Leeham News and Analysis
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Leeham News and Analysis
- MTU gets support from Pratt & Whitney to develop the WET engine November 29, 2022
- Boeing faces exodus of senior engineers in tight market for talent November 28, 2022
- Pontifications: Airports and aviation or mass transit, conventional or high-speed rail November 26, 2022
- Bjorn’s Corner: Sustainable Air Transport. Part 47. eVTOL traffic November 25, 2022
- The Boeing 767 Cross Section, Part 1 November 24, 2022
Airbus poised to overtake Boeing in wide-body sector, bracket Boeing at both ends
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Introduction
Airbus is poised to produce more medium twin-aisle airplanes than Boeing by the end of 2017 and maintain 
the lead into the early 2020 decade, according to production rates that have been announced, unannounced and based on estimates according to production gaps; and other information, a Leeham News and Comment analysis shows.
The wide-body arena has traditionally been Boeing’s to dominate. Although Airbus has outsold Boeing in this sector in recent years, Boeing’s greater production capacity and earlier-to-market 787 vis-à-vis the A350, which will only deliver to its first operator next month, maintained the advantage for Boeing’s market share for years.
The A340 wasn’t a high-demand airplane, eclipsed as it was by emerging ETOPS authority and a highly desirable, very efficient 777 Series.
Airbus and Boeing each face challenges with their aging wide-bodies. The 777 Classic is now on its downward life cycle following the launch of the re-engined, re-winged 777X. Boeing claims it can maintain current production rates of the Classic, but the official line is about the only one that believes this.
Airbus’ A330 Classic, now called the ceo after the launch of the A330neo program, similarly was headed toward sharp declines in the production rates. Airbus quickly achieved 121 commitments for the neo, but first delivery isn’t planned until December 2017 (which probably means 1Q2018) and it still needs to bolster the backlog of the ceo, which drops sharply in 2016. Airbus has been far more transparent than Boeing about the risk to the production rate, and announced a reduction from 10/mo to 9/mo in 4Q2015. We don’t think this will be enough, and Airbus has talked about rates of 7-8/mo.
With this as a backdrop, we believe Airbus will begin out-producing Boeing in medium-wide-bodies within a few years. We leave out the Very Large Aircraft as highly niche. But inclusion would only make the case worse for Boeing. We expect the 747-8 production rate to be cut from 1.5/mo to 1/mo, with an announcement coming as early as next month. Airbus is currently producing the A380 at 2.5/mo.
Summary
- We forecast the crossover point in production favoring Airbus in 2017.
Airbus has notified the supply chain to plan for a higher-than-announced rate of 10/mo for the A350. - We expect the A330ceo rate to be further reduced, offset by the ramp-up of the A330neo.
- We expect the 777 rate to begin falling in 2017 and continue to fall up to the EIS of the 777X in 2020.
- Ramp up of the 777X rate will take several years, providing Airbus a production rate advantage from 2017 through at least 2022.
- Airbus already has the advantage over Boeing in the single aisle sector. Gaining the advantage over Boeing in the twin aisle sector brackets Boeing in a way that has never been done before.
CASM Paradigm: Lower Seat Mile Cost or Higher Yield; Evaluating the GOL competition
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Introduction
As Brazil’s budget airline GOL reportedly evaluates whether to acquire 20 Boeing 737-7s or Embraer E-195 E2s, the principal of the “CASM Paradigm” is a concept worth examining.
This head-to-head evaluation of the E-195 E2 and the 737-7 MAX is a rarity. Typically the head-to-head involves the Bombardier CS300 and the Airbus A319neo. All three have the same seating capacities. The E-195 E2 has slightly fewer passengers than the 737-7 with similar seat pitch.
The competition is also what might be seen as a contrary competition. Airframers agree: the airline industry is upgauging. Capacity discipline, long elusive until after the global financial collapse of 2008, has been driving load factors higher. But lowering unit costs, or the Cost per Available Seat Miles (CASM) has long been the principal measure by which airlines, OEMs and aerospace analysts measure efficiency.
Although Trip Costs of aircraft operating over a route is important, the trend toward upgauging at all levels clearly is the driving force.
Figure 1. It’s an age-old debate: the cost per available seat mile (CASM) vs trip cost. CASM typically wins, and the airline industry is migrating toward larger aircraft. Embraer, not surprisingly, thinks this has gone too far. Graphic: Embraer, reprinted with permission. Click on image to enlarge.
Embraer takes a different view, arguing that trip costs and a smaller airplane should trump the CASM obsession. A smaller airplane will mean higher yields, EMB says. A larger airplane provides lower trip costs but drives yield lower.
We visited Embraer’s headquarters earlier this month and received a full briefing on what EMB calls the CASM Paradigm. In our report today, we detail the presentation and discuss other considerations beside CASM vs Trip Costs that drive the size of the aircraft acquired.
Summary
- The CASM Paradigm becomes a vicious, circular cycle, driving airlines to larger aircraft but lower yields.
- Extra seats on larger aircraft mean lower unit costs but at the cost of profits.
- Scope Clauses remain an issue in the US.
- Connecting traffic, pay scales also are issues.
- We analyze the operating costs of the E-195 E2 vs the 737-7.
- We discuss the GOL competition.
Part 2: Boeing 757: Airbus A321neoLR as a replacement on long and thin routes
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By Bjorn Fehrm
Part 2 of 3
Introduction
In Part 2 of our three-part 757 Replacement analysis, we take a close look at Airbus’ new 97 tonnes take off weight A321neo, revealed by Leeham News and Comment October 21. We call the 97t airplane the A321neoLR (Long Range); Airbus has yet to name the aircraft, which it began showing to airlines last week.
We analyze the A321neoLR’s capabilities and limitations when compared to the aircraft it intends to replace, the Boeing 757-200W. We have chosen to do so using a real airline configuration as opposed to an OEM’s typical seating layout. By comparing the 757-200W and the A321neoLR over the route structure that United Airlines is using the 757 today, we can better see the characteristics of the A321neoLR and what operational consequences the differences between the types would mean for the airlines. Before we start, a short recap of Part 1 about the 757 and its replacement candidates. Here is what we found:
- the seating capacity of the A321 is within 10 seats of the 757-200 in a standard configuration; the 737 MAX9 is trailing with about 20 fewer seats.
- the myth about the strong engines of the 757 is just that, a myth.
- the good field performance of the 757 is coming from its wing more than any advantage on the engine side
- the A321neo and 737 MAX9 were hindered in their capability to replace the 757 for long and thin international routes by characteristics that can be changed. For the A321neo, this may be accomplished with rather modest changes to Max Take Off Weight (MTOW) and tankage. For the 737 MAX9, more elaborate changes to the wing and engines are required, both hard to do.
Figure 1. Boeing 757-200 of British Airways which launched the 757 together with Eastern Airlines 1983. Source: Wikimedia.
Summary, Part 2
- We will now look in detail on the changes Airbus is doing on the A321neoLR, what each change brings and any restrictions that remain.
- We will also detail why we think it will be harder for Boeing to match the A321neoLR with a 737 MAX9 development.
- We detail prime, present 757W long-thin routes.
- We present 757W international, A321neoLR and 737 MAX9 “long range” configurations.
- We provide economic comparisons such as Payload-Range charts and Fuel consumption per trip and per seat diagrams.
In the final Part 3, will look at Boeing’s alternative to an A321neoLR, a clean sheet New Single Aisle (NSA) and a prospective Small Twin Aisle (STA) design and how much such an approach would surpass the A321neoLR on medium and long haul networks and when it could be available.
Boeing’s on the defensive in single aisle market as Airbus enhances A321neo
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Introduction
Boeing is on the defensive in the single-aisle market.
