Odds and Ends: Dominating Wide-Bodies; Trying to save the 747-8; Delta waits; China OKs 787

Dominating Wide-Bodies: Boeing claimed at its investors’ day yesterday it will dominate the wide-body sector. This, predictably, caused some mirth among our Reader Comments.

We agree with Boeing–for the next several years.

The 777-9X will have a monopoly in its seat size, just as the 777-300ER does today. Boeing’s greater production plans, both announced and with figures bandied about for some time, also support this.

Below is our chart, based on announced production numbers, anticipated 787 production and our own prognostications.

Production rate is per month.

	2014	2015	2016	2017	2018	2019	2020
A380	3	3	3	3	3	3	3
A350	2	4	6	8	10	10	10
A330	10	10	10	10	8	8	8
Total	15	17	19	21	21	21	21
777X							2
777 Today	8.3	8.3	8.3	8.3	8.3	6	6
787	10	10	10	12	14	14	14
747	1.75	1.75	1	1	1	1	1
Total	20.05	20.05	19.3	21.3	23.3	21	21

What do you think?

Saving the 747-8: The Puget Sound Business Journal has this article about Boeing’s latest effort to improve sales prospects for the 747-8, particularly the passenger model. Only 31 Intercontinentals have been ordered by airlines (vs 262 Airbus A380s). This is only a 10.5% market share for Boeing.

Delta Waits: Delta Air Lines hasn’t ordered the Boeing 787, the Airbus A350 or the re-engined aircraft. The 787s it inherited from Northwest Airlines’ order and merger have been pushed out to 2020 and, for all intents and purposes, may as well be considered canceled, though they are still on the books. Why no orders for the new or re-engined airplanes? This article explains.

China OKs 787: Chinese authorities have at long last certified the 787 for operation by its airlines. China Southern was one of the early launch customers but swapped delivery slots to avoid the so-called Terrible Teens (overweight, highly re-worked models). Chinese carriers hoped to have the 787 in service in time for the 2008 Summer Olympics in China, and when the 787 was named, the number “8″ was said to be a good number in China (thought there was never really any doubt about the name since 8 was next in sequence).

But certification was delayed and delayed. We’ll probably never truly know why, but market rumor reported a nexus between the Chinese certifying the 787 and the FAA’s dawdling on certification procedures for the COMAC C919. Not that the Chinese would ever play politics with airplane deals, mind you….

EADS earnings and Airbus A350, A380 updates

EADS reported its first quarter earnings and in the process reiterated plans to fly the Airbus A350 in June.

Speculation remains rampant that Airbus will fly the airplane in time for the Paris Air Show.

Meantime, sales for the giant A380 languish, with open delivery slots in 2015–the year Airbus has said the program will break even. Like the rival Boeing 747-8I, sales of the Very Large Aircraft have stagnated while sales of the Big Twin engined airplanes have flourished. Airbus, like Boeing on the 747-8, took a huge write off years ago on the A380 program.

Airbus is sticking with its 20 year forecast of 1,300 VLA Passenger sales for Airbus and Boeing, and officially expects to capture 50% of the market. We’ve believed the forecast to be, kindly, optimistic. But the A380 has nearly 90% of the VLAP market and we expect this to remain the case. Airbus might reach its goal of 650 sales over 20 years, but even this is likely to be generous. This are new sales on top of the 272 already sold.

In a lawsuit between Rolls-Royce and Pratt & Whitney a few years back, it was revealed Airbus expected 630-650 program sales, which means about 42% of the sales have already been reached. (It took Boeing nearly 40 years to reach 1,300 747 sales, and for a time the 747 held a monopoly in the “jumbo jet” market). No orders for the A380 have been booked so far this year.

Sizing up the 777X vs Airbus–and Boeing

It was no surprise that Boeing’s Board of Directors authorized the sales force to begin showing the 777X to customers for sale, as opposed to the concepts. As we’ve reported (and as did others), this move was expected this week. Entry-into-Service (EIS) is slated for late 2019, and will be driven in part by development of the GE9X engine.

The 777X replaces the 777-200LR and 777-300ER, with the 777-9X at nominally 406 passengers giving Boeing a monopoly position similar to that currently enjoyed by the -300ER. The 8X/8LX is 353 passengers.

