Saturday, February 11, 2017

777X Check-Mate's Airbus in Checkers?

Can the 777X program get its wings during 2017? The main thing, Boeing needs about another 150 777-X's orders placed to feel a sense of comfort as it will strive to build about 100 of its type each year. That arbitrarily production numbers fills the five year business cycle, requiring about 500 777X for the production cycle backlog. Currently the book stands at 326 777-X ordered since Singapore dissed Airbus. A significant number but only represents about 65% of five hundred units needed during a five year production plan, or a customer buying plan.

At the end of any five year period, Boeing already needs a reload for the 777X orders totaling another five hundred when keeping the annual production count at 100. Counting today’s backlog of 326 777X’s and going forward ten years from first delivery (2018-2019), gives Boeing  time to fill up 174 more 777X orders by 2022 and another 500 777X orders by 2029 totaling 626 777X ordered over the next 10 years. In other words Boeing needs about 62 777X ordered each year going forward for maintaining an optimal production pace for an extended period of time.

The Singapore Air order becomes a cross road for both manufacturer as the market ponders not having A-380 replacements and coupling with long range metrics from a customer perspective. Airbus wants a business case made for going forward with more A-350 models or an A-380 renovation called a NEO. However, this ship may have already sailed and Airbus was left at the dock!

Image result for 777x9 A-350 1000

When Boeing announced the 777X type, it had done its due diligence within the total market and needed to sew its family of aircraft together while beating Airbus to the draw. The Airbus dilemma, Airbus knew it was already shot when Boeing moved on the 777X announcement, and it now finds itself scrambling for an answer without spending billions. The A-380 is "Dead On Arrival", and Airbus knows it. The A-350-1000 has peaked while the A-350-2000 and A-350-8000 are billions away from becoming a reality. It will take Airbus at least five years to bring ether Airbus advanced wide body concepts to the market.

The long range mega planes market is a very thin one at that. City pairs from 7,000-9,000 miles are counted on ledger sheets with airlines forecasting and note pads. It doesn’t take a big computer analyzing if it will be profitable. Meanwhile, it takes multitudes of people and computers tracking every "single aisle" routing pairs as those routes are numbered in the thousands. 

Looking at the wide bodied end of opportunity is a two edge sword. First the 777X carries a lot of people. Secondly, there are limited opportunities for moving lots of people going from point A to point B farther than 8,000 miles. 

The 777X got there first. Remember when Airbus announced the A-320 NEO before Boeing was even ready for announcing the 737-Max a year later. Somebody got "fired" at Boeing for that mess-up.

The wide body announcement of the 777X several years back is the same thing in reverse for Airbus as what happened with Boeing during its single aisle debacle. Airbus wasn’t ready with gap filling its just launched A-350-900 wide body, and Boeing stole the thin market before it could even load up its drafting pencil lead. Boeing was playing chess and Airbus was player checkers, and it has now found itself check-mated at this time. 

Airbus can’t sacrifice the A-350-2000 even though it’s a rook, and not the single aisle pawn used to confound Boeing. Losing the wide body battle can crumble the Airbus castle. The A-380 is not a “Queen of the skies”, but it will retire off the board quicker than accountants can count any profit. 

The 777X once again angles across the chess board and captures the A-380 as if it were a bishop. Is the 777X a rook or a bishop? Singapore Airlines has hinted at retiring its fleet of A-380's through fleet reductions. The Singapore Boeing 777X order was no hint at all.

The Singapore Airlines order is a market game changer (20 777-X9's and 19 787-10's). Boeing can currently connect the dots from its single aisle to Jumbo size twin engine aircraft. The only hole in its scheme is with the A-321 NEO. A 737 Max-10 pawn would be a sacrificed piece on the board, as once again the Boeing "787 Knight" will rewrite the 757 market using a CFRP based Tweener in ten years. 

It’s coming, it’s just a matter of somebody else money before announcing or moving forward on various other programs such as the 737 Max, the 777X and 787-10. Boeing must stop spending somebody’s money on vast programs before the Tweener can get to the money trough or gets on the game board.