The Airbus A320neo family has about a 57% market share against the Boeing d 737 MAX. As recently as Wednesday’s third quarter earnings call, Boeing CEO Jim McNerney expressed confidence in market share recovery to parity. We don’t see this happening.
The development by Airbus of a 97t “A321neoLR” (Long Range) airplane as a 757 replacement for the long, thin routes of around 3,900nm, although a small market of perhaps 100 airplanes, enhances the A321neo model and could give a boost the the A320neo campaigns.
We had the worldwide exclusive on the development of the A321neoLR Wednesday.
Boeing’s image in the single-aisle sector took a big hit at the ISTAT Europe conference last month. About 1,200 people attended the event and in an audience poll, only 23% voted that Boeing has the most competitive narrow body family; 50% voted for Airbus.
Photo taken at the ISTAT Europe conference in Istanbul last month. Photo via Twitter.
Despite Boeing’s public, professed optimism, our Market Intelligence tells us that Boeing is indeed worried about its single aisle market position. And even though the market potential for the A321neoLR is small, there is the knock-on effect to consider. There is demand for a 757 replacement from airlines and in market perception. The same ISTAT Europe conference asked what Boeing should do next; 54% said replace the 757 and another 18% said replace the 737-9, a combined 72% pointing to a need for Boeing to do something with the single-aisle sector.
Photo from the ISTAT Europe conference at Istanbul last month. Photo via Twitter.
Summary
- Airbus’ latest move with A321neoLR increases pressure on Boeing
- A321neoLR could support additional A320neo sales
- 737-9 can’t be further enhanced to match A321neoLR.
- 737-7 unlikely to be built; A319neo becomes niche model
- Market perception gives “most competitive” edge to Airbus
- What Boeing has to do next
A380neo becoming a reality
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Introduction
We last looked at the Airbus A380 economics in February, when the airframer was promoting the giant airplane as a 525 seater. Since then, Airbus recast the airplane as a 555 seater. This changes the economics somewhat. Further, Airbus is floating an 11-abreast coach configuration vs the out-of-the-box 10 abreast.
Tim Clark, president of Emirates Airlines, continues to press for a re-engined A380. In our companion Assessment of the Very Large Aircraft market, consultant Michel Merluzeau believes Airbus will re-engine the airplane.
So do we.
It has been pretty clear to us that Airbus will do an A380neo. The question is when. Emirates’ Clark last month predicted the decision would be taken within six month. Our latest Market Intelligence says he will be right; we understand that Airbus is right now preparing for an A380neo project.
Summary
We thereby see the time ripe for looking into the A380neo again. When we last covered the subject (Updating the A380: the prospect of a neo version and what’s involved, Feb. 3, 2014) we concluded:
• The present configurations for the A380 of 525 seats fills the A380 to a much lower density than is the norm today.
• A cabin configuration of 555 seats would be a realistic three-class configuration with the economy section on the lower deck still in a spacious 10 abreast with seat width at 19 in.
• The efficiency of the A380 filled to that low density was on par with the best per seat benchmarks in the industry, the Boeing 777-300ER with the economy section in a tight 10- abreast, 17- inch configuration.
• The best in market benchmark would move considerably when the Boeing 777-9X enters service 2020. The per fuel seat cost would then we almost 20% lower than today’s A380.
Today our article shows:
• A re-engined A380neo, with other improvements typical in such an endeavor, reclaims the per-seat advantage for the A380.
When re-running the data in our proprietary model, we have more and better data around the likely engine variant, the Rolls Royce Advance, which was announced by Rolls Royce in March. It will be available for an A380neo rolling off the production line 2020. We have also put in more work into our standardized cabins, adjusting the relationship between premium and economy seating to a ratio closer to the one airlines use today. Airbus has also been active on the A380 cabin side. It has had several studies how to better utilize the cabin space in the A380. The results are now presented to the market.