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The 777-9X falls just within the Very Large Airplane category of +400 passengers. We believe this will sound the death knell for the struggling 747-8I. The 747-8 nominally carries 467 passengers but Lufthansa, the only operator so far, configures the airplane for 362-386. The 777-9X will likely be far fewer than 406 in Lufthansa’s configuration but plane mile costs should be far superior to the 748. In high density configuration, the 9X will be solidly in VLA territory.

Update, 900am PDT: Boeing dropped five orders for the 747-8F from ailing lessor Dubai Aerospace. The 8F backlog is now down to 33, plus 26 for the 8I.

Gov vows to keep 777X in Washington

Gov. Jay Inslee vows to keep assembly of the 777X in Washington State, a development that gained even higher profile this week with the announcement by Boeing Tuesday that it will spend $1bn to expand its Charleston (SC) facility.

In a press gaggle last week following Boeing’s opening of the Everett Delivery Center at Paine Field, where the current generation 777 is assembled, Inslee repeated his vow to win assembly of the successor airplane for Everett.

“Boeing management understands we’re the jewel of aircraft manufacturing in the world,” Inslee said. “We have to understand that every single model from here on, including the 777X, is going to be competed. We need to do our job to be competitive, to improve the skills training from machinists and engineers, to improve the transportation system so that we can move products and Boeing can move their engines back and forth. If we can do these things, we’re always going to be on top and I intend to do that.”

We asked Inslee about Washington’s strict environmental regulations compared with Southern states, including South Carolina, where regulations are much more lax compared with here. Inslee, a strong environmentalist during his tenure in Congress and who has a strong “green” agenda as governor, replied:

“I am firmly of the conviction that we can have a sound environment and a booming economy, including aerospace. What we can do is maintain our standards but I do hope we can find a way to expedite our permitting decision-making. I think we can make these on a more timely basis and I am working with my regulatory agencies to do that. I believe Boeing values the environment as we do in Washington, and we’re going to have both.”

The press gaggle then shifted over to Pat Shanahan, VP of Aircraft Programs, who was the ranking Boeing representative at the Delivery Center’s opening. In his position, he is also keenly involved in new aircraft development.

Given the now-paranoid nature of Washington politicians and media over Boeing’s future here, Shanahan was asked if the new Delivery Center had any bearing on Boeing’s commitment to Puget Sound.

“We wouldn’t build a facility like this if we weren’t committed to it,” he said. We then asked if the Everett facility has enough room to seamlessly integrate the 777X, or whether an expansion would be required, or whether another airplane program would have to be discontinued to make way. We noted that the Renton facility had to displace some staging areas for parts and equipment currently serving the 737NG production to make way for the 737 MAX line start-up.

“We have a lot of options,” replied. “You saw in Renton we had a lot of options. Over the course doing any kind of development, or laying out a program, you go through every one of those as well as what kind of investments are required and what kind of business case you need to make. We’re in the midst of the 777X doing lots of studies.”

Shanahan declined to answer a question from a reporter whether the 777X will kill the stagnant 747-8I.

Separately:

• Here are some video interviews on the Porter Airlines/CSeries announcement.

McNerney on unions and other stuff; where will 777X be built?

Note to Readers wishing to comment: See this article and our Comment #35 and be forewarned.

Boeing CEO Jim McNerney is cited in the Puget Sound Business Journal on labor unions, China and other stuff from his appearance at an aerospace summit.

In the article, McNerney tries to take a moderate stance on unions. But just this week Boeing announced it is moving SPEEA and other union jobs out of Puget Sound, here and here. The moves resulted in a blast from Seattle Times columnist Jon Talton here, and our response here.

Production is booming in Seattle’s Puget Sound, but it’s clear to us that Boeing is engaged in a long-term strategy to build up Charleston as a major, second production plant–not just a 787 production line. We see Charleston-as-to-Seattle as Hamburg-is-to-Toulouse some day. We don’t see Everett shutting down (at least not in our lifetime) because there is too much there. We think Renton is more at risk, once there is a New Small Airplane finally designed to replace the 737–but this is well into the next decade.

The question over where the 777X will be be built is, to us, a little more vexing. Logic says build it here, given the similarities between the baseline 777 and the derivative 777X. This is no different in principal than the 737NG and the 737 MAX–it would have been silly to build it elsewhere.

But McNerney’s comments about labor in the Business Journal notwithstanding, the anti-union sentiment at Boeing Corporate is obvious for all to see.

The future of the 747-8 is in jeopardy. Boeing said as much in its 2012 10K: