Sunday, February 19, 2017

Part of The Game is Stealing The Wide Body Market

Airbus learned a long time ago as in the 1990's to bring to market a new concept before its competitor could as found in the single aisle market with its NEO A-320's during the years 2010-2016. It romped over Boeing bursting out with more than 5,000 units sold. Boeing came out second with 3,600 737 Max sold. However a bigger influence on this strategy of First to Market comes the condition of Market forecasting. Using the Boeing data of market forecasting demonstrates how Boeing has cut Airbus off at the pass.

Fig. 1 Boeing Data Source as of 12-31-2016

Boeing has stated in its forecast the market will need:

"On the wide body side, 9,100 airplanes are in the forecast, with a large wave of potential replacement demand in the 2021- 2028 time frame. Boeing projects a continued shift from very large airplanes to small and medium widebodies such as the 787, 777 and 777X.

With cargo traffic forecasted to grow at 4.2 percent per year, Boeing projects the need for 930 new freighters and 1,440 converted freighters." 

In this discussion several assumptions should be made. Boeing's forecast is accurate and world conditions remain seasonally straight going forward or in other words the world remains stable.

The below chart opens a discussion of wide body and of the large wide body stealing from Boeing over Airbus starting with the 777-9X.

Fig.2 Looking at the potential. As of 12-31-2016: The Boeing Forecast for demand.

The focus is on the last lines of the market by size and capability of aircraft offered. Both Boeing and Airbus have bracketed each other found in the backlog data and the future is open for single aisle where Boeing seeks opportunity for 4,096 small duo aisles. The large wide body includes the A-350-900 and A-350-1000 with seating between 300-400. Its undelivered advantage is centered on its key aircraft the A-350-900. However Boeing splits this anomaly in the A-350 seating when the 787-8 and 787-9 is at 240 and 294 seats respectively, making the 787-9 classed in the small wide body data by this chart when it could be considered a medium body by seating capacity. The Airbus arrangement pushes ahead of Boeing in a bracketed manner. It tries to undercut Boeing with its A-330 NEO's at one end and then beat it in the large end with the A-350-1000 types of aircraft.

Boeing has beaten back the A-350-900 attempts with its medium WB's (787-9) 787-10, and 777-300- ER's. The Boeing Bracketing occurs with the top end of the market with its 777-9X and 8X order book where Airbus cannot sink billions into an answer for this line- up, since the remaining large market forecast is relatively small. 

That end has forecasted room for 2,391 medium wide Body orders spanning the 300-400 seat capacity over the next 20 years. This number works out for a market wide availability of taking orders for up to 119 aircraft a year from both maker's combined. The 777-9X has stolen the forecasted availability (large wide body) undercutting future aspiration for any new A-380 orders while giving the 747-8i a nice send-off. A 777-10X concept is restrained by how litle room remains at the super large end. That end only has room for only 139 more large air-frames ordered in the upcoming years thus ending the Airbus fantasy for the A-350-2000. 

The market has responded with this deadlock. It isn't ordering anymore A-380's or 747-8i's as that class has already dried up the potential long before Airbus intended. The 747-8i was a lost leader also intended for slowing the A-380 onslaught of orders from the beginning. It did its job and now the market "Big's" have moved on to the 777-9X order book were it now stands at 326 or so orders.

The 777-8X is a one-off gap filler making the 777-9X a stronger proposition as the 8X addresses the 777-200LR retirement. Its range and seating capacity of around 350 seats neatly folds in commonality strategy for having a family of aircraft even though less than sixty have been ordered and no further orders from Boeing for the 777-8X have been taken. 

The A-350-900 and A-350-1000 is an Airbus attempt at bracketing Boeing with these offerings having a 330 -366 seat capacity for its customers. The Boeing recommendations for seat count as follows from its family of aircraft. The 787-9 seats 294, the 777-8x seats about 356, and the 777-9X attacks the Jumbo end with 405 seats. There is no market at this time for a Boeing 777-10X seating about 450. The -10X would truly replace the 747-8i with comparable capacity and superior efficiency.

When reading and studying the Boeing 20 year outlook it appears it is a real dog fight having no end, but Boeing has filled the Big End of the wide body market before Airbus could get a "Big" design into production. This condition is leaving little room for potential orders in the next decade as only 139 remain from predictions when factoring on order  backlog. The 777-9X slots have already stolen this market from its 530 stated potential having 326 of the 777-X's already ordered. This leaves a remainder of 139  "Big's" available for the whole of the market within this forecast until 2035.