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Sunday, May 29, 2016

The MAX-X Formerly Known As The "MOM"

The problem then is found in the marketing point where aircraft parts for a Max-X would be significantly different than its formal offering on current Max types. However, Boeing is already stuck with a stand-alone type citing its aging 757, as it loses airspace due to its eminent retirement. A 737 Max 10-X is under consideration as reported by Reuters

The real decision tree will be based on units "possibly ordered" if it decides taking this route. The Max-10X would have to have 1,000 plus units committed "what Ifs",  in order to spend scarce resource capital on a new single aisle type. Boeing is taking a customer headcount on how many would order if launched or announced. 
The window for a decision of this nature will come soon after the 777X makes first delivery so Boeing will take the next four years making that decision before announcing. It is just in the white board phase of concept with erasers being handy. 

The key to this mystery is coming from what the engine makers are doing to develop an engine fit for this new aircraft configuration. If CFM is testing a larger Leap-1 it isn't for Airbus and it won't fit on a current 737, therefore the Max-10 is under consideration with some developmental money on the table. The MOM could be a reality by 2021.


Saturday, May 28, 2016

What IF The F-22 Inventory Grows

The what-ifs are tossed about as Generation 4.5 F-22 resurgence appears on the horizon. The F-22 could impact the F-35 and it should not become a reality until the F-35 reaches IOC or has proven its fifth generation status in actual world time duties. The F-22, became a much beleaguered program so much that Lockheed Martin were only allowed to build 187 of its type during the first decade of the 21st century. However, things happen such as ISIS, Iraq and all things terrible in the world and the F-22 had a real world shake down.



It proved to be a real fighter, and so much better than a 4.0 fighters, the Air Force wants another (at least) 200 F-22 in its inventory. It’s truly a remarkable aircraft as it covers the battle field with two engines and can benefit from the F-35 development. The F-35 and F-22 have a symbiotic relationship. Everything learned on the F-35 program may transfer to the F-22 standing inventory. The Air Force would like to increase its standing F-22 force as the world's most capable fighter in its time slot. The F-35 can give the F-22 some of its highly developed and secret capabilities. The F-22 is very fast with two engines and has Gen 4.5 stealth capability. It’s a blue collar fighter with all the bells and whistles that any adversary regrets meeting in air space. It can out fly China, Russia and any other nations most advanced fighter. 

The F-22 will give the F-35 more time in the tinkering shop to make it whole. If the F-35 is a fifty year airplane, then its concurrency has fallen behind its fifty year objectives through its slow maturation into service. The F-22 can cover for F-35 as a wing man would in aerial combat. It can give much needed cover for F-35 maturation process working out "all" its kinks. A decision needs to be made in 2016 whether or not to restart the F-22 production. 

If or when any production starts, it will transfer a cost to the F-35 program through the number of its own units built. It was once conceived that 3,000 F-35's would be built during its life cycle. That unit number has dropped as cost on its development have increased. The pentagon and congress will have to come to terms soon how they will manage two projects and maintain effective levels for the F-35's development. 

The answer is simple, for every F-22 built, one F-35 will be struck from its production run. Since every F-22 built is very capable of replacing a one for one F-35 struck from production, the Air Force will maintain its over-all capability. If building only two hundred more F-22's, then there will be 200 less F-35 built over its program life. The only detrimental caveat is the cost of production ramp-up for the F-22 is very expensive. That costs may reduce total F-35 units even more by reducing its air wings size more than planned. 

If the US is planning a Generation 6 JSF, then it makes sense to cap the F-35 force to a significant number such as 1,800 having another two hundred F-22's at its flanks making the composite force of F-22's and F-35's equaling about 2,200 aircraft in the US Air Force.  Counting F-15, F-16 and FA-18 retirements, provides for smooth transition which can be accomplished during both production runs as the F-22 enhances the F-35 better than any of its predecessors are capable of complimenting. The F-22 is significantly better than any of the aforementioned Gen 4 aircraft that are aging rapidly. Making more F-22's is the bridge to the F-35 dominant role, it will play over the next 50 years. Perhaps in another 20 years there will be enough Trillions for adding additional Air Force aircraft for the world security objectives.


