Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing’s 737 North Line and the Everett factory: in transition now June 9, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 25. June 6, 2025
- New RISE powerplant benefits from decades of GE research and development June 5, 2025
- Engine makers emphasizing durability, reliability June 4, 2025
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
A350 program update: EIS date set (sort of); ambiguity over -800; talk of a -1000 stretch
Airbus provided a program update Monday to the international media. Here are links to initial stories.
Airchive: Airbus sees shift toward 250-300 seat aircraft. Airchive reproduces some of the illustrations Airbus presented. Airchive reports the planned EIS for September 2014 (as does the headline Aviation Week article below) but adds that EIS could slide to November or December. (We have it for early 2015.)
Aviation Week: September 2014 EIS targeted.
Bloomberg: Airbus will eventually seek certification with lithium batteries.
Bloomberg’s story has a couple of important points:
- While multiple -800 customers have moved to the longer A350-900, Airbus still has outstanding orders for 89 units and will build the plane if customers want it, Evrard said. He gave no indication when production of the -800 versions may begin. (Emphasis added.)
- Evrard said stretching the A350-1000 by adding panels to make the fuselage longer for additional passengers would be perfectly feasible from a technical point of view.“Stretching further is possible, there are no show-stoppers, but today it’s still in the pre-concept phase” he said.
On the first point, we previously reported that a change in production sequence was likely coming. An Airbus spokesperson denied it, but the comments above at the briefing certainly infer otherwise.
On the second point, Evrard’s comments about stretching the -1000 are, in our view, significant. We reported last night in our interview with Airbus Americas Chairman Allan McArtor that Airbus was looking at this hypothetical, though no internal proposal had been made. Still, it’s clear to us that Airbus is giving solid consideration and we predict that eventually will proceed.
The Airchive report of a market shift toward the 250-300 aircraft is also significant. With continued trends toward upgauging, this will soon shift to 300-350 and then to 350-400. The corollary is that the Very Large Aircraft sector continues to shrink.
Odds and Ends: Middle East carriers high on 777X; Airbus’ Japan ambitions; Low fare airlines
Boeing 777X: Reuters has this article on negotiations between Boeing and Etihad Airlines for the new 777X. Reuters reports that up to 30 777Xs could be ordered, along with a follow-on order for the 787. Emirates Airlines is expected to order between 75-100 777X. Qatar Airways will almost certainly place a 777X at some point.
The Boeing Board of Directors is expected to give the go-ahead for the 777X this month, with a public launch at the Dubai Air Show next month. Emirates is widely anticipated to place its order there, though its president, Tim Clark, has been quoted in the press that it’s possible he won’t be ready by the air show. Because this air show is in Dubai and the home base for Emirates, it’s quite possible the Etihad and potential Qatar orders would come outside the air show.
Lufthansa Airlines has already ordered the 777X, subject to formal program launch.
Airbus in Japan: Having achieved a major breakthrough with a large order for the A350 from Japan Airlines, Airbus has set some ambitious goals to increase its market share in this country, reports Bloomberg News.
Low Fare Airlines: Images and myths surround low fare airlines. We’ve written many times in the past that the USA’s Southwest Airlines, which built its image since its founding in 1971 at the low fare airline, often isn’t any more. (In fact, we were years ahead of the mainstream media in discovering this.) You can usually get lower fares on the legacy airlines, though bag fees and change fees, if you have check bags or change your flight, destroy the savings. If you don’t have to do either, it’s usually cheaper to fly the legacy airline than Southwest.
In Europe, Ryanair is viewed as the cheapest airline to fly. The base fare is ridiculously low but fees are imposed for everything except using the loo, though CEO Michael O’Leary would like to charge for this, too. This article calculates that in fact Ryanair isn’t the cheapest way to travel. The article rates the top 20 low fare carriers and Ryanair comes in #4.
Airbus’ McArtor on VLA, 777X, 757 replacement and Airbus future products
Airbus Americas Chairman Allan McArtor.
Allan McArtor believes there will always be a market for the Very Large Aircraft (VLA), but he’s not surprised Boeing cut the production rate of the 747-8.
