Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
Airbus’ A350-1000 dilemma
Airbus has a dilemma with what to do about the A350-1000.
.
Does the OEM stick with the -1000 as it is, ceding the 400 seat segment to Boeing with its new 777-9X? Or does it stretch the -1000 (we’ll call it the “1100” for a placeholder) for what appears to be a very limited market segment?
.
If Airbus does stretch the -1000, what does this stretch look like? One that will match the 9X range and capacity? Or one that matches the capacity but not the range?
Here are the implications of the dilemma facing Airbus.
.
Stay the Course
For a long time, Airbus officials said they were satisfied with the design, once tweaked, of the -1000 and they didn’t need to respond to a “paper” airplane. The characterization had a ring to it, for that’s what Boeing officials often said about the -1000: it wasn’t a “real” airplane, they didn’t know what it was, it was a “paper” airplane or some variation thereto.
.
Of course, this was rhetoric by both parties. Lufthansa Airlines ordered 34 777-9s. A huge order+option commitment is anticipated at the Dubai Air Show from Emriates Airlines for the -9 and the smaller, ultra-long range (ULR) -8 that is sized directly across from the -1000. Airbus is now faced with the prospect of Boeing once more having a monopoly position with the 777-9 as it did for many years with the 777-300ER.
.
Does Airbus want to cede the 400-seat segment to a Boeing monopoly? The question is, how big is this segment? Is there a business case to build the airplane, or one that’s big enough for two airplanes?
.
Boeing’s current 20 year forecast indicated there is a need for 4,530 “small” twin aisle, 200-300 seat jets and 3,300 for “medium” twin aisle jets, 300-400 seats, for a total 7,830. Airbus forecasts a need for 4,694 250-300 seat jets and 2,085 350-400 seaters, for 6,779 jets, a difference of nearly 1,100-but, then, Airbus doesn’t have a competitor to the 787-8 at the lower end of the small jet sector.
.
Airbus further breaks out its forecast: 2,438 250-seat and 2,256 300-seat jets within the “small” twin; and 1,306 350-seat and 779 400-seat jets within the “medium” twin category. Boeing doesn’t subdivide its forecast.
.
The 777-9 will kill the near-dormant 747-8 Intercontinental and will likely eat into sales of the Airbus A380. Does Airbus avoid cannibalizing its own product or does it allow Boeing the monopoly to do so?
Source: Great Circle Mapper
Match the 777-9
Airbus could decide that, despite a its own narrow forecast for a 400 seat segment, it would be better to play in this sandbox, whatever the impact on the A380, than to cede this segment to Boeing. The question then arises, does an A350-1100 match the 777-9 in seats (or come close to it) and range, around 8,100nm-8,400nm?
To match means a major undertaking for a small number of airlines that need a plane with this range. It means a new wing–typically a $3bn project, more or less–and new engines in the 104,000-105,000 lb thrust range. The Rolls-Royce Trent XWB on the A350-1000 is 97,000 lbs and it can’t be pushed any farther, our information tells us. The cost of developing an entirely new engine for such a narrow market doesn’t have a business case. One might exist on the presumption that engines have to get bigger, and a new engine design would provide the basis for an entirely new generation of engines. After all, the Trent fundamentally has been around since the A330. It may well be time, but is an A350-1100 the product from which to develop it? Furthermore, it takes at least seven years to develop a new engine and probably a lot longer. The engine is the pacing item, far more than the airframe. Even if the go-ahead were given this minute, Airbus and RR would be hard-pressed to come up with an A350-1100 by 2020, when the 777-9 EIS is anticipated. So…
The 787-10 Approach
The most viable option for stretching the A350-1000 appears to be following the approach Boeing took with the 787-10: a couple of simple fuselage plugs, some enhancements to the existing engines, the same wing and reduced range that covers 90% of the markets required by the airlines–foregoing the miniscule need by Emirates Airlines for that last 5%-10%.
Source: Great Circle Mapper
An A350-1100 with reduced range of 7,000nm-7,500nm and a 400 seat capacity would have highly favorable cost per available seat miles. It wouldn’t get you from Paris to Tahiti, but how big is this market? It wouldn’t get you from Dubai to Los Angeles, but are billions of dollars worth of R&D to do so going to get the return on investment to make sense for this airplane?
