Leeham News and Analysis
There's more to real news than a news release.
To fuel or not to fuel
Here are a couple of items about the refueling capability of the KC-30/KC-330 tanker, which is one point of controversy in the continuing saga of the Boeing-Northrop Grumman tanker contract award.
Boeing likes to point out that Northrop’s KC-30 hasn’t passed gas through its bloated airplane (sorry, we couldn’t resist the puns) and that there are delays in the EADS/Airbus KC-330 program to Australian. The KC-330 is the basis for the KC-30.
Aviation Week has this story about the KC-330 and some issues with the refueling boom. Northrop Grumman provided a link to this video showing fuel transfer on an Airbus A310 test-bed aircraft.
Northrop likes to point out that Boeing’s sixth generation boom proposed for the air force hasn’t been built, nor has the airplane to which this boom will be installed.
New, 0920 PDT: A Reuters report published in London’s The Guardian raises precisely the issue we raised weeks ago: that efforts by the US Congress to overturn the tanker award based on jingoism can potentially do more harm do Boeing in the global market than letting the USAF award stand, assuming the GAO reject’s Boeing’s protest.
Tanker wars, continued
Boeing and Northrop continue their tanker public relations war. Boeing fired off this press release about the KC-767’s “survivability” vs. the Northrop KC-30.
Northrop fired off a release about jobs, steering people to a 3 1/2 minute National Public Radio report.
Northrop partisans also made sure we saw this biting cartoon.
(For the record, we previously have asked Boeing to send us any similar cartoons supporting the KC-767, but were told none existed. If there are any, we’ll post them.)
Here’s a pro-Boeing cartoon, which for some reason we can’t insert the image, so here’s the link.
New A380 customer
We understand there is a new A380 customer in Asia. It’s currently a Boeing 747-400 operator and the order is for eight plus four options. We haven’t yet learned which airline but it’s not in China.
Boeing’s IDS struggles
This story by Dominic Gates of The Seattle Times paints a grim picture for Boeing’s Integrated Defense Systems. He points out that IDS “can’t boast even a single prime contract to supply the US military’s next generation of fighters, bombers, tankers and transport planes.”
Here’s an article from Aviation Week discussing China’s plans to build a plane that directly targets the Boeing 737 and Airbus A320 lines and another in The Australian about the engine competition between GE and Rolls-Royce that’s developed concurrently with the rivalry between Airbus and Boeing.
Derivatives not always good for military
Steve Trimble at Flight International has an interesting piece about commercial derivatives for the military. The theory is that this saves money. Tain’t necessarily so, says Steve. You can find the story here.
Where does Boeing turn?
With delivery delays of around 15 months now expected for the Boeing 787 program, where does Boeing turn to help its customers?
One suggestion was upping the production of the 767, currently at one a month. This won’t work–it takes about two years to do so, according to Boeing. By then the 787 program should be more or less back on track.
A blogger suggested that the 777 could be the answer. Not likely, either, because the 777 has a four year backlog and is being produced at the rate of seven a month, its highest ever.
The used airplane market is very tight. Boeing is looking for 777s, 767s and even Airbus A330s and A340s with little luck.
Boeing and the airlines will have to cope as best they can.
Here’s the backlog chart for Boeing. The production rates are:
737: ~30/mo
747: 1/mo
767: 1/mo
777: 7/mo
787: planned–initially 3/mo, increasing to 10/mo within 18 mo
| Unfilled Orders by Model | Through February 2008 | ||
|---|---|---|---|
| Model Series | Orders | Deliveries | Unfilled |
| Total Unfilled Orders | 3544 | ||
| 737 | |||
| 737-700 | 1474 | 921 | 553 |
| 737-700BBJ | 115 | 94 | 21 |
| 737-700C | 12 | 11 | 1 |
| 737-800 | 2705 | 1348 | 1357 |
| 737-800BBJ | 17 | 13 | 4 |
| 737-900BBJ | 6 | 0 | 6 |
| 737-900ER | 227 | 15 | 212 |
| Total Unfilled for 737 | 2154 | ||
| 747 | |||
| 747-400ERF | 40 | 31 | 9 |
| 747-400F | 126 | 116 | 10 |
| 747-8 | 26 | 0 | 26 |
| 747-8F | 78 | 0 | 78 |
| Total Unfilled for 747 | 123 | ||
| 767 | |||
| 767-200ER | 121 | 120 | 1 |
| 767-300ER | 538 | 523 | 15 |
| 767-300F | 82 | 49 | 33 |
| 767-400ER | 38 | 37 | 1 |
| Total Unfilled for 767 | 50 | ||
| 777 | |||
| 777-200ER | 433 | 405 | 28 |
| 777-200LR | 47 | 17 | 30 |
| 777-300ER | 354 | 130 | 224 |
| 777F | 78 | 0 | 78 |
| Total Unfilled for 777 | 360 | ||
| 787 | |||
| 787-3 | 43 | 0 | 43 |
| 787-8 | 642 | 0 | 642 |
| 787-9 | 172 | 0 | 172 |
| Total Unfilled for 787 | 857 | ||
| Total Unfilled Orders | 3544 | ||
| Model Series | Orders | Deliveries | Unfilled |
Congressional move ill-advised
A move in the US House to adopt legislation to overturn the USAF tanker award to Boeing is ill-advised on a number of levels.
According to a story in The Seattle Post-Intelligencer, Boeing supporters in the House, incensed over the award by the Air Force to Northrop Grumman and Airbus parent EADS selecting their A330-based KC-30 for the KC-45A tanker, are thinking about adopting legislation to block the award. The details, according to the news story:
- Prohibit the award of a US government contract to any company found by the US government to be receiving illegal subsidies;
- Direct the USAF to reconsider the competing tanker proposals and “factor in subsidies;”
- Direct the USAF to reopen the bidding and allow Boeing to propose a tanker based on the 777;
- Cancel the NGC contract outright.
