Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
- 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
Airbus takes comfortable lead in YTD orders
Airbus took a comfortable lead in the orders race year-to-date through July 31 following the Farnborough Air Show, in which is announced a combination of new orders and inked a 100 airplane deal with Dubai Aerospace Enterprises that was announced at the Dubai Air show last November. DAE’s 100-plane order with Boeing, also announced at the Dubai Air Show, was completed in December and was posted to the 2007 order book.
- Airbus and Boeing continue to about evenly split the single-aisle orders, with Airbus pulling slightly ahead now through July. Airbus now has a 52% market share after trailing Boeing marginally through June.
- For the medium twin-aisle category, Airbus continues to maintain a wide margin YTD, taking advantage of stalled sales for the 787 as a result of the delays in the Boeing program. Including all models in the medium twin category, Airbus has a 68% market share. But if only the 787 and A350 are considered in this category, Boeing maintains a 61% market share.
- In the large twin category, Airbus has a 57% market share on the strength of its A350-900 orders. Sales of the 777, led by the -300ER, have slowed.
- The Very Large Airplanes group remains unchanged in July vs. the YTD through June.
- Overall, Airbus now has a combined S/A and T/A market share of 57%, up sharply from June on the strength of the Farnborough orders, including the 100 DAE airplanes.
Although 787 sales have stalled, there is a rumor of a pending new order for double-digit airplanes. Airbus in August announced a fourth customer for the A350-1000 that should be inked by year end, if not in August.
| Single Aisle | ||
| 737 | 421 | 48.4% |
| A320 | 448 | 51.6% |
| 869 | ||
| Twin Aisle Medium Twin Engine | ||
| 767 All | 0 | 0.0% |
| A310 | -5 | -2.8% |
| A330P | 125 | 48.1% |
| A330F | 11 | 4.2% |
| 787 | 79 | 30.4% |
| A350-800 | 50 | 19.2% |
| Total | 260 | |
| Total Airbus | 181 | 69.6% |
| Total Boeing | 79 | 30.4% |
| Twin Aisle Large Twin Engine | ||
| 777-200 | 16 | 13.0% |
| A350-900 | 72 | 58.5% |
| 777-300 | 28 | 22.8% |
| A340 | -3 | -2.4% |
| A350-1000 | 10 | 8.1% |
| Total | 123 | |
| Total Airbus | 79 | 64.2% |
| Total Boeing | 44 | 35.8% |
| Very Large Aircraft | ||
| 747 | 2 | 40.0% |
| A380 | 3 | 60.0% |
| 5 | ||
| Single Aisle | ||
| Airbus | 448 | 51.6% |
| Boeing | 421 | 48.4% |
| 869 | ||
| Twin Aisle | ||
| Airbus | 263 | 67.8% |
| Boeing | 125 | 32.2% |
| 388 | ||
| Total Market Share | ||
| Airbus | 711 | 56.6% |
| Boeing | 546 | 43.4% |
| Total | 1,257 | |
The Day After the Draft RFP
There has been some time to digest the Pentagon’s announcement for the re-compete for the aerial tanker program. Predictably, Boeing’s supporters are unhappy. Anything short of a tailor-made RFP guaranteeing a Boeing award won’t make them happy, as their efforts to craft legislation in Congress demonstrates.
Here are a couple of stories that capture the flavor:
The Seattle Post-Intelligencer
Having incorrectly called the competition once–we thought Boeing would win and were stunned when Northrop did–we’re going out on a limb and predict Northrop is the favorite this round. (In this we are not alone, but we weren’t last time, either.) But we have a somewhat different view than the hand-wringers over the revised RFP.
The original RFP contained a delivery timeline sought by the Air Force that was not challenged by Boeing in its protest and which the GAO didn’t address. And this timeline isn’t changed in the new Draft RFP, either. And that is the Air Force wants the “prototypes” (our word) of the KC-45 delivered in 2009.
