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.

Airbus’ A330 improvements aimed at maintaining market position vs 787

Airbus last week announced additional gross weight upgrades and improvements to the A330-200/300 that increase range and reduce fuel burn. Aviation Week has this story about the enhancements.

This is the latest in a series of improvements taking advantage of the four year delay in the Boeing 787 program that Airbus believes will enable the airplane, which first entered service in 1994, to remain viable well into the 2020 decade.

Boeing launched the 787 in December 2003 and promptly claimed the aircraft would kill the A330. Had the aircraft entered service in May 2008 as originally planned, Boeing might have been able to make strides to do so. But delays allowed Airbus time to incorporate several Performance Improvement Packages (PIPs). The European company has sold more A330s post-787 launch than it did before.

The latest improvements give the A330-300 an anticipated range of more than 6,000nm, compared with less than 4,000nm when the airplane entered service.

Random thoughts about Airbus, Boeing and related issues

We’ve been traveling on business all week and naturally the conversation was all aviation. We spoke with lessors, aerospace analysts, hedge funds and private equity. In what amounts to a data dump, here is what is being discussed “out there.” This is in no particular order.

• The new outbreak of ad wars between Airbus and Boeing is viewed largely with eye-rolling and disdain that two world-class companies are behaving like two year olds.
• Nobody, but nobody we talked with believes the public numbers advanced by either Airbus or Boeing.
• Boeing will have virtually a new airplane with the 737 MAX by the time it’s done, similar to the design creep of the 747-8 and the magnitude of change between the 737NG and the 737 Classic.
• Airbus pulled a coup with the NEO, forcing Boeing to do the MAX….
• But there is some sentiment that Airbus and Boeing should have resisted doing a re-engine and stuck with the the current airplanes. Airbus should have let Bombardier proceed with the CSeries for the niche 100-149 seat market unchallenged, having bigger fish to fry.
• Bombardier doesn’t know how to effectively sell the CSeries and it is unwilling to cut deals that would sell the airplane.
• Operating leasing is a ticking time-bomb, largely (but not entirely) due to book values of the aircraft on the balance sheet far exceeding current market values.
• Boeing claims the 787-10 will “kill” the A330-300. The market agrees–but only by the middle of the 2020 decade. Boeing can’t deliver enough 787-10s to make a dent in the global fleet before then. By then, the A330 will be about 30 years old and broadly at the end of its natural life cycle anyway. So what’s the big deal?
• Airbus is doing a good job enhancing the A330 to keep it competitive with the 787.
• There remains skepticism that the LEAP engine development is proceeding well. The buzz on the street is CFM still has a lot of challenges with the development.
• There is some feeling the MAX will be late–not because of any concrete knowledge, but because of Boeing’s performance on the 787 and 747-8 programs.

Unrelated to Airbus and Boeing, our colleague Addison Schonland has this first-hand account of Isreal’s Iron Dome.

New battle breaks out between Airbus and Boeing–in advertising

A new battle has broken out between Airbus and Boeing, this time with a sharp (and perhaps unprecedented) advertisement by Airbus accusing Boeing of outright lying.

(Click to enlarge.)

We don’t remember ever seeing this direct assault by one of the Big Two OEMs on the other. We certainly recall advertisements in the debate over two engines (Boeing 777) vs four (A340)–but to call the competitor a liar like this? It’s new territory, at least in print.

Airbus has been calling Boeing a liar in conferences for its representations for years.

As regular readers of this column know, we’ve been especially skeptical of Boeing claims, based on conversations we’ve had with airlines that have analyzed the aircraft involved, and in some cases those which operate both fleet types. The neutral arbiters–these customers–universally tell us Boeing claims are exaggerated and that the costs between the two OEM’s narrow-body aircraft are about equal. The costs between the Boeing 747-8I and the A380 are also exaggerated by Boeing, these companies tell us.

Furthermore, we’ve cast doubt on Boeing’s reliance of US DOT Form 41 data (which in itself is distorted and unreliable) and a study in Europe that looks at data from 2006-2009, data that is clearly out of date.

At the same time, we’ve taken Airbus to task over its parameters in concluding the A330-300 is a better airplane economically than the forthcoming 787-9.

At ISTAT Europe in September, an official from Virgin Atlantic publicly challenged Boeing’s Randy Tinseth over economic data Tinseth presented comparing Boeing and Airbus aircraft. Tinseth, according to those present, merely responded that he stood by the numbers.

Bloomberg has this story on the controversy. Reuters has this story.

In a way, the entire fight is silly. No airline or lessor will buy Airbus or Boeing aircraft based on these sort of claims. The airlines run their own economic analysis and the lessors are more concerned about lease rates and residual values. The entire conference and advertising effort is for consumption by uninformed journalists, financiers and aviation geeks. Those who actually understand the nuances tend to dismiss the claims of either manufacturer (as we do) and run our own analysis or rely on the airlines and lessors for impartial information.

The market has spoken. Airbus currently has sold about 1,400-1,500 A320neos to Boeing’s 1,000 737 MAXes. Airbus also, in recent years, has sold more current-generation A320s than Boeing has sold 737NGs. For the Very Large Aircraft, Airbus has an 86% market share of passenger airplanes.

These statistics tell more than anything Airbus or Boeing manipulate.

787-10 decision anticipated very soon, perhaps within days

Boeing’s Board is expected to be asked very soon, perhaps at its meeting in October, to grant Authority to Offer the 787-10 to customers, according to two sources.

A Boeing spokeswoman said that ATO for the 787-10 is expected to occur before the ATO for the 777X, since the -10 is a more straight-forward project than the X, but could not confirm the October timeline.

The straight-forward stretch of the 787-9 will have less range (about 6,900nm) than either the -8 or -9 models, which comfortably top 8,000 nm but it is expected to carry around 323 passengers, putting it squarely in the class of the 777-200ER and the A350-900.

At 6,900nm, the airplane will cover most missions required by airlines. By foregoing a new wing and added fuel tankage, the operating weight of the airplane is expected to be roughly equal to the 787-9. A slightly higher-thrust engine will be required. Rolls-Royce announced a higher thrust version of the Trent 1000 now powering the 787 at the Farnborough Air Show, and insiders said this engine is specifically intended for the 787-10.

The 787-10 is billed by Boeing as the airplane that will “kill” the Airbus A330-300, but the 787 was also billed as the airplane that would kill the A330-200. The delays in the 787 program have given Airbus time to enhance the A330 family and the rival announced gross weight, range and engine Performance Improvement Packages to the 300 (and which are anticipated for the 200) at the Farnborough Air Show.

Airbus is also selling the A330 family at discounts to the 787 family today and this will continue in the future. The lower capital costs, Airbus believes, allows the A330 to remain competitive. Airbus COO-Customers John Leahy told us that Airbus expects to sell the A330 beyond 2020.

The 787-10 would replace the 777-200ER, which has largely been killed by the A350-900.