Delta Air Lines: Bombardier, in a welcome development, landed a major order with Delta for 40+30 CRJ900s, beating out Embraer’s E-Jet proposal. Delta has a large, installed base of CRJs and EMB wasn’t too optimistic, in management-analysts meetings last week, according to research notes. But BBD liked its odds, considering the CRJ is more fuel efficient than the E-Jet (being a small airplane), even if the E-Jet is far more comfortable.
For BBD, the order is important for two reasons. First, the CRJ backlog is shrinking. Deliveries begin 2H2013, and this illustrates the point. Second, with BBD sucking up cash in advance of CSeries first flight in 1H2013, the deposits, progress payments and delivery payments are welcome, indeed.
The next face-off between the two OEMs is American Airlines, where both have large installed RJ fleets of aging aircraft.
Boeing 787 events: Airworthiness Directive. “Emergency” landing. AirInsight puts things into perspective.
Airbus lands China orders: Hmm. EU suspends plans to impose ETS tax. Airbus lands orders for 60 A320s and 10 A330s. What do you make of that…
Enders now 1-1, sort of: Tom Enders, CEO of EADS, lost his bid to acquire BAE Systems due to German government interference. The merger would have reduced government meddling, balanced EADS commercial and military business, put EADS on a more equal footing with Boeing and positioned EADS better for US DOD contract bids. But Enders has now won a corporate governance restructuring that ends government meddling in daily operations. He still hasn’t achieved his other goals, but this one is so huge that we rate Enders’ won-lost record 1-1.
Posted on December 6, 2012 by Scott Hamilton
Boeing and its engineers’ union, SPEEA, suspended talks Dec. 4 until after the first of the year at the request of the federal Mediator.
Boeing and SPEEA issued terse statements citing the Mediator but adding no comment of their own:
WASHINGTON, D.C. – Federal Mediation and Conciliation Service Director George H. Cohen issued the following statement today on the ongoing labor negotiations between the Boeing Company and the Society of Professional Engineering Employees in Aerospace:
“At the request of the Federal Mediation and Conciliation Service, negotiations between The Boeing Company and the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001 are being suspended until after the first of the year. Both sides agreed to this mediator request.”
“In the interim, the FMCS will be in discussion with the parties to schedule resumption of negotiations.”
Posted on December 6, 2012 by Scott Hamilton
Airbus last week announced additional gross weight upgrades and improvements to the A330-200/300 that increase range and reduce fuel burn. Aviation Week has this story about the enhancements.
This is the latest in a series of improvements taking advantage of the four year delay in the Boeing 787 program that Airbus believes will enable the airplane, which first entered service in 1994, to remain viable well into the 2020 decade.
Boeing launched the 787 in December 2003 and promptly claimed the aircraft would kill the A330. Had the aircraft entered service in May 2008 as originally planned, Boeing might have been able to make strides to do so. But delays allowed Airbus time to incorporate several Performance Improvement Packages (PIPs). The European company has sold more A330s post-787 launch than it did before.
The latest improvements give the A330-300 an anticipated range of more than 6,000nm, compared with less than 4,000nm when the airplane entered service.
Posted on December 3, 2012 by Scott Hamilton
We’ve been traveling on business all week and naturally the conversation was all aviation. We spoke with lessors, aerospace analysts, hedge funds and private equity. In what amounts to a data dump, here is what is being discussed “out there.” This is in no particular order.
Unrelated to Airbus and Boeing, our colleague Addison Schonland has this first-hand account of Isreal’s Iron Dome.
Posted on November 30, 2012 by Scott Hamilton
Labor contract negotiations between Boeing and SPEEA took a turn for the worse (and things were bad already) when Boeing asked for federal mediation.
If this request is granted, SPEEA won’t be able to strike while mediation is in process. Only after an impasse was declared by the Mediator, could SPEEA walk out (or conversely, Boeing could lock out the union).
If mediation is granted, Boeing buys an indefinite time during which aircraft deliveries was proceed more or less uninterrupted.
Update, 530 PST: Well, it seems our long history in the airline business got the better of us. In 20 years we never saw a strike happen until an impasse was declared in a mediation. As Nixon press secretary Ron Ziegler famously said, the statement above is “inoperative.”
SPEEA is already engaging in job action, refusing voluntary overtime and working to the rules. Look for this to expand.
The last time SPEEA struck for an extended period—40 days in 2000—Boeing deliveries for the year dropped by 50.
Negotiations update, Nov. 29, 2012
Boeing proposes mediation in SPEEA negotiations
Today, the company responded to SPEEA’s counter proposal regarding wage increases, the Voluntary Investment Plan and the BCERP basic benefit. Because the differences between the parties are still significant, and this was clearly reinforced during today’s conversation, the company proposed that a federal mediator meet with the Boeing and SPEEA teams. We hope the expertise of the Federal Mediation and Conciliation Service can help move the two sides toward a resolution.
