo plane. A 777 GE 90 wouldn’t fit; this requirement has been changed to the C-17. The C-17 has an 18-foot wide cargo bay; the GE-90 is slightly over 10 ft wide (bare engine, without nacelle). SDR pg. 40, 3.6.3.3.1.
Here is Boeing’s statement, issued upon receipt of the DRFP:
“Our next step is to conduct a detailed review of the document. We want to understand how requirements will be defined and prioritized and how the proposals will be evaluated. That information will help us decide which plane to offer or whether to offer both planes. We appreciate that there will be frequent, open discussion with the U.S. Air Force as we go forward. Both the Air Force and the American taxpayer will benefit from the tanker options we can offer. Boeing has a KC-7A7 ‘family of tankers’ available to meet the warfighter’s requirements. Whether it’s the agile, flexible 767-based tanker or the large 777-based tanker, Boeing will deliver a combat-ready tanker with maximum capability at the lowest cost.”
What is noteworthy is the reference to offering the KC-767 and the KC-777. This is contrary to stated DOD intent to buy only one airplane. This is something we suggested Boeing do for the 2006 competition on the theory it would checkmate the Northrop bid. While we think the 777 is too big for the KC-X competition, a dual-offer by Boeing simply cannot be matched by Northrop.
Northrop believes its KC-30 is the right-sized aircraft in the sweet spot.
Here is Northrop’s statement:
“Northrop Grumman applauds the Defense Department and U.S. Air Force for re-starting the effort to replace its Eisenhower-era KC-135 aerial refueling tankers, and the company is looking forward to competing for and winning the contract again.
“Northrop Grumman will review the draft RFP and provide the U.S. Air Force with comments on the draft in short order. We will defer further public comments until we have completed our review.”
Here is the synopsis as publish on the Business Opportunity website.
DOD Tanker Briefing
Updates:
Here is a running update of the Pentagon briefing to reporters, 4pm EDT, 24 Sept.
William Lynn Deputy Sec Def:
- USAF will be source-selection team but overseen by DOD. There will be independent review panels as well, including from other services.
- This is not a re-run of the prior process. GAO found substantial flaws in previous process and we’ve taken pains to be explicit about criteria, scoring system and decision tree.
- This is a Best Value competition, not a price shoot-out. Price is extremely important but not only point. We will look at price, life cycle and war-fighting requirements.
- This is a step forward toward acquisition reform.
- This is not a cost-plus contract, and includes not-to-exceed prices. Will constraint prices considerably and move toward avoiding cost overruns.
- We’ve played this right down the middle.
Refueling Dr. Strangelove
The Draft Request for Proposal for Round 3 of the KC-X tanker competition isn’t even out yet and the procurement process is already perverted.
The DRFP is thought to be ready for release tomorrow (September 24). The USAF reportedly has scheduled briefings for Congress at 11 AM EDT.
In what is clearly an orchestrated effort spearheaded by Boeing, the political focus is entirely on the interim report by the World Trade Organization that Airbus benefited from illegal subsidies for its A-series commercial airliners, including the A330-200 on which the Northrop Grumman KC-30 is based.
[youtube=http://www.youtube.com/watch?v=Qs7EikHQGlA]
Washington State and Kansas Members of Congress demand that the US Air Force include language in the DRFP that considers the launch aid–a reported but unconfirmed $5bn for the A330/A340 sister program–in evaluating the KC-X proposals.