Leeham News and Analysis
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Air Wars: The Global Combat Between Airbus and Boeing
By Scott Hamilton
Sept. 7, 2021, (c) Leeham News: My book, Air Wars: The Global Combat Between Airbus and Boeing, is now available on Amazon.
Three years in the making—delayed by the need to include the Boeing 737 MAX crisis and the impacts of Coronavirus—Air Wars is a combination of a biography of John Leahy and the 1982 book, The Sporty Game. The Sporty Game was considered the definitive book about the competition between Boeing, McDonnell Douglas and the young Airbus.
Leahy worked
for Airbus for 33 years, 23 of them as the chief commercial officer for the company. Throughout executive turmoil at Airbus, and at Boeing, Leahy was the one constant salesman. Boeing officials were slow to recognize the threat Airbus and Leahy presented. The wake-up call, according to a top Boeing salesman at the time, was the 1992 order from United Airlines for Airbus A319s and A320s. United considered the airplanes superior to the 737-300/400. The order prompted Boeing to develop the 737 NG. From there, the global combat became a “bare-knuckle brawl,” as journalist Dan Catchpole put it this week.
Executives and salesmen from Airbus and Boeing were interviewed for Air Wars. So were industry leaders. My own archival resources and reporting were used as well.
The result is a book that describes the successes and failures of Airbus, Leahy, and Boeing. It describes how Bombardier came out of nowhere to become a threat initially dismissed by Boeing—but recognized by Airbus. Air Wars describes the sales campaign that launched the A380 and killed the proposed 747-500/600—but led Boeing to the 787.
Air Wars begins with the crucial sales campaign with American Airlines that led to the decision by Boeing to launch the re-engined 737 program—which later was branded as the 737 MAX. The book also dispels the myth that Boeing was hasty in designing the re-engined 737.
Many untold stories are in Air Wars, including sales campaigns, product strategy decisions and personal anecdotes about Leahy—including how McDonnell Douglas tried to recruit Leahy from Airbus in the early 1990s.
A synopsis of the book is below.
777X demand grows ever less certain
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By the Leeham News Team
Introduction
Sep. 6, 2021, © Leeham News: As Boeing slogs through an increasingly deep obstacle path to getting its beleaguered 777X into service, questions are growing around the airplane’s true demand and whether Boeing can ever break even on the program.
The manufacturer classifies 74 orders as questionable under the ASC 606 accounting standard. Boeing now counts only 246 777X orders as firm. It now expects entry into service to occur in late 2023, although key customer Emirates Airline believes this is more likely to be early 2024.
There are officially still eight identified customers for the passenger 777X: ANA, British Airways, Cathay Pacific, Emirates, Etihad, Lufthansa, Qatar Airways, Singapore Airlines. But COVID-19 is forcing major network carriers like these to rethink their long-term growth plans. Increasing competition in Europe and Asia over a likely permanently smaller set of business travelers means even fewer of these orders are likely to remain intact.
Boeing’s first 777X departs on its maiden flight in January 2020. Source: CNN.
Boeing CEO David Calhoun recently said a freighter version of the 777X might replace today’s 777F. New ICAO noise and emission standards mean that the 777F and 767-300ERF, can’t be produced after 2027. But it’s unclear whether the 777-8F — a program that hasn’t been launched — will be ready by 2028.
Summary
- Passenger 777X is troubled by permanent loss in premium traffic, poor financial risk profile.
- 777X freighter demand is limited by 777F classic market size, P2F conversion feedstock.
- The air cargo market will revert to historical norms.
The single-aisle freighters, 737-800BCF versus A320P2F.
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By Bjorn Fehrm
Introduction
September 2, 2021, © Leeham News: In our series about freighters, we now look at domestic single-aisle freighters based on the Boeing 737-800 and the Airbus A320. The 737-800BCF is the follow-on small Boeing freighter conversion from the 737-400, as more 737-800 passenger feed-stock becomes available.
There is also ample feed-stock of older A320-200 with market values that make these interesting as a P2F freighter.
Which one of the two offers the lowest costs per tonne-km? We use our performance model to find out.
Boeing’s 737-800BCF Source: Boeing.
Summary
- Both the 737-800 and A320 older aircraft are available at prices that make freighter conversions attractive.
- Which of these freighters has the best operating economics, and what is the difference in capacity?
The factory freighters, Boeing’s 767-300F versus Airbus’ A330-200F
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By Bjorn Fehrm
Introduction
August 26, 2021, © Leeham News: In our series about freighters, we try to understand why the Boeing 767 factory freighter, the 767-300F, has outsold the Airbus entry, the A330-200F, six to one. In the passenger variants, the Airbus A330 is the more popular model with a 30% delivery advantage.
We model the freighters to understand any technical and operating economics differences; then we complement with market observations.
UPS was the launch customer for the 767-300F, with first delivery in October 1995.
Summary
- The Boeing 767 freighter is the market’s most successful widebody freighter after the Boeing 777F.
- It has, over the years, trumped the Airbus entry, A330-200F six to one in sales and five to one in deliveries. We investigate why?
Aircraft replacement conundra
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By Vincent Valery
Introduction
Credit: Delta Air Lines
Aug. 23, 2021, © Leeham News: Boeing has been studying the launch of a clean-sheet aircraft design for more than a decade. In light of the lingering effects of the COVID-19 pandemic, it is unlikely the American OEM will launch such a program until a recovery is well underway.
