EADS-Airbus investors forum

EADS and Airbus wrapped a two-day investors forum today. The PDF slide presentations are up on the web; the actual webcasts apparently won’t be posted until next week.

There is a enormous amount of information to slog through, even without hearing the webcasts.

 19 Comments

 Posted on December 16, 2011 by

 Airbus, EADS

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Southwest launches 737-8, bypasses 737-7 for now

Here is an article we did yesterday for Flightglobal Pro’s subscription service.

The Southwest Airlines order on 13 December launching the 737 Max programme is a launch of the -8 version. The carrier, which has substitution rights between the -7 and the -8, has chosen to bypass the -7 for now.

Brian Hirshman, SVP Technical Operations, told Flightglobal Pro on 15 December that the carrier is up-gauging its fleet, which it began doing this year with acquisition of the 737-800 for the first time. Southwest, throughout its history since is 1971 birth, has relied on the 737-200/300/500/700, preferring smaller sized aircraft and high frequency as its business model.

Read more

 16 Comments

 Posted on December 16, 2011 by

 Airbus, Boeing, Bombardier, CFM, CSeries, Pratt & Whitney

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FedEx orders 27 767-300Fs, defers 11 777Fs

Flight Pro (aka Flight Global) has reported FedEx ordered 27 Boeing 767-300Fs for delivery from 2014 through 2018 but at the same time deferred 11 777Fs within the 2013-2018 period as cargo demand softens.

The 767s will replace MD-10s, which are more than 40 years old.

Airbus had pitched the A330-200F but it was considered “too much airplane” for FDX. FDX also evaluated the potential 767-400F, but a FDX official told us at ISTAT Barcelona Boeing did not want to proceed with this new variant and risk impacting the USAF KC-46A tanker development. The KC-46A is a derivative of the 767-200, called the 767-2C.

 22 Comments

 Posted on December 15, 2011 by

 Airbus, Boeing

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Southwest press conference on 737 MAX order

Southwest Airlines held a web press conference (with written question submissions the staff can screen in advance–bad idea) on its new 737 MAX order. Here are highlights:

Gary Kelly, CEO

  • Only four 737 MAX delivered in 2017. Just 15 the following year. (From press release.)
  • Christmas came early to Southwest. [Last time Kelly said that was when he proposed moving from Sea-Tac to Boeing Field in Seattle. Got his head handed to him in the local opposition. Editor.]
  • We have seen tremendous advances with technology.
  • COO Mike Van der Ven led effort.
  • This is coming at just the right time. One of the main challenges we face are high fuel costs. We are very much in need of new technology to reduce the fuel burn and reduce environmental impact.
  • This supports our financial strategy.
  • Commonality major point.

Jim Albaugh, CEO of BCA.

  • [Albaugh looks a lot happier at this press conference than he did at the American Airlines one.]
  • Southwest is a special customer and we have a special relationship.
  • This is the first definitive agreement we signed. Southwest will get airplane #1 when it rolls off the line in Renton.
  • [With Southwest getting only 4 airplanes in 2017, this suggests a late 2017 EIS.–Editor]
  • 948 commitments now, projects 1,400-1,500 by the end of next year.
  • I don’t have the real thing but I have a model for you and a video.
  • [Video shows MAX will winglets, not the oft-speculated raked wingtips.]
  • This is largest order in Boeing’s history.

Kevin McAllister, VP Sales and Marketing for GE, representing CFM.

  • Southwest formally launches the LEAP-1B.

Mike Van der Ven, COO.

  • This allows us to accelerate the retirement of older airplanes.
  • Have 150 options to expand as well.
  • Our choice guarantees WN a single fleet type well into the next decade.
  • 16-18% fuel burn improvement over 737 Classics.
  • We’ve been in conversations with Boeing for several years.
  • Efficiency improvements allow up to improve without complexity.
  • Compared with A320neo and both did the job but 737 MAX was our choice.
  • Cost is $1.2bn for all outstanding orders (including those existing before today). Per year.
  • Airplanes still being defined.
  • 717s in leases 2017-2020+ and will work to see what the alternatives are but will operate through lease terms if we have to.
  • Primary factors of fleet commonality and gauge of 737-8 (more seats), lighter airplane vs A320.
  • We like the GTF technology but this comes as a package and CFM has millions of flight hours behind it. GE and CFM have been very good in past in delivering products on time and meeting specifications.

Brian Hirshman, SVP Technology, WN

  • We did extensive analysis vs A320neo and felt 737 MAX better suited.
  • Plane works better at Chicago Midway Airport, among other issues.
  • MAX would have to fly the same mission as NG and are satisfied it would do that.
  • We wanted as much commonality as we can.

John Hamilton, Boeing 737 chief engineer.

  • The airplane is fairly well defined. Will reach final configuration in 2013. It’s well enough known that WN and Boeing had confidence to go forward at this time.
  • MAX will have capability to have increased payload-range vs NG.
  • Airport performance was important, especially at key airports.
  • We will make sure we get Southwest what it wants.
  • We both would have liked a new airplane, but when you look at lessons learned [from 787] it was more challenging to bring to market in the timeframe customers wanted.

Chaker Chahrour, EVP CFM

  • Core is optimized for MAX for best overall fuel burn.
  • We believe we have much more credible technology than GTF. We have tremendous amount of confidence in our technology and at the end of the day it will be the most economical.

 41 Comments

 Posted on December 13, 2011 by

 Airbus, Boeing, CFM

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Southwest places firm order for MAX

Southwest Airlines became the first customer to place a firm order for 737 MAX. The press release is here. First delivery is 2017.