Northrop already has two KC-30 platforms flying and two more on the way. Granted, these must be converted into tanker configuration. But Boeing doesn’t have a flyable airplane nor is it likely to be able to have the KC-767AT prototype ready next year.
This is because the “AT” is a combination of elements from the 767-200ER, the 767-300ER, the 767-400 and the 777. Deemed a “minor modification” by Boeing–and the “Frankentanker” by Northrop–the process of integrating the parts and producing the airplane most likely will take longer than 2009 once Boeing received a contract, if it did.
Boeing’s track record with the KC-767s for Japan and Italy doesn’t inspire confidence, and these are straight-forward conversions of the 767-200ER.
The delivery timeline outlined in the original RFP also argues now, as it did then, against Boeing offering a tanker based on the 777. This production line is already at capacity of seven a month and with a backlog of 358 at June 30 (the latest data available), that’s slightly more than four years before Boeing could deliver a prototype KC-777, even if 100% of the research and development were done and ready to go into production–which it probably is not.
Let’s remember that the re-compete is about eight points identified by the GAO, but there are other criteria involved. The desired delivery schedule is the main reason we think Northrop has the edge; Northrop has a plane ready to go now; Boeing’s airplane is in the computer.
Pentagon reissues tanker RFP
The Pentagon today re-issued the Request for Proposal for the aerial tanker competition today.
As the press conference begins, here is a running synopsis:
- USAF plan and process as we go forward to have a week or so to discuss the details with Boeing and Northrop. Each side will have face-time to discuss details.
- A final RFP will be issued in a month. Proposals due by about October 1.
- From October 1 will evaluate proposals and have discussions with offerors, plus face time with each.
- Plan to have award by year end and debrief offerors in January.
- We’ve provided the offerors very clear and unambiguous insight into the relative order of importance of keep performance parameters (KPP) and provided a matrix to fully understand priorities.
- There are different ways to give consideration to extra credit for exceeding KPPs.
- The warfighter has said life cycle is 40 years (vs 25) so cost evaluation will be on 40 years.
- The key change to the RFP is to highlight and to make very clear the relative importance to each capability. We made sure we are going to evaluate in terms of fuel offload that we will recognize value of offload in excess of KPP.
- We will look at fuel cost, and cost of government ownership over 40 years.
- The Pentagon gives positive consideration for fuel offload above threshold, but it appears that not for cargo and troop capabilities above threshold.
- We are very measured and very specific to respond to GAO, but otherwise views the changes to be minor.
- The USAF is playing a significant role in new RFP, as are other services, comprised of all new members, along with an independent review team to review what the Source Selection team does.
- We won’t be using any models to determine 40-year life-cycle costs; we’ll use real cost analysis.
- Jobs and industrial base are not part of the RFP process but these are part of the overall plan to determine whether the industrial base exists to build the plane. But these are not part of the technical evaluation.
- In general, the way we’re evaluating life cycle cost in terms of importance is unchanged from one RFP to the other RFP. The acquisition cost is a separate issue.
End of conference.
Our immediate take:
Both sides got something in the rebid:
- Size gets extra credit for fuel offload, but because Northrop’s KC-30 has greater capability, this feature seems to favor Northrop.
- The life cycle cost is extended from 25 to 40 years, and this would seem to favor Boeing’s KC-767. We discussed both elements Tuesday in our Commentary on our Corporate Website.
It didn’t take long for Boeing’s advocates to look for bias, according to this CBS News report. They’ve been advocating including the 40 year life cycle but excluding the extra credit, a position we find just plain stupid. If you alter the RFP to allow one, then you need to allow the other.
The question is whether Boeing will protest the changes; officials said at Farnborough that they might because they felt any changes to the RFP should reset the process from scratch.
Here is the Draft RFP, Part 1. 27 pages.
Here is the Draft RFP Part 2. 96 pages.
Here is Northrop’s statement. (No response yet from Boeing.)