McArtor, who as chairman of Airbus Americas, is hardly an unbiased observer. He says the 747-8 Intercontinental is uneconomic and the market for the 747-8F is weak. But he also acknowledged that the dearth of sales for the Airbus A380 has been a challenge.
Airbus has forecast 1,200-1,300 VLA-Passenger deliveries over a 20 year period every year since 2000, while Boeing has steadily reduced its forecast to just 540 VLAPs in its current forecast. Airbus believes it will capture 50% of the market, based on its forecast. In fact, it currently is capturing between 86%-90% of the sales.
Each forecasts several hundred more VLA-Freighter deliveries during the next 20 years. Boeing currently holds a monopoly in the VLAF sector, but sales haven’t been on a pace to meet either company’s forecast, nor have sales of the A380 remotely maintained a pace that suggests Airbus will meet its own forecast, without dramatically adjusting both the total market and its market share expectations.
In an interview with Leeham News, McArtor maintained there will “always” be a demand for the VLA. He acknowledged that one can quibble with the forecast or the timing, but airport constraints and growing markets between key cities, such as London-Tokyo, London-New York, Paris-Tokyo or New York and similar segments, will demand a VLAP.
Airbus so far this year has has a net order for the A380 of minus three, but it signed a Memorandum of Understanding for 20 from specialty lessor Doric during the Paris Air Show. This is expected to be firmed up before the end of the year, potentially at the Dubai Air Show.
Boeing is also expected to make a splash at Dubai with the highly anticipated public launch of the 777X, with a large order from Emirates Airlines. The airplane, with a new composite wing, new engines, systems upgrades and cabin modifications, will come in a 350-seat 777-8 and a 407-seat 777-9. The 777-8 directly competes with the Airbus A350-1000. The 777-9 doesn’t have an Airbus competitor and at nominally 407 seats falls just within the VLA sector, which begins at 400 seats.
Boeing cuts 747 rate on weak demand
Boeing 747-8 production rate: To the surprise of absolutely no one, Boeing today announced it will trim the production rate of the 747-8 from 1.75 per month to 1.5/mo through 2015. the only surprise is that it wasn’t reduced to 1/mo.
Boeing cited lower demand for Very Large Aircraft, both in passenger and freighter models. Boeing stood by the airplane, however, predicting a cargo market recovering next year.
“This production adjustment better aligns us with near-term demand while stabilizing our production flow, and better positions the program to offer the 747-8’s compelling economics and performance when the market recovers,” said Eric Lindblad, vice president and general manager, 747 Program, Boeing Commercial Airplanes, in a statement. “Although we are making a small adjustment to our production rate, it doesn’t change our confidence in the 747-8 or our commitment to the program.”
There is a backlog of only 51 aircraft.
The USAF wants to replace its two Air Force One 747-200s in 2021. We think Boeing will be hard-pressed to keep the line alive until then. The official launch of the Boeing 777X, and the widely expected order for the larger 9X version at the Dubai Air Show next month, will make it that much more difficult for Boeing to sell the airplane.
Odds and Ends: Repairs begin on Ethiopian 787; WTO appeals; CSeries update
Ethiopian 787: Remember that Boeing 787 fire at London Heathrow Airport some months back? It seems that Ethiopian Airlines, the owner, and Boeing, have finally reached agreement on how to fix the airplane–but nobody is saying how, according to Steve Wilhelm at the Puget Sound Business Journal.
WTO Airbus/Boeing: In case anyone was wondering what’s happened to the cross-appeals of the World Trade Organization findings that Airbus and Boeing received illegal subsidies, it seems the USA isn’t the only place where budget constraints have bollixed things up. The appeals are delayed by budget shortfalls at the WTO.
CSeries Update: In case you’ve been wondering about the Bombardier CSeries test program–the plane has flown only three times since first flight Sept. 16–BBD just posted this YouTube with an update.
[youtube=http://www.youtube.com/watch?v=JwkhQDDEgdw&w=420&h=315]
We understand that the long run of rainy weather in advance of the first flight (delayed by a week because of the weather) meant that some of the testing that had been expected in advance of the flight resumed after the flight.
Flight Global has this short story.
