Bloomberg News reports that Airbus has asked for US$18 billion in financial aid for development of the A350 XWB. (Holy smokes, the price of things has gone up.) Here’s the report from The Seattle Times.
Boeing, predictably, doesn’t like the idea. Neither do we.
We’ve long been on record that we don’t like corporate welfare, however it’s masked. This includes launch aid, government loans, research & development funding, tax breaks or anything else. This applies to Boeing, Airbus, Bombardier, Embraer, the Chinese, Japanese and Russians.
Airbus says it wants the loans to have a level playing field for the A350 vs. the 787. Two of the three models are actually competitors to the Boeing 777. If one accepts the Airbus rationale at face value, then it’s aid request should be trimmed by two-thirds to in essence cover only the A350-800 (yes, we know the impossibility of segregating out the one model, but you get our point).
But whatever is done, we still don’t like it. Not for the reasons Boeing complains about. We just don’t like corporate welfare, period.
In an interesting piece that looks like an about face, Loren Thompson of the Lexington Institute now sounds like Boeing when it comes to the USAF tanker award. Thompson just published this piece on his website challenging the Air Force to answer a bunch of questions that are right out of Boeing’s playbook. Setting aside for the moment that the questions may well be answered in the GAO protest investigation, why Thompson is asking these now is ripe for speculation.
Immediately after the award, Thompson–the beneficiary, apparently, of USAF leaks on the award, didn’t raise these questions and praised the Air Force for an open and transparent process. He’s since been the target of more than a little criticism about receiving Air Force leaks. In fact, on March 18, US Rep. Todd Tiahrt (R-KS), a hyper Boeing supporter (and former Boeing employee), wrote Michael Wynne, secretary of the Air Force, demanding to know how Thompson knew the Air Force was going to award the contract to Northrop (albeit only a half hour or so before the announcement–Editor) and knew the rationale behind the decision before Members of Congress did. (The latter is probably a bigger sin than the award to Northrop, in the view of some Members of Congress. Heaven help those who step on Congressional protocol.)
In the letter, Tiahrt requested that Wynne provide:
More: We can’t help but speculate–and that’s all it is–that with this kind of heat on leaks to Thompson, perhaps his sources, and his answers, have dried up on this issue and what we’re seeing now is a bit of frustration emerging.
We’ll remind readers that although we did not support Boeing’s filing of a protest, once it was filed we agreed that it needed to be vigorously pursued and that all of Boeing’s questions needed to be answered. These include the same questions Thompson raises. Only by addressing the questions thoroughly can the integrity of the USAF process be affirmed or disallowed (for the lack of a better term). Also reminding readers, our position was and is that if the GAO affirms the USAF decision, Boeing and its supporters should respect this decision. If the GAO upholds Boeing’s protest and recommends a re-run of the competition, the USAF Northrop and its supporters should likewise respect this conclusion (the USAF is not legally bound by a GAO recommendation, it should be noted).
Of course, a compromise can always be worked out by doubling the procurement and splitting the contract. As we wrote last week on our Corporate site, we believe there are missions for which the KC-767 is better suited than the KC-30 and vice versa. Furthermore, replacing 500 old KC-135s at the current proposed rate of 12-18 a year is ridiculously low. The US is spending something like $1 billion a day in Iraq (which Iraqi oil production was supposed to pay for, it might be remembered, according to Vice President Cheney); doubling the tanker production equals a month-and-a-half of expense of the Iraq war–spread out over many years it would take to produce the tankers. It’s a good investment.
New, Wednesday, 700 AM PDT: James Wallace at The Seattle Post-Intelligencer interviewed Thompson–here’s his report.
Speaking of aerial tankers, Airliners.net has a nice photo here.
The White House threatened to veto a House of Representatives bill that includes, among other provisions objected to by the White House, provisions that would undo the USAF KC-45A tanker award to Northrop Grumman, according to this Reuters report.
It’s a lengthy article and the references to the tanker controversy are minimal, but it’s significant that there appears to be White House support for Northrop’s contract. This may explain what is widely perceived to be a Boeing strategy to delay the contract through protests (and appeals, if its protest is denied by the GAO) and political tactics with Congress until after the next president takes office–on the assumption the next president will be a Democrat. Both Hillary Clinton and Barack Obama, the Democrats, have questioned the contract (though Obama is more temperate in his comments than Clinton). John McCain, the Republican, is no fan of Boeing and blocked the 2004 contract to Boeing after discovering improprieties.
