Leeham News and Analysis
There's more to real news than a news release.
Odds and Ends: Boeing discounting; A380 analysis; A320neo LEAP
Boeing discounting: Although Boeing alternately acknowledges it’s under price pressure from Airbus or it’s maintaining pricing on its aircraft, UBS aerospace analyst David Strauss concludes that discounting is increasing on the 737 and 777 but is somewhat better on the 787.
Strauss writes in an August 6 note that discounting on the 737 is around 59%. The 777 is now discounted at about 54% and the 787 trails at 46%. (He doesn’t bother with the 747-8.) These are for in-production models.
Strauss concludes that 737 discounting increased since the introduction of the MAX in 2011.
Current list pricing for the 737 is $78.3m for the -700, 93.3m for the -800 and $99m for the -900. The MAX list prices are $87.7m, $106.9m and $113.3m.
The list prices for the 777 are $269.5m for the -200ER, $305m for the -200LR, $330m for the -300ER and $309.7m for the -200LRF. The -8X comes in at $360.5m and the -9X at $388.7m.
The 787-8 lists for $218.3m, the -9 for $257.1m and the -10 for $297.5m.
We are hearing, however, of special cases in which the 787-9 runs for $135m or significantly less and the 787-8 for as low as $115m. We also hear of the 777-300ER being offered for as little as $128m in special circumstances. The calculated discounts UBS mentions for 737 fall within the pricing range that we hear in the market. Strauss writes that some discounts to list reached 65%, also within the range of what we have heard.
The discounting becomes increasingly important because Airbus says it can price the A330ceo and neo sharply below the 787, up to 25% less. Boeing has far less flexibility to discount the 787 than with the 737NG and 777 Classic. The former still isn’t making money while the latter have amortized production lines–just as the A330ceo line is fully paid for. Airbus has offered the A330ceo at steeper discounts to list than Boeing offers the 787, and the forthcoming neo will also see steeper discounts than the 787–unless Boeing becomes more aggressive in that pricing, which will only increase the time to profitability.
A380 analysis: Here is a good, detailed analysis about the Airbus A380 and its position in the marketplace.
A320neo LEAP: CFM’s LEAP-1A, for the Airbus A320neo, has entered production. Aviation Week has this article with the details.
Overlooked possibilities for the A330neo
There are overlooked possibilities for the Airbus A330-800 and A330-900 New Engine Options.
What, you may ask, are these?
The A330neo might give new life to the poor-selling A330-200F program and, perhaps more importantly better position Airbus to compete for the next round of the USAF Air Force Tanker competition, the KC-Y program.
Half time 2014 for Boeing and Airbus
The major OEM’s have published their half time 2014 results and we can make an analysis of their half year results together with orders / deliveries and the state of their product lines. We compare Boeing and Airbus on the high end and in a follow up article Embraer and Bombardier on the low end. To make orders and deliveries comparable we include the month of July as the OEMs collected business to be announced at Farnborough mid July.
Boeing had a strong first half 2014. Boeing Commercial Airplanes (BCA) business is now past the initial problems on the 787 program and delivered 48 units January to June 2014 (8 per month) which is the same numbers as for the 777 program. The 737 is now at rate 40 per month with a first half total of 239 deliveries. The 747-8 is at rate 1 with only 6 deliveries and the 767 has stopped as a commercial program with only 1 delivery during the first half year. The commercial deliveries of 342 aircraft drove a 4% increase in company overall revenue and a 5% increase in earnings compared to first half 2013 (both non-GAAP i.e. the core business performance), this despite a Defense, Space and Security side which was down 5% on revenue and down 15% on earnings.
777-9X, 787-9 and 777-300ER in ANA colors
The troubled unit is Boeing Military Aircraft (BMA) which is struggling with its 767 tanker program (KC46A charged BMA with $187 million and BCA with $238 million due to increased development costs) and it is also fighting to not have its major military airplane program, the F18, stop 3 years from now from lack of orders. The military aircraft order drought contrasts with BCA where first half orders was 783 aircraft, mainly 737 but also 777X, where Emirates and Qatar confirmed their orders for 200 777X. Read more
Can the A350-800 rise out of its own ashes, like the Phoenix?
