Monday, October 17, 2016

Boeing Leads: as World's Largest With Aircraft Orders and Builds

Image result for Boeing production line
Airbus order summary as of September 30, 2016 Below is Airbus Data

Boeing Data Below is slightly ahead of Airbus with Orders as of October 11, 2016

Its Boeing net 432 vs Airbus net 380 orders.

The production summary is as follows for the year

Boeing has delivered 563 aircraft recorded YTD
Airbus has delivered 462 aircraft recorded YTD

It appears Boeing is in the pole position for World's Largest Commercial Aircraft Builder with about 100 days to go for all the Year Ending surprises added to the books per usual.

Friday, October 14, 2016

Perth To Europe and Melbourne To Dallas Threatens 45 787-9's Options with Qantas

The why's (devil) is in the details. Melbourne and Brisbane airports want to be the first home for 787-9's in the Australian flying habitat with having extended routes going to Dallas Texas. Perth wants the honors going to Europe. Qantas has 45 optioned 787-9's as its targeted expansion and can't start filling the order book until the airports get along with one another. 

Qantas wants and needs to replace its aging 747-400's. The 787-9 is the right size however pride comes before the fall when airports are concerned. The solution is with Qantas and where they will base with its first 787-9's in Australia. The answer should be easy but the word pride and advertising is the sticking point. An easy answer is to have three 787-9's show up in Australia on the same day or in the same week. The first airport that actually can launch a flight wins pride award. The Australian government may offer a lottery for the honors of 787-9 acceptance and take this negotiation off the table and have Perth complete the 787-9 implementation plans as scheduled. Otherwise, Qantas may take its ball and go home if the opposing sides can't get along.  

Thursday, October 13, 2016

Boeing Data Says... 787 Had A Strong 30 Days!!!!

Boeing just updated its YTD orders list on its Web Site. It had a big year in thirty days. Long had it during 2016 it marked a net 19 787 on the books. Since so many 787 plates are spinning in the air it was a time to confuse the readers further with an Winging It exclusive chart of what just has happen with the 787 numbers contained below in a YTD chart.

Fig. 1

What all this means is that you must look at the 2016 column for perspective since the program started delivery about five years ago. The net backlog has only shrunk by thirty-five units since 2012 because of the recent orders. Before last week Boeing had only booked 19 net 787's for the year and had a backlog reduction during 2016, standing at -89 units of book shrinkage. This number compares with a program backlog reduction comparing a  post Qatar and China Southern orders booked compiling a 2016 -47 unit reduction for the year.

The big number is that at the beginning of 2012 Boeing had 767 units of 787 undelivered and now it has only 732 undelivered making and over-all drop in units of only -35 units which describes a healthy program. Boeing does have an opportunity to keep this number static (@-35) until the end of the year, as it will deliver another three dozen 787's before year's end, and it could receive additionally like number of orders before the end of 2016.

The synopsis conclusion, that over four years Boeing has achieved high production at maintaining an almost constant backlog margin, optimizing its program functionality.  

Wednesday, October 12, 2016

Emirates Has A Card in Play For Both Builders A & B

Airbus (A) and Boeing (B) each have dogs in the wide-body fight. Airbus is seeking a packaged deal with its A-350-900, 1000, and the 1100 proposal. Boeing is going to the mat with its 787-9 and 787-10. Don't count the 777X out of the equation at this point. Perhaps Emirates stalling on making a decision is waiting for the 777-9X to fly around the world during tests. 

My own belief, this is the "trump" Boeing card which wishes to play hard going against Airbus with a knock-down drag-out fight over time. However, during 2017 is going to be an exciting year for Boeing with its testing of a new family of wide body such as the 777-8X and 777-9X where sometimes is forgotten by aviation watchers from around the journalist world watching for 787 orders. 

