Conservatives attack ExIm Bank again; Embraer v Bombardier

Conservative tax groups are once again attacking the US Export-Import Bank and its funding of US exports, including Boeing aircraft.

ExIm was created during the Great Depression to support US exports. It get attention because Boeing is the most visible beneficiary. The think tanks believe ExIm financing amounts to corporate welfare–a position that is 180 degrees from their usual approach to corporations.

Delta Air Lines is leading corporate attacks because it contends that foreign airlines get preferential financing and put it at a disadvantage.

Delta says that carriers like Emirate Airlines hardly need ExIm support, and it has a point. But less well-capitalized airlines like LionAir certainly could use it. Some further reform may be needed; international rules to bring ExIm fees and interest rates to market rates were already adopted. Tightening eligibility may be fair.

Delta had this to say in an Op-Ed piece in Forbes. You have to click past the advertising page to read it.

But eliminating ExIm? We disagree, as we have written on several occasions. The think tanks would hand this market support over to Airbus, which benefits from the European Credit Agencies export financing and this wouldn’t go away. This would put Boeing and its supply chain at a disadvantage to Airbus in international sales.

Embraer vs Bombardier: Here’s an interesting article explaining how Embraer sees the market a bit differently than Bombardier.

How Boeing planned installing 787 fix in the field-a worldwide exclusive for CNN

Boeing held at least three press conferences to explain the battery system fix for its 787 and it dropped hints here and there about the teams going into the field to install the fix over a five day period per airplane, but officials never revealed the planning that went into the world-wide effort.

Until now.

We sat down with Boeing Commercial Aviation Services (CAS) last week for a world-wide exclusive on assignment for CNN International to get the story about the planning, the logistics, the mobilization not only of the teams of 300 that deployed into the field but for the first time learned of how Boeing drew from across the enterprise–the “One Boeing–” in greater detail than has been previously revealed.

Odds and Ends: Avoiding risk; Avoid 787 goofs with 777X; Anticipation for the 777X; CSeries expectations

Avoiding Risk: Jetmakers avoid risk by revamping existing models.

Avoid 787 goofs with 777X: This Reuters article reports how challenging the brand damage has become with the 787 issues, and it’s not the first time we’ve heard the link.

Looking forward to 777X: Akbar Al-Baker didn’t say much during the grounding of the 787, but he’s back in the news now. He looks forward to the 777X but couldn’t resist complaining about the GE90 on the current 777. That’s odd: the GE90 has only been in service since the creation of the 777-300ER and is well regarded in the industry. But Al-Baker being Al-Baker–need we say more?

CSeries Expectations: Bombardier says first flight will be next month. Expectations are beginning to increase, according to this article.

Sizing up the 777X vs Airbus–and Boeing

It was no surprise that Boeing’s Board of Directors authorized the sales force to begin showing the 777X to customers for sale, as opposed to the concepts. As we’ve reported (and as did others), this move was expected this week. Entry-into-Service (EIS) is slated for late 2019, and will be driven in part by development of the GE9X engine.

The 777X replaces the 777-200LR and 777-300ER, with the 777-9X at nominally 406 passengers giving Boeing a monopoly position similar to that currently enjoyed by the -300ER. The 8X/8LX is 353 passengers.

Airbus v Boeing TA

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The 777-9X falls just within the Very Large Airplane category of +400 passengers. We believe this will sound the death knell for the struggling 747-8I. The 747-8 nominally carries 467 passengers but Lufthansa, the only operator so far, configures the airplane for 362-386. The 777-9X will likely be far fewer than 406 in Lufthansa’s configuration but plane mile costs should be far superior to the 748. In high density configuration, the 9X will be solidly in VLA territory.

Update, 900am PDT: Boeing dropped five orders for the 747-8F from ailing lessor Dubai Aerospace. The 8F backlog is now down to 33, plus 26 for the 8I.

Sizing up engine market share on the A320 family

While competition between Airbus and Boeing snares nearly all the headlines and all the “sex,” competition for engine orders is less sexy and receives less attention.

Part of this is because of the increasing trend toward sole-sourcing. The Boeing 737 has been sole-sourced by CFM International since the creation of what is now called the Classic series: the 737-300/400/500. Pratt & Whitney believed at the time Boeing was upgrading the 737-200 that airplanes were up-gauging and bet its future on the Boeing 757 size. It was one of the classic corporate blunders of all time.

Shut out of the 737, P&W joined with Rolls-Royce and MTU to build the International Aero Engine V2500 for the Airbus A320 family. IAE came to the table late, giving CFM a solid head start on the program with a variant of the CFM 56 that powers the 737 Classic and later the 737 NG.

IAE trails to this day, but has done a remarkable job of coming from behind. CFM tends to be favored on the A319 and A320 while IAE is the preferred engine on the larger A321. IAE offers more thrust and better economics on the A321 while the CFM has better economics for the smaller Airbuses. CFM’s reliability is legendary and tends to be better than the V2500.

The blog PDXlight has done a marvelous job of dissecting the engine market share of the A320 family for the New Engine Option. We asked PDXlight to do the same exclusively for us for the A320ceo family. The results are below the jump.