The announcement last week that Hawaiian Airlines swapped its order for six Airbus A350-800s for the A330-800neo isn’t a particular surprise, although we thought HA might issue an RFP and open the competition for Boeing.
That it did not may speak as much as to lack of the Boeing 787’s availability as anything else. But Airbus had some advantages going into a replacement for the A358: HA already operates a fleet of A330-200(ceos), so there is commonality between the neo and the ceo, minimal integration costs and the likelihood of additional Airbus incentives to keep HA in the Airbus family.
An alternative air show
The Farnborough Air Show got all the headlines this month, but we went to a small air show in Everett (WA), right at Paine Field, where Boeing dominates.
The Historic Flight Foundation is the brainchild of John Sessions, who has put together a private collection of all-airworthy airplanes. It’s also near by the Paul Allen (yes, the Microsoft Paul Allen) collection of airworthy airplanes at the Flying Heritage Museum and across the field from the restoration center of the Museum of Flight, which is at Boeing Field.
Farnborough does little to relieve 777 Classic, A330ceo production gap issues
The orders and commitments announced by Airbus and Boeing at the Farnborough Air Show last week for the A330ceo, the A330neo, the Boeing 777-200LRF and the 777-300ER will help fill the looming production gaps for the two airplanes, but work by both OEMs still needs to be done.
See the production gaps, before the orders and commitments were announced, by clicking the following links:
Airbus A330 delivery schedule, 2015-2020
Analysts split on Boeing 2Q earnings
Aerospace analysts split in their reaction to Boeing’s second quarter earnings. Many were upbeat on the commercial aircraft results, while others didn’t like the higher-than-expected, continued deferred expenses for the 787 program and a big charge on the KC-46A program.
Bloomberg News was quick to point to the KC-46A program charge and the implications that this is yet another costly new airplane program for Boeing.
Traders didn’t like the news, either, with stock falling more than $3 despite higher profits for the period and higher profit guidance going forward.
The Bloomberg article cites several analysts who didn’t like elements of the earnings report.
Here are initial notes, pre-earnings call, based on the press release:
Airbus A330-800 and -900neo, first analysis, part 3: performance
In our first two parts of the analysis of the Airbus A330neo launch at the Farnborough Air Show, we have gone through the information provided by Airbus and Rolls Royce and provided comments on what these really mean from a practical point of view.
Areas we wanted to verify with our independent model have been how the A330neo would perform versus the A330ceo, especially on shorter ranges, than the Airbus example of 4,000nm and how it would stack up against the Boeing 787.
We give the first answer to these questions with data from our proprietary, independent model. This is first-cut data and we bring it forward in time as there is some confusion on what Airbus has said about the shorter range performance of the A330neo. Read more
GE analysis post Farnborough
Our wrap up of Farnborough would be incomplete without looking closer at the world’s leading engine supplier, GE Aviation, which together with partners (like SAFRAN in CFM joint venture) garnered more than $36 Billion in orders and commitments during the show. This figure was only significantly bettered by Airbus ($75 Billion) and it came close to Boeing’s $40 Billion. With such level of business the claim by GE Aviation CEO, David Joyce, that the Airbus A330neo engine business was not the right thing for GE as they have more business than then they know what to do with, was certainly no case of “sour grapes”. Read more
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Posted on July 28, 2014 by Bjorn Fehrm
Airbus, Airlines, Boeing, Bombardier, CFM, Comac, CSeries, Embraer, Farnborough Air Show, GE Aviation, Leeham News and Comment, Pratt & Whitney, Rolls-Royce, Uncategorized
737 MAX, 777, 777-300ER, 777X, 787, A320NEO, A330neo, Airbus, Boeing, Bombardier, CFM, Embraer, Pratt & Whitney, Rolls-Royce