The clear choice, the financially responsible choice, and the expeditious choice appears to follow the Boeing approach and develop an A350-1100 (or, perhaps, the “A350-1000-10”).
Boeing 777X engineering assigned outside Washington State
The Seattle Times, Reuters and others are reporting that Boeing has decided to assign 777X engineering outside the State of Washington.
The news went down like the proverbial lead balloon in Seattle. The fear, of course, is that this is a precursor of locating the Final Assembly Line away from Everett, to either Charleston or the “undisclosed location” that is also said to be under consideration, which is thought to be Texas.
Boeing hasn’t ruled out doing engineering work in Seattle, but Boeing has been moving engineering jobs out of Washington all year as it clearly works to diminish the influence of SPEEA, the engineers’ union.
SPEEA Tweeted in response to The Seattle Times story, “This would appear to be work that had been outsourced on the 787 program…..not work being moved out of Puget Sound.”
We think this is an ominous development for Washington, but at the same time it could well be another of Boeing’s masterful chess game to extract incentives from Washington, South Carolina or the undisclosed state.
Update: The Wall Street Journal has this story. The WSJ broke the news.
This WSJ story from April is worth re-reading.
CFM LEAP accelerating in test program; Airbus and the A350-800
Aviation Week has a long, detailed story about the test program for the CFM LEAP engine, which is accelerating rapidly.
In its 737 MAX program update yesterday, Boeing said the LEAP-1B has begun testing and it will benefit from the testing already underway for the LEAP-1A, the version that is designed for the Airbus A320neo family. The LEAP-1C for the COMAC C919 is on its original schedule for certification in 2015, despite the fact the C919 has slipped to at least 2017, reports AvWeek.
The 737 MAX is exclusively powered by the LEAP, as is the C919. The former has more than 1,600 firm orders and the latter just hit its 400th order/commitment. CFM faces competition on the A320neo family from Pratt & Whitney’s P1000G Geared Turbo Fan, where PW holds a 49% market share against CFM, which previously held a larger, more dominate position in the A320ceo competition. A large number of orders don’t yet have an engine selection.
PW is the sole-source engine provider for the Bombardier CSeries, the Mitsubishi MRJ and the Embraer E-Jet E2. PW splits the engine choice on the Irkut MC-21 (soon to be renamed the YAK 242) with a Russian engine.
Just as Boeing’s LEAP-1B will benefit from the experience of the LEAP-1A now in testing for Airbus, Airbus will benefit from the testing and experience of PW’s testing of the GTF on the Bombardier CSeries.
Aviation Week also has a story about the Airbus A350-800 with the blunt headline, The airplane Airbus doesn’t want to build. This refers to the A350-800. AvWeek muses that the outcome of the merger between US Airways, now the largest customer for the airplane, and American Airlines, may be the deciding factor for the airplane. We agree. With American’s large order for the Boeing 787-9, the A350-800 would be unnecessary.
That would then leave Hawaiian Airlines as a key decision-maker. We hear in the market that Hawaiian is just sitting back and waiting to see what kind of incentives Airbus will offer to entice a switch to the larger A350-900.
Odds and Ends: AA, US and DOJ have mediator; new C919 order; A380 break even
Movement on AA-US merger: Terry Maxon of The Dallas Morning News reports that American Airlines, US Airways and the Department of Justice have picked a mediator to sort out the DOJ’s lawsuit to block the AA-US merger. See also this Maxon report.
Maxon has a long piece, asking several pontificators (including yours truly) what they think the outcome will be.
Bloomberg reports that American CEO Tom Horton “sees a way” to a settlement but did not elaborate.
COMAC orders: COMAC says it received 20 more orders for the C919, but it once again is from a Chinese lessor, not an airline. A majority of orders for the C919 are from Chinese lessors, in stark contrast to standard practice among established lessors that they want to see a solid base (or a likely solid base) for a new aircraft type from airlines before signing up.
Although COMAC says this latest order brings the total up to 400, a data base shows only 275 so far (meaning the other 125 haven’t been converted to firm orders yet).
A380 Break Even: Airbus CEO Fabrice Bregier says hitting break even on the A380 program in 2015, which is the current plan, will be difficult if deliveries fall below the target of 30 per year. Airbus should deliver 25 this year, he said.
