Leeham News and Analysis
There's more to real news than a news release.
Comparing the 747-8I and the A380 after the advertising battle commenced
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.
New battle breaks out between Airbus and Boeing–in advertising
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.
Odds and Ends: A320 Sharklet tests better than forecast; Emirates and A350-1000
Airbus PhotoSPEEA contract terminates Nov. 25
The Everett Herald has this story.
The Seattle Times has this story.
Sunday, November 25, is a critical date in the looming confrontation between Boeing and its White Collar engineers union, SPEEA. This is the date the current contract terminates.
After this date, both sides are basically free to escalate short of a lockout or a strike. SPEEA is gearing up to have another contract vote and the leadership has already basically rejected the second Boeing offer. A strike vote still has to be taken before SPEEA could strike. Based on our conversations, we don’t see the prospect of a strike until after the first of the year–if at all. The union isn’t known for its willingness to walk out.
After members rejected Boeing first contract proposal with a 96% vote, things initially appeared to improve between labor and management. The good will turned out to be short-lived.
Rhetoric is heating up and by all appearances, it seems that SPEEA may well be headed toward a second contract rejection. Work-to-rules and refusal of voluntary overtime is already underway. Large demonstrations have taken place.
What happens after the contract terminates remains to be seen. We’re not optimistic about the next several weeks.
Odds and Ends: Cargolux, Qatar to split; P-8A and MAX; More on Sequestration; Dodging that depth charge
Cargolux, Qatar Airways to split: Several news stories report that Qatar Airways is going to dump its 35% stake in Cargolux. The stories indicate a disagreement in the direction of Cargolux. This story is the most detailed, although it’s now a month old and out-of-date.
The day before the news broke last week, we were told that Qatar wanted to set up a Cargolux hub in Doha and decline more deliveries of Boeing 747-8Fs to Cargolux in favor of using Qatar Airways’ Boeing 777Fs. This tracks similarly with the month-old story linked above. Cargolux has eight 748Fs on order.
There is a general softness in global air cargo traffic that is causing some cargo airlines to consider deferring 748Fs as well, complicating Cargolux’s viability.
We were also told there are sharp personality differences between the Qatar and Cargolux board members that aggravated relations between the two companies.
P-8A and MAX: Bloomberg has this story that looks at an angle about the Boeing 737 MAX that hasn’t been discussed before: Boeing will stick with the NG-based P-8A Poseidon and not shift to the MAX.
Sequestration: We had a recent think piece on how sequestration might not be a bad thing in the long run because it would force the Pentagon to truly re-think its global defense strategy. This piece in Defense News, an authoritative trade publication, picks up a similar theme.
Dodging that depth charge: EADS wanted to merge with BAE Systems. BAE is the prime contractor of the UK’s nuclear submarine fleet. Read this story about the HMS Astute. EADS may well have dodged that bullet–er, depth charge.
Odds and Ends: Air France v Rolls-Royce for A350; Virgin America rejigs; Last A340s sold; Heading South with SPEEA
Air France v Rollsr-Royce: The saga continues-see this Bloomberg story. We understand there is more to it than just maintenance. Rolls wants AF to order the Trent 1000 for the 787 order, too.
Virgin America: This airline, headquartered in San Francisco, has been an airline in search of a business plan. Its operations don’t have a niche and didn’t fill a void (like jetBlue created and filled at NY-JFK). It’s lost hundreds of millions of dollars. And, finally, the losses have caught up. Bloomberg has this story about aircraft order deferrals and cancellations. The deferrals are Airbus A320neos (note to Alabama: VA was going to take the first neos from the new Airbus Mobile plant in 2016).
Virgin is seeking to restructure aircraft leases, according to two industry sources. Failing to do so could lead to a Chapter 11 filing, the sources say.
Last A340s Sold: The remaining two Airbus A340-500s, originally destined for ailing Kingfisher Airlines, have been sold.
SPEEA and Boeing: Things appear to be heading south with SPEEA. This could affect Boeing’s year-end push to deliver as many as 50 787s as well as the other 7-Series.
