Leeham News and Analysis
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Leeham News and Analysis
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Pontifications: From the sidelines of the ISTAT conference, Notes #2
March 13, 2015: More Notes from the sidelines at the ISTAT conference this week in Phoenix.
By Scott Hamilton
Boeing 777 production rates and advancing schedule
Randy Tinseth, Boeing VP-Marketing, predictably stuck to Boeing messaging Monday at the ISTAT conference when I asked him about the change in tone I described in my post Monday morning about the 777 Classic production rate to the entry-into-service of the 777X.
Waving a copy of my post in the Q&A session of Tinseth’s market update and saying I had transcripts of every Boeing earnings call and investors presentation in which the “bridge” question was posed since the 777X program was launched, I cited Boeing CFO Greg Smith’s response to orders in the March 5 JP Morgan investors’ day and asked Tinseth about it.
Production rates on single-aisles keep going up, up
Figure 1. Airbus and Boeing production rates for the A320 and 737 lines are going up as announced rates and rates under consideration go to lofty levels. Click on image to enlarge.
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Introduction
March 3, 2015: c. Leeham Co. Production rates for single aisle airplanes continue to go up for the Big Two, following the Airbus announcement last week that the A320 rates will go to 50/mo in 2017 and officials are considering going to more than 60/mo.
We’ve previously reported that Airbus already has notified the supply chain to be prepared to go to 54/mo in 2018.
Rate 50 will propel Airbus ahead of Boeing, which will briefly be ahead of Airbus when the 737 production rate goes to 47/mo next year, compared with the Airbus plan to take A320 rates to 46/mo next year. The two companies are at parity this year. (Figure 1.)
Summary
- Bombardier, COMAC and Irkut add to supply by 2020, but impact will be minimal.
- No 747-8 deliveries scheduled in 2018. We see program termination coming very soon.
- A330ceo production rate reduced, higher rate for 787 than announced.
- We see short-term Airbus advantage coming in wide-body production rates as A350 ramps up. We stick with our call that 777 Classic rates have to come down.
- We reduce A380 production rates in our estimates.
CS300 first flight Wednesday, direct challenge to 737-7 and A319neo
Feb. 25, 2015, c. Leeham Co. Bombardier’s direct challenge to the Big Two duopoly in the 125-149 seat sector is scheduled for its first flight Wednesday, weather and gremlins permitting.
Bombardier photo.
The CS300, challenger to the A319neo and 737-7, is to take to the skies as Bombardier’s flight testing program enters the final stretch. BBD still claims it will deliver the first CS100 by the end of this year, though most analysts (and we) believe it will slip into 1Q next year.
The CS300, 135 seats in two classes and 149 in standard one class, matches the 31-inch pitch configurations of the “baby” Airbus and Boeing products.
Bombardier claims large operating economic advantages over these competitors. Our analysis shows economics probably a bit closer than Bombardier would like.
Bombardier’s crisis of confidence perhaps the biggest challenge for CSeries
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Introduction
Feb. 18, 2015, c. Leeham Co.: Alain Bellemare, Bombardier’s new president and chief executive officer, has his work cut out for him.
Figure 1. The CSeries was supposed to enter service in late 2013, two full years ahead of the Airbus A320neo. This market advantage has been lost with repeated delays. BBD is sticking to its public statement that EIS is now the second half of this year (most put EIS in the fourth quarter), but there is growing belief EIS will slip to the first or even the second quarter of next year–after the A320neo EIS. Source: Bombardier, Airbus, Leeham Co. Click on image to enlarge into a crisp view.
We outlined the corporate and market perception challenges ahead of him in our Feb. 13 post. Investor and media reception to the CEO leadership change was mixed. Although Bellemare’s appointment was seen as a positive, stock traded down and Bombardier took a pounding in the press (see some reaction at the bottom of this post).
He also has challenges with a changing market place, driven by two years worth of delays in the CSeries program and exacerbated by a changing global political environment.
Summary
- Bombardier faces a crisis in confidence from customers that has to be fixed.
- The CSeries has lost its entry-into-service advantage over the Airbus A320neo and has reduced its advantage over the A319neo, the Boeing 737-8/7 and Embraer E-190/195 E2 EIS due to delays.
- A changing global political environment poses additional risks to the CSeries skyline.