Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 22. May 16, 2025
- Services are driving revenues and profits in difficult times, Part I May 15, 2025
- The BWB has a long way to go before flying passengers, freight May 12, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
- Does an A220-500 need a new wing and engines? Part 2. May 8, 2025
Odds and Ends: Puzzling math remains puzzling in 737 v A320 debate
Puzzling math remains puzzling: Boeing has said for the better part of two years that the 737-800 is 8% more economical than the Airbus A320 and the advantage translates into leads it claims for the MAX over the NEO. With the addition of the Advanced Technology Winglets (BATW), Boeing now claims the 737 MAX will be a whopping 18% more economical than today’s A320 and up to 10% better than the NEO.
Such claims make Airbus almost apoplectic. Airbus rejects outright Boeing’s 8% claim and further said its own analysis on the MAX (pre-BATW) indicated the best improvement Boeing could get was 8%, not 10%-12%. Airbus also sniffs at the new BATW. Airbus evaluated the design before settling on the sharklets as more advantagous.
We’ve always been skeptical of numbers advanced by Airbus and Boeing because, after all, they are hardly objective. We’ve placed more weight in analyses offered by customers, for obvious reasons: they are the ones who have to operate the aircraft and truly know theory in real life.
We’ve previously written that Lufthansa concluded the 737 MAX will have a 2% advantage over the A320neo (also pre-BATW), which returns the competition to the “status quo.” This means that in Lufthansa’s analysis, today’s airplanes are only 2% apart, not Boeing’s claim of 8%.
Now comes information to us that Qantas–which operates both types through its own airline and the JetStar subsidiary–finds its operating experience to be so close as to be indistinguishable.
So we asked Boeing about that, and about how its methodology comes up with the numbers it advertised. Here’s the response, foregoing addressing the results of the airlines, citing long-standing policy of not commenting on customers. As for the methodology:
[Our analyses] are based on our average vs. Airbus and not individual customer statistics. There are too many variables to be able to address specifics and details.
Our numbers are cost per seat and are based on a 500 nm mission using typical European economic rules for airplanes with two-class seating giving the Next-Generation 737-800w (with PIP – Performance Improvement Package) 162 passengers and the A320 150 passengers.
Fuel burn values are Boeing tested values for the Next-Generation 737 and Boeing estimates for the A320. Maintenance costs are estimated using Boeing methodology which takes into account industry reported data from the FAA and IATA for both manufacturers. Same crew cost, landing and navigation and passenger handling cost models are applied to both airplanes.
We’ll note from our previous discussions with Boeing that Boeing acknowledged factoring in 737 PIPs (as cited above) but not factoring in A320 PIPs. Airbus claims Boeing uses the CFM56 as the base engine for the A320, rather than the V2500, which is 1.5% more efficient. Airbus also claims that Boeing uses older versions of the CFM56 as the A320 base engine rather than the newer, more efficient model. Airbus also uses 800nm vs Boeing’s 500nm for its analysis. (AirInsight’s analysis of US operation confirms that A320s and 737s tend to fly, on average, around 1,100sm, concluding that the longer range assumption is indeed a fairer data point.)
So the puzzling math used by Airbus and Boeing remains puzzling. The airlines say the airplanes are very close. We believe the airlines.
ExIm Bank: Just when we thought this was over, it turns out the Republicans in the US Senate Wednesday blocked a vote to approve reauthorization of the US ExIm Bank and a hike in its ceiling to $140bn. This story has additional detail. Boeing and GE take a hit on this.
Emirates to Boeing on 777X: Get a move on. You’re taking too long.
AA plans 767 retirement from about 2015–does this mean 787 order will finally be firmed up soon?
American Airlines announced that it plans to retrofit Boeing 777-200s and half its Boeing 767-300ER fleet with lie-flat business class seats as a means to upgrade its international service. AA also announced that it plans to retrofit only half of the 767 fleet and retire the rest.
IAM 751 Tweets that the retirement will start about 2015.
Does this mean American is preparing to at long last firm up its MOU for up to 100 Boeing 787s? The MOU was made several years ago, but was never firmed pending resolution of pilot contract negotiations. This, of course, hasn’t happened, and now in bankruptcy, American is moving under Section 1113 of the bankruptcy code to void the contract (and other labor agreements) and to impose its own terms.
