3/30/2016

No MOM!

You read it here first: there will (in all likelihood) be no so-called MoM.
After my last post a few articles underline what I wrote. Richard Aboulafia wrote  a commentary in the Aviation Week and Scott Hamilton just posted a story about notes from Buckingham Research, Bernstein Research and Goldman Sachs regarding Boeing and the MoM aircraft.
Goldman Sachs still thinks Boeing could develop MoM, but concludes that Boeing is in a lose-lose Situation here.
Bernstein thinks that MoM could be the "Mirage of the Market" rather than the "Middle of the Market".
Buckingham concluded that the market is not big enough to justify the development.



2/22/2016

Why I don't believe In MoM...


In the last couple of weeks a new discussion about the so-called „Middle of the Market“ or “MoM” aircraft broke out. Apart from that nobody really knows what this aircraft should look like (B757 successor or B767 successor or both, narrowbody or widebody, scalable to cover the B737 market or not?) or every potential customer wanting something different, I do not really believe in the launch of such an aircraft in the near future.

Why?

Airbus has no interest in such an aircraft. They have a good market position with their A321neo, especially the LR version and the future A330-800, although I don’t foresee large order volumes for that aircraft. For sure Airbus is studying the MoM, but (for now) for the pure purpose of looking into what Boeing could do and if and how Airbus would have to react to it.

Boeing would be the one to launch such an aircraft. But do they have to do it? Although the B737MAX has less orders than the A320neo, the amount of orders the B737MAX got is massive. The B737MAX8 is right in the sweet spot of the market and has a small advantage in costs per seat against the A320neo – if the LEAP-1B engine performs as advertised, what remains to be seen.

The B737MAX8 just had it’s first flight. the –MAX9 and the –MAX7 have to follow. So why unsettle your (potential) customers talking too much and eventually launching a new aircraft that would at least partly overlap with the B737MAX family?

Also, Boeing will probably feel a drop in cash flow during the transition of the B777 Classic to the B777X between 2020 and 2022, just when the MoM would need large sums of money for R&D spending.

But there is another aspect why I do not believe in a launch of MoM for a, say, 2024 entry

1/27/2016

B777 Classic / B777X gap

Scott Hamilton has a new projection regarding the production gap of the B777 Classis (see here and here).
Looking at my own model I come to similar conclusions. According to my information, which might not be the newest and most accurate any more, but should not be too far off the current planning at Boeing, the complete production rollover from the current B777 Classic to the B777X should be done by  early 2023, as is shown in Scotts picture.
According to my math and including the six aircraft which were booked in January I get a gap of 249 aircraft which needs to be sold to keep the production rate at 7.33 until the B777X takes over full production in 2023. I started the 7.33 rate in Q2 2019 here, when the  B777X "feathers in" the production (using "Boeing tech talk" here).




If we go down to a rate of 7 aircraft a month in early 2018 we would end up with 214 open production positions.


I think this clearly shows the need of a rate cut for the B777 Classic and that this rate cut has to come soon. We will see how hard analysts will question Boeing today on that. But meanwhile it seems that Boeing acknowledged that need...


UPDATE: Boeing just announced to cut production to 7 aircraft per month in 2017. When I put that into my model, Boeing is still 198 oders short. This first production cut of the B777 Classic might not have been the last one.

11/24/2015

A320neo with PW1127G-JM certified!


Two important milestones for the A320neo program in one week: last week the LEAP-1A and the identical -1C) got it’s certification, both from the FAA and the EASA.  Today, the A320neo got it’s Type Certificate with the PW1100G-JM. The road to EIS is now free and we can expect that the first aircraft will be delivered until the end of the year, almost exactly 5 years after Airbus announced the A320neo on Dec. 1st, 2010.

The A320neo has about 4500 firm orders today, enough backlog for 7-8 years of production.

Now the suppliers, first and foremost the engine suppliers have to show that they can meet the ramp up. This will be no easy Task!

In my last post I wrote that there is a significant downturn in flying time of the two A320neo equipped with the LEAP-1A. Since then it even got worse. In the last week, there was only one flight from the D-AVVB, the 2nd LEAP-1A prototype. The week before also saw less

11/13/2015

A320neo flight test program


After Airbus launched the A320neo program on Dec. 1st, 2010 we are now close to entry into service, with Qatar Airways as the first customer. After several - say - hick-ups in the test program it now looks as the PW1100G powered version is successfully completing the last steps in the certification program. The third aircraft with the GTF engines, an aircraft that will be delivered to Indigo later, joined the test fleet and is doing Function and Reliability testing. There were two hick-ups there two, one in Thessaloniki, were the aircraft was on ground for several days and another in Kiruna, were the aircraft flew back two days later.