A321ceo vs. B737-900ER deliveries

After yesterdays order from Jetblue for 30 more A321 (15 x A32ceo and 15 x A321neo with the right to convert to the A321LR), the order from Air Asia for 100 A321neo's and the conversion from Norwegian, now taking 30 A321LR, I looked into the delivery breakdown of Airbus und Boeing's narrowbodies.
Airbus delivered 40% of their narrowbodies as the A321this year so far - Boeing delivered less than 10% of all their B737NG's as the B737-900ER version.
The jury is still out if the pressure for Boeing is big enough to be forced to launch a B737MAX-10 or a clean-sheet MoM aircraft. GE Aviation CEO still has problems with the business case, as one could read in one of the latest editions of Flightglobal (sorry, I have no link, saw it on hardcopy only).
Boeing said they still have time to decide what to do...

No clean sheet B757 / B767 succussor!

I refer to the story in herald.net reporting from the Boeing Investor Day on May, 21^st 2014. Reading the article we must come to the conclusion that a clean sheet design B757/767 successor will not happen for some time.

After the financial B787 debacle, which is now between $23 and $25 billion in the reds and with a costly B777X program ahead nobody in the Boeing upper management will have the will to try to sell another technical and financial adventure to the shareholders.

One could say that Boeing now has all the learning about how to develop and produce a fiber carbon aircraft and the development of the B777X wing would give further experience and would lower the risk. But this aircraft – a B757/767 successor – would have different competitors, coming partly from Boeing itself. The B737MAX-9 and the A321neo from the lower side, the B787-8 and a A330neo from the upper side. Of course, the B737MAX-9 and the A321neo would not be able to do the critical B757 missions and the A330neo and the B787-8 are optimized for longer ranges and thus would not offer optimized costs for, say, a 4000nm mission. But this market segment alone, which can not be served by the B737MAX-9 and the A321neo, would be too small  to present a business case with another $10-$15 billion investment upfront.

Sales prices would also be a problem with a A330neo, which, with a 2018 EIS by 2025 could have written down development costs and could be given to customers for prices we see today for the baseline A330 (escalated by inflation, of course).

Boeing yesterday made clear (as Airbus did before) that future aircraft will (for the foreseeable future) only see incremental developments rather than revolutionary designs. The plans from Airbus for an electric regional aircraft might be the only exception, but we have to wait another few years to see if this concept will really become reality.

Is there a demand for a B757/B767 successor? Yes, of course! Will Boeing sell one aircraft less if they (and Airbus) don’t do it? No! And this is what counts for the shareholder. Period!

The B757 successor discussion

Yesterday MTU’s COO Rainer Martens revealed during the annual results presentation that there is a plan to upgrade the PW1100G engine for the A320neo with another 3% SFC jump by 2019. On a side note, as the turbo machinery of the PW1100G and the PW1400G are identical,  the MS-21 will also benefit from that as I think that P&W and their partners will not start building  two different engines.

But what does that mean in a broader context?

Firstly, we can be very sure that a similar PIP (Performance Improvement Package) will also be worked out for the LEAP-1A (and the LEAP-1C destined for the COMAC C919, as this engine has the same turbo machinery as well). Another report on a german website cites MTU’s Martens that the 3% improvement are agreed with Airbus so we expect that there is a corresponding  agreement between Airbus and CFM to lower SFC around 2019/20. As the GE9X goes into service by that time frame we can expect a lot of technology transfer from the GE9X to the LEAP-1A – and subsequently to the LEAP-1B for the B737MAX.

Secondly, this makes the business case for any A320neo and B737MAX successor harder. This is why I do not believe in a B757 successor in the time frame that was discussed by Scott Hamilton and others lately. At least not in the sense of a purpose build aircraft. Here is why:

·         The 3% lower SFC for the A321neo (and probably sooner or later also for the B737MAX-9) leads to 100+nm more range, bringing these two aircraft even closer to the capabilities of the B757 today.

·         As of today the A321ceo can do about 95% of all routes flown by the B757 today. And the A321neo can only NOT do five city pairs flown by the B757 today (I go that verbally from Airbus). 

