Pontifications: Airbus USA321 a milestone for US aerospace

Hamilton KING5_2

By Scott Hamilton

March 28, 2016, © Leeham Co.: The first US-built A320ceo family member took to the skies for its first flight last week. The A321ceo, destined for JetBlue, is the first assembled at the new Airbus A320 plant in Mobile (AL).

This is a milestone for Airbus, obviously. The Mobile plant was first proposed as the assembly site for the KC-330 MRTT (Multi-Role Tanker Transport) proposed for the US Air Force to replace the aging Boeing KC-135s. Northrop Grumman, which paired with Airbus parent EADS (as it was then known) to offer the KC-330, won the contract. The celebration was short-lived. The Government Accountability Office overturned the award. Northrop bowed out of the next round of competition, which Boeing won.

Airbus subsequently decided to create an A320 assembly site at the same Mobile location planned for the KC-330. (I visited the site for grand opening last September.)

This is the fourth A320 assembly site, after Toulouse, Hamburg and Tianjin. Airbus hopes the Mobile site will help spur sales in the US, where it still trails Boeing in market share.

Milestone for US Aerospace

While this plant is a milestone for Airbus, it’s a milestone on a much more macro level, too. This is the first commercial airplane assembly site by a second airplane manufacturer since Boeing closed the McDonnell Douglas MD-11 and MD-95 (aka Boeing 717) assembly lines in Long Beach (CA) in 2000 and 2006, respectively. The last legacy MDC assembly site, for the military C-17, closed early this year.

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Pontifications: Airbus’ new edginess

Hamilton KING5_2

By Scott Hamilton

March 14, 2016, © Leeham Co.: Airbus is presenting a new edginess in the long-running war of words with Boeing, adopting a tactic Boeing has used for years to make its case.

The European manufacturer has never been shy about getting in its digs at Boeing, but generally Boeing’s messaging—years in the making and steadfastly adhered to—has had more sticking power than Airbus’.

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MOMentum appears to be slowing for new Boeing airplane

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Introduction

Model design and paint by Camil Valiquette. Photo via Google.

March 10, 2016, © Leeham Co.: MOMentum for the Middle of the Market aircraft seems to be slowing from last year, as potential buyers and Boeing struggle to define an aircraft that would be affordable to build, affordable to buy and fulfill different mission requirements for capacity or range.

Meantime, Airbus is content to watch Boeing’s predicament, secure in what it believes is the winning strategy.

Summary

  • Attendees at the ISTAT conference last week had no consensus about what the airplane should be, when or even if Boeing should launch the airplane.
  • Some customers want range, others want capacity.
  • “757 replacement?” Not really.

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PW’s Geared Turbo Fan was catalyst for MRJ90 order

March 8, 2016, © Leeham Co.: Pratt & Whitney’s Geared Turbo Fan technology was what prompted a used airplane lessor to place its first new airplane order,

Pratt & Whitney’s Geared Turbo Fan was the key reason lessor Aerolease decided to order the MRJ90. Photo via Google images.

selecting the Mitsubishi MRJ90 in the process.

Jep Thornton is a partner with the small lessor Aerolease, a 20-year old company that has up to now concentrated on acquiring McDonnell Douglas DC-8s, Airbus A300s and Boeing 757s for conversion to cargo aircraft. Aerolease has about 40 aircraft under management and ownership.

Thornton and Mitsubishi announced at the Singapore Air Show last month a Letter of Intent to order for 10 MRJ90s and options for 10 more. Deliveries begin in three years.

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ISTAT Day 2: MOM business case remains a challenge

March 1, 2016, (c) Leeham Co.: The manufacturers and their customers remain unclearISTAT-logo_no_tag-(2c) about the need and design of the so-called Middle of the Market aircraft, their representatives said at the ISTAT AGM today in Phoenix. The business case has yet to be proved.

Participants in the Middle of the Market Panel are:

Ron Baur, VP Fleet, United Airlines

Robert Lange, SVP Market and Product Strategy, Airbus

Randy Tinseth, VP-Marketing, Boeing

Bert van Leeuwen, Managing Director, DVB Bank

  • We’re at the 2016 ISTAT AGM in Phoenix and will be reporting on presentations and news from the sidelines.

Van Leeuwen, the banker, said financiers would need to see at least 1,000 MOMs in the market with a broad customer base to feel comfortable financing the airplanes.

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ISTAT Day 1: Leahy’s biggest fear: producing enough planes to meet demand

Feb. 29, 2016, (c) Leeham Co: Aircraft lessors financed 48% of the Airbus deliveries in ISTAT-logo_no_tag-(2c)2015, with direct sales and sale-leasebacks, says John Leahy, chief operating officer customers for Airbus.

  • We’re at the 2016 ISTAT AGM in Phoenix and will be reporting today and tomorrow on presentations and news from the sidelines.

“Lessors are a key and integral part of our strategy,” Leahy said. Airbus only financed 2% of its own products last year. Export Credit Agencies financed only half the numbers of Boeing, he said.

Leahy does not see a downturn any time soon.

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737 MAX to roll out to Boeing product strategy challenges

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Introduction

The Boeing 737-8 rolls out tomorrow to challenges to Boeing’s product strategy. Image via Google images.

