Assessing the A350 program

News from EADS that it is beginning to consider another Airbus A350 assembly line, or ramping up production more quickly than currently planned, to accommodate increasing demand for the -1000 validates a desire expressed months ago by John Leahy, COO of Customers for Airbus, that he could see more -1000s if he had the capacity to build them.

Delivery slots for the A350 are essentially sold out to 2020. Orders for the -1000 stalled in part because of this, in part because Airbus tweaked the design, in part because Boeing engaged in an effective campaign to cast doubt over the model and in part because Tim Clark of Emirates Airlines and Akbar Al-Baker of Qatar Airways can’t resist negotiating in the press to pressure Airbus to do more.

We believe the -1000, at 350 passengers, is a bit small. It compares with the 365 passengers in the Boeing 777-300ER. We felt from the start that Airbus should have had at least 30 more passengers. But the -1000 threatens the -300ER. Airbus claims the -1000 will have 25% lower trip costs; even Boeing’s own presentations grant the -1000 about 20% lower trip costs.

With Boeing planning a 350-passenger 777-8X and a 406 passenger 777-9X, the need for a larger “A350-1100″ becomes acute. Boeing has had the monopoly with the 777-300ER, which will be broken by the -1000. The 9X will retain a monopoly; Airbus, to be fully competitive, needs to match this size.

This will mean a new wing and larger engines, of course, no small investment. There is already a huge gap between the -1000 and the A380. The 777-9X, which will be more efficient than the 747-8 (and which will kill the dying 748), will eat into the A380 demand. So will an A350-1100, but better to do so from within than to see your competitor take the sales.

The A350-900 is moving forward with continued market demand.

This leaves the A350-800.

Boeing engaged in a public campaign to cast doubt on the viability of the -800. Airbus has poorly defended the airplane, and its efforts to switch customers to the -900 further casts doubt. But officials insist the -800 has a future. The question is, when?

The current entry-into-service plan for the family is the -900 in the second half next year (we think it could slip into early 2015); late 2016 for the -800 and 2017 for the -1000. There are only two -800s scheduled for delivery in 2016, with the bulk in 2017, when the -1000 is due for delivery in reasonably sizable numbers.

We’re told from several sources that Airbus is switching customers from the smallest model to larger versions in part to de-risk the program. Schedule on the -900 is already tight and resources are focused on this sub-type. Switching customers relieves pressure on these limited resources.

Another reason, expressed by Leahy: the -900 is more profitable for Airbus (though we are also told reliably Airbus is offering incentives valued at “millions of dollars” to switch).

Leahy also says switching to the -900 gives customers earlier delivery slots. We’re not quite sure how, but this is what he told us.

We believe the increasing demand for the -1000 will prompt Airbus to resequence the EIS, moving the -800 from 2016/2017 to 2018. This will open slots in 2017 for the -1000 and ease integration pressure for Airbus.

But will Airbus keep the -800? Our checks in the market with customers so far suggest the answer is yes. Abandoning the -800 will totally cede the middle-twin-aisle sector to the 787 and we doubt Airbus wants to do this. The A330 will be approaching its 30th year from EIS in 2024, and by then will reach the end of its natural life cycle, if not somewhat before. Airbus needs to come up with a solution to replace the A330 (perhaps that ever-talked about NEO?).

Airbus needs to address (1) the absence of a competitor to the 777-9X, (2) the future of the A350-800, (3) the absence of a new technology competitor to the 787-8 and (4) the successor to the A330.

Qatar wants to be first 787-10 customer; praises EU for ‘face-saving’ freeze of ETS

Akbar Al-Baker, the CEO of Qatar Airways, said he wants to be the first customer for the Boeing 787-10. He has some competition for this status.

Boeing is talking with customers now for the new sub-type, which is expected to get the Board go-ahead this month. Air Lease Corp., British Airways and Singapore Airlines have widely been identified as likely launch customers in market talk.

Also at the delivery ceremony for Qatar’s first 787-8, Al-Baker praised the European Union for freezing plans to impose its carbon trading scheme called ETS. He termed the move “face-saving,” noting that several countries ordered their airlines to refuse payment, led by France China.

“This was a very wise decision,” Al-Baker said.

Qatar takes delivery of Middle East’s first 787

Qatar Airways took delivery November 12 of the Middle East’s first Boeing 787. Qatar took contractual delivery of the airplane earlier but physical possession in ceremonies at Boeing Field Monday night.

CEO Akbar Al-Baker said the carrier will take delivery of four more 787s this year. Deliveries of a total of 59 continue into 2017.

Al-Baker said Qatar has conversion rights between the 787-8, the 787-9 and the forthcoming 787-10. Although Boeing and Qatar have discussed the -10, Boeing has yet to formally launch the program. Ray Conner, CEO of Boeing Commercial Airplanes, said formal Authority to Offer the -10 will be coming soon. Customers who recently attended a Boeing meeting expect the ATO to come this month. It had been expected last month, but the Board had additional questions, customers tell us.

Al-Baker called the 787-10 the most cost efficient aircraft on a unit (seat mile) basis.

Odds and Ends: 787-9 progress but Qatar blast Boeing; EADS; Airbus

Boeing 787-9 progress: Aviation Week has this article detailing progress in the 787-9 program.

Qatar blasts Boeing: In what should come as absolutely no surprise, Qatar’s vocal CEO took his displeasure with Boeing public, blasting the company for late deliveries of the 787-8. Qatar’s first 787 was supposed to be handed over in August but has not for undisclosed reasons. Flight Global has this interview with Al-Baker, which dates from about a year ago.

Boosting the take-off: Airbus is looking at assist for take-offs to allow for shorter runways. This is not a new concept. This Google images page show lots of variations in Jet Assisted Take Off, many dating to piston days. We remember seeing a photo elsewhere of a Braniff Airways DC-4 or DC-6 using JATO for La Paz, Bolivia’s, high altitude airport but couldn’t fine one on Google.

EADS-BAE merger trouble: Government interference could tank the merger, Reuters reports.

787 surge line delayed by rework; 787-9 to use this line in 2013; 787-10 launch all but certain

Boeing is delaying activating the 787 surge line in Everett (WA), while rework on the first 65 787s continues. Steve Trimble of Flight Global has this report. Meanwhile, Bernstein Research, in a note issued today, says the surge line will be where the 787-9 is produced and that the launch of the 787-10 is a near-certainty:

Boeing management described development work on the 787-9 as being ahead of plan at this stage. The 787-9 will go into production in 2013 on the surge line, where change incorporation is being done today on earlier airplanes. First delivery for the 787-9 is planned for early 2014. At this stage, Boeing also sounds optimistic about the 787-10. We have seen the 787-10 as a natural derivative, given the size of the wing.

But, success involves getting weight down sufficiently on the 787-9. Boeing appears optimistic on this
point, but we will wait to see progress. We are conservatively assuming first 787-9 delivery in late 2014. Although Boeing does not intend to announce a 787-10 launch until it is farther along on the 787-8, it appears that a launch is all but certain at this stage.

Bernstein also expects Boeing to deliver 595 aircraft this year vs 581 for Airbus, returning Boeing to the top spot as the world’s #1 airplane maker. With the 787 and 747-8 now being delivered, Bernstein forecasts Boeing will remain #1 through 2016, the outside of Bernstein’s current forecast.