This Bloomberg report quotes Lehman Brothers’ aerospace analyst as concluding there is no value attributable to Airbus reflected in the share price of parent EADS. The value of EADS’ non-Airbus business make up all the share price. Morgan Stanley analysts come to essentially the same conclusion, according to Bloomberg.
There’s a very subtle difference in the language of Boeing’s press release today touting its KC-767AT tanker attributes.
Ever since the USAF awarded the KC-45A tanker contract to Northrop Grumman, Boeing has said the Air Force wanted a “medium” sized tanker and told everybody who would listen (and many who wouldn’t) that the Air Force repeated told Boeing that it wanted a “medium” tanker.
The press release today states, in part:
“The Air Force Request for Proposals seemed to call for a medium-sized tanker designed to meet the unique needs of today’s expeditionary Air Force.” (Emphasis added.)
This “seemed to call” language is a far cry from the definitive statements made by Boeing since the February 29 award.
There’s another element beginning to emerge to all this “size” issue. Information that’s been provided to us within the last week suggests that as far back as 2006, Boeing was citing Air Force “indications” about a “medium” size tanker. We’re still looking into this and we don’t yet know where the information will lead us, but there may be more to all this than currently is known outside of a very few circles.
Boeing is participating our our Eco-Aviation conference June 18-20 in Washington, DC, organized with Air Transport World.
There is a high quality list of speakers.
Eco-aviation continues to gain importance in profile and substance. Boeing’s Scott Carson, president of the Commercial Aircraft division, spent a fair amount of time during his presentation at the annual investors’ conference yesterday talking about aviation and the environmental movement.
In an interview we just completed with Airbus for the new publication, Aviation and the Environment, Airbus discussed the environmental advances of the A350’s new Rolls-Royce Trent XWB engine compared with the new Trent 1000 on the Boeing 787. Although the Trent XWB doesn’t represent a technological break-through, it does provide advances over Rolls’ own latest engine technology for the game-changing 787.
Whereas fuel efficiency and noise have been the drivers in the past for new airplanes, there are a whole new set of drivers for technological advances to protect the environment.
Boeing’s new environmental report is important reading for a better understanding of what Boeing is doing and the issues in eco-aviation.
ASDF’s in-flight refueling plane damaged during checkup at base
NAGOYA, May 21 KYODO
An in-flight refueling airplane sustained damage and was unable to fly in early March during a checkup shortly after it was deployed in late February as Japan’s first plane of its kind at an Air Self-Defense Force base in Komaki, Aichi Prefecture, base officials said Wednesday.
The engine covers on both wings of the KC-767 tanker were damaged March 5 as leading edge flaps on the wings suddenly lowered when a worker was checking the plane in a hangar at the base.
An ASDF member who was in the cockpit said the slats lowered after the electrical system for the slats suddenly came on when the officer was replacing an electric bulb for the hydraulic pump switch, they said.
The base suspects there was some operation error behind the incident.
Two KC-767s, jets developed based on the Boeing 767, have been deployed at the base and were involved in test flights. They are scheduled to be put into full operation in late fiscal 2009, which ends in March 2010.
In-flight refueling planes help to extend the flight range of fighters.
May 21, 2008 12:19:15
The Seattle Post-Intelligencer reports today that Boeing plans to double production on the 767 line to accommodate airlines affected by the delays in the 787 program. We reported this back on April 15.
The P-I reports production will double to two a month sometime next year. We reported that the boost would come in 2010 and could be a doubling to 24 a year or even somewhat higher, to 27-30 a year.
We’ve also reported that lessor Aircastle may swap some Airbus A330-200F positions for A330 passenger slots to take advantage of 787 delays. We can now report that lessors Intrepid Aviation and Guggenheim are also thinking of swapping out early A330F slots for A330P positions, adding to their orders for A330s instead of a pure swap. Additional freighter orders would be placed with early positions being switched to the passenger model.
We’ll have more details in an update of our Corporate Website later today, delayed so we can include information from Boeing’s investors day conference this morning.
US Sen. Patty Murray (D-Boeing) faced off with Secretary of Defense Robert Gates over the USAF contract award of the KC-45A to Northrop Grumman. Northwest Cable News of Seattle has this good report, along with video.
Update, 9PM PDT Tuesday: Here’s another take on the same story from The Seattle Post-Intelligencer.