When considering the 787-9 and 787-10 against the Airbus A-350 family you must throw in the 777-X's as a Boeing counter offer. Emirates is anxious to watch what the 777-X will do before dropping serious coin into an early order hat. That comes next year so they must keep the suitors of Airplane sales in check a little while longer. The 777X deliveries will start in 2020. A time period which will suite any buyer in hot pursuit of an extreme wide-body going 9,000 miles. 

Distance is a key issue for Boeing as it offers its 787-10's for medium haul. They travel about 6,800 miles on an 10's extended route while the 777-8X or -9X which is designed to go plus 9,000 miles mops up the global market. The choice for Emirates will happen during testing of the 777-9X at Paine Field Everett, Washington.

If Boeing validates the 777X concept through various test flights, then Emirates will order a bevy of Boeing Aircraft late 2017. The order made will include the approximations of Boeing types fitting Emirates needs.  As follows a Guesstiment: 20 787-9, 10 787-10, 10 777-8X and finally 15 777-9X which opens up for options of about 50 more wide bodies going forward. Boeing has about 105 wide-bodies in play replacing the 70 cancelled A-350's from 2014.

Emirates will need to hurry as the 787 production window is beginning to fill up with orders from Qatar, China Southern and others for the 787-9's. A move by Emirates may certainly cancel some A-380's in waiting as the Boeing family of aircraft will fill multi segments of Emirates market with right sized aircraft. The Euro -American sector would nicely fit the 787-10 while the Emirates- East Asia market is built for the 787-9. Finally, all circumvention of the globe is left to the 777-X's with 350-400 passengers.  

China Southern Airlines to buy a dozen Dreamliners from Boeing Co.

The month of October has become an order saving month for Boeing another shoe has dropped from Boeing's sales effort where China Southern has ordered 12 more 787-9's. Adding to this total is the 30 Qatar 787-9's ordered last week. In total the 787 order book has grown by 42 787's in October 2016. If I were a betting man Boeing's order book is not done for the year. If you then add the 8 Dreamliners, Pakistan Air has already ordered you could say October was a 50 Dreamliner month.

Seattle Times:

"Boeing finalized an order for a dozen 787-9 Dreamliners from China Southern. The order, worth about $1.7 billion after standard discounts, brings total 787 orders above 1,200 for the first time."

Watch the Boeing Order Book adjustments at the end of October and it will go + 1200 Dreamliners ordered (1,211 by Winging It) from announced customers. Boeing is now 100 orders away from reaching a 1300 Dreamliner order bench mark for breaching the $30 Billion dollar deferred cost account it accrued during the 787’s development. It is great news for investors, now and going forward.

Tuesday, October 11, 2016

787 Book To Build Metric An Indicator of Program Health

A "Book to Build" (BB) ratio has relative importance for a programs health. Ideally a ratio of one means for every 787 ordered one is built. A solid number for a mature program. However, successive time periods of one to one or any other ratio may indicate a potential problem or becomes a problem for someone else.

If the backlog is small then a manufacturer would want a slightly larger than one BB ratio until it reaches its ultimate production capability for satisfying customers.

If the BB ratio goes under 1 then the backlog may reduce itself over time where the less than 1(<1) BB then becomes a program weakness. 

Because of extended <1 ratios, its production must decrease, and it will indicate a smaller cash flow going forward. If the backlog becomes so large it discourages ordering, strains supply chains and requires capital investments for plant expansion, then it becomes a management problem. Therefore a +1, 1 or <1 BB ratio becomes somebodies problem over time.

Currently during 2016. the Boeing BB ratio for the 787 is running at about .45 and is <1. A manageable number because of its huge backlog that is already causing customers to wait up to 7 years before receiving its 787's ordered. The delivery wait time becomes another relative number depending on a customer’s needs, capitol, or market impulse. Now at this time there are two or three driving factors affecting BB ratios were a number in itself like .45 is a nebulous, relative, and conditional factor, dependent on multiple seasonal adjustments throwing the whole mess into statistical ball for College graduates living in a cube.