Southwest had been urging Boeing to proceed with the re-engine for two years, only to watch American Airlines become the first company to commit to the MAX last July.

Southwest has ordered more 737s than any other customer. It was the launch customer (and operator) of the 737-300/500/700.

AirInsight reports Southwest likely received a discount of around 48%.

Southwest’s delivery schedule for the MAX is here.

 11 Comments

 Posted on December 13, 2011 by

 Boeing

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Leahy dismisses Boeing economic claims on 737 MAX vs A320neo

We did the following story Nov. 30 for Flight Global’s new Flight Pro subscription service.

Airbus’ new A320neo family will have up to 11% better fuel burn than the Boeing 737 Max family, John Leahy, COO Customers for Airbus, asserted November 30 at the Credit Suisse Aerospace conference.

Leahy challenged Boeing’s claims that the 737-800 Max will have a 7% advantage on a seat-cost basis. Boeing computes its figures on a total cash operating cost basis, which Leahy rejects as being subject to manipulation.

“There are some very aggressive people in marketing and Seattle who are veracity challenged,” Leahy told the Credit Suisse audience.

“I think that best way to look at it when everything else is equal is fuel burn. If you look at something where you can really change the variables too much, [it’s flawed]. If they say ‘I think the Airbus airframe is more expensive to maintain than our airframe,’ I advertise that it is less expensive. I think most airlines would agree with me. The worst I’ve ever seen is that we are equal. Boeing says the Airbus engine is substantially more expensive to maintain. They say Airbus is heavier so they put in a little bit extra charges. By the time you’re done, you probably see all sorts of different things to throw money in. If you can convince the airlines that you are right, I wouldn’t have the dominant market share I have. They would.”

On this basis, Leahy said the neo will defeat the Max in each model. The A319neo will have 6% lower fuel burn vs the 737-7; the A320neo will have 6% lower fuel burn; and the A321neo will have 11% lower burn.

He also said Airbus’ analysis concludes the Max will only achieve a net fuel burn reduction of 8% vs the 10%-12%Boeing claims.

 53 Comments

 Posted on December 12, 2011 by

 Airbus, Boeing

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US disputes EU claim of WTO-Airbus compliance, threatens sanctions

As Yogi Berra once said, “it ain’t over till it’s over.”

The US Trade Representative rejected EU claims that it had complied with WTO rulings that Airbus received illegal subsidies and that these had been repaid.

Here is the USTR statement. USTR claims sanctions of $7bn-$10bn annually are in order.

The USTR also objected to new subsidies granted (though without specifying, this presumably relates to the A350, which was not part of the 2004 case). Airbus has claimed the WTO didn’t rule out subsidies per se, just the terms on which they had been granted and that new subsidies for the A350 would be drawn on commercial terms.

The financial statements of EADS, Airbus’ parent company, shows reimbursable launch aid (as EADS/Airbus calls it) increased by more than 1bn Euros in 2010 over 2009, but did not specify how much of this was associated with the A350. The A320neo program wasn’t launched until December 2010, so while this could have benefited from launch aid, the probability that the increase was mostly related to the A350 seems high.

Boeing issued a statement that names the A350.

Airbus rejected the USTR and Boeing claims.

We say: we’re tired of the whole thing. As we have noted many times, we don’t like subsidies, period. Of any kind. To Airbus or Boeing or anyone else.

 38 Comments

 Posted on December 9, 2011 by

 Airbus, Boeing

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NLRB drops Boeing case

New York Times.

Now Boeing and IAM 751 can get on with the business of building airplanes without distractions.

 6 Comments

 Posted on December 9, 2011 by

 Boeing

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IAM-Boeing, the day after

Here are several stories on the day after the historic IAM-Boeing contract vote. The importance of the success of this vote cannot be understated.

CNBC interview with Jim Albaugh.

Seattle Times, with comments from IAM 751 president Tom Wroblewski.

Washington Post.

The Street.com.

 11 Comments

 Posted on December 8, 2011 by

 Boeing

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Boeing message on IAM vote

From: Jim Albaugh
Subject line: A future of shared success
For distribution to all BCA employees
Dec. 7, 2011

IAM-represented employees said “yes” today to a four-year contract extension that opens a new era of job security, stability and shared purpose.

I’m thrilled with the outcome and grateful to union members for supporting this landmark agreement. I also want to thank IAM leaders for the hard work and constructive dialogue that produced this contract, which will bring great benefits to our employees, our customers, our communities and our company.

The contract ensures that the 737 MAX will be built in Renton, affirming Boeing’s role as an economic engine for the region. It provides production continuity as we work to meet customer demand for our airplanes. It demonstrates Boeing’s commitment to its highly skilled workforce and marks a new chapter of cooperation between the company and its largest union.

The tentative agreement announced last week drew overwhelming praise from community leaders, elected officials and business analysts. They called it “a tsunami-sized deal” and “a shot in the arm” for the state’s economy. Washington Gov. Chris Gregoire said it showed “a strong commitment by both sides to secure the future of aerospace in Washington state.”

All of that is true. But this contract represents something even bigger – affirmation that reasonable minds can prevail. It demonstrates that even now, in a nation too often polarized and mired in disagreement, people can come together in good faith and find a way forward.

As competition in our industry grows more fierce, the need for Boeing and its unions to stake out common ground has never been greater. This agreement points the way to a future of shared success. To IAM-represented employees, I say thank you for approving this contract and demonstrating your faith in the amazing things we can achieve together…JIM

 1 Comment

 Posted on December 7, 2011 by

 Boeing

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