At this point, no one, including LNA, knows for sure what the New Boeing Aircraft (NBA) will be and, most importantly, when it will likely enter service. Among the possible scenarios, Boeing could decide to wait until more innovative propulsive technology, such as an open rotor, is mature enough.
Should Boeing decide to take the latter path, the NBA would realistically enter into service in the middle of the next decade. Under such a scenario, airlines operating older-generation aircraft need to find replacements among the current type of in-service aircraft.
Most older-generation in-service aircraft seating 100 or more passengers have an immediate replacement in size, which usually comes with more payload-range capacity. However, some don’t, which creates a headache for fleet planners.
LNA will highlight in this article the current in-service aircraft that don’t have an immediate replacement and assess the options to replace those.
Summary
- Lack of close replacements in two market segments;
- One market isn’t a problem for passenger airlines
- But another can be;
- One variant concentrates most aircraft without replacements;
- A carrier to watch.
Pontifications: Does Embraer’s turboprop design foretell what Boeing needs?
By Scott Hamilton
Aug. 23, 2021, © Leeham News: Could Embraer’s new turboprop design have formed the basis for the 100-150 seat Boeing single-aisle aircraft had the joint venture proceeded?
A former Boeing engineer thinks it might have.
The aft-mounted, open rotor engines and the ability to switch later to hydrogen fuel represent the kind of advances Boeing could use to restore its leadership role in commercial aviation.
Under the proposed JV, which Boeing ash-canned in April 2020, Embraer would have been responsible for development of the 100-150 seat aircraft Boeing needs to replace the 737-7 and 737-8.
HOTR: When “Buy American” isn’t
By the Leeham News Team
Aug. 20, 2021, © Leeham News: President Biden’s “Buy American” policy means increasing the US content in things purchased by the federal government. Except when it doesn’t.
Biden announced the policy in July. LNA raised the prospect that the increasing US content requirements could make it difficult for Lockheed Martin and Airbus to offer an A330-200-based airplane for the US Air Force’s KC-Y Bridge Tanker.
LNA now has clarity on this. Under Biden’s Buy American policy, there are—as it turns out—some key exemptions.
The P2F freighters, 757-200P2F versus A321P2F.
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By Bjorn Fehrm
Introduction
August 19, 2021, © Leeham News: In our series about freighters, we now look at domestic freighters based on the Boeing 757-200 and the Airbus A321. The 757-200 is a popular Passenger to Freighter (P2F) conversion, but as production of the 757 stopped in 2004, there is a limit to the conversion feed-stock for the model.
At the same time, older A321s are reaching market values where their cost enables competitive P2F conversions.
We use our performance model to check if the A321P2F is a good alternative to the 757-200P2F.
The first EFW A321P2F was delivered to Qantas in October 2020. Source: Qantas.
Summary
- The feed-stock for the Boeing 757-200 Passenger to Freighter conversions will diminish at some point in the future.
- The alternative in the same freight volume class is a converted A321. We check how well it fits the bill as an alternative to the 757-200.
An Update on Airbus, Boeing Orders at Risk
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By Vincent Valery
Introduction
Aug. 16, 2021, © Leeham News: As a result of the COVID-19 pandemic and delays in the re-certification of the 737 MAX, Boeing lost a large number of 737 MAX orders in 2020. The majority of the cancellations were flagged as ASC 606 adjustments on Boeing Commercial Airplane’s website.
Since the Federal Aviaton Administraton lifted the 737 MAX grounding in November, the program has accumulated new orders from longtime Boeing customers, notably Alaska Airlines, Ryanair, Southwest Airlines, and United Airlines.
Unlike Boeing, Airbus isn’t subject to an accounting rule similar to the ASC 606 adjustments. Therefore, the European OEM does not break down the orders at risk of cancellation by the program. Airbus only discloses the nominal value of its total adjusted order book in its annual report.
LNA analyzed in July and November last year Airbus’ and Boeing’s order books to identify orders at risk and come up with an apples-to-apples comparison. We perform an update of this analysis with the latest order books from both OEMs.
Summary
- Difference between LNA and Boeing methodology
- Adjustments exacerbate traditional OEM strengths and weaknesses;
- An upcoming order book clean-up for older programs;
- Two programs with material adjustments;
- Some twin-aisle variants are less popular than others.
Pontifications: A330ceo P2F picks up steam
By Scott Hamilton
Aug. 16, 2021, © Leeham News: Freighter conversions for the Airbus A330ceo are picking up steam as the inventory jumps following the COVID-19 pandemic.
There are 20 A330s that have been converted: 13 -300s and seven -200s. Package carrier DHL converted eight -300s, the most of any operator. It has contracts to convert 20 more, reports Cargo Facts.
The combined 40 P2Fs exceeds the number of A330-200Fs that was built fresh off the factory line—38.
Most observers consider the new A330-200F program a failure, although this may be a narrow view. While commercial sales were disappointing, the -200F was a companion program to the A330 Multi-Role Tanker Transport. There are so far 61 orders for the MRTT; as of last month, 48 were delivered. Looking at this as one program off the same platform, this means there were 99 orders to date.
Airbus and Lockheed Martin have joined to bid on the US Air Force contract for between 140-160 refueling tankers in the KC-Y competition that begins shortly. Boeing will offer the KC-46A, based on the 767-200ER platform. Lockheed last week announced it will rebrand the MRTT the LMXT.