Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
- Tariffs Tumult Takes Over GE Aerospace Q1 2025 Earnings Call April 22, 2025
- Boeing reports mixed results of latest employee survey, but middle management and officers remain key obstacles April 22, 2025
- Hopes for 1Q financial progress turns into bumpy ride for Boeing April 21, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
Ryanair and a GTF-powered A320/737
Jon Ostrower has an interesting think piece about the prospect of Ryanair ordering up to 400 Airbus A320s or Boeing 737s powered by the new Pratt & Whitney GTF, or Geared Turbo Fan P1000G.
We first broke the story that Boeing is evaluating the prospect of 737 “re-generation” for an article we did for Aviation and the Environment magazine. P&W is developing the engine for Mitsubishi’s MRJ regional jet and Bombardier’s CSeries, but both airplanes are small. The MRJ seats 70-90 and the CSeries 110-149, but the MRJ has only one order in Japan and the CSeries continues (at this writing) to be stillborn. P&W has been developing the GTF for 20 years; without re-engining the A320 or 737, this investment is pretty much down the drain.
With Boeing and Airbus seemingly putting off a full replacement airplane for their prime jets until around 2020 or even later, airlines–notably Southwest–want a more fuel efficient airplane before then. The GTF would save 12%-15% on fuel burn. As we wrote for AE magazine, Boeing is on track to make some decisions for a 737RG this year with a prospect for an EIS in the 2013-15 period. This is a timeframe P&W can meet to provide the GTF to Boeing.
Airbus, of course, provided an A340-600 test bed for P&W to get some good data for the GTF. This information went to Airbus’ R&D department, where evaluation of a GTF A320 is almost a certainty.
Or not. James Wallace of The Seattle Post-Intelligencer reports that Airbus super-chief John Leahy says there aren’t any talks going on with Ryanair.
Why Airbus nixed AF One bid
Seattle Times columnist Ron Judd got the real reason why Airbus parent EADS said no to bidding on Air Force One:
“Airbus backed out only after the US government failed to qualify for financing.”
EADS/Airbus says ‘No’ to Air Force One competition
EADS and its subsidiary Airbus won’t compete for the Air Force competition to replace the US President’s Air Force One.
The very idea of the President of the United States possibly flying around in a French airplane was blasphemous, even for us. With only three orders in the USAF Request for Information (RFI), there was no way EADS would assemble the A380 in the US, in contrast with the prospect of building the KC-30 air force tanker in Mobile (AL), meaning the airplane would have been assembled in France.
This leaves Boeing as the sole-source supplier for the new Air Force One and its two backup airplanes. Boeing will in all likelihood offer the 747-8 (as opposed to the 777 or, even more far-fetched, the 787). The 777 and 787 are considerably smaller than the 747-8, and the new composite technology for the 787 is something the Secret Service probably would like to see proved before entrusting POTUS to it.
Boeing has eight VIP orders for the 747-8I.
EADS’ statement is below:
Financing Airbus, Boeing customers
Too much is being made over a decision by France to funnel cash through French banks for the express purpose of providing financing to Airbus customers.
France will provide $6.5 billion to the banks for loans to the airlines. The US government should follow suit. Bloomberg News has this report about the lack of financing available to customers potentially hurting Boeing.
The French stories headline or write about the money to the banks being aid to Airbus. In a round-about way, it is, but more to the point the world credit crisis is putting the squeeze on airlines. Depending on who you believe, there is a funding gap of $10bn to $28bn this year for customers buying airliners. Even though Airbus and Boeing pledged up to $1.5bn and $1bn respectively in customer financing this year, and other OEMs will likely step up as well, and even though the export credit agencies are doubling their participation, this isn’t enough.
The Obama Administration proposes around $900bn as a stimulus for the US economy, some of it for dubious project the Republicans rightly question, such as millions to resod the National Mall in Washington, hundreds of millions to engineer social policy via Planned Parenthood and (at least at one point) funding to build a museum in Las Vegas about the history of the mob.
Boeing is the USA’s largest exporter. Instead of funding dubious projects, Obama should earmark money for the banks that would be required to put into the credit markets to finance Boeing airplanes.
France got it right. The US should follow its example.
Airbus 2008 orders 4th best
Airbus announced its 2008 order book today, with 777 net orders, reflecting cancellations of 65 A319s from bankrupt US discount airline Skybus, the last of the original A350 orders and a few others.
The tally is the fourth best Airbus posted going back through 1995, that last data immediately available from the company.
Gross orders were 900.
| Airbus Orders | ||
| 1 | 2007 | 1458 |
| 2 | 2005 | 1111 |
| 3 | 2006 | 824 |
| 4 | 2008 | 777 |
| 5 | 1998 | 454 |
| 6 | 1997 | 389 |
| 7 | 2004 | 270 |
| 8 | 1999 | 244 |
| 9 | 2000 | 243 |
| 10 | 2002 | 219 |
| 11 | 1996 | 208 |
| 12 | 2003 | 186 |
| 13 | 2001 | 184 |
| 14 | 1994 | 80 |
| 15 | 1995 | 77 |
Airbus YE08 Conferences Tuesday, Thursday
EADS and its subsidiary Airbus will have their year-end 08 press conferences January 13 and 15 to discuss 2008 orders, events and the outlook for 2009.
This comes on the heals of a January 9 analyst report by Goldman Sachs (London) on EADS with a Sell recommendation entitled, “It’s worse than we thought.”
The gloomy report follows one in December, also a Sell rating, that Goldman today says wasn’t gloomy enough.