Friday, May 27, 2016

Since December 2011 The 737 Order Book Grows

Starting with SWA anchor order in December 2011 for 150 Max and ending with an order chart through April 2016. A summary view not including one hundred Vietjet 737's or eight Norwegian 737's, shows a robust Boeing order book for its single aisle first four months during this year. In fact, 2016 may surpass Airbus single aisle order count for the year. Knowing that Airbus prefers sandbagging order announcements for airshows, a steady pace has been established by Boeing for its single aisle offerings. The Neo-Max gap continues to shrink. The game change could occur, once the first Max delivers while falling into customer hands when comparing the Airbus A320 offering having a rough first delivery.

Single aisle by the numbers:

  • Max Ordered since          2011-December: 3,090
  • NG Ordered since            2011-December: 1,356
  • Military Ordered since      2011-December:      79
  • Other 737 Ordered since  2011-December:        8

                                                 
                                                  Total      4,532

Starting with January 2012, the time represents just over four years and 4 months or about 52 a month backlog build for the 737 family of aircraft. Dividing 4,532 by 52 months a straight line order rate can be established of 87 units ordered a month worldwide since the first Max order.

An Airbus snap shop since January 2016 shows a single aisle order pacing for only fourteen A320 NEO's. This falls well below Boeing's 2016 order pacing for the first four months as it totals 35 single aisle booked per month. Adding Boeing's May order count of 108 737 (to date) would increase its order pace up to 50 from 35 single aisle per month during 2016. 

Having a pace of 87 orders a month on average since 2012, the current 2016 total for Boeing of 249 is well below the last four years pace where the total units ordered should be about 348 units booked, if it were maintaining its four year pace.

Even though this is an off order year for both giants I would expect Boeing to outpace the single aisle production with its orders through December 2016.


Monday, May 23, 2016

VietJet Has Ordered Up With Boeing

Counting 100 single aisle Max 8-200C's as an opening headline is a considerable boost for the VietJet Airline and its airplane maker, Boeing, with its aspirations in the East Asia's market.


Not wanting to go on about the deal it is apparent Boeing is busy in the region making significant headway with Vietnam's other commercial carrier, This order is for VietJet and not its own Vietnam Airlines, who currently and already has booked both the Boeing 787 (19) and the Airbus A350 (14) aircraft in a prior significant order. The region will explode with Boeing aircraft having the 100 Max 200C's on order. This is the same type Ryan Air (Ireland) ordered a few years back when it  required a stretch version of the 737 Max 8 and Boeing accommodated it with a 197 seat Max 8 with additional doors and a modified galley. Now VietJet’s order solidified the model production for Boeing.


Saturday, May 21, 2016

The Ever Important Boeing 777X Wing Center Opens

Boeing has now opened its newest building for business. The 777X wing center built on the massive 777 campus adjacent to the 777X future assembly building.

Boeing Opens 777X Wing Center


The Boeing 777X Composite Wing Center covers more than 27 acres under one roof. (Photo: Boeing)

This now starts the race to first flight.

Friday, May 20, 2016

Today Is National Zumwalt Day: It Delivered!

DDG 1000 delivered today after 4.4 billion was spent and follow-on Billions will be spent pushing forward a Navy dream of Oceanic dominance protecting US interest, allies, and it defense of America. What can the DDG do is the big mystery? So far it has shown it can go stealthy, run fast, and mess with any electronic warfare imposed on the ship. It can light up a small city with its gas turbines generation. 

Navy photograph

DDG1000 US Navy Photo

What is proposed for the DDG 1000 while in San Diego during 2017?