This fleet upgrade and retirement announced suggests to us that American might be nearing a resolution (under 1113 if nowhere else) that will lead to firming up the 787 order.
No wonder Jim McNerney favors an American solution to a US Airways merger.
Odds and Ends: Lufthansa on 747-8I vs A380; ExIm deal reached; not quite, Dan Rather
747-8 vs A380: While Boeing and Airbus engage in a long-running and unseemly war of words about whether the 747-8I is more economical than the A380–and each accuse the other of playing fast and loose with the data–the only opinion we consider that counts comes from the airlines. Lufthansa says the A380 is more efficient than the 747-8I on a seat-mile basis. This is what LH said years ago, before either airplane was delivered. End of story.
ExIm deal reached: It looks like a deal has been reached with Republicans to support extending the authority of the ExIm Bank and to raise the ceiling to $140bn. As readers of this column know, we were highly critical of the Republicans for opposing this funding mechanism for American business. Boeing benefits greatly–ExIm has been called “Boeing’s bank–” and that’s OK. The ceiling hike isn’t really enough for the three years, however; ExIm funds stuff at about the rate of $35bn a year (about $12bn of which are Boeing airplanes).
Not quite, Dan Rather: We just finished reading Dan Rather’s new book, “Rather Outspoken,” which chronicles some of his career. In it, he cites his “Dan Rather Reports” effort on the Boeing 787 composites questions about crash-ability and flammability as one of his hard-hitting, post-CBS, HDNet award-winning examples of his after-life from CBS. Except that his conclusion in his book is wrong.
“Our report shed light on what might otherwise have been swept under the rug,” Rather writes, referring to the questions raised about composites and safety. “It triggered a recertification process and caused Boeing to reluctantly acknowledge potential problems with the CFRP fuselage.”
Well, we don’t know about that; Boeing almost never admits a mistake and we certainly don’t recall one admitted here. But what we do know is that Rather’s following conclusion is flat-out wrong.
“In the aftermath, Boeing delayed delivery–seven times….These were better, safer airliners because Boeing had finally taken more time before delivery.”
There can be no other conclusion than Rather is taking credit for Boeing delaying the 787 seven times as a result of his report. And anyone who followed the 787 debacle knows that the seven delays had little or even nothing to do with Rather’s report, but rather (pun intended) because of the supply chain, industrial problems, and just plain screwing up.
Odds and Ends: Boeing revises MAX winglet, adding 1.5% to efficiency
Update, 2:15 PM PDT: Airbus issued this response to the Boeing development:
“This kind of split-tip device was among the options we studied for the A320 Family, and we decided instead to advance with our Sharklet design as the most efficient. Our Sharklet figures (3.5% improvement over the already-efficient A320 wing with wing-tip fences) are flight-test proven.”
Original Post:
Boeing today announced a revised winglet to add 1.5% in fuel efficiency for the 737 MAX, releasing a photo. See here. This will be on top of the advertised 10%12% fuel burn gain previously announced.
Separately, David Hess, CEO of Pratt & Whitney, told the PW media day “that as far as we know, the 737 MAX is not an opportunity for us,” citing the Boeing-CFM exclusivity agreement.
Update, 0900 PDT: Boeing held a tele-press conference to discuss the new “Boeing Advanced Technology Winglets,” (BATW) which it also called “dual feathered” winglets.
Boeing said this is an exclusive Boeing design and not derived from a similar design promoted by Aviation Partners. Key points:
- Up to 1.5% lower fuel burn, depending on the length of mission;
- The design used Computational Fluid Dynamics to design it, a process used from the 787/747-8 programs;
- This is completely new technology, not having roots to the MD-11 which has a similar-looking wingtip arrangement;
- The wingspan is increased by only “inches” compared with the NG;
- The BATW is likely scalable to larger aircraft;
- There are no current plans to make the BATW available on the NG, though this could change;
- Although there will be some benefit to range, the BATW isn’t significant;
- Boeing now claims 18% better all-in costs than the current Airbus A320 (based on figures as a starting point Airbus disputes);
- This just about does it for aerodynamic changes to the 737; architectural changes should be nailed down in the third or fourth quarter; and
- “Our major trades aerodynamically are done.”