The Goldman analysts look at plunging worldwide airline traffic, the dismal state of affairs in China’s aviation sector and what is now at least a three year delay in the troubled A400M program, also worse than thought in the December report. (More after the jump.) Read more
New Air Force One; Boeing layoffs
Flight International reports that the Air Force issued a Request for Information (RFI) for a new Air Force One to replace the Boeing 747-200 that will be 27 years old when it’s replaced.
The USAF previously said that it is interested in a new Air Force One, and Airbus had provided information about its A380.
Boeing is determined to keep the exclusivity it’s had for the airplane since providing the very first jet AF One, a Boeing 707-120, to President Eisenhower. Later model 707s were provided up until the 747-200 entered service for President George HW Bush.
Boeing will likely offer the 747-8I, but according to Flight, the Boeing 777, the Airbus A330 and the A340 might qualify. We’d have to think that the Boeing 787 and Airbus A350 could also qualify, setting aside service entry dates, but the Secret Service is quite conservative and may not be ready to accept the new composite technology for the Commander-in-Chief. Even though the twin engine Boeing 767 had been in service for years, the Service wanted a four-engine 747 for safety when replacing the 707.
This has the potential to be another controverisal Airbus vs. Boeing competition. Although we’re only talking about two airplanes vs 179 in the KC-X tanker competition, and even though a European company won the contract to supply the next generation of White House Marine helicopters, the status symbol of flying the President of the United States around is beyond compare. Air Force One represents the United States.
Our view that the Northrop/Airbus KC-30 is better than Boeing’s KC-767 for the Air Force tanker is well known. Airbus and Boeing can debate all day long about which airplane is better, the A380 or the 747-8. Both airplanes are good, sound aircraft. In this case, as an American, we come down firmly on Boeing’s side: Airbus could pay the government to make the A380 Air Force One, but we think the president ought to fly an American aircraft and Air Force One ought to be Boeing. Airbus shouldn’t even waste its time on this one.
So there.
Layoffs at Boeing
Boeing confirmed layoffs hinted at some weeks ago in this press release. The company will lay off 4,500 of its nearly 75,000 workers.
The move is prudent, given the global economic conditions and deteriorating airline market. But SPEEA, still in contract negotiations for its Wichita (KS) unit, doesn’t think so; see SPEEA’s statement after the jump: Read more
2009: Recovery for Boeing, Challenges at Airbus
Update, January 10:
Bloomberg News reports EADS says it will be three years after the A400M’s first test flight–which remains unscheduled–before Airbus will ship the airplane to customers. This is hardly good news.
Original Post:
Commercial Aviation enters 2009 with a high level of uncertainty. Boeing’s headlining 787 program and the lower profile but increasingly costly 747-8 development face critical milestones this year. Airbus’ A350 does, too. The global financial market meltdown last year hopes for recovery this year but the global economy is questionable.
These are just a few of the issues facing Airbus and Boeing this year.
Boeing continues to dominate the headlines with its troubled 787 program, so we’ll look at the US aerospace company first.
Year for Recovery
This has the makings for being a year of recovery in new airplane programs. No new joint BCA-IDS program is without significant issues and two of BCA’s three new airplane projects have significant delays.
The 787 program needs little review here; its issues are well known. The question is when the first flight and flight testing will begin.
Boeing says the first flight will be in the second quarter; Air Transport World first reported that April 20 is now the schedule for first flight and Flightblogger followed with its own reporting on a timeline leading to this date. Our own checks suggest that a new development and testing timeline for the critical software systems is aimed for a sooner-than-later second quarter first flight (the old timeline suggested a June-August timeline for first flight). Our checks also report, however, that April 20 is thought to be aggressive and our sources are unsure this date can be met.
What is important to emphasize here is that this date is an internal timeline and Boeing is only saying first flight will be in the second quarter. This means it could take place on June 30 and still meet the publicly stated goal.
At long last, we expect that the first flight and the flight testing will get underway this year. These are obviously critical milestones in the recovery of the 787 program and Boeing’s operations.
Delta Air Lines may cancel the 787 ordered by Northwest Airlines now that NWA is a subsidiary of Delta. NWA ordered 18, but Delta’s CEO Richard Anderson is unhappy with the delays and performance issues (the 787 is overweight and has a shorter range than originally advertised, though the extent of the latter is in dispute). Anderson likes the 777LR and it’s possible there could be a deal for more 777LRs to replace the 787-8s ordered by NWA.
A cancellation will be nothing but a minor embarrassment for Boeing—with 900 orders, losing 18 won’t matter much and it’s possible others will come forward to grab these in any event. Read more
Overwrought concerns
As the world economy and the airline industry seemingly implodes, there is an increasing amount of concern emerging among some aerospace analysts and Internet bloggers over what this means for Airbus and Boeing.
The consensus is that Airbus and Boeing will begin seeing serious declines in aircraft deliveries as early as next year.
These concerns have been exacerbated by the announcement from China’s central government that it wants the airlines to defer deliveries next year. As we pointed out some weeks ago, this is highly unusual: China historically has been a stalwart through bad times for Airbus and Boeing, growing and ordering airplanes when other regions in the world were going through major downturns.
This has led some to particularly point to the new Airbus assembly facility in China as a risk factor for Airbus.
There certainly is sound reason for concern, but so far this is overwrought.
We participated in a conference last week that included Airbus and Boeing officials. During our private conversations with them, we came away more comfortable that for 2009 at least, the two companies are not going to see major declines in deliveries, based on current market conditions.
This is a different distinction than deferrals, and a this is an important distinction.
Papers play catch up on 787 delays
The Wall Street Journal, The Seattle P-I and other papers are only now playing catch-up to aerospace analysts who last week forecast the first deliveries of the Boeing 787 won’t be until summer of 2010.
We also forecast this on Tuesday.