Leeham News and Analysis
There's more to real news than a news release.
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.
EU caves on ETS, for now–but says it didn’t really cave
The European Union caved in on implementing the carbon trading scheme known as ETS that would have taxed international airlines flying into Europe.
The EU claimed it didn’t really cave to international pressure (Financial Times, free registration required) but clearly it did. China was the first country to tell its airlines not to pay. This was followed by counties in the Middle East, India and the US Senate. But we’re going to give credit to China, not only as the leader but a country which adeptly uses its strength in ordering-or not-aircraft from Airbus or Boeing as political tools.
China put on hold ordering $14bn worth of Airbuses, notably 35 A330s. Airbus froze production rates pending this order–which means a loss of jobs.
As countries protesting the unilateral ETS scheme noted, such taxation should come from international agreements through the airline organization ICAO.
What is so annoying about the ETS scheme is that the taxes would go into the countries’ general fund and not be applied to environmental improvements.
Airbus, Boeing under price pressure
The Wall Street Journal has two articles about Airbus and Boeing being under price pressure. There is a third article by the WSJ about Airbus wanting its suppliers to consolidate.
The two companies have accused each other of engaging in a price was in the single-aisle category. Airbus also is dropping prices on the A330 vis-a-vis the 787, as we reported following an Airbus presentation last May at its Innovation Days in which it illustrated a $900,000 lease rate for the A330-300 vs a $1.2m rate for the 787-9. The A330 had a slightly higher list price than the 787-9 and the time (Boeing since has raised its list price and is now higher).
To the next President and next Congress: Maybe Sequestration should happen after all for the long-term good
As voters go to the polls today, we’ve turned our thoughts to Sequestration and the impact on Defense budgets.
Defense sequestration is widely view as a disaster for national defense and for employment. Sequestration requires a cut of $500bn over 10 years, or $50bn a year. Spending for FY2013 is $902.3bn, according to government figures, excluding the Afghan war. A $50bn cut would be 5.5%.
We certainly acknowledge the adverse impact of cutting $50bn from next year’s budget, but we can’t help but wonder if there isn’t 5% that is “fat.” Parochially, Boeing’s KC-46A tanker is on the hit list for cuts. Given the difficulty it took in getting to this contract and the pressing need to replace the KC-135, we would hope this program would survive.
But we’re thinking on a higher plain.
United’s 787s delayed, but nobody is saying why
There appears to be a lot of focus on delays in delivering the next Boeing 787s to United Airlines–which has received one–but neither Boeing or United is saying what’s behind the delays. (Update, Dec. 1: one of the three was delivered yesterday.)
According to the Ascend data base, line numbers 45, 50 and 52 are supposed to be delivered this year and 55 and 77 are supposed to be delivered in January. All are with GEnx engines.
Here are some possible reasons for the delay:
- Rework is the obvious one. The first “clean” airplane to come off the Boeing assembly line in Everett was around line #66. The lower the line number, the more rework. UAL’s line numbers are higher, but rework is still necessary.
- GEnx engines. The failures on the 787 and 747-8 GEnx engines were unrelated and, as these things go, not especially severe, but fixing them is, we are told, complex for engines already assembled. Qatar refused delivery of its first 787 because of the GEnx issue. Contractually delivery has been accepted but the airline also wanted additional IFE (inflight entertainment equipment) installed and physically hasn’t accepted delivery. So…
- IFE upgrades: These UAL 787s were ordered by Continental Airlines prior to the merger and it’s been reported in the press that the delays in Boeing’s delivery left UA/CO will older, less sophisticated Buyer Furnished Equipment (the IFE). Maybe UAL wants more current IFE?
We were asked by media if this is another blow to the 787 program. We don’t think so. At this point, we haven’t heard of anything about the reason for the delay and pretty well shrugged it off anyway.
Meanwhile, Airbus is in talks with at least some of its A380 customers seeking compensation for the operational interruptions resulting from required inspections related to wing rub brace cracking. Compensation could amount to millions of Euros per customer.
KC-30 performing well for Australia; Boeing C17, Lockheed C130, Alenia C27J
The Airbus KC-30 is performing well, according to this article. Here is a PDF of the report referenced in the article: Airbus Tanker Proves Its Worth
The same writer prepared this piece on transport aircraft, including the Boeing C17, Lockheed C130 and Alenia C27J (purchased and subsequently rejected by the US DOD).
Odds and Ends: Airbus and Boeing BBJs; Oops by Sen. Cantwell; positive SPEEA talks
MAX BBJs: Boeing is offering 737-8/9 MAX BBJs but not, as yet, a 7 MAX BBJ. Boeing says it is still studying a 7 MAX BBJ. there have so far been no orders for the 7 MAX.
Airbus ACJ A318: Airbus says it’s offering an enhanced A318 Airbus Corporate Jet. Improvements are mainly to the interior, though the press release says, “These include Sharklets on the wingtips, which make the aircraft look nicer….” The Boeing and Airbus announcements were at the NBAA trade show.
Oops by Cantwell: Sen. Maria Cantwell (D-WA) is running for reelection. One of her TV ads is called The Hub, in which she promotes Washington State as the Hub for aerospace and her work in Congress on behalf of Boeing.
Only there was a big Oops in the first version: it opened with stock footage of US Airways Airbus A320s. Not only were these not Boeing airplanes, US Airways hasn’t ordered a Boeing since Steve Wolf was CEO–nor has America West, now combined with US Airways, ordered a Boeing aircraft since the 757.
The ad ran for some time on KING 5 (NBC-Seattle) until it was scrubbed and replaced with opening stock footage of a Boeing 767.
All YouTube videos containing the Airbuses have been “removed by the user.” Here is the revised ad.
[youtube http://www.youtube.com/watch?v=R8KV3mh9sp8&w=560&h=315]
Someone in Cantwell’s campaign really muffed this one.
Positive SPEEA talks: Last Friday, Boeing and SPEEA each released statements indicating negotiations have taken a positive turn. The Seattle Times sums it up here.
Boeing wants to outsource more work to Mexico; updated MAX v NEO orders
Boeing outsourcing: In an election where outsourcing is a major political campaign issue, The Seattle Times reports Boeing wants to outsource more work to Mexico. Here is Boeing’s letter, via The Times.
MAX v NEO: Here is an excellent set of tables updating the orders between the 737 MAX and the A320 NEO. According to the analysis, Airbus right now has a 63% market share for the airframe. On the NEO, where two engines are offered, CFM has a 41% share vs PW’s 39% share with the remainder undecided.