Aviation Partners has a similar concept; the differences between Boeing and AP are evident.
Here’s how McDonnell Douglas executed a similar concept on the MD-11:
Odds and Ends: A320ceo production to end in 2018–PW; responds to 777X RFI
A320 Current Engine Option: The Airbus A320ceo production will end in 2018, according to David Hess, the president of Pratt & Whitney. Hess made the remarks today at the annual PW media day.
Hess said PW anticipates delivering an aggregate of 8,000 V2500 engines by the time the A320ceo winds down.
GTF to have >1m hours by year-end 2015: Hess also said the GTF will have accumulated more than 1m hours of tests and operations by the end of 2015 and more than 3m hours by the time the Boeing 737 MAX enters service in 4Q2017.
PW revenue will double from $12.7bn today: Hess said revenue will double by the end of 2020, driven by the GTF and aftermarket support. “The engines that we are developing today will define PW.”
Second GTF variant enters flight test: The Mitsubishi variant of the GTF made its first flight yesterday.
PW responds to Boeing RFI for 777X engine: in the 90,000-100,000 lb class. The benefits of GTF grow the larger the engine, says Hess.
Odds and Ends: ‘We’re happy with LEAP, confident it will meet target’
During the Boeing 1Q2012 earnings call, CEO Jim McNerney had this to say about the story that won’t die (that Boeing continues to look at the PW Geared Turbo Fan for the 737 MAX):
The gear turbo fan, the — yes. The — right now, as I think we’ve announced many, many times, we are working exclusively with CFM on the MAX, and we’re very happy with the development there. We’re confident that we can meet the targets that our customers need and that we’ve promised them. So that’s our plan going forward.
“Right now.” Was this a Freudian slip or an inconsequential choice of words?
Boeing likes American Airlines as stand-alone: McNerney also said Boeing prefers AA to emerge from bankruptcy as a stand-alone airline. This is no shock; the US Airways management is exclusively Airbus, and while American strayed from Boeing last year, it still placed a large order for 737NGs/737 MAXes.
McNerney talks about pricing: I think the summary on pricing is 777 steady, steady as she goes, capturing value, in many ways a uniquely positioned airplane today and significant productivity associated both with better conversion and with taking up rate. So the margin environment there, I would say, is good and favorable going forward. 37, all of the comments I just made on productivity apply. Significant productivity, both absorption kind of productivity due to increased rate as well as conversion productivity per unit. Slightly more aggressive pricing environment due to the introduction of the MAX and the NEO. So there’s launch customer kinds of pricing that have happened in a few cases. But I think at the end of the day, the — we anticipate about half of that market, which is a big number. And we see a pricing environment that’s not too different than the pricing environment we’ve had historically after we get through some of the launch customer — loss — launch customer pricing, which is part and parcel with our business.
[Source for all the quotations: Seeking Alpha Transcripts.]
We are hearing there essentially is a price war going on right now between Airbus and Boeing for single aisles, as Boeing attempts to stem the inroads and success by Airbus with the A320neo. In this case, we’re hearing Boeing is the aggressor (which follows, since it is playing catch-up).
Boeing won Delta Air Lines on the 737-900ER v A321 competition largely on price, we understand–bidding 10% lower than Airbus. We also believe price is likely the determining factor in the soon-to-be-completed United Airlines deal, where Boeing is widely reported to now be the favorite.
Another story that won’t die
We’ve recently tagged a few items “a story that won’t die.” Here is another one, the continuing analysis of the Pratt &
Whitney GTF for the Boeing 737 MAX.
Although Boeing’s Lauren Penning told The Puget Sound Business Journal there isn’t a “team” at Boeing working on this prospect, reports out of Aspire Aviation (now Orient Insight), Aeroturbopower, Airline Economics and last month’s ISTAT meeting continue to create buzz on this topic. The AirInsight piece was published in limited circulation two weeks ago.
USAF inserts plan for AF One replacement into future
The current Air Force One (all two of them) entered service in 1990 and 1991 and are based on the Boeing 747-200. The time appears nearing for a replacement.
Defense News reports that the USAF has added replacements in its future planning.
Given the long history of the Secret Service demanding more than two engines, a replacement would almost certainly be the Boeing 747-8I.
Here are a couple of links to the history of Air Force One here and here.