Airbus announced 1,619 gross orders for 2013–1,503 net orders–and a backlog of 5,559 aircraft. The company delivered 626 aircraft for the year. It ended the year with 51% of the market vs. Boeing.
Boeing won the delivery race but came in second in orders.
CEO Fabrice Bregier said that 10 years ago Airbus delivered only half the aircraft it did in 2013.
Bregier, at the annual press conference, says “re-engining [the A330] is always an option, but not only option,” reports Reuters. “[Airbus COO-Customers John] Leahy says Airbus could eventually add 1-2 rows to A350-800.”
Aviation Week reports the A350-800 EIS could be moved back a couple of years, also reporting it could be enlarged by two rows.
Bregier says A320 production could increase, reports say from the press conference. (We report in our e-mail distribution today what the production rates will be over the next few years–this will be published on this website next Monday.)
With the increasing possibility that Airbus will defer or even drop the A350-800, the case for an A330neo becomes much stronger. Absent the A358, Airbus has no effective competition to the Boeing 787-8. The current A330, which we will call the A330 Classic, is a very good airplane but it is not as fuel efficient as the 788. The Airbus argument that the A330 Classic is competitive is based on the most favorable of assumptions and rests in part on the key capital cost assumption and moderate fuel prices.
In a story on Friday Reuters confirmed our December 23 e-newsletter report (which subsequently was published at Leeham News and Comment December 29) that Airbus is seriously considering an A330neo. This certainly clears the air on this score.
Source: Airbus
Airbus argues that the lower capital cost offsets the higher operating costs of its A330s vs Boeing’s 787-8 and forthcoming 787-9.
The following table includes Airbus’ assumption as well as 2013 lease rates reported by the appraisal firm Collateral Verifications (CV). Airbus assumes a higher lease rate for the 787-8 than CV reports. CV does not yet have an estimated lease rate for the 787-9.
Current Market Value is the price an airplane can be expected to sell for in today’s environment. Current Base Value is the theoretical price in a stable supply-and-demand market.
We really hoped we were done with this story, but the saga of the IAM 751 Boeing 777X contract vote lives on.
The critics of the election’s timing note that several thousand members of 751 were on vacation on January 3. Absentee voting was allowed for the first time in IAM history, but according to media reports, about 2,700 members did not vote in this election who voted in the November 13 election. The 777X contract was rejected then by a 67%-33% margin.
If these 2,700 members voted in the January 3 election, about 72% of these would have had to vote “Reject” to overcome the 51% “Accept” result. This is 5 percentage points greater than the November 13 Reject vote. We’re not persuaded this would have occurred.
We were involved in local suburban and state legislative elections from 1998 through 2011. In the suburb where we live, voter turnout in presidential years routinely was 85%. We analyzed voting results and voting trends in all but the 2011 election. In no case did absentee votes alter the initial reported outcome by more than 1%. Those on the losing end hoped that absentee ballots would make up the difference. We always calculated what percentage of votes would be required to overcome a deficit. Super-majority percentages were beyond reach.
It is based on this experience, and the percentages achieved in the November 13 and January 3 votes, that leads us to conclude that even if the “missing” 2,700 members had cast votes, the required percentage to win–72%–was impossible to achieve.
We believe the contract still would have been accepted.
The members of the International Association of Machinists District 751, in a dramatic reversal of its November 13 landslide contract rejection, today approved a revised contract offer from Boeing by a vote of 51% to 49%.
http://www.youtube.com/watch?v=0TCWIIs9P2c
Approval means Boeing will produce the new composite wings for the 777X and undertake final assembly of the airplane right here in Puget Sound (Seattle). The 777 Classic is assembled at Boeing’s Everett factory, home to all wide body assembly since it was built specifically for the 747. The 777 Classic’s wings fuselage panels are produced in Japan and shipped to Everett for assembly to the fuselage.
The outcome was in doubt as 751 members began voting at 5am today. Rallies leading up to the vote were largely anti-acceptance. Pro-acceptance rallies were lightly attended.
Sentiment on blogs and in Comment sections of the Seattle papers overwhelmed positive comments. Reports from the field polling places suggested the contract would be rejected.
The vote secures jobs for the IAM members at the expense of ending the defined pension plan in 2016 in favor of a 401(k) approach to retirement benefits. It also extends of Letter of Understanding (#42) providing that 737 MAX and KC-46A tanker production remains in Puget Sound through 2024, to which is when the 2016 contract has now been extended.
The controversial contract may bring mixed feelings to union members, but it brings unfettered job to elected officials, the Puget Sound supply chain and other interested parties who feared Boeing would take all the 777X production elsewhere at the cost of nearly 30,000 direct and indirect jobs and huge hits to the local economy.
But make no mistake: when Boeing proceeds with a new airplane design to replace the 757, followed by one to replace the 737, we’re going to see another round of efforts to browbeat the union and the state into more concessions or give-backs in exchange for production to be located here.
The timeline for decisions for a 757 replacement should begin around 2017. Decisions for a 737 replacement should begin around 2020.
Vote results and IAM 751 statement are here.
