If Boeing Gets The 797 Right, Then What?

The much discussed and speculated A321 NEO buster goes further than just breaking the Airbus back. If Boeing gets it right, the plane will go further into the Boeing playbook and reorganize its single aisle division. This commentary covers the 800 pound "IF" sitting in the room. The 797 designed right will encroach upon the Boeing Single Aisle top end while filling its gap, as a segway to its 787 family. Airbus will be disrupted as its single aisle and dual aisle offering will be over matched for a new Boeing dual aisle and engine 797.

The 737-9 and 737-10 is a single aisle marginal offering for the gap of things flying. The 737-Max 8 may become a part of a single aisle duo in Boeing's line-up. A perfect storm is a Boeing line-up by 2030 of a 737-Max 7, and 737 Max 8/200 partnering with a 797-8 and 797-9 concept. The 737-10 and 737-9 become an awkward single aisle offering when compared to a 797's comfort and passenger efficiency. Boeing will realign its model offering stumping Airbus on what to do. It is clear to see Boeing is once again shooting the moon on the cheap using its vast technology bank for flying machines.

The 797-8 should carry 200-220 passengers and fly an ultimate 5,000 miles. A 797-9 should carry 220-250 passengers and fly 5,000 miles easily. The 737-Max 7 is the 150 seat commuter offering while the 737 Max 8 and its 200 stable mate will carry up to 200 passengers. No need to stretch out single aisle into a nightmare boarding or disembarking. Let a twin aisle do the number crunching when passengers want to move to and fro.

Boeing is taking its time because there is more in play than a one model gap filler. It must have all options on the build table before announcing. Every media outlet assumes a one and done 797 gap filler referred as a New Medium Aircraft (NMA). Boeing is reinventing its offering for several purposes.

• A market shift to rising passenger demand
• A market requirement for longer medium routes.
• The newly announced Max-9 and Max-10 is a stop gap until further notice.
• A 797 completes Boeing and troubles its competitor.

The 797 makes sense only if it realigns Boeing's type offering. The investment is not one dimensional with one model for its type. Boeing recognizes it must be more aggressive with a vulnerable Airbus line-up. It needs to build passenger capacity with comfort and a seven across 797 will address both needs. Secondly, Boeing sees an expanding route distance as more markets adjust and the single aisle falls into its own gap of not going far enough with over-packed seating.

Having stated a few topics of where Boeing may go aligns with the time it is taking to make a decision. It is pondering more than just a 797 model bridging between the 737 to the 787. It is remaking its aircraft line-up going far forward in time. Once a 797 is concocted, it will go clean sheet on its single aisle family. The 787 family will need an upgrade after 2030. Boeing will wait until it has made money with the 787 when the money pit it created building this duo aisle is filled in with its own profits.

Time line watching for progress is one step at a time. The steps Boeing is taking is becoming a straighter path for regaining the high ground Airbus has assaulted. A highly functional family of aircraft from single aisle to dual aisle is the goal. There are too many single aisle types and not enough dual aisle types at this time for the changing market demand and demographics.

Boeing's Gross Order Campaign 2017 YTD Review

Boeing has gone halfway during 2017 and there are many more unanswered questions but from a positive outlook. It has out dueled Airbus into a substantial lead but it maybe not enough for this years campaign. The second half of the year will be reserved for some surprises for which it is hard to determine the outcome for either mega maker.

Boeing has netted about 381 orders as reported by its website, Boeing.com. Airbus orders remain tepid at 203 net orders. The net effect comes from cancellations and conversion from one model to another. However, the gross count score card is illustrated below with various charts made by Winging It from Boeing's current data reports.

A gross number is a bell weather number suggesting the activity within the order book. A high gross number ratio to its net number indicates how robust the order book has become. The booking of 421 gross orders to 381 net orders can be interpreted several ways. Boeing's net-to-gross ratio is .90 where it indicates a high order book efficiency at this time.

The Airbus net to gross efficiency is .82 applied the gross count of 248 thus netting its 203 orders. The second observation is the total orders made during 2017, ignoring the cancellations or conversions to another model. The post Paris Airshow count is a telling story. It is well known Boeing had many conversions from the Max 8 over to the Max 10. Boeing received orders-commitments for 361 Max 10's. In that number were a great portion of conversions from other Max models going to the Max 10. Boeing, though lists its order book according to actual firm transactions so its netting effect of .90 is indeed a remarkably high ratio considering all of the Max 10 conversion transactions. Below is the YTD Gross Orders in figure 1.