There are so many things wrong with this approach.
- The World Trade Organization hasn’t ruled on the US complaint, so the USA’s interpretation of what constitutes “illegal” subsidies may or may not hold up before the international body charged with adjudicating these things. Apparently this minor legal detail doesn’t matter to the members of Congress who are behind this one. Furthermore, following the same concept, the EU has “found” Boeing to be receiving “illegal” subsidies (also a complaint before the WTO). If Congress adopts this clause, then the EU would be perfectly justified in retaliating against Boeing by adopting a similar rule. Bad idea all the way around.
- We’ve written on this one before. The USAF has no expertise to factor in anything about the subsidies. It needs to stay away from this topic.
- Boeing had the option to offer a “KC-777” alone or in tandem with the KC-767. Boeing says it was discouraged from doing so, but as far as we know hasn’t presented written evidence to support this, at least publicly. Presumably this element is detailed in the protest filed with the Government Accountability Office. If so, then the GAO can determine whether the USAF improperly steered Boeing away from offering the KC-777 and equally presumably, this might be grounds to send the competition back to the drawing board (so-to-speak). Congress doesn’t need to be involved on this element.
- This is the worst possible interference in Congressional meddling. It sends a message to any foreign defense company, and any domestic company partnering with a foreign company, that it’s a waste of time to compete for Defense business. As we wrote March 22, Britain’s BAE Systems was the sixth largest DOD contractor in 2006. What kind of message would this Congressional action send to BAE? Boeing partnered with Italy’s Alenia to offer the C27J twin-engine turbo prop for light cargo operations. It so happens the Alenia airplane won this contract. The Congressional action proposed on canceling the Northrop deal has all sorts of horror-ramifications.
Let the GAO deal with this, like the law allows. If the GAO upholds Boeing’s protest, so be it. But if the GAO rejects the protest, Boeing and its supporters need to let this one go. In fact, Boeing would be better off calling off the dogs on this Congressional fight. Boeing might win the battle but lose the war. The EU won’t sit back idly if Congress interferes, and Boeing will be the one to pay the penalty, not some member of Congress with a few district jobs to protect.
As we previously said, Boeing would be far better off to devote its engineering resources to fixing the 787 program and developing the Blended Wing Body for the KC-Y competition scheduled for 2020. A KC-BWB, and subsequent commercial applications of the BWB, would be far more advanced than the KC-30 or anything else Airbus has to offer, and superior to the KC-777. Go for this gold, and the advanced technology that comes with it. Don’t stick with an airplane originally designed in the late 1970s-early 1980s. Think ahead. Be bold.
Blended Wing Body test model. Source: Boeing
Eco-Aviation in the US
Eco-Aviation continues to gain ground in the US. Environmental forces in Europe have been targeting aviation for several years, and very aggressively. In the US, the issue has been much slower to catch on.
Airbus and Boeing have been working for years to reduce the environmental impact of their airplanes. The development of the A380, 787 and A350 are manifestations of this effort. In concert with the engine makers, GE/CFM, Rolls-Royce, Pratt & Whitney and International Aero Engines, the manufacturers have worked to reduce CO2 emissions.
We’ll be taking a more in-depth look at this issue next week on our corporate website bi-weekly update. In the meantime, Air Transport World and Leeham Co. have organized the USA’s first dedicated Eco-Aviation conference.
This conference has representation of the environmental community, US regulators, airframe and engine manufacturers and the airlines.
More information about the conference may be found here.
Hopscotching through Europe
We’re sometimes accused of having a warped sense of humor (guilty) that occasionally gets us in trouble with readers. But we simply can’t help ourselves.
We found something in the Boeing tanker protest that we could not help but chuckle at. Boeing has made a real issue over the inexperience of Northrop Grumman and EADS compared with Boeing on building tankers. Boeing also has criticized the production model of Northrop/EADS. The Airbus A330-200 on which the Northrop KC-30 is based in built in England, Spain, Germany and France and the fuselage components will be shipped to Alabama for assembly. (Not unlike the 787 and KC-767 production models, but that’s neither here nor there).
In the protest, Boeing had this gem:
“…The Northrop/EADS…production process…will hopscotch through Europe to produce some planes….”
Who says Boeing doesn’t have a corporate sense of humor?
Separately, Northrop said in a conference call that 50% of the revenue from the tanker will make its way to EADS, which then has to pay its suppliers. We took a stab at assessing this figure on our corporate website in a report. It looks like we were pretty close in our assessment.
When Hazy talks, people listen….
Steven Udvar-Hazy, the CEO of International Lease Finance Corp., carries enormous weight in the airline industry. His ILFC is the biggest customer of Airbus and Boeing. His public criticism of the A350 (Version 4.0) at the ISTAT conference two years ago (in response to a question we asked, BTW) set the stage for Airbus to redesign the aircraft.
Hazy once said he doesn’t think the A380 will sell more than 300-400 and he doesn’t think the 747-8I will sell well, either. Both predictions remain to be seen, but people listened.
While the world waits for Boeing to tell us about the latest delay for the 787, Hazy told the JP Morgan Aviation & Transportation conference today that he expects an all-in delay of 15-16 months from the original May 2008 delivery schedule, according to someone who was there. That means August or September of 2009 before the first delivery.
Hazy is usually extremely well clued in on these sorts of things. He told us of the third delay for the A380 before this became public, and we broke the news at the time.
It’s like the old EF Hutton slogan: When EF Hutton talks, people listen. EF Hutton is defunct, but this analogy isn’t to suggest that ILFC is headed that direction. It’s simply a great line.