We’ll be at IAM 751’s headquarters tonight for the vote results. Follow us on Twitter @leehamnews for news throughout the evening from around 7pm. We’ll post results here when announced, which is estimated between 8-9pm PST. Depending on how things are going, we may also update this post during the evening before the results are in. Update, 7:30pm: We’re at IAM 751 HQ awaiting the vote. Vote counting is done here and is either underway or done at the other locations except Everett, where high turnout and slow process delayed counting, which was estimated to begin at 7:30. IAM officials don’t know yet how long it will take to complete the counting and call in the results. We’re still standing by for result announcements around 9pm until advised otherwise. Unlike the November 13 vote, it’s very quiet here. The prediction is for a “no” vote. We shall see.
Update 8:30pm: Nothing new, still in holding pattern.
Update 9pm: Everett done counting, results in about 20 min, now said to be too close to call.
Two third of Readers in our on-line polling this week urged IAM 751 members to accept the Boeing contract offer that contains major concessions, notably on pensions, in exchange for Boeing selecting Washington State to assemble the 777X and produce its wing here.
The unscientific polling is broad-based and not restricted to union members, and should not be considered indicative of the outcome of the vote today. Results are to be announced tonight around 9pm PST.
The polling results below are as of January 2. Voting is still open so totals may differ in the original post vs what is reported below, but voting subsided to the point where results should remain constant.
Answer | Votes | Percent | |
---|---|---|---|
Accept | 366 | 67% | |
Reject | 183 | 33% |
Key political leaders in the Puget Sound area met Monday with Ray Conner, CEO of Boeing Commercial Airplanes, before meeting with the press and urging the members of IAM 751 to approve the contract.
The Puget Sound Business Journal has a detailed story, including the dire consequences if the contract is rejected.
The Associated Press has a similar story.
IAM 751 sent a letter December 23 to its members recommending a No vote and detailing why.
According to the civic leaders meeting with Conner, the BCA CEO said if the 751 members don’t accept the contract, the wing production will be sent elsewhere. According to the news reports, Conner was more ambiguous about the fuselage work and final assembly.
The Requests for Proposals Boeing issued after 751 members rejected the first contract offer on November 13 allowed for splitting the FAL and the wing production among sites. But we confirmed with Washington’s Director of Aerospace that if Boeing does this, none of the $8.7bn in tax breaks the state offered Boeing will be extended; it’s an all-0r-nothing offer.
Missouri is the only other state to go public with its tax break offer: $1.7bn from the state and $1.4bn from St. Louis County.
Texas, California, South Carolina, Alabama, Utah and Georgia are among the 22 states that offered up 54 sites to Boeing in the RFP process. North Carolina and Pennsylvania are the only ones to publicly reveal they were eliminated in Boeing’s early analysis of the RFPs.
The contract offers set off internal strife at the IAM. District 751 leaders are feuding with the IAM International leaders, who negotiated the contracts with Boeing and who have largely run roughshod over 751. Local leaders oppose ratification of the contract and the International urges acceptance. International forced the January 3 vote over the objections of the District.
But our polling also shows the District 751 leadership is in trouble. A large percentage of our Readers blame 751 leaders for the current mess and more want to see the District leaders replaced than the International heads.
A large number of Readers also believe District 751 should be decertified as Boeing’s union representation and a large number believe 751 should divorce from its affiliation with IAM International.
We understand that neither decertification nor “divorce” can occur until 2016 under the current contract, or until 2024 if the contract is Accepted and extended. One of our Readers believes that if this contract is rejected, it is possible for changes to be made this year. We don’t know the answer.
These poll results are below the jump.
Looking ahead in 2014: We wrote this outlook for 2014 for CNN International Travel. More seats, more fees, quieter year.
IAM 751 members vote Friday on the ‘777X contract.‘ Here is a letter dated December 27 from Boeing to the Machinists making the case to vote for the contract.
It is the TWA Twin Globe livery that is the clear choice by our Readers for American Airlines to select for a retro livery.
TWA’s last livery was a distant second. (We didn’t particularly like this design.) The design should probably go on an MD-80, the derivative of the DC-9 on which the Twin Globes livery appeared.
Answer | Votes | Percent | |
---|---|---|---|
Boeing 707 Twin Globes Livery | 944 | 53% | |
Final Blue/Red/Gold Livery shown on Boeing 757 | 427 | 24% | |
Red Stripe, Solid Tail Livery shown on Boeing 747 | 165 | 9% | |
1950s Livery seen on Lockheed Constellation | 158 | 9% | |
Boeing 707 Delivery Livery (no Twin Globes) | 56 | 3% | |
Reverse Red livery shown on McDonnell Douglas MD-80 | 23 | 1% |
In other news and irreverence:
Changing Domain URL for Leeham News and Comment
We have acquired a new domain name for Leeham News and Comment: www.leehamnews.com. There may be a lag in the transition, but try one or the other and you should get to our site.
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Posted on January 11, 2014 by Scott Hamilton
Leeham Co., Leeham News and Comment
Leeham Co., Leeham News and Comment