Here is a Seattle Times report, quoting a spokesman for US Rep. Norm Dicks (D-Boeing) already whining about the new RFP. No mention of the 40 year life cycle element by Dicks’ office, which he advocated.
Update, 4:10PM PDT: Washington State’s other Boeing advocates are quoted in this article and this one, all complaining about the extra credit for extra fueling capabilities. The hypocrisy is palpable. Some of them are behind legislation in the US House that would all but require an award to Boeing rather than the “fair” competition they advocate, and all seemed to favor changing the RFP to a 40-year life cycle on the assumption that this will guarantee a win for Boeing. Yet they object to the extra credit change. These politicians, and those from Kansas who rival Washington, aren’t remotely interested in competition and all their rhetoric to the contrary is political pablum.
This just in from Boeing:
Boeing has received the amended Request for Proposals (RFP) for the KC-X tanker competition. Given the very narrow window for commenting on this draft, our team is focused on identifying and understanding any changes that may have been made to the original requirements and evaluation criteria. We also need to see how the document addresses the strong concerns the Government Accountability Office identified in sustaining our protest.
Despite the fact that the first competition appropriately addressed the aircraft’s intended mission, until we receive the final RFP it is too early to offer any details about Boeing’s path forward.
Boeing remains committed to providing the most capable tanker to the warfighter and the best value for the American taxpayer.
No comment on whether Boeing will protest the DRFP.
Steve Trimble of Flight Global has a series of short items in his blog. Rather than linking each one, here’s the link to his home page–select the individual tanker items as you will.
Taking the low road
We’re back from a week of travel where we had no access to the Internet and one of the first things we saw was the news report about “Alabamians to Build American Tankers” and their radio ads blasting Boeing for its original scandal in the tanker program and connecting it to the re-compete for the USAF aerial tanker.
There is no getting around the fact that the competition is where it is today because of improprieties of the 2001-2004 tanker award. But Boeing’s Jim McNerney, in one of his early acts as the new CEO, stepped up and authorized a fine of more than $600 million to settle this scandal and the Lockheed Martin trade secret theft case, and declined to take the tax deduction that was permissible because it wasn’t the right thing to do. These two actions are one reason we continue to have great respect and regard for McNerney’s leadership.
Thus, with Boeing having settled this matter, it should not be an “issue” in this competition, factual history notwithstanding.
We’ve often been critical of Boeing’s PR, advertising and political lobbying campaign over the tanker competition. We’ve thought that the campaign was ill-advised and sometimes distorted and had no place in the competition. We’ve also repeated called on Boeing and Northrop Grumman to tone down the rhetoric or ideally stop altogether. This “Alabamians to Build American Tankers” is a new low in this entire competition.
The pro-Boeing site Tanker War Blogs has a good synopsis and has some information about who’s behind this trash.
Thursday’s Farnborough impressions
Airbus had its press briefing, rescheduled from Monday, much to the puzzlement and speculation of observers and rivals (or, perhaps, that should be in the singular).
The speculation was rife: Airbus’ super-salesman John Leahy had a big order up his sleeve for announcement. British Airways would announce an A350-1000 order. Cathay Pacific Airways would order the A380 and A350.
Alas, it was none of these. CEO Thomas Enders started the briefing saying that he thought it be more productive for Airbus to recap the week, with orders to talk about, than to start the week with nothing to say. And that’s what it was.
Airbus ended the week with 247 firm orders plus commitments for nine airplanes. One hundred of the orders, however, are left over from the Dubai Air Show–the contract was signed at Farnborough, but these can’t truly be considered a part of this air show.
The breakdown is 128 A320s (70 from Dubai); 11 A330s; 98 A350s (30 from Dubai); and 10 A380s, though four of these were ordered instead of the carrier taking four test airplanes, so this is only a net gain of six.
The A350 program has now sold 472 firm orders, a rate Leahy and the statistics say is faster than the Boeing 787.
This tally is also Airbus’ second best Farnborough Air Show, following the one two years ago when 280 orders were announced.
Other highlights from the Airbus conference:
- Airbus is looking at developing a freighter for the A330-300, with a decision perhaps 6-12 months out;
- The company is spending about $160 million annually (at current Euro exchange rates) on research to enhance the A320 between now and a replacement airplane, involving weight savings, new interiors and a soon-to-be-tested blended winglet developed by Aviation Partners;
- Application of the new P&W Geared Turbo Fan on the A320, once rejected by Leahy, may be a possibility after all, depending on customer demand and the outcome of test flights of the GTF on the A340 test bed;
- The A350 is essentially sold out through 2017, which parenthetically is also about the same time as the 787; and
- 3,000 aircraft flying today are 20 or more years old; in five years, this number will double.
Tom Williams, EVP-Head of Programs, called Bombardier’s launch of the CSeries a “brave thing.” He believes the plane will be seen as an interim plane, bypassed by the next generation of single-aisle aircraft, serving a niche market that he believes is much smaller than Bombardier forecasts; that it will be an orphan aircraft, without a family to buy “up” to; and it will enter the low-end of the Boeing and Airbus markets.
Airbus’ end-of-show brief was a very useful wrap; Boeing might want to follow suit at future shows. This timing by default gives Airbus the headlines as the show wraps.
Other stuff, mostly whimsical:
- Every time a military jet fighter or bomber throttled up for take-off, car alarms up and down the nearby parking lot went off;
- “Green” aviation was a theme through the air show, right down to the notices on the waste bins to recycle. Maybe they do things differently in Europe than in the US, but there were no separate bins for plastic bottles, newspapers, and trash like back home;
- At a big 2 1/2 hour press conference on Green aviation where Boeing Commercial President Scott Carson and Airbus CEO Tom Enders were featured speakers, Boeing didn’t have hand-outs of Carson’s speech–not even on flash drive–while the Airbus flash drive was packaged in an oversized, non-recyclable box with non-recyclable plastic neatly holding the drive;
- At the same eco-conference, an engineer for Rolls-Royce engines couldn’t figure out how to work his Power Point presentation;
- Boeing had a very classy eco-aviation center;
- BAE Systems had perhaps the most interesting aircraft display, an indoor retrospective of aviation pioneers with replicas of several wood-and-wire era bi-planes; and
- Reporters still rate the Airbus media chalet lunch menu the best-of-show, an important item considering most journalists are moochers; Boeing had a good cut fruit tray, though, something Airbus should do next time.
Wide-body GTF
Flightblogger reported a few days ago from Farnborough that an unidentified manufacturer has approached Pratt & Whitney inquiring about P&W’s new geared turbo fan engine for a wide body airplane.
We had the opportunity to ask the obvious question of the obvious people.
John Leahy, the COO-customers for Airbus, said definitively, “No,” it wasn’t Airbus.
That sort of narrows the field, doesn’t it? But no admissions across the tarmac at the Farnborough Air Show.
Scott Carson, the president of Boeing Commercial Airplanes, gave us one of his patented, almost mischievous Scott Carson smiles and said, “No comment.” We asked, Will you deny this?
Still smiling, Carson replied, “You’re tenacious.”
Wednesday’s Farnborough impressions
Pretty dull today. A couple of orders. Boeing did dedicated tanker brief, rolling out the successor to Mark McGraw, the previous head of the tanker program. Dave Bowman comes from the C-17 program.
Perhaps not surprisingly facing a large contingent of Europe press, the questions were tough, or in the words of one American journalist we connected with late, “brutal.” Maybe we’re jaded (some will say we’re insensitive, but we won’t pursue this train of thought), but we thought it was just a “tough” press conference with the questions one would expect under the circumstances.
The questions focused on alleged protectionism on the part of Boeing in filing the protest (Boeing previously denied such and did again); whether it will protest a redefined request for proposal, as officials have previously suggested (not directly answered in the 45 minutes we were present, but Boeing takes the position that a redefined RFP ought to result in starting the process over from Square One [our term]); and so on, along these lines.
Boeing, at last, clarified how it comes up with its assertions that the KC-30 of Northrop Grumman, based on the Airbus A330-200, will require $44 billion in fuel more than the KC-767 over 40 years, based on $200/bbl oil.
It was detailed and, for those uninitiated in the ways of airplane economics, rather arcane. To put it succinctly, and very simplistically, Boeing’s paid consultant makes the calculation based on what in the aviation industry is termed “trip costs.” This means how much fuel is burned from engine start to engine stop. On this basis, including other calculations, Boeing’s consultant arrives at his opinion.
Boeing points out, correctly, that the A330 uses more fuel than the 767. Countering Northrop’s long-held rebuttal, and in answer to a question at the briefing, Boeing says comparing the passenger operations of the two airplanes isn’t applicable because the Air Force isn’t concerned with what is known as seat-mile costs. This is the cost of operations divided by the number of seats on board to arrive at a cost-per-seat.
For passenger operations, the A330, larger than the 767, burns more fuel but has more seats so the seat-mile cost is lower. For the Air Force, the dynamics are obviously different, so Boeing contends that trip mile costs should be the relevant yardstick.
Northrop responds (obviously not at the Boeing briefing, though) that the Air Force analysis based on intended operations concluded that the KC-30 is 6% more efficient.
There was a great deal more to the briefing, but we think you have the gist of it.
For a report on who Dave Bowman is and why he is now heading the tanker program, The Seattle Post-Intelligencer’s James Wallace has this story. The story raises the prospect of Boeing offering a tanker based on the very long 767-400. We asked a similar question of Bowman, only why not the 767-300? This would still be a “medium” plane as defined by the Rand Corp. Analysis of Alternatives (the 777 is a “large” plane, under the Rand AOA), and it would be closer in size to the KC-30.
Bowman essentially said anything is possible, but in response to a question from Steve Trimble of Flight International, Bowman said to avoid a tail strike with the refueling boom on takeoff, a long take-off roll and a shallower rotation would be required, which would potentially not meet the runway performance requirement (7,000 ft) of the RFP.
Here are some of the stories to come out of the air show on the tanker:
Reuters, including some further reporting on the fuel burn issue;
Finally, The Mobile Press-Register’s JD Crowe once again has a biting anti-Boeing cartoon on the tanker. Boeing needs to get a cartoonist to get equal time.
Update: For those keeping a running tally, through Wednesday Airbus is leading in announced orders, 241 to 201, but 100 of the Airbus airplanes were announced last November at the Dubai Air Show; the paperwork was finally signed at Farnborough.
More on the tanker
Here’s a good article about why the USAF chose the Northrop tanker.
Tuesday’s Farnborough impressions
It’s a quiet show; few orders. One of the biggest, from Dubai Aerospace Enterprise (DAE), signed a contract with Airbus for 100 planes was merely confirming the order announced last November at the Dubai Air Show. Now these orders can finally be booked at Airbus and on its website.
DAE’s order for 100 Boeing airplanes, also announced at the Dubai show, was inked before the end of last year and booked in Boeing’s 2007 numbers.
Reporters are largely bored this year. This item for MarketWatch pretty well sums it up.
Jon Ostrower from Flightglobal gave this 15.40 minute podcast with IAG for Monday’s events. We gave this 11 minute podcast about Tuesday’s events.
This AP story sums up the day’s orders.
The Wall Street Journal today had this interview with Boeing CEO James McNerney that indicate it is a remote possibility that Boeing will bid a tanker based on the 777 instead of rebidding its KC-767. A subscription may be required to read The Journal’s piece. Boeing will hold a full tanker briefing Wednesday.
Update, Wednesday morning: This blog site keeps a running tally of orders. For the record, we don’t consider the Dubai Aerospace Enterprise to be a “Farnborough” order. This was announced last year at the Dubai Air Show; it was merely “inked” at this one. Thus, all news sites keeping tallies should put an asterisk by this one.