United Airlines is the latest carrier to return the Boeing 787 to service today, on a route from Houston to Chicago. UAL CEO Jeff Smisek is joined by Boeing CEO Jim McNerney on the flight.
Meantime, the Wall Street Journal rained on the parade a bit with an article detailing other issues facing the 787. (Via Google News, but subscription may be required.)
Japan Air Lines, ANA and LAN expect to have the airplane back in service in June, according to reports.
Deliveries of new 787s resumed this month. All this will soon return momentum to Boeing, with formal launch of the 787-10 now anticipated by observes to likely come at the Paris Air Show. Launch will come with orders–widely believed to be from British Airways, Singapore Airlines and Air Lease Corp, and possibly others. If this happens, these will go a long way to restoring the brand damage caused by the ground of nearly 3 1/2 months.
Implications include a boost in the production rate of the 787 to as much as 14 a month. Although this may or may not be announced concurrent with the 787-10 launch, the boost is, in our view, a must. While Boeing expects some 787-9 customers to swap to the 10, reality demands that production increase beyond the 10/mo that will be achieved by the end of this year.
Boeing needs new capacity for the 10 and to open slots for customers who want the 8 and the 9. The line is essentially sold out to 2019-2020 as it is.
EIS for the 10 is planned for 2018, giving the supply chain plenty of time to ramp up.
Fourteen a month–seven in Everett and seven in Charleston–is an unprecedented rate for a wide-body airplane. Airbus is producing the A330 at 10-11 a month and plans to push out the A350 at 10/mo, though at one time there had been talk of a target of 13. The company is already considering a second production line to accommodate demand for the A350-1000. Like the 787, the A350 is essentially sold out to 2019/2020.
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.
Cost of 787 fix: It will cost nearly $500,000 per aircraft to install the battery fix in the Boeing 787, documents released by the Federal Aviation Administration indicate. The actual math is $466,666. Analysts believe the 787 grounding cost Boeing about $600m, which the CEO said yesterday was absorbed in the R&D budget. Jim McNerney also said there are no contractual obligations to compensate customers for the grounding, but something will likely be worked out.
LOT will resume flying the 787 June 5, it was reported today.
China’s Airbus Order: It appears China is satisfied with the European Union’s about face on carbon taxes. Readers may recall China opposed the EU’s attempt to levy taxes on foreign airlines over carbon emissions. China vowed not to buy any Airbus aircraft–particularly the A330–in retaliation. Several other countries opposed the tax, though these didn’t go so far as to boycott Airbus. Today an $8bn order for Airbuses, including the A330, was announced by China.
Air France 447: More data has surfaces on Air France 447, the Airbus A330 that plunged into the Atlantic on a flight from Brazil to France several years ago. In a cooperative post-investigation that included Airbus and Boeing, efforts to replicate the crash in a simulator failed.
It separately emerged that the pilot of the flight had one hour of sleep and the co-pilots also didn’t have the requisite sleep.
Racing Toward 2,000: At ISTAT, Airbus COO Customers John Leahy said he expected to gain another 200 orders this month for the A320 family, reaching 2,000 orders for the neo in the process. Lufthansa and Turkish have since announced orders.
A400M certified: The troubled Airbus A400M has been certified.
Beating back anti-droners: Boeing and supporters killed legislation in Washington State that would have outlawed drones. Boeing’s subsidiary Insitu is headquartered in Washington and considered leaving to Oregon, across the Columbia River. A coalition is also working to have Moses Lake (WA) selected as a drone testing site under an FAA program.
It’s official: Boeing regains lead as No. 1 aircraft producer, sales king, but victory overshadowed by 787 crisis
On a day when Boeing would normally be celebrating its return as the world’s number one aircraft producer and retaking the order crown, the 787 crisis over shadow’s the Airbus 2012 Results review in which the European OEM concedes the lead for the first time in a decade.
Airbus today (European time) announced it delivered a record 588 aircraft to 89 customers in a single year, and took in 914 gross orders (833 net), achieving a 41% market share on the order contest. Boeing delivered slightly more than 600 aircraft last year and received just over 1,200 orders, driven by the 737 MAX.
Going into 2012, Airbus COO-Customers John Leahy conceded the turn-about. But he noted then that for 2011-2012 Airbus would likely retain the lead, and today he revealed that it did, reporting a two-year market share of 53%.
The A320neo retains a lop-sided market share of 62% at the end of 2012. Boeing edges Airbus in A320ceo v 737NG backlog with 51.5%. Other categories: