Monday, June 2, 2014

Airplane Wars, Battle of The Engines

Red Font is the Rueters Report June 2, 2014.
Black Font Liftndrag interjections.
DOHA, June 1 (Reuters) - Boeing vowed on Sunday to carry out a smooth transition between current and future models of its two most profitable jets - the long-haul 777 and smaller 737 - and dismissed Airbus plans to overhaul its own A330 model.
Sales chief John Wojick told Reuters he was confident of selling enough of Boeing's current long-distance benchmark, the 777-300ER, to fill the gap until a new revamped 777X version enters service in 2020 and avoid any interim production cut.
"We are looking at solid demand for the airplane, and we think we can fill the bridge, and that is my job," Wojick, senior vice president of global sales & marketing at Boeing Commercial Airplanes, said in an interview.
Airbus is making a plea with SAA for its Ilk and the airlines is biting towards buying the Airbus Product with a fancy sales pitch that Airbus has a more "economic aircraft" than Boeing. Airbus is also buying a lot of fuel for its customers by dropping significant price point for its older aircraft models. Therefore, a few million off the list  price buys how many inefficient gallons burned?
Asked if he based his forecast on the current production rate of 8.3 aircraft a month, or 100 a year, he said, "yes".
Boeing and European rival Airbus are both focusing on overhauling their most cash-generating models to help pay for developments of two revolutionary carbon-fibre jetiners, the Boeing 787 Dreamliner and the Airbus A350.
While investors have welcomed this cautious strategy, analysts say both companies face challenges in keeping output of existing models stable while airlines wait for the new ones.
Airbus is upgrading its A320 family, which competes with the 737, while looking closely at upgrading its wide-body A330 jet.
If it decides to re-engine the 20-year-old A330, Airbus would be gambling that lower capital costs and proven reliability would be a match for the 787, which has had a spate of technical problems recently but has a lightweight design.
Boeing is significantly out of the woods on the 787 family problems. In fact the 787-9 just exampled Boeing`s lessons learned in a smooth transition to market this upcoming July for Air New Zealand. The 787-10 should be a ditto project. Mentioning 787 problems now is a moot point and not relevant in today's sales presentations. Listened to what Wojick notes about a re-engined A330 NEO.   He may be stretching it a little by saying a 30% advantage over the an A330 Neo but even it comes in at 25% its a game crusher for the A330 Neo. Airbus can't possibly catch-up a 30% improvement from the 787-10 over the current A330.
Wojick insisted those numbers would never add up.
"The 787-10 burns 30 percent less fuel per seat than the A330-300. That is going to obsolete the A330," he said.
"There isn't a price at which people will buy the A330 once (you have) 30 percent fuel savings. It is a huge benefit to an operator."
COMBATIVE
The remarks on the fringes of an annual meeting of the International Air Transport Association reflect a more combative tone after Boeing suffered market share losses to Airbus in sales of narrow-body jets.
They drew a sharp response from Wojick's counterpart at Airbus, chief operating officer for customers John Leahy, who told reporters the rejigged A330 would be Boeing's "nightmare".
Airbus is close to a decision on whether to launch the "A330neo", he said, adding that it would have similar cash operating costs to the main 787 model but cost less to buy.
Airbus and Boeing have been in a struggle for market share on short-haul jets since around 2011, when Airbus decided to upgrade the A320.
Leave it to John to say, "Rejigged A330 is a 787 Nightmare". However, John has to address physical properties of gravity, weight and thrust when using physics during talking about rejigging the A330. It must strap on new engines that will be better and reduce frame weight significantly while designing new wings of which they (Airbus) have not shown a propensity for excellent wing making.  Boeing has with the 787 fabulous wings. Using such a word as rejigging is a signal that Airbus is desperately trying to recoup its A350-800 as originally planned. If the A350-800 is so miserable in concept that only 30-40 have been ordered, it may indicate the customers know smoothing about Airbus' plastic concept at the small end. After all, Boeing quickly dumped the 787-700 model as it reached a point of plastic model resistance for having no discernible advantage with the smaller sized regional 787-700.  The A350-800 is a no-go and the A330NEO is a John Leahy "Rejigged Hail Mary". It sounds like Boeing has just asked Airbus and the A330 Neo for lunch. 
Airbus claims a 60 percent share of that market, but Wojick called the statement exaggerated and said Boeing had outsold its rival since deciding to re-engine its own 737.
He said Boeing had now sold enough of the existing 737NG models to ensure a smooth transition to the new 737 MAX.
"We are sold out on the 737NG," he said.
At the same time, he signalled that Boeing could keep raising output after reaching a goal of increasing production of the 737 family as a whole to 47 a month from 42.
Airbus has also hinted at future production increases from 2018 onwards after setting an earlier goal of 46 A320s a month.
Peabody goes back, to The Way Back Machine, with his friend Sherman and discusses how Airbus stole the march on single aisle, by announcing way ahead of Boeing's flat feet, the all new A320 Neo? Crazy orders came in. With this Airbus head start, it doesn't make the Neo Single aisle better or more popular with customers. It means just that they caught Boeing Flat-Footed and took on immense orders that first year, where Boeing has been closing the gap since then year by year.  Boeing has made its recovery point and people now have a single aisle choice. May the slickest single aisle win. Boeing stormed production right back up and is now flooding single aisle with new NG's so it can set up for the MAX and make a seamless production transition.
"We are pretty confident that with the demand that we are seeing for the 737 MAX, at some point out towards the end of the decade, we have got the possibility for even more airplane demand out there," Wojick said, adding he did not see evidence of a plane order 'bubble' that is being predicted by some analysts.
"When one region has financial difficulties, another region will be doing quite well," he said.
Asked about signs of an economic slowdown in Asia, where low-cost airlines have placed heavy orders for A320 and 737 jets, Wojick said, "I don't think you are seeing a huge change there, but I do think some of the airlines there are maybe not able to take all the airplanes that they were looking to take in a given time period".

Boeing has not seen airlines defer orders, he said, but he added, "Certainly we are not seeing them exercising all the options they have for growing even faster than they were predicting." (Additional reporting by Victoria Bryan, Siva Govindasamy, Amena Bakr; Editing by Praveen Menon and Jane Baird)

Back to the battle of the engines, when you have an airframe that is the most advanced on the planet, then it comes down to an engine war to make the difference in the fight for airspace. My logic is that you fit new high performance GE`s or Rolls Royce on that advanced frame then the builder maximizes its technology. If a builder tries for a NEO attempt of higher performance on a second tier heavy frame, like the metal ones are now considered, then you are putting lip stick on a pig. No matter how much you rejigged that pig during a modification. Airbus is doubling down on a thin bet with the A330 NEO concept. It is also getting desperate on its A350-800 nobody wants. Boeing is standing pat on its hand of aces. Wojick is not fluffing the Boeing party line, he is merely pointing out to customers, "The Great Gotcha", Boeing has over Airbus as Toulouse wanes its efforts on knee jerk counter measures in this dog fight.