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Boeing Board OKs offering 777X

It’s been the worst kept secret of the past few weeks: the Boeing Board of Directors has authorized offering the 777X to airlines. Dominic Gates has this story, and more are coming from The Wall Street Journal, The New York Times and others.

Update, 6pm PDT:

Here’s the WSJ article (subscription may be required).

Here’s the NYT article (we got this off Google News so it should be readily available to anyone).

Update, 7pm PDT: Dominic Gates has more information, including where the 777X might be built

Odds and Ends: Test sites for UAVs; Qatar CEO on 787; more on 747F crash

Support for UAVs: Innovate Washington, an arm of the State, is promoting sites in Washington as test sites for Unmanned Aerial Vehicles (UAVs). There are 37 states seeking to become test sites for UAVs.

The Pacific Northwest Aerospace Alliance on April 30 issued an endorsement of the plan.

Boeing’s Insitu unit builds UAVs and is headquartered in Washington.

Qatar’s CEO on 787: Akbar Al-Baker, the outspoken CEO of Qatar Airways, was remarkably quiet during the three-month grounding of the Boeing 787. He’s usually a pain in the rear to a number of OEMs with his public criticism. He’s back in the news today. He says Boeing will compensate Qatar for the grounding and adds he thinks the grounding was an over-reaction to Social Media coverage of the JAL and ANA events. He said the evacuation of the ANA 787 was “unnecessary,” according to the news report.

Retry on Boeing apology: Seems we linked a Wall Street Journal article to the posting on Boeing’s apology in Japan for the 787 problems. Let’s try this one again: Here is the story we meant to link.

More on 747F crash: Flight Global’s air safety expert weighs in the the video of the National Air Cargo crash.

Odds and Ends: 747-400 crash on tape; Repairing the 787 brand; Another 747 doom-and-gloom story

This is dramatic video on the National Air Cargo Boeing 747-400F crash at a US AFB in Afghanistan.

Repairing the 787 brand: We’ve noted previously the brand damage Boeing has to deal with following the 787 issues. This article reports that Boeing has taken out full page ads to repair the brand.

747 Doom and Gloom: We recently linked the post to the Puget Sound Business Journal story casting a dim picture for the future of the Boeing 747-8. The Wall Street Journal follows up with this equally doom-and-gloom piece.

Odds and Ends: Change fees; Two ex-NTSB members rap Boeing, FAA, current NTSB

About those change fees: Last week we reported from the US Airways Media Day and among the topics was that of change fees. US Airways matched United Airlines to charge $200 if you change your ticket. Here’s an article about how to deal with these fees.

Here’s another article about change fees, and how they’ve soared in recent times. If you think fees in the US are bad, look at the table and note in particular Ryanair’s fees–this carrier is notorious for charge for everything, and at steep prices, something subject to this funny video:

[youtube http://www.youtube.com/watch?v=ZAg0lUYHHFc&w=560&h=315]

Why are fees becoming so prevalent? Because this is where airlines are largely making their profits. US Airways said last week it expects to earn $600m from fees this year. This is more than its entire profit from 2012. This means airline operations lose money and profits come from the fees.

Also on US Airways: we also reported last week about some outstanding labor issues between the IAM at US Air and the TWU and American Airlines. An agreement over the weekend was reached about merging these two workforces under one union banner, according to Terry Maxon at the Dallas Morning News.

Ex-Members Rap FAA, NTSB: We bet they won’t be invited to a reunion. James Hall and John Goglia, former members of the National Transportation Safety Board, had harsh words to say about the FAA, Boeing and the NTSB over the certification of the Boeing 787 and the subsequent fix. Hall said the FAA needed to recertify the airplane, not just the battery.

Ethiopian Airlines resumed service with the 787 over the weekend, while Japan’s ANA engaged in a proving flight. This Wall Street Journal article (via Google News, so everyone should be able to read it) references additional measures required by Japan.

US Airways Execs talk to us about fleet plans, change fees and the AA livery

We had the opportunity to sit down for a one-on-two interview with Scott Kirby, President of US Airways, and Derek Kerr, EVP and CFO, during the annual media day. We covered labor, fleet planning, change fees and the new American Airlines livery.

When we talked right after the merger was announced, you indicated that all the labor problems at US Airways were solved and you had agreements with American’s labor groups. Yet I read about continuing labor issues. Bring me up to date about this.

Derek Kerr: I think what we’re talking about is we have a road to solve all the labor problems. The contracts have a methodology for the pilots and flight attendants for who we’re going to get there. The only thing we have right now is our ramp and mechanics. We don’t have a deal with our ramp and mechanics and we’re negotiating that today. That is in normal negotiations. We’re going through with a mediator. That really is the only area where we are working on from a stand-alone perspective to try and get a deal done with our group. It’s a little complicated because we are trying to work the two groups (TWU represents American Airlines, IAM represents US Airways-Editor.) From the standpoint of where we are today, we have to road to get the pilots done. We have the road to get the flight attendants done. We have the ramp and mechanics on [the American] side complete. We have a six year deal. We’re trying to get our group together with that.

American is taking about 65 A319ceos. US Airways has a large fleet. You indicated when we talked right after the merger was announced that you expected to use some of US Airways’ 319s on American routes, but at that time it was too soon to draw any conclusions about the integrated fleet plan. What is your thinking today?

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