Add the 100 extra miles coming out of the engine improvement and what is left? Maybe three routes, maybe four routes, maybe still all five. Add some improvements to the airframe and what is left then…?

I am  sure there is no business case left then for building a standalone aircraft with the capabilities of the B757. But also as part of a new family of narrowbodies, aka the A30X and the B797, there is no real need to compromise the efficiency of the whole family with a wing that is large enough to cover distances more than what the A320neo/B737MAX families will do. Otherwise Airbus and Boeing could lose market share against a Bombardier CS500 and a forthcoming Embraer small narrowbody  which are designed for ranges less than 3000nm.

But I do not see these new breeds coming a of 2025 as James N. Krebs postulated in this very interesting guest column at Leeham News. But if we see a further 3% improvement from the engines at the end of the decade, how should there be another jump of 20% in fuel burn in 2025? The technology for an aircraft with an EIS must be defined by 2018/19. With a regular tube-and-wing aircraft I cannot see a jump more than 10% from the airframe - if designed for the same range (more range: less efficiency gain for shorter routes). If we take 1% efficiency gain for every year from improved engine design (and that seems optimistic as it gets harder and harder), we get a maximum of 15% versus neo/MAX. Not taken into account that there can still be something done to the existing aircraft as well like building the fuselage from AlLi or enhancing the wing. The business case for an all new aircraft then disappears in my eyes. But I am not a bean counter…err… accountant.

Another question is if someone will do something in the sector left by the likes of the A300-600R and the B767-300(non ER): 250-300 seats, 4000nm max range. Being hinted to think about that, as can be read in the Pudget Sound article. I do not count that as a B757 successor and  I do not know if there is a business case for that but Lufthansa always cried for “people mover” like that.

Lion Air - another Boeing-Airbus splitter?

In one of my recent posts I speculated about a large narrowbody order accompanying the launch of the low cost carrier from Lion Air and NADI, based in Kuala Lumpur and aimed to take on Air Asia. But Rusdi Kirana, owner of Lion Air, said that the aircraft will be B737-900ER and probably later on B737MAX-9 channeled through Lion Air's existing order book with Boeing.
Now there are news out, reporting that Kirana said that Lion Air needs more planes and Scott Hamilton predicts an order for 100 A320neo's to be knocking at John Leahy's door.
I remember (and found) a press article last year, a few weeks after the massive order from Lion Air for B737-900ER and B737MAX-9 was announced, in which John Leahy mentioned that Airbus and Lion Air already had a MoU in place, but then political pressure from the White House inhibited Lion Air from defecting from Boeing to Airbus. Who know - maybe the MoU is still valid?
It looks like there are two 100-aircraft-orders in the works in Toulouse. The other of course being for AirAsia. Reports last week said that this is not only for the A320neo - earlier reports suggested that the A320ceo is the aircraft to be ordered as Tony Fernandes said that AirAsia needs more planes "soon". I guess there will be also a nice number of A330-300 (presumably the new 240t version) and maybe more A350's in the deal. At last weeks ISTAT Europe the A330-300 was one of the most mentioned aircraft (in a positive way): Nico Buchholz, Lufthansa VP Fleet Strategy said that it is a "bloody profitable" aircraft for their North America destinations. But also AirAsia Co-Founder Conor McCarthy was very positive about the aircraft (but he also thanked god that AirAsiaX has just two A340-300 in the fleet).
The new (still to be announced) AirAsia order was public since Farnborough (or even earlier, I don't remember exactly). It will go to AirAsia's board in the coming days and then officially announced. I would guess the Lion Air order for A320neo's (if true) will be announced shortly thereafter.
As boring the summer was in terms of new aircraft orders (at least since Farnborough), as interesting might get the rest of the year...

Payload Range Diagram

After my last post a debate started about the range of the B737MAX-8 and -9, precisely whether these ranges can only be achieved with an additional fuel tank. It seems like (and Scott Hamilton pointed us to that) that Boeing already said that the MAX-9 range of 3595nm is reached with an additional fuel tank. Boeing did not say anything about the MAX-8 fuel tank configuration to reach 3640nm of range, but it seems logical that this will also be only achievable with the additional fuel tank.
A further hint to that is the difference between the different OEW and MTOW gains, relative to the NG.