Dec. 7, 2015, © Leeham Co: Boeing rolls out its first 737 MAX tomorrow to no press fanfare. Today there is a limited press tour of the assembly line, but, according to reporters who were invited, there will be no press briefings.

It’s an inexplicably low-key event for what Boeing otherwise touts as a major evolution of the venerable 737 line.

As good as Boeing claims the airplane will be, and as much spin as Boeing’s marketing department tries to put on the rivalry vs the Airbus A320neo, the 737 MAX clearly is second fiddle—and it’s not going to get better.

Summary

  • Airbus holds a commanding market share: 60% to 40% of the family comparisons.
  • Airbus holds about a 55% share of the A320neo vs 737-8 comparison.
  • The A321neo outsells the 737-9 by about 4:1.
  • Boeing faces cash flow challenges in 2020 decade.

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Boeing’s 767 revitalized as a MOM stop gap, Part 3

By Bjorn Fehrm

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Introduction

Aug. 31 2015, ©. Leeham Co: After examining the characteristics of the Boeing 767 to serve the market segment that Boeing is studying for its Middle of the Market (MOM) requirement, the 225 passenger/5000nm sector, we will now finish the series by looking at how the 767 can be made economically more competitive.

We will study the influence of improved aerodynamics like Aviation Partners Boeing’s Split Scimitar Winglet for the 767. We will also look at what engine PIPs can provide and also look at what a re-engine could bring.

Finally we examine at what happens when we add crew costs, underway/landing fees and maintenance costs to form Cash Operating Costs (COC) followed by capital costs to form Direct Operating Costs (DOC).

Summary:

  • Boeing’s 767 has the right cross section for passenger transportation in the 225 passenger/5000nm segment.
  • Its wings and empennage are too large, however. We make them work harder by transporting the 767-300ER fuselage and passengers.
  • We also introduce aerodynamic and engine improvements. Still, the fuel consumption per seat mile is considerably higher than modern alternatives.
  • At a Cash Operating Cost and Direct Operating Cost level, the higher fuel consumption has less influence in today’s fuel prices. The result is that the 767-300ER becomes an interesting alternative as long as the fuel price stays low.

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Boeing’s 767 revitalized as a MOM stop gap, Part 2

By Bjorn Fehrm

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Introduction

Aug. 31 2015, ©. Leeham Co: Last week we started to look at Boeing’s 767 to see if it can serve the passenger and range space which is not well covered by modern aircraft: the 225 passenger/5,000nm sector. Boeing calls this the Middle of the Market or MOM. Boeing recently said that there is some increased interest for the 767. We analyze why and what can be done to increase any chances of it having a new life as a passenger aircraft.

We started with comparing the 767’s different variants to the most likely MOM aircraft from our series “Redefining the 757 replacement requirement for the 225/5000-sector”. We will now continue and look at the 767 in detail, its strong suits and its less efficient areas. We will also discuss what can be made to address the less efficient areas.

Summary:

  • Boeing’s 767 has the right cross section for passenger transportation in the 225 passenger/5,000nm segment.
  • It also carries cargo containers, not as efficiently this time. We show what the consequences are.
  • Finally the wing is not the slender wing of the modern aircraft. We show what impact it will have on overall efficiency.
  • Combined with engines from the 1990s, this gives less than stellar fuel economics. We investigate what can be done about this and how much of an impact it will have in today’s low fuel prices.

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Boeing’s 767 revitalized as a MOM stop gap?

By Bjorn Fehrm

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Introduction

Aug. 27 2015, ©. Leeham Co: In our Monday article, “Boeing sees healthy future for 767,” Boeing’s spokesperson said, “We are continuing to explore additional capabilities and improvements” for the 767. It was not clear what these improvements were other than a 0.5% engine performance improvement package (PIP) that was introduced earlier in the year. With lower and lower fuel prices, existing aircraft get more and more viable as a stop gap to cover market segments that today are not part of the plans for the OEM’s modern products.

We will therefore examine the 767 deeper to understand what can be improved further and how well such an improved model would serve as a stop gap replacement for the lack of a modern Middle of the Market (MOM) aircraft. We explored how a MOM aircraft should look like in our series, “Redefining the 757 replacement requirement for the 225/5000-sector”.

The 767 has several of the attributes that we found optimal for a MOM aircraft, one having a seven abreast cabin cross section. In the 767 variant that is being produced for the US Air Force tanker program, the 767-200ER, the overall fuselage dimensions are also close to the ones we found desirable for a MOM aircraft.

With fuel now well below $2.00 per US Gallon (about $1.35), we will compare the 767 to our MOM specifications and try to understand where there is a fit and what would needed to be changed to improve the 767’s efficiency so that it could serve as a MOM stop gap. Finally, we will check if such changes can be economically viable in different fuel price scenarios.

Summary:

  • Different to the 757,the 767 is still produced for the foreseeable future, thanks to the US Air Force tanker program.
  • Boeing 767 is the only produced aircraft that has the desired seven abreast cabin, which we found optimal for a MOM aircraft.
  • How does the 767 fuselage and wing compare to the ones we found desirable for the MOM?
  • Is the cargo capability of the 767 acceptable for a MOM role?
  • We explore the primary characteristics in our first article today. We will go deeper with technical and economical analysis in subsequent articles.

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