757, 737-900ER/9 MAX, A321 replacement should be the next new airplane
The Boeing 757 doesn’t have a true replacement. The Airbus 321neo and Boeing 737-9 fall short. The 9 MAX doesn’t measure up to the A321neo. Boeing has to move toward a program to replace the 757 and the 737-9.
With the launch of the Boeing 777X a given, what’s next in aircraft development?
John Leahy, COO-Customers of Airbus, gave a tantalizing hint at the ISTAT conference last week in Barcelona, Spain, when he said the OEM was studying a stretch of the 350-seat A350-1000 to fill the gap between it and the 525 A380 and to compete with the 400-seat 777-9. But then he tried to reel it back, saying there was “no story here,” according to Aviation Week.
.
*************************************************************************************************
- KING5 (NBC Seattle) has this report about the 757 replacement.
*************************************************************************************************
.
Then Boeing’s own Joe Ozimek, who heads sales for the 737 MAX, asked the lessor’s panel which aircraft do they want and CIT Aerospace president Jeff Knittel said a replacement for the Boeing 757, Tweeted AFM magazine.
.
This is what we think will be the next big project.
.
We reported in March 2012 that Boeing continued studies-dubbed the New Airplane Study, or NAS-of a replacement for the 757 even after launching the 737 MAX program and billing the 737-9 as the 757’s replacement.
.
Except that it isn’t. Far from it.
.
The 737-9 doesn’t have the range, the field performance or the payload of the 757. Neither does the Airbus A321neo, although it is much better than the 737-9.
.
Entry-into-service for what we will dub the 757R is envisioned for 2025-2027, leaning toward the former.
.
During the media briefings in advance of the Paris Air Show, Boeing acknowledged it saw a market for the 757 replacement. Although 1,049 757s were built in its production run ending in 2003, a solid sales effort for its era, we believe the market is far larger when you consider the general up-gauging that’s been happening and the sales of the A321ceo/neo and the 737-900/900ER/9. Through September, there have been 1,861 A321 family sales and 766 of the largest 737 family siblings sold. Combined with the 757 sales, this totals 3,676 programs sales for all three airplanes, excluding future sales.
.
|
Aircraft |
757-200 |
757-300 |
A321ceo |
A321neo |
737-900 |
737-900ER |
737-9 |
|
Sales |
994 |
55 |
1377 |
484 |
52 |
530 |
184 |
.
Although Boeing claims the 737-9 is a replacement for the 757, for some 80% of the missions, and while Boeing claims the 737-9 is better than the A321neo, sales figures tell the story. Furthermore, airlines we talk to universally tell us the A321neo is more capable than the 737-9.
.
The combined sales figures demonstrate that Boeing is trailing badly in the 180-220 seat single-aisle sector, with a mere 29% share of the market and even worse with the 737-9 at just 27.5% of re-engined competition. To recapture this market, Boeing has to proceed with a new airplane.
.
We believe a 2025 EIS means activity will begin to truly ramp up for decision-making as early as 2017. Eight years now is becoming the norm for new airplane development lead time.
.
Development of the true 737 replacement will then flow out of development of the 757R. The first 737 MAX EIS, for the -8, is slated for July 2017. The -9 follows in 2018 and the -7 in 2019, assuming the only two customers (Southwest Airlines and WestJet) don’t swap these for larger models or proceed with another solution entirely.
.
We believe the MAX, coming two years behind the Airbus neo family, will have a shorter production life than the neo, especially with the poor-selling and poorer-performing -9. A 10-11 year production run is probably a reasonable expectation.
.
Airbus and Boeing each have said they expect a replacement for today’s single-aisle airplanes around 2030. We believe this may be advanced a few years to as early as 2027.
.
The question is, which company goes first? We think Boeing has the greater need and greater motivation. We believe Boeing will be first off the mark.
Odds and Ends: Supply chain demands; Southwest hints?; Retrospective on A320/737 replacements
Supply chain demands: Earlier this week, we talked about the prospect of production wars as Airbus and Boeing ramp up over the next five years, combined with the new entrants and the new offerings from Bombardier and Embraer.
We noted that this will mean opportunity and risk for the supply chain. Ryan Murphy from Salem Partners has a long analysis the starts with the finishing sector but which goes beyond this to discuss the broader implications. It makes for an interesting read.