·      Complete ship’s array of weapons (known/unknown)
·      Install war fighting capabilities (unknown)
·      Test in secret operational capability (Unknown)
·      Complete training of war fighting crew (about 140 members)

The 33+ knot and 16,000 ton Zumwalt is something not to criticize as another DoD expenditure that is flawed. It’s the pride of Bath Iron Works and Raytheon Technology. All systems will be go in 2018. It will turn lose a capability, the Arleigh Burke class of destroyer cannot not match. The DDG 51 series is a twentieth century tool of defense from the 1990's. This destroyer, who can't be found easily, and does not yet have installed its full lethal function will change geopolitical aspirations. First assignment maybe the South China seas where China is building military sand castles in the sea region of multiple nations.  China is imposing its will and the US has a ship China can't build at this time.

Winging It solutes the people of Bath Iron Works and the US Navy having made this day possible. It’s the first of a family of three, but once accomplished the added value will be more follow-on Zumwalt types as a repayment for billions invested. 


Thursday, May 19, 2016

Ruili Orders Six 787-9's

Boeing, who is stuck in a ordering down cycle, does a pick six 787-9's from Ruili, a Chinese airlines expanding its footprint going forward. This year, in particularly is noted as a "order pause year" for Boeing citing low fuel costs and customer's solid fleet inventory as a reason for the 2016 pause. Airbus also has had a slow order start, thus making any order binges "so last year". This period sets up as an airshow dependent year for order announcements. 

Ruili 737 in action



The airshow grows in importance when Boeing or Airbus tents have something to say at the shows. Even though Boeing holds this year’s order lead during the first half of 2016, an airshow may change whose doing what to whom. My own order predictions are out the window as the makers are shaking the order tree for any ripe commitments.  Any prediction will be coming from the airplane makers themselves born out of hopefulness from a friendly customer. The other side of the order business is hanging onto any orders placed prior to 2016, and preventing cancellations. This year remains prone to order cancellations in the wide body arena.
The economy is not the culprit for airline ordering malaise, but underlying factors contribute to the order pause such as competitive risks. Opening a new route with its current aircraft inventory is a risk when the competitive margins are slim going into a new market served by another airline. Buying new aircraft for such a market is a greater risk. An expanding airline such as Ruili may hesitate investing with new equipment when they have older. However, in Ruili's case they have a small inventory to begin with including any wide bodied aircraft. Summarily, all Chinese based airlines are strictly given oversight by its government and its respective fleet expansion mode. Making Ruili's order transaction an accomplishment for Boeing completing the deal.

This does indicate the condition of the world airline market where special situations makes the order during 2016. The remainder of the year should see sales with customers who have rendered down to a decision point, where risk taking becomes the higher priority for its business model, rather than waiting for all the tea leaves to line up before ordering. The six Ruili 787-9's is a big deal in today's market.


Wednesday, May 18, 2016

Airline Aging Inventory FIFO Bodes Well For 787

The US airline giants American, Delta and United have inventory that will be approaching 20 years old by 2020. The combined fleets contain a variety of both Airbus and Boeing frames. The fleet renewal paradigm is now in play. United is running up 787 deliveries without replacing older models as they become a serious target for Boeing's order making team. The Boeing backlog is becoming ripe for order placing with its family of 787 and 777. United recently converted fourteen 787's into 777's on its books. That particular move by United, suggest a near term fleet adjustment during a time of a retiring fleet age and increasing fleet capacity. United moved with a lower financial impact while increasing its order book.

American airlines became a Boeing star when it received its first 787 in the bright colors of its hanger. It too has its fleet shuffling as jets retire, routes are expanded, and passenger capacity changes. Out goes older 767's and in comes the 787 so Boeing hopes will happen. The battle field has changed to the fleet renewal scheme of things and both Boeing and Airbus are suitors expecting big orders from these three US shoppers during the next two years. When placing an order an airline should expect a five year window in which a delivery is completed. Manufacturing analyst see the customer's fleet age per unit, they can expect orders to be placed in a certain window of time.


