Boeing’s production gap challenge for the 777 Classic

Wall Street aerospace analysts are becoming increasingly concerned that Boeing will fall short of its goal to maintain 777 production rates at the current 8.3/mo through the introduction of the 777X, planned for entry-into-service in 2020.

One analyst predicts a rate reduction from 8.3/mo to seven and then to five as 2020 gets closer. Others are beginning to hint that they won’t be far behind in lowering expectations. But don’t tell this to Randy Tinseth, VP Marketing for Boeing.

“We have things in the pipeline and we’re working on those,” he told us July 1. “We’re confident the sales will come home and we’re confident we’ll bridge the gap.”

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The struggling Boeing 747-8

News reports that Boeing is promoting the 747-8I to Emirates Airlines prompted some to leap to conclusions that the struggling program is about to get a sorely needed shot in the arm. We don’t think so.

For one thing, Emirates president Tim Clark immediately poured cold water on the idea. In the process, in the same report, he said the 747-8 can’t match the Airbus A380 economics.

For another thing, we believe Emirates is trending toward a two-aircraft type fleet for which there is no room for a third–whether it is the Airbus A350 or the 747-8I. It’s clear the Emirates business model is built around the A380 and the Boeing 777-300ER/777X.

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New airplanes nearing fruition? A330neo, 757RS buzz increasing

Development of two airplanes–the Airbus A330neo and a replacement for the Boeing 757–may be pushing to the forefront, according to two news articles yesterday.

Reuters reports that a decision whether to proceed with the Airbus A330neo could come before the Farnborough Air Show, even if a formal launch isn’t announced at the international event next month.

Bloomberg reports that Boeing may be nearing the launch of a 757 replacement sooner than expected.

A330neo

We’ve written extensively about both prospective airplanes, with the A330neo concept one of many subjects from the Airbus Innovation Days. The Reuters article reports what we have been hearing for some time: the airplane could be announced at Farnborough–but it might not be, either. What is new is the increasing likelihood Rolls-Royce will become the sole-source supplier. Aviation Week originally reported this prospect.

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Odds and Ends: MH370 Update: Australians think hypoxia most likely, others still point to pilot misdeeds; and more

MH370: Australian investigators, having reevaluated evidence of missing Malaysian Airlines MH370, conclude that crew hypoxia may be the most likely reason the flight disappeared. But even within the Australian government, this is not a unanimous conclusion, and it’s certainly not within the international community. The captain of the flight is the chief suspect, according to other reports.

Boeing cost cuts: Ray Conner, CEO of Boeing Commercial Aircraft, explained Boeing’s cost-cutting approach in Washington State and with suppliers and plead for understanding, reports the Seattle Times. Conner also termed the potential loss of ExIm Bank funding as a “huge blow,” should Republicans in Congress succeed in killing the program. Closing ExIm would give Airbus a major advantage, he said.

Airbus funding: Airbus and a company in the Middle East have created an Islamic funding structure to help finance Airbus aircraft in the region. With the Middle Eastern carriers becoming more and more important in global aviation, expanding this area as a funding source naturally follows. Islamic financing is not new, but it’s been a narrowly-based source of funding.

 

Asiana crash finding implicates Boeing somewhat, but our view is this is a pilot issue, plain and simple

The National Transportation Safety Board (NTSB) yesterday lay the Probable Cause of the crash of the Asiana Airlines Boeing 777 last year at San Francisco as pilot error, but in the process implicated a “complex” auto-throttle system as a contributing factor.

Not surprisingly, Boeing disagreed (“respectfully” so), nothing that 55m flights in the 777 had occurred without incident.

While we are not at all surprised at Boeing’s position (we would have been surprised had it been otherwise), we side with Boeing on this one.

We will grant that perhaps the auto-throttle system might be tweaked to make a safe airplane and safe system even better, incorporating an aural warning when necessary. And perhaps the training procedures could be made better and more clear. But in the end, it remains the responsibility of the cockpit crew to monitor instruments and speak up when things aren’t as they should be.

In this case, the flight was also under visual flight rules (VFR). So, the pilots should have been:

  • Looking out the window to visualize the approach;
  • Monitoring the airspeed and altitude instruments, among others; and
  • Speaking up. Most importantly, the third pilot did see something was wrong but didn’t say anything. Culturally, it is common in Asia for subordinates to defer to the Captain. But it’s lousy Cockpit Resource Management.