Southwest: Hints of things to come? Yesterday we wrote about Southwest Airlines and the demise of the Wright Amendment that restricts travel from Dallas Love Field. We suggested several routes that Southwest would launch from Love once the Amendment passes into history.
Here’s a display Southwest erected on its countdown to the end of the Wright Amendment. We think it hints at things to come. Going clockwise: Chicago, New York and Charlotte seem to be where the airplanes are going. Then Los Angeles and Salt Lake City seem to be implied destinations. But the last one? Boise, or some other obscure city?
Or are we reading too much into the placement of these airplanes?
Source: Dallas Morning News
Our thoughts:
Retrospective: We were looking at previous posts for some specific information and in the process re-read one about replacing the Airbus A320 and Boeing 737. The post dates from 2009. In light of subsequent events, it makes for interesting re-reading. We discuss the internal views of Airbus and Boeing about replacement or re-engining their aircraft and the engines from Pratt & Whitney and GE Aviation/CFM. We also touch on Boeing leaning toward not replacing the 777.
Retrospective, Part 2: Airchive has a nice set of historical looks at the development of the Boeing factory at Everett: Part One and Part Two.
Odds and Ends: Embraer reports weak quarter; MRJ FTV #1 assembly; JAL, ANA politics
Embraer’s Third Quarter: Embraer delivered fewer commercial airplanes in the third quarter than had been expected. The maker of E-Jets and the E-Jet E2 re-engined versions due beginning in 2018 listed its deliveries and backlog in its press release. Analysts expects 22 E-Jets would be delivered in the quarter. But the backlog is up 44% year-over-year, largely on the strength of the launch of the E2 (150 orders, 100 of which are for the smallest E-175 E2 and 25 each for the E-190/195 E2), and orders from Republic Airways Holdings and SkyWest Airlines for the current generation of E-Jets. The E-175 remains to most frequently-ordered airplane.
Although Embraer is expanding the size of the E-195-E2 by up to 12 seats, orders have been few. The E-190 has proved a better-selling model than the E-195.
Source: Embraer
Officials expect to have a healthy fourth quarter delivery stream.
Mitsubishi MRJ: Assembly for the first Mitsubishi MRJ Flight Test Vehicle (to borrow Bombardier’s term for the CSeries) is underway. The first delivery was originally planned for this year; it’s now planned for 2017, four years late. This rivals Boeing’s 787 and exceeds the Airbus A350 and as yet the CSeries.
JAL, ANA Politics: Reuters has an analysis about the suspicion politics may have been involved in the decision by Japan Airlines to buy the Airbus A350 and the pending order by ANA of an Airbus or Boeing airplane.
Southwest’s forthcoming expansion will offset AA-US consolidation
Southwest Airlines has begun a one year countdown to the day the Wright Amendment will disappear.
The Amendment, named after former US House Speaker Jim Wright, restricts Southwest’s ability to fly from in-town Dallas Love Field. Originally Southwest was restricted to Texas and the immediately adjacent states. The Amendment has been modified several times. Today the carrier may fly anywhere within the US beyond the exceptions with one stop. Love Field is now restricted to 20 gates; Southwest controls all but a few of them.
.
The restrictions were put into place to protect the then-new Dallas-Ft. Worth Regional Airport, which was constructed mid-way between the two cities. All the airlines at the time served Love Field and when DFW was created, they all agreed to move to the new airport and close Love Field to airline traffic. Except Southwest, which didn’t exist at the time of the agreement but which began service from Love in the interim between the signing of the agreement and the opening of DFW. The attempts by Braniff International Airways and Trans Texas International (nee TRANS Texas) to put Southwest out of business are industry folklore.
The fear was that Southwest and Love would hurt DFW and the airlines competing from the distant airport, including American Airlines. When Southwest a few years ago launched a full-scale attack on the Wright Amendment, American led the charge to block the effort. The compromise was the gate restriction, the one-stop service and a five year phase out.
Who could have foreseen that this now could help come to the rescue of American and US Airways as they fight the US Department of Justice’s attempt to block the merger of these two carriers?
Here’s why.