Wednesday, February 26, 2014

The Dirty Little Airplane Wars By Marquess Of Queensberry. Airbus Keeps Its Dukes Up!

"Taking aim at Airbus's flexibility over pricing of the A330, whose development was paid for long ago, a Boeing executive said it would be a "losing proposition" against the smaller 737 in China, even if Airbus gave up any gap in price.
An Airbus official retorted curtly, saying Boeing's own data was "veracity-challenged".

Rueters reference see link below.
Combine that with John Leahy's, " Dogs Breakfast", at Singapore Air Show. You are beginning to see a pattern that Boeing has really, really  an irritating new Zip Code under Airbus' central nervous systems spine. Everywhere Airbus turns, is a sales pitch from Boeing, that is blocking Airbus' attempt on world dominance. Its begins to show-up with the 747-8i, in that dwindling Fat Body market for the A-380 and is encroached upon by a cheaper and more efficient by seat count, 747-8i. Currently, Boeing is nipping at Airbus' below its own A380 break even point. With the A-380 order count at 304 total booked, it can't reach its break-even number due to time valuation for money as it will take another 10 years of production.  Cost increases and money devalues on locked prices. The break-even point varies over time upward in units, and Airbus is doomed to that outcome, as order numbers grow quiet. Even though Airbus has just received a large order for the A-380, (two years of sales work) that profit dog won't hunt in the upcoming years. It will lay on the Airbus' front porch by 2016. Everybody who wants one will have its orders up. 2016 and Airbus will be in a mid afternoon restaurant slump for the A-380. While the little dog, 747-8i may continue to nip at Airbus' heals.

Rueters: Article Reference for Context

Wikipedia Unofficial Count
CustomerEntry into serviceFirm OrdersOptionsDeliveriesEARRPress Release
Air Austral20142*
Air France20091229*[2]
Asiana Airlines20146*[3][4]
British Airways20131274*[5]
China Southern Airlines201155*[6]
Etihad Airways2014105*[8]
Hong Kong Airlines201510
Kingdom Holding Company20131*
Korean Air2011108*[9]
Malaysia Airlines201266*[11]
Qatar Airways2014103*[13][14]
Singapore Airlines200724119*[15]
Skymark Airlines20146*[16]
Thai Airways International201266*[17]
Transaero Airlines20154*[18]
Virgin Atlantic201866*[19][20]

304 orders with  123 deliveries tells the tale after a many year leap (2007) on Boeing's next offering, the 787 (2012). Even though they are not in the same same class, they represent the same type of gigantic capitalization poured out during a R&D and production of a type change aircraft. Boeing will surpass  the Airbus A-380 break even point on the 787 from its own investment hole. Before Airbus can get it "there", as in making money they will languish since the A380 is inflexible for route changing. In fact the order book will shrink before Airbus can make its money on the aircraft, where Boeing continues to bring in, its 787 sales order book, well beyond break even. Boeing now has enough 787 on the books to make a profit by 2017. That is my own sensible projection for writing down a profit for the project, when everyone else says sometime in 2015 for the 787. Sometime in 2015 will also be the follow-on sales years for current owners of the aircraft. The A-350 will have its splash during that time and the comparisons will have been made. A second look for the 787 after 2015, will be at an epic period for the 787. All airlines will want to know who did the best. The 787 or the A-350.

If Boeing fixes everything in a permanent fashion by then, "they really need to do that little thing",  it will come down to bottom lines of commercial carriers and the flying reach of such aircraft in its business plans. The A-330 is already marked for niche duty, and will have a graduation ceremony of rotating out to those niche routes, as airlines resupply  the A-330 with the "new premier generation of aircraft". This includes the MAX and the 777X models coming on, later in the decade.

So the Dog's breakfast is now seved in South East Asia by Leahy. The stakes are high, and becomes the tipping point for the duopoly. Winner takes the domination award. "The Veracity (or lack thereof) Challenge Award" should be awarded to Airbus rather than Boeing. The old school yard adage is in play at high levels, as Boeing is tempted to say, "it takes one to know one". Since they brought it up, they will receive the "Veracity Award Of Acheivement". They somehow explain how the A-350 works better than a 787, before customers even take delivery, using old technology with a plastic bodies. Meanwhile these so called  "untruthful competitors", have over 120 airlplanes for its customers flying every day, every hour and every second. After-all, Airbus sweeps the "Hydraulics" award, and the "My Extra Wide Body is Not Enough Award" (77X). Plus they receive a medallion for "No New Breakthrough Technogoly On The A-350 Award. They just barrowed from 787 suppliers, its new stuff to plug and play on the A-350.

I haven't mentioned the Neo and single isle dominance. Unfortunately no one has produced its single isle champion to the market, as of yet, and we have bloated order books for both sides. The veracity remains with its actual operational numbers. The spin of the roulette wheel will tell who wins and who loses. The Max has made the case it beats the NEO. The Neo claims order book numbers and proclaims,"customer's know best, look at our sales numbers". Boeing retorts, "we are gaining on you NEO because we are better." ... And so forth and so forth!

This battle will be solved by the veracity of flight test numbers of the MAX. Then the table will turn when those actual numbers come out and play in the minds of airline analyst and CEO's. If the Max has more seats than the comparable Neo and flies cheaper, then the single isle market does not move aircraft for its amenities, but for the the cheaper ticket prices. On board passenger gizmo's are not as important on a three hour flight as on a 15 hour 787 flight. Customers want to hop on and hop off with value and efficiency. The MAX has a leg up on that matter as its ticket prices could trend lower than the NEO's  tickets could do, because of MAX value is imputed within the airframe. Why fly on an American Airlines NEO when you can fly on a SW Max for those hours spending $20 dollars cheaper for the ticket, savy!

That would also take Boeing to get that message out after its two years in service. Then you will see aircraft NEO models orders, flipping from Airbus to Boeing in the third year during the NEO vs MAX war.

Veracity of a Dog's Breakfast is Airbus' war cry, as it pains its way through South East Asia's market. A better war cry from Boeing is the "The Silence of Victory is Our Engine, Our Wings and Our Design".