If the pilots had been doing their job, the plane almost certainly would not have crashed. The auto-throttle may have led the pilots to a false sense of security, but in the end they didn’t fly the airplane.

That’s was caused the crash.

Southwest Air’s expansion to resume next year, says CEO

Southwest Airlines plans to complete the integration of AirTran by the end of this year, positioning the carrier to resume expansion into new markets, says CEO Gary Kelly.

In an interview last week at WN’s Dallas headquarters, Kelly said the last of AirTran’s Boeing 717s will exit service by year end, leaving Southwest with a fleet of 690 Boeing 737-300s, -700s and -800s. There were 56 737-700s, 52 -800s, 30 -7 MAX and 170 -8 MAX on order at December 31 with more than 220 options for all types.

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Challenge 777X tax breaks, “correct” US ExIm Bank Boeing funding, says Airbus CEO

Challenge Boeing 777X tax breaks and adjust the US ExIm Bank rules.

This is the view of Airbus CEO Fabrice Bregier.

We had the opportunity for what amounted to a one-on-one, on-the-record discussion with Bregier during the Airbus Innovation Days media briefings two  weeks in Toulouse. We sat at Bregier’s dinner table, which although filled with media, was in a noisy setting, allowing us to have some elbow-to-elbow conversation on a variety of topics that couldn’t be heard in the din.

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Next new, clean sheet airplane around 2030, says Airbus

Airbus currently is planning for the next new, clean sheet airplane around 2030 and now are focusing on incremental improvements to the existing product lines, officials said at the Innovations Days annual media briefing last week in Toulouse.

Fabrice Bregier, CEO of the Airbus commercial aircraft unit, said that “innovation is on a case3-by-case basis,” with a successor to the A320 family requiring an engine “with great benefit.” He did not define this, but previously Airbus indicated a successor needs a combined 30% airframe/engine improvement to make an entirely new airplane design worthwhile.

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Airbus Innovation Days, Part 5: wide body twin development

Kiran Rao, executive vice president, strategy and marketing.

Rao discussed the wide-body strategy for Airbus at Innovation Days on Wednesday. The following paraphrasing synopsizes his remarks.

  • More than 3,500 wide bodies have been sold by Airbus, starting with the A300B2, the first wide0body twin.
  • 1,200 wide-bodies are in backlog. A330: 250-300 seats; A350: 280-370 seats; A380 more than 500 seats (two-class, long range layout).
  • Airbus officials, including Rao, continued to promote the company’s 18-inch seat campaign, comparing the A-Series against the Boeing 777/787 17-inch 10 abreast and nine abreast respectively.
  • Boeing has to go 10 abreast with the 777 “because the economics don’t work at nine abreast.” Boeing had to go with nine abreast on the 787 rather than eight abreast because the “economics don’t work” compared with the A330 otherwise.
  • Economics is the “most important criteria” and the “Airbus aircraft come out ahead.”
  • Rao claims the A330 has lower maintenance costs, lower airport, lower navigation and lower capital costs. The A330 has simpler systems so costs less to maintain, particularly on the engines. The A330-300 is slightly lighter than the 787-9.
  • For the first time we’ve heard, an Airbus official referred to the “A330ceo.”
  • Each seat for a long-haul operator is worth $2m per year, so an A350-900 vs a 787-9 with 35 more seats can generate $70m more revenue per year.
  • The A350-1000 has a 15% COC per trip and a 5% COC per seat advantage, Rao says. Assumptions: 4,000nm, $3/gal, 2 class configuration, 369 seats for A350, 405 seats for 777-9.
  • 777-9X is inefficient without the stretch and a longer wing. It has inferior comfort, Rao says.

Analyzing the Emirates order cancellations

The cancelled order for 70 Airbus A350s before the company’s annual Innovation Days was a surprise and an embarrassment that took the edge off what was intended to be a two day promotion of Airbus programs.

The cancellation by Emirates Airlines was certainly not good news. But it probably should not have been a total surprise. That it was had more to do with people not paying attention. Emirates had been signaling for some time it had issues with the program ever since Airbus rejigged the A350-1000 a few years ago, without consulting Emirates in the process.

Headlines were bad and while most analysts were measured and reporting balanced, there were a few exceptions of hand-wringing disaster for breathless stories.

Airbus tried to downplay the cancellation, without much success. But an objective analysis suggests Airbus and the rationale analysts are correct: while a blow, it’s hardly a program-defining moment, any more than the Bombardier CSeries-Pratt & Whitney engine failure last month was a defining moment in that program.

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