Boeing held an investors’ conference today that began at zero dark thirty PDT, so we weren’t up to listen to the webcast. The PDF presentations are here.
According to news reports, McNerney said interest in the forthcoming 787-10 and 777X is high. We expect both models to be launched this year, with the 787-10 coming at the Paris Air Show and the 777X later in the year (perhaps at the Dubai Air Show, with Emirates Airlines a launch customer?).
Reports also quote McNerney as saying Boeing’s airplanes are better than Airbus’ (what else will he say?). He said the 777-9X and the 787 bracket the Airbus twin aisles (true) and the 9X won’t have any competition from Airbus (also true).
McNerney claims Boeing has a five year lead on Airbus in working with composites, which is a bit of a stretch: 25% of the A380 by weight (which is more than the 787) is composite (the aft end of the airplane) and Airbus has been using composites on airplanes since the A300. But he is correct that the 787 had a long lead over Airbus for a composite fuselage. Unfortunately much of this lead has been squandered due to poor execution.
The 3:13 hr/min replay is available here; you have to register first.
787 Rate Hike: Boeing CEO Jim McNerney acknowledged the company is considering a production rate hike for the 787. Readers here know we’ve been saying for months this is necessary for the 787-10 and to open up delivery slots for customers for the other sub-types.
A350 fly-by at PAS? Will the Airbus A350 make an appearance at the Paris Air Show after all? Is the Pope Catholic? Speculation is rampant that it will happen.
Embraer wins order for E-Jet: Embraer picked up an order for 40 E-175s from SkyWest Airlines, for operation on behalf of United Airlines.
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.
With a tip of the hat to Airliners.net, we came across this illustration. In case the visual doesn’t work well below, the direct link is here.
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.