During today’s session, we explained the salary increase pools proposed by SPEEA for both the professional and technical units of 6 percent a year for three years would move the salaries of our employees above the Puget Sound market. We also pointed out that SPEEA’s proposal to allocate two-thirds of the salary pool to all engineers and techs significantly slows the salary growth of top performing engineers and techs.
We explained that our Voluntary Investment Plan company match of 75 percent of the first 8 percent employees contribute is already market leading when compared with our aerospace peer companies. SPEEA proposed a company match of 75 percent of the first 10 percent.
Finally, we explained that the company’s proposal to increase the BCERP basic benefit each year over a four year contract to $85, $87, $89 and $91 keeps the plan market leading. SPEEA proposed to increase the basic benefit each year over a three year contract to $87, $93 and $99. The vast majority of SPEEA-represented employees retire under the pay-based benefit which will continue to go up with pay increases, including EIP, and will make an already market-leading plan even better.
The intent of our proposal is to improve upon a total compensation package that already leads the market. The question is — how far can the package exceed the market while we remain competitive as a business for the long term.
We encourage you to log on to the negotiations website to see regular updates where you’ll also find the Pay & Benefits Estimator. The Estimator shows how the company’s offer will affect you personally.
And the SPEEA message:
Posted on November 29, 2012 by Scott Hamilton
Boeing’s next twin-aisle strategy: Aspire Aviation has this long article looking at when Boeing will launch the 787-10 and 777X.
Our thoughts on the topic: We are hearing EIS for the 787-10, as Aspire reports, will be 2018 or beyond and that EIS for the 777X will likely be 2020 or beyond. As always, the situation is fluid and things could change. Aspire’s projection of a formal 787-10 launch in June is timed, probably not so coincidentally, for the Paris Air Show. (Unlike the boring Farnborough Air Show, Paris already is shaping up as a prospectively exciting show. Bombardier announced first flight of the CSeries is now expected in June [before, during or after the Show?] and Airbus would like to fly the A350 before the show–something that will likely be a challenge.)
We know Boeing continues to wait as long as it can in hopes Airbus will commit to a final design of the A350-1000 before launching the 777X, but time may be running out unless Boeing is willing to extend the gap between EIS of the -1000 and EIS of the 777X.
A 2018 or later EIS of the 787-10 means Boeing will avoid the EIS of two airplanes (the MAX and the -10) simultaneously, which could be a lesson-learned from the 787/747-8 programs. Readers may recall that Jim Albaugh, former CEO of Boeing Commercial Airplanes, said Boeing would avoid this in the future after experiencing the problems of the two programs.
Perhaps, and this is speculation, extending the time between EIS of the 787-10 and the 777X is partly driven by the same concern.
Given program history, at least some Wall Street analysts we’ve talked with are already raising the prospect that the 737 MAX EIS (4Q2017) might slip. Why? They are concerned about the broadening design creep as well as development of the CFM LEAP-1B. Can they point to anything concrete? Not yet. Chalk the conversation up to Boeing’s poor performance on the 787 and 747-8 programs and the fact that there are still industrial issues with the 787 suppliers, according to the chatter.
You read it here first: Aviation Week reports Lion Air is considering Airbus A320s to supplement its Boeing 737 fleet. We reported this on September 24.
Posted on November 29, 2012 by Scott Hamilton
Within minutes of each other, we received the updates from Boeing and SPEEA, below. It doesn’t sound like they were in the same meeting.
Boeing and SPEEA discuss Ed Wells Partnership funding
Today, Boeing and SPEEA had an in-depth conversation about the Ed Wells Partnership and SPEEA’s proposal to fund the program.
The Boeing team restated our commitment to Ed Wells and clarified that we do not intend to cut funding to the program. Our focus remains on finding solutions to deal with expected future cost increases for Ed Wells, which is just one component of our employee training program.
While these negotiations continue, we already have an agreement in place to continue offering a full schedule of Ed Wells courses through the first quarter of 2013.
Boeing and SPEEA are scheduled to meet again Thursday morning.
Boeing has addressed the full range of proposals since our initial offer in September. Today, we posted a new fact sheet showing the current status of the issues raised as concerns by SPEEA from that initial offer.
We encourage you to log on to the negotiations website to see regular updates.
And now the SPEEA update.
Prof & Tech Negotiations Update
Again, no response to SPEEA counterproposals, Boeing still wants to cut training
The Boeing Company today (Nov. 28) again did not respond to our counterproposals and issues from last week, including our proposals on respectful wage pools, pension and pay disparity between the Professional and Technical employees.
Discussing the Ed Wells Partnership – our joint training program – the company’s proposed budget would result in the loss of 10,000 class seats during the next four years. The bulk of discussions revolved around the impact of these cuts on engineers and technical workers and a re-explanation of SPEEA’s funding proposal.
“The presentation included an example of a student who credited an Ed Wells class for his ideas that helped the company,” said John McLaren, Professional team member. “The idea resulted in a $6.3 million savings for Boeing each year, 1,200 gallons of fuel savings per airplane annually for customers and enabled Boeing to increase the 737 production rate.”
Link to Joint Ed Wells PowerPoint presentation
Link to SPEEA Ed Wells PowerPoint presentation
Our efforts remain focused on negotiating a contract that recognizes our contributions to the success of Boeing. We encourage members to continue workplace actions, including refusing to work voluntary overtime and other ‘work-to-rule’ actions to bring pressure on Boeing corporate.
We are doing everything possible to avoid the need for a work stoppage. However, as it’s also important to be prepared, the SPEEA Bargaining Unit Negotiations Support (BUNS) committee is holding two picket captain training sessions next week. Interested members should look for the notice in the SPEEA online calendar or talk to their Council and Area representatives.
Posted on November 28, 2012 by Scott Hamilton
Notation: Aeroturbopower weighs in on the controversy with his usual data-driven analysis.
With the commencement of the advertising battle between Boeing and Airbus, it is useful to make some additional comparisons prepared by AirInsight.
Here is the offending Boeing ad that set off the ad wars. It’s a two-page spread and sorry, we couldn’t scan it into one advert. Click each image to englarge.
From AirInsight:
The 747-8I and A380 are quite different aircraft, and while some view them as direct competitors, they are more properly lone players in different segments of the VLA market. Nonetheless, an airline will likely evaluate both aircraft as it maps its growth strategy, and two carriers, Lufthansa and Korean Air, have chosen to fly both aircraft types for different route structures. Each of those airlines have indicated that the 747-8I fills a gap between their 300 seat aircraft and 525 seat A380 aircraft, and will deploy the aircraft appropriately to traffic demand and traffic growth in different markets.
While the two aircraft are quite different, they are still compared to each other and both aircraft mile and seat mile economics. Of course, in comparing these aircraft, seating configurations make quite a difference, and the two aircraft manufacturers utilize markedly different assumptions in that regard. Boeing indicates that standard 3-class seating configuration for its 747-8I is 467 seats, but Lufthansa is currently using 362 in its aircraft, compared with 334 in a 747-400, and 526 for its A380. Each of these layouts is oriented heavily towards premium class seating, an essential element for many carriers these days.
Posted on November 28, 2012 by Scott Hamilton
A new battle has broken out between Airbus and Boeing, this time with a sharp (and perhaps unprecedented) advertisement by Airbus accusing Boeing of outright lying.
(Click to enlarge.)
We don’t remember ever seeing this direct assault by one of the Big Two OEMs on the other. We certainly recall advertisements in the debate over two engines (Boeing 777) vs four (A340)–but to call the competitor a liar like this? It’s new territory, at least in print.
Airbus has been calling Boeing a liar in conferences for its representations for years.
As regular readers of this column know, we’ve been especially skeptical of Boeing claims, based on conversations we’ve had with airlines that have analyzed the aircraft involved, and in some cases those which operate both fleet types. The neutral arbiters–these customers–universally tell us Boeing claims are exaggerated and that the costs between the two OEM’s narrow-body aircraft are about equal. The costs between the Boeing 747-8I and the A380 are also exaggerated by Boeing, these companies tell us.
Furthermore, we’ve cast doubt on Boeing’s reliance of US DOT Form 41 data (which in itself is distorted and unreliable) and a study in Europe that looks at data from 2006-2009, data that is clearly out of date.
At the same time, we’ve taken Airbus to task over its parameters in concluding the A330-300 is a better airplane economically than the forthcoming 787-9.
At ISTAT Europe in September, an official from Virgin Atlantic publicly challenged Boeing’s Randy Tinseth over economic data Tinseth presented comparing Boeing and Airbus aircraft. Tinseth, according to those present, merely responded that he stood by the numbers.
Bloomberg has this story on the controversy. Reuters has this story.
In a way, the entire fight is silly. No airline or lessor will buy Airbus or Boeing aircraft based on these sort of claims. The airlines run their own economic analysis and the lessors are more concerned about lease rates and residual values. The entire conference and advertising effort is for consumption by uninformed journalists, financiers and aviation geeks. Those who actually understand the nuances tend to dismiss the claims of either manufacturer (as we do) and run our own analysis or rely on the airlines and lessors for impartial information.
The market has spoken. Airbus currently has sold about 1,400-1,500 A320neos to Boeing’s 1,000 737 MAXes. Airbus also, in recent years, has sold more current-generation A320s than Boeing has sold 737NGs. For the Very Large Aircraft, Airbus has an 86% market share of passenger airplanes.
These statistics tell more than anything Airbus or Boeing manipulate.
Posted on November 27, 2012 by Scott Hamilton
Posted on November 25, 2012 by Scott Hamilton