737 MAX program update
Boeing today gave an update for the 737 MAX program. Keith Leverkuhn, VP of Program Manager, provided the briefing. Michael Teal, chief project engineer, was also on the call. The highlights, paraphrased:
KL:: We’ve had firm systems definition, firm design definition.
- We now promise fuel improvement of 14% over today’s 737, vs 13% at the pre-Paris Air Show briefing. This is the integration of the engine performance, and the weight. This will widen gap between the MAX and the competitor.
- CFM will begin assembly of the LEAP 1B in the next several weeks. Ground testing begins next year. Will get benefit of LEAP 1A testing [the one on the Airbus A320neo-Editor].
MT: We see airplane having an 8% operating cost per seat over competition.
- The MAX will remain the lighter airplane vs A320neo.
- The 737 historically had more reliability vs competitor’s.
- Carefully offering new systems that will only give advantage without affecting reliability. Will add some of these first to the 737NG before the MAX.
- Introducing on-board Digitable Flight Data system to NG to have paperless cockpit, on-board connectivity features to NG. MAX will build from these. MAX will be able to offer real-time data to prepare for maintenance actions. MAX will also have built-in maintenance test systems.
- Leveraging from the lessons learned on recent development programs from 747-8 and 787. We implemented non-recurring development on these programs to predict future performance of design releases. These programs have been integrated on the MAX.
KL: With the recent audit numbers coming in and the 14% fuel efficiency, and continuing to make progress and pulling delivery date from 4Q to 3Q 2017, the MAX just keeps getting better.
Q&A
777X FAL: 50/50 for Washington, decision boils down to tactical or strategic considerations, says trade group chair
The decision where to site the Boeing 777X Final Assembly Line–Everett (WA), where the current 777 is built, or Charleston (SC), where Boeing is rapidly acquiring land and shifting work from Washington–will boil down to tactical or strategic considerations, says the chairman of a suppliers trade group.
It’s 50/50 whether Washington will be selected, says J. C. Hall, chairman of the Pacific Northwest Aerospace Alliance. PNAA represents small- to medium suppliers in the Pacific Northwest, with concentration in Puget Sound around the Boeing plants in Everett and Renton.
We spoke with Hall today, with plans to post the interview tomorrow. But today The Wall Street Journal posted a story about this topic, so we’re advancing the posting. Jon Ostrower wrote:
Boeing is now evaluating using the South Carolina plant for both final assembly of the 777X and to build the jet’s new carbon-fiber composite wings, according to two industry officials briefed on Boeing’s development of the 777X. “South Carolina looks more and more promising.”
And:
The South Carolina plant has had some hitches. Boeing initially planned to be building three 787s a month by the end of this year, but the new site wasn’t prepared to make that jump and the company now expects to build two to three 787s a month there by year-end. The Everett plant will build eight 787 a month by year’s end, relying further on its twin assembly lines. Boeing announced Wednesday it would accelerate total 787 production to 12 a month in 2016 and 14 a month before the end of the decade.
We’ve previously written that our market intelligence tells us Boeing Commercial Airplanes wants to build the 777X in Everett but that Boeing Chicago (i.e, headquarters) seems to favor Charleston.
[youtube=http://www.youtube.com/watch?v=RJ5MotPlUu4&w=420&h=315]
How the Scimitar has an advantage over winglets
Alaska Airlines is the latest carrier to order the Aviation Partners Boeing Scimitar split winglets. Here is the press release. United Airlines was the launch customer for the Scimitar.
Alaska Airlines image.
The Scimitar provides additional fuel burn savings over the blended winglet, also created by APB. The blended winglet has been retrofitted to most Boeing 737NGs, some Classics and some Boeing 757s and 767-300ERs.
Boeing has adopted a split winglet for the 737 MAX, but of its own design, which is similar in look to the APB Scimitar. APB’s cost for the Scimitar is a list price of $545,000 for the 737-800-3, a designation for the Scimitary-equipped 737-800.
Range increase in nominal over the blended winglet, according to APB.
Here are APB’s charts showing the advantage of the Scimitar over the blended winglets:
737-800-3
.
.
737-900ER
.