Going back to the Boeing 2016 BB ratio for the 787, the Boeing VP wants senior management to say the BB is right inline with our projections. which in itself, is a nebulous comment because a projection could be a bad or good indicator of things to come. 

Currently, and in Boeing's case, they are in a strong position until the backlog drops below a three year output (of about a 390 backlog) and is in a weak position when the backlog is seven years out (of about a 910 backlog). The Boeing BB can absorb about another two years of a less than "one" BB ratios before big orders are needed during a future production year. 

Airbus is rolling dangerously near problems with its single aisle large backlog creating a low market order absorption capability and its leaner order intake for the A350 program will shrink its backlog at an alarming rate. The Airbus ratios fall close to a perfect storm from lack of wide body orders and too many single aisle orders adjusting its production capacity during the next five years while costing Airbus Euros. Qatar seized a moment for the 60 LOI Max orders because they too are watching ratios and backlog size , and when it needs to order for optimal deals.

·      The recent Qatar order for 30 787-9's is a prime clue for what the market absorption for the 787 has become.

·      The 787 is validated from a strong Qatar (options to order) occurrence who is the most fussy Boeing Customer.

·      In spite of other factors concerning trade deals with US military equipment, it is a strong signal Qatar is still leveraging ordering deals and favoring Boeing with this order. The lesson learned is that Qatar continuous its independence with the mega builders by playing hard to get.

·      Finally, Boeing can now move forward with greater assurance moving its BB ratio closer to 1 as an optimal position while backlog continues to shrink.

SEE... book to build ratios are not complex, if you are a VP and have minions to explain it all, and how it will affect Qatar at the next Middle East Air Show. The bottom line is so much easier than BB ratios.

Saturday, October 8, 2016

Does Qatar Know Something We All Don't Know About The Max

Al Baker: “For us to mitigate the risk, we had no alternative but to order the reliable 737 family of aircraft.”

Image result for Qatar orders Boeing

Al Baker is a shrewd and wise business man who does not make knee jerk retaliatory moves towards manufacturers for whom he has great needs towards the fortunes of Qatar Airlines. The recent Letter Of Intent (LOI) for 60 Max aircraft was more than a warning shot over the Airbus bow. It was an unleashing of an offensive effort coming from Al Baker's hip pocket after his former true intentions of making Airbus his premier supplier of Qatar's aircraft. A LOI is a gentleman's agreement with an "if" statement somewhere in that letter. 

Al Baker got Airbus' attention and can salvage something for Boeing if he does view things directed towards doubts with Airbus' capabilities. 

He has expressed the heart of the Airbus disappointment in a not so cryptic terminology. He is not happy with the failure of the A-320's GTF engine from its start-up. The GTF engine theory did not live up to its promise and needed extensive re-work. The A-350 market performance displayed a 90% reliability numbers with its first four Qatar deliveries.

What was not said and is held close the Al Baker’s vest, “what are the A-350 actual efficiency numbers in operation from the desert region?” It can be speculated those numbers too have stunned Al Baker's love of Airbus product. 

Boeing is coming out with an error free 737 Max with a proven engine having a 14% efficiency improvement over former models. Al Baker said so, mentioning what's behind Qatar's intent. They can get the "Max" sooner rather than later with an operationally sound engine for Qatar's desert region. It's kind of a big deal. Boeing can still lose the market battle if they drop "ball" on the goal line. 

But Boeing must prove itself under a single aisle LOI after which Qatar has already ordered 50 confirmed A-320 NEO’s, while waiting for its Airbus deliveries. But... they canceled four A-320's already. Another sign Boeing has a chance and is positioned well to step-in, and steal the charge away from Airbus, which it seems they have already done that little thing.

The spear is pointed towards the customer's operational heart using commonality. Watch the 737 Max-8 test pilot comments, "This avionics display on the Max looks just like the 787,747-8i and 777X displays". Therefore, when a Boeing customer orders across types they are buying pretty much the same commonality for which its pilots, maintenance and passengers will depend on while having a high valued experience both on the bottom line, and just the bottom in the seat.