Boeing 737 MAX update
Update: Aviation Week has this piece that has some good close-ups of artwork.
Boeing held a tele-conference updating the 737 MAX program. Beverly Wyse, VP and GM of the 737 Program are Michael Teal gave the briefing.
Beverly Wyse (BW)
Michael Teal (MT)
BW: 737 MAX has met firm design concept. Honeywell will provide an electronic bleed air system. Flight deck will have large displays from Rockwell Collins. MAX production will have future growth capability.
MT: We have in place a plan to preserve training commonality with large flight deck displays. We engage with regulators for training regulations and feel this will not be an issue.
Development team made significant progress to have aerodynamic design. We removed nose gear door bump from earlier iterations. We can get longer gear within the wheel well. LEAP 1B reached architectural freeze in September, freezing fan size and core size. Final design freeze will be in April 2013.
With the completion of firm concept, the completion of production design can move forward.
BW: It is important we maintain stability in our production plan. The 737 MAX transition allows us to maintain stability with NG rate increases and into the MAX.
Q&A:
BW: Third production line begins in 2015 with construction of first flight test aircraft. Eventually will use the third line for future rate increases beyond the planned 42 a month.
MT: Will only offer radial tires on nose gear, nose gear retracts further into the wheel well.
MT: 13% fuel reduction is a per-seat off the 737NG from today’s most efficient NG (19% better than original 1997 NG.) MAX will continue with the same maintenance cost as today’s NG.
MT: Goal is to have the same field performance as NG.
BW: 737-7 MAX: Many of our customers select a primary model but have substitution rights into other model. We see the -7 as being part of a family of aircraft where airlines can use -7 on thinner routes. It also serves missions in high-hot regions, such as in Tibetan plateau. We see the -7 serving these critical missions. I would no say “no question” that we will build it, but customers have asked about it and it is in our family today.
MT: Flight test plans for -8 will have four test planes. Expect to have two flight test airplanes for the -9 and -7.
BW: Part of the reason for more flight test airplanes is to proceed as fast as possible.
MT: Can’t give you at this time an exact count of the amount of change of MAX vs NG. This is part of the design process between now and the middle of next year.
MT: This airplane is an amended type certification, do not see re-certification.
[Editor: UBS Securities issued a new research note even as the teleconference was proceeding, with this comment:
[Systems changes represent onset of scope creep: This morning BA announced that it had achieved “Firm Concept” on 737 MAX including new bleed air system from HON, new tail cone, new winglets, and surprise move to upgrade 737 NG displays from HON with 787 large format displays from COL. BA’s move to incorporate updated systems beyond the engine represents a departure from its stated strategy of minimal design changes on 737 MAX.
[When MAX was announced, former CEO of BCA Jim Albaugh said he wanted minimal changes. The MAX has, for some time, appeared to be undergoing design creep, hence the questions about commonality and re-certification.]
BW: Right now we are saying 2017 EIS, [Southwest Airlines previously told us 4Q17, Jim Albaugh hoped to advance this schedule); as we move forward we will get more definitive about the schedule.
Qatar takes delivery of Middle East’s first 787
Qatar Airways took delivery November 12 of the Middle East’s first Boeing 
787. Qatar took contractual delivery of the airplane earlier but physical possession in ceremonies at Boeing Field Monday night.
CEO Akbar Al-Baker said the carrier will take delivery of four more 787s this year. Deliveries of a total of 59 continue into 2017.
Al-Baker said Qatar has conversion rights between the 787-8, the 787-9 and the forthcoming 787-10. Although Boeing and Qatar have discussed the -10, Boeing has yet to formally launch the program. Ray Conner, CEO of Boeing Commercial Airplanes, said formal Authority to Offer the -10 will be coming soon. Customers who recently attended a Boeing meeting expect the ATO to come this month. It had been expected last month, but the Board had additional questions, customers tell us.
Al-Baker called the 787-10 the most cost efficient aircraft on a unit (seat mile) basis.