In a recent A380 update, Airbus showed an 11-abreast main economy cabin with 18 in seats, now without raising the cabin floor to fit the seats. By adjusting how the seats interfaces the cabin’s sloping walls, Airbus avoids changing the floor height in part of the cabin.
We will now use this latest data to check where an A380neo would stand in terms of efficiency against the Boeing 777-9X, its most difficult competitor when it comes to the cost of transporting passenger from A to B. In later articles we will look at a more complete cost picture and also look at the A380’s strong side, the revenue and yield when one can fill the aircraft. Read more
Part 1–Boeing 757: An analysis of facts and myths
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By Bjorn Fehrm
Part 1 of 3
Introduction
The Boeing 757 was developed in the late 1970s as a replacement for Boeing’s popular 727 mid-range single aisle aircraft. Starting from the smaller 727, it ultimately grew to 180 to 230 seat capacity and US transcontinental range. With initial orders from Eastern Airlines and British Airways, the aircraft nonetheless had poor sales through most of the 1980s, picking up with a surge of orders in 1988-1990 when major deals were announced from American, Delta and United airlines.
Figure 1. Boeing 757-200 of launch customer Eastern Airlines.
Following the 1991 Persian Gulf War and recession, orders plunged until the mid-decade with a respectable resurgence. After 9/11, sales dried up and Boeing terminated the program.
Summary
- The 757 program had slow sales in its first decade, robust sales for a few years then declining sales through most of the 1990s.
- Sales were respectable in the late 1990s but dried up after 9/11.
- Boeing efforts to boost sales with the 757-300 were a failure–only 55 were sold. 757F sales were a moderate success.
- The 757-200 had strong engines for its time (especially the Rolls Royce equipped models), we dissect if this is still true.
- With the 757 being the only narrow-body with trans-Atlantic range, what is missing from today’s Airbus A321 and Boeing 737 MAX9 to make the cut? What can be done with small changes will be answered in part 2.
- How will a future clean sheet NSA perform compared to these three? How much of a game-changer will a clean sheet design be if it enters service 2025? We look at the answers in part 3.
Boeing cargo forecast: 540 new 777F, 747-8F category deliveries over 20 years
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Introduction
Boeing forecasts a requirement for 540 new cargo aircraft of 80 tonnes and up over the next 20 years. This is for airplanes in the Boeing 777F and 747-8F category.
Another 250 new-build cargo airplanes in the 40-80 tonne sector are also forecast in the latest Boeing Cargo forecast for 2014-2033, issued this month. Boeing also forecasts 1,330 P2F conversions.
The forecast is premised on an expectation that cargo traffic will grow at an annual rate of 4.7%.
The forecast appears to fly in the face of conventional wisdom.
Summary
- New-build freighter deliveries lag at Airbus and Boeing.
- Freight is increasingly being carried in the bellies of passenger aircraft.
- Airbus, Boeing orders for new-build freighters stalled.
- Cargo load factors dismal.
- IATA data points to continued challenges.
Part 3: Boeing 757 replacement: 757 and Airbus A321neoLR versus clean sheet designs.
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By Bjorn Fehrm
Part 3 of 3
Introduction
In Part 2 of our three-part 757 Replacement analysis, we took a close look at Airbus’ new 97 tonne take-off weight A321neo, revealed in a world exclusive by
Leeham News and Comment October 21. We analyzed the A321neoLR’s capabilities and limitations when compared to Boeing 757-200W and we saw that it could do the international flights that the 757-200 does with about 25% better efficiency. In this final Part 3, we will now compare the 757 and A321neoLR against what can be Boeing’s reaction, a clean sheet New Single Aisle, NSA, or New Light Twin Aisle, (NLT). First the conclusions from Part 2:
Summary
For Part 3 we can summarize:
Figure 1. Fuselage cross sections of our models of NSA and NLT. Source: Leeham Co.
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Posted on October 28, 2014 by Bjorn Fehrm
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