Qatar has just ordered 40 Boeing wide bodies with intent on 60 737 Max after the first capstone order for 60 777X when it was first announced. In there, somewhere, should be equal opportunity for Airbus, but you can't find it only when reading about four NEO cancellations with Qatar.

When the Boeing's 60 LOI are finalized, then Boeing must deliver on its promise as it has learned a lesson from the Airbus debacle. Al Baker has already read and validated the tests reporting for the Max before it pivoted towards Boeing. He really bought the whole family of aircraft for Qatar as a common aircraft line from Boeing. When locking in on the Boeing wide bodies, Qatar also locked in on the Max. When the Max order is finalized, then look at the Qatar booking options, which would point the way for its future plans. After-all they optioned for 30 787's when they bought the first thirty 787. Now they have just purchased those 30 options because the aircraft just "plane" works well.

Friday, October 7, 2016

Boeing, Order-up! Not 30 But 40 Wide Bodies and a Side of Single Aisles Super-Sized

Yes, Boeing has turned the tide for 2016 with 30 787-9, 10 777-300-ER and 60 more 737 Max as the LOI side dish. Some say it’s a $18 billion dollar promise from Qatar. It’s much more than market share and dominance. Qatar originally ordered a vast numbers of Boeing 787's (30/30) and A-350's (43 +37). Boeing has delivered all its initial 30 787 and Airbus, well Airbus has dithered the Qatar patience since it went into a hole when coming to this day's announcement. Qatar has now positioned itself to cancel some A-350 orders as Boeing now has 787, 777-300 and 777X added to the Books where Qatar ordered initially 43 A350-900's and 37 A-350-1000 which the first delivery A350-900 now resides under a cloud of under performing operational metrics.

This Qatar order pressures the Middle East as it seeks wide bodies in earnest. The Emirates order has come full circle after it cancelled its 70 A-350's several years back, and now news circulates about with a new order placement for wide bodies fulfilling its fleet replacement and expansion designs. Boeing is the leading candidate even though Airbus is in the order fight with Emirates, who is now more open towards any Boeing offers than any Airbus apology for biffing its original 70 A-350's.

Now Qatar, who built its fleet around the A-350 as its feature fleet wide body airplane, has turned 180 degrees with this mega billion order for thirty 787-9's and ten 777-300-ER . Then comes another 60 Max it wants as it’s under LOI soft negotiations at this time. 

The importance of the Qatar/Boeing order should not be overlooked in the wide body and single aisle market place. Competition in the Middle East is something where every nation in the region watches, and each with keen interest towards one another, causing Mid-East competitors to react. The Qatar order signals, names have been taken and they will soon kick "others" fleet's sterns.

Ouch, really Airbus, you lost this order after you where the company (Qatar) favorite with having Qatar’s 43 A350-900 and 37 A-350-1000 orders placed not so long ago. Then Airbus started delivering the A-350 first aircraft in a lumpy stream of stop and go for Qatar's displeasure. They were unhappy with the lumpy trial and error production technique where Airbus delivery schedules were uncertain.

Boeing's production efficiency help win today’s order and saved Boeing's 2016 order book. Having thirty 787-9's added is a near term solution. Let's not forget the ten 777-300-ER's as critical to the 777X production transition (not yet there but strengthening).

I can't imagine what price Boeing offered for both models as they desperately needed production slots filled during the upcoming 777 Year. It may have diverted Boeing away from a monthly production reduction in the next year. 