Image result for american airlines 787 delivery

Delta is a wild card for Boeing as they have demonstrated a propensity for choosing any manufacturer at any time. The result is a mixed fleet of Airbus and Boeing where Boeing maintains the lead and Airbus has an aging fleet. The Single aisle is the anxious area for Boeing while Airbus has received favorable order status for its wide body. They just stalled Boeing by ordering 25, A330-900 and 25, A350-900's which becomes not a good day is for Boeing, as the Airbus good day replaces its aging Boeing aircraft such as the 767. Boeing didn't beat Airbus on pricing and Delta went for the best price. 

Delta Fleet Age and Numbers


The First in First Out (FIFO) market mode is the buying impetus for 2016-2017. The oldest aircraft in a fleet must go and be replaced by any aircraft manufacturer offering the best deal. That buying environment will extend Boeing's $30 billion development charges beyond the 1,300 unit block, before all sunk coasts are recovered from the "Pit". 

Sunday, May 15, 2016

787 Is Expanding The Market In An Overlapping Coverage

A long headline for saying the 787 is rapidly fulfilling its promise of connecting all the world's loose ends when aviation could not connect those ends before the 787. Previously, a connectivity outlook would involve the 777 or the 747, but the 787 isn't about mass, its about convenience. The 787 can land at "almost" any sensible sized airport in the world without much ado. That is the 787 market, and everyday the news headlines searched by "787" opens another new route at an alarming pace.

Asia, the Mideast and America are rapidly filling the skies with new 787 routes. The A350 has stumbled out of the gates where Qatar threatens a Boeing purchase over another A350 delivery delay. Time is Qatar's enemy as the world routes are rapidly being filled with 787's. The 787 market overlaps in all corners of the earth is noticed after delivery number 400 from the 787. Every week the news documents how some airlines is assigning the 787 to current or new route.  All 787 equipped airlines are announcing route expansion with its fleets of 787's. The Dreamliner will soon turn a momentum corner, as it will soon become a fleet replacement model for older aircraft including the venerable A330 flock and its routes flown.  

Friday, May 13, 2016

Boeing Taking A Moon Shot On Market Management

In a "what if", one can dream? Boeing is playing its future "what if" card clear from the production floor. The leadership of Boeing has made its pronouncement. It is a target capability of production units, coupled with a reliance on wide body cash and profitability engines. Boeing will once again depend on its 787's as a make or break aircraft for its gigantic mega corporation.

Business News Net Work:

"Boeing Co's top executives laid out an ambitious, five-year strategy on Wednesday to increase revenue and profits and secure the company's future for the next 100 years, promising to boost efficiency, return free cash to shareholders and expand the after-market services and parts business."

Ambition is that "what if" dream coming from Muilenburg, Boeing chief, as he outlined the: who, what, when and where, of the financial sources and uses for stockholder value. Part of that plan is maximum productivity.

"Boeing described how it will pay back nearly $30 billion in deferred costs from the 787, saying 70 per cent would come from selling larger, more profitable versions of the plane and higher prices.

Boeing also addressed whether its output will overshoot demand if there's a downturn in the aerospace cycle. New plane orders have slowed, and by 2020, Boeing will be making more than 900 planes a year, a position some analysts questioned."

My own head took a snap at that expectation of 900 airplanes made a year by 2020. The following head shaking conditions will exist then as does now:


  • Whose money will build the production capability needed?
  • Will there will be Department of Defense (DOD) terminology or acronyms used such as Initial Operational Capability (IOC)?
  • Can I get a Real estate License before 2020?
  • Does Just in Time actually mean Just in Time?
  • Is Boeing betting Airbus can't meet, match, or exceed Muilenburg expectations?


The sum of Boeing's parts will push Boeing to market resiliency which is a noble concept originating from a multitude of terabytes from a business computer analysis. The accounts agree that it is possible if you have your "what Ifs" in a row. Now talk to the people who will build 900 aircraft a year and see if it flies.