Flightblogger on 737RE, Aeroturbopower on A320 v 737-800

Two very interesting posts came up today.

The first is from Aeroturbopower, a blog that concentrates on engines and engine-related stuff. In today’s post, Aeroturbopower has a very interesting analysis on fuel burn on the Airbus A320 vs the Boeing 737-800. The results may surprise you, given the very effective messaging campaign by Boeing and the equally poor messaging campaign by Airbus.

The second posting, by Fightblogger, confirms what we wrote about a week ago: that Boeing and CFM are close to choosing the 66 inch fan for the 737RE. Flightblogger has more detail than we did and provides a good overview of what the 737RE will likely be.

Milestone in aerial refueling: the unmanned KC-10

Very clever and creative flying, as reported here.

Qantas, Transaero buy Airbus; Hazy cool to 737RE

AirInsight just posted three pieces about aircraft developments. One concerns the big order from Qantas for A320/A320neos, another is about the Transaero deal for the A320neo and the third is our report referenced in the 777 post below about Steve Hazy’s cool view toward the 737RE.

Boeing continues to work on design definition of the 737RE, with plans to send the program to the Board of Directors this month for approval to launch the airplane.

Bernstein assess 787 profitability

Bernstein Research issued a report today assessing the Boeing 787 program profitability.

Highlights:

  • It appears unlikely to us that Boeing will deliver a positive program gross margin over an initial accounting block of 1000 airplanes, if production inventory results so far can serve as a guide.
  • We have evaluated scenarios varying price, baseline cost (cost of 45th airplane), and learning curve rates. We apply parameters that we see as optimistic, including average pre-escalated pricing of $120 million (50/50 787-8 /787-9 mix) and an 82.5% learning curve.

Assessing the 777 upgrade

The “godfather of leasing,” Steven Udvar-Hazy, the CEO of Air Lease Corp., weighed in on the 737RE and the prospective improvements to the 777 during ALC’s earning’s call. And when Hazy speaks, the industry listens.

Hazy, who favored a new airplane in the 737 class, wasn’t too happy about the 737RE decision and thinks Boeing has a ways to go on developing this aircraft. We’ll have more about this in a separate post.

As for the prospective improvements of the 777, Hazy had this to say:

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Narrowing the 737RE design

While the aviation world is waiting to see what the Boeing 737RE will be, information that has emerged publically from Boeing and information we’ve obtained gives, we think, a reasonable picture of what the airplane will look like.

This information is current as of last week. Boeing is still settling on the 737RE design and things could change, but from what has been said and on what we have pieced together, this appears to be a reasonable assessment. It appears the 737RE will largely come down to this:

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Embraer ponders new, 2,000nm airplane

 

 

Embraer is pondering a new, 2,000nm airplane in the 130-150 seat class. Here is the Flight Global story.

The interesting thing about this is that Bank of America’s Ronald Epstein characterizes the CSeries as having too much range with 2,950nm, which gives it US trans-continental operations. In fact, Bombardier offers two versions: the 2,950nm range XT and the 2,200nm standard.

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Boeing comments on the 737RE

As the aviation world waits for Boeing to define the 737RE, it might be worth taking a close look at the July 27 earnings call discussion relating to the airplane, apart from the topic of where the aircraft will be built—we covered that thoroughly last week.

Our resource is the earnings call transcript as published by Seeking Alpha. As we go through the transcript, we will highlight certain statements and then offer some commentary at the end of the section.

Here is what CEO Jim McNerney said in his prepared remarks.

Also in recent months, a broader customer view has emerged in support of the greater certainty of gaining significant incremental improvement in a re-engined 737 in the near to midterm over the more perfect solution which may be available further down the road. It has always been our view that if it looked like we are putting meaningful market share at risk by waiting to do a new airplane, we would re-engine instead. That combined with our new engine technical production assessment against lead time for new engine decision led us to the judgment that we have made.

We are confident that our re-engined 737 will maintain the value proposition we have in the marketplace today and we expect to see strong demand for this product. It will be the most fuel-efficient airplane in its segment and have the lowest operating cost, while also meeting customer needs for range, payload, standardization, reliability and fleet compatibility.

Over the next several weeks, we will continue our work to finalize the configuration and other details in anticipation of a launch this fall pending board approval.

Comment: As we have talked with our various market sources, one believed Boeing would suffer a market-share drop of at least 20% if it elected to proceed with a new airplane instead of a re-engine. This drop would come because customers would pull back on orders for the 737NG while waiting for the new airplane. Whether this is a valid number might be debatable, but the theory is consistent with McNerney’s comments. Earlier this year, Boeing Capital Corp. held an investor’s meeting in New York and remarks indicated that Boeing was prepared to take a 10% 737 market share drop in favor of a new airplane, figuring it would regain it with an aircraft superior to the A320neo family. Then there is the question of whether Boeing could actually afford a new airplane program, a topic McNerney did not address, in light of the losses on the 787 and 747-8 programs and the billions in cost overruns and delayed cash flow. Finally, there was strong undercurrent that the Board of Directors was not prepared to approve another new airplane program with the 787 and 747 programs in the condition they are in.

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FAA funding gap won’t affect 747-8, 787 certification plans

As Boeing pushes ahead toward certification of the 747-8 and the 787, with goals for delivery of the 747-8F and the Dreamliner before the end of this quarter, Congress adjourned without funding the Federal Aviation Administration responsible for the process.

Boeing hopes for certification of the 787 this month; it has not specified anticipated certification of the 747, but with a previously acknowledged “neck and neck” to EIS for the two airplanes, it’s logical to conclude 747 certification is along the same timeline.

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Aviation Week has new twist on American Airlines Airbus-Boeing deal

Aviation Week has a story on the Airbus-Boeing deal–and says it isn’t really a firm order, likening it to the Boeing 787 of a few years ago.