The sixty LOI 737 Max caught my breath as it catches the program back on fire with future customers. Qatar becomes a sales talking point for future Boeing 737 Max sales pitch. Future customers will wonder why the Max? while they get sound Boeing answers for the customer’s own operations. Part of the 737 Max LOI, is coming from receiving a Airbus “burn”. Perhaps Airbus wasn’t careful for what they wished for as they experience "Boeing like" supply chain issues of too much too soon supply strain. Qatar is not happy as thy fell behind its own expansion models from Airbus' dithering in the factory. Emirates and now Qatar, who’s next? The A-320 engine wasn’t ready and it was flawed, hence the Max order.

Boeing can capitalize with the Airbus production quandary only if they keep its promise with Middle East customer for delivery. It must keep on time with Qatar fleet plans. The Boeing product must beat the Airbus product on the ground and not in air since flying parity is so close between the two producers.

The ease of ground maintenance, information systems and longevity between service cycles makes the Boeing business case. If a Airbus delivery promise can’t be met, those NEO's on the ground becomes a moot point. "So what", if an airplane travels 100 miles further on a tank of fuel and your point is??? An airline can save millions with operation expenses and timely delivery of promises. Qatar Air gave Airbus a burn today as does Emirates when it canceled its huge A-350 order several years back. It sent Airbus spiraling with those cancellations. Now Boeing gets 40 more wide body orders and 60 LOI Max's when it desperately needs it. Airbus team meeting time, 6:00:AM Paris time tomorrow. 

Tuesday, October 4, 2016

Pakistan Has Entered The 787 Jetway

A prior “Winging It” article highlighted the Middle East potential and then mentioned other countries in waiting for unknown quantities of wide body orders. Today the news reported Qatar has a big Friday Oct. 8th announcement and then Pakistan came to the forefront ordering eight 787s.

A “Winging IT” predictive summary is that Boeing will add thirty-eight 787's and an additional ten 777-300ER to its order book, thus bolstering its wide-body drive before years end. 

However the story won't end there as both the Saudi and Emirate orders have not concluded. Combined they may yield close to 100 wide bodies ordered with Boeing. The catch to all this, is military play as Qatar views the region beyond commercial aviation. They have a military dog in the fight. 

If all cards are played, it will astound the aviation market as there are more Middle East players in the wings starting with Turkey. In all Boeing may trek into 2017 with more than 150 wide body orders from this point forward to the end of 2017. The majority will be 787's with about 30 more 777's on the wings. All of this can come crashing down with a change of heart for Boeing but is not anticipated.

Monday, October 3, 2016

The Middle East and Boeing's Usual Suspects

Boeing needs wide body orders stat. It has been cultivating Middle East clientele for many years. The time has come where both the slack order year meets Middle East need.

Qatar recently received its last Dreamliner order while booking so many A-350's. Today they are disappointing and a bit angry with Airbus. In the highly competitive passenger aviation business it has left Qatar holding the travel bag. Its 787 works just fine. Qatar is thinking 787 at this time when Airbus is sluggish and not as dependable as Boeing's delivery schedule.

Saudi Air is in the works with buying US military aircraft recently approved by the US to do so. A 787 package is in the works with Boeing awaiting completion of the military deal. When that is complete expect an expansion of Boeing's 787 order book. All Things 787 indicates about 13 787's.

Emirates has positioned itself after considering Boeing or Airbus who for some reason Emirates abandon a huge Airbus order of 70 a few years back (ouch). Now the negotiation are in the final stages where Emirates is deciding on a package which is centered around environmental conditions of heat and tonnage. Emirates has been deploying new deliveries of 787-9's around the region. Since Emirates cancelled 70 of its A-350's back in June 2014, the Emirates plans have a gaping hole in its inventory and needs more wide bodies than what was ordered initially with its 787-9 orders. "All Things 787", blog reports: "I can see them taking 30 or so 787-9s and 45 787-10"

A full read of All Things 787 for October 1, 2016 will put this issue in perspective!

The point of all this order chatter is Boeing is anxious for filling its wide body order book including 777X types and the Middle East is ready for this accommodation. Even Turkey has a dog in this order fight but that may come in early 2017 as it arranges financing.