Boeing has booked 421 orders so far this year. There are more opportunities remaining during the year and a net 600+ order year is within Boeing's reach. Airbus needs 400 more orders in the remaining six months to keep pace with Boeing's opportunities.

Below is the Boeing Order-Paris effect during the month of June:

Figure 2.

The 184 units were placed as orders and does not indicate net orders. If using the .87 ratio number, an expectation net number could be 161 units (when multiplying .87 times 184). The Paris Airshow results will take the remainder of the year or longer settling up all LOI, MOU and commitments adjusting the order book. The efficiency rate of .87 is just a number based on current order book performance. As an example the Max 10 had 361 total transactions in various stages. Not all will become firm orders, some already are finalized. However, using the theoretical .87 ratio number the 361 Air Show total could turn into 314 firm 737 Max 10's orders. So much can happen during any campaign. The success of any sales transaction is subject to customers financial condition or market changes, indicating anything could happen with changing the outcome. 

Below is the June order count by type:

• 737-Max 104 units
• 777-300ER 4 units
• 777X   20 units
• 787-Dreamliner 56 units

In total 184 units from the show sales were made concurrently with sales outside the show during the month of June, 2017. 

Approximate Backlog Boeing and Airbus

Airplane Wars in the backlog trenches awaits Boeing's paper airplanes from Paris converted from MOU, LOI, options. The Boeing file on paper grows. However it is maintaining its margin from the Airbus book at 1 trillion Airbus to 898 billion for Boeing.

Is Boeing's Max 10 what A Max 9 Should Have Been?

Ever since Paris, a story is developing about the survival of the 737 Max-9. Airbus claims the 737 Max 10 will cannibalize the Max Fleet and not harm the Airbus NEO offering. On the surface this would be a true but a optimistic position taken by Airbus. However, Boeing may have missed with its 737 Max 9 Offering and made the course correction with the Max 10.

From the 737 Technical Site


Max -10:

• Length 43.8m / 143 feet 8 inches, ie 66 inches (1.68m) or 2 seat rows longer than the MAX-9
• Passenger capacity 230 in single-class layout, 12 seats more than the MAX-9.
• Range 3215nm. Slightly less than MAX-8 and -9 (3,515nm) but 265nm more than -900ER
• Slightly higher MTOW, approx 92,000kg
• Engine LEAP-1B with possible thrust bump
• Probably trailing-link MLG, that extends up to 23cm on take-off to prevent tail strike.
• An “improved flap design” that enables more approaches and landing at Flaps 40
• Maximum landing weight center of gravity modified in a way that will avoid “tail tip” events.
• Improved body contour to reduce the risk of tail strikes.
• Autoland will be certified for lower landing flap settings to improve go-around climb performance following enroute icing conditions.
• Entry into service approx 2020

Max -9:

• Length 42.1m / 138 feet 1 inch, ie 66 inches (2.6m) or 5 seat rows longer than the MAX-8
• Single class passenger capacity of up to 220
• MTOW 88,314kg
• Range 3515nm
• Engine LEAP-1B 28B1
• Only 220 of the 3600 MAX orders are for the -9
• Two flight test aircraft, 1D001, N7379E (42987/6250) and 1D002, N739EX (42989/6308)
• Expected certification Q1 2018
• Entry into service approx 2018, Launch customer Lion Air.

Incremental change is like trying shoes on at the shoe store. A customer can't fit the arch and goes to the next size. The show width is too narrow so it goes the next 1/2 size up. Then the heel slips off when walking. The bunion wears on the outer wall of the toe area. So goes the MAX build of the single aisle aircraft. Something to small, too big and then not just right. Boeing needs a NMA and John Leahy
from Airbus stated the obvious. Boeing is competing with itself in the single aisle.

Fig. 1

Above  states the Leahy  case in specifications. The weight, passengers and range do not bracket the A321 NEO in a sandwich between models. Boeing can only hope the Max 10 is just enough to compete with the A-321 NEO but won't exceed it. A perfect scenario for Boeing would be a NMA and a Max-9 in the family bracketing against the NEO family at every fit for routes and capacity. The 737 MAX 10 appears on paper to be a match for the A321-NEO with a slightly less capability. The Max-10 hurts the 737 MAX-9 chances at the back end. The models are so close in capability it becomes a more out of convenience to buy one or the other. An Airbus customer has no motivation for even looking at the 737 Max -9 when it could buy a Max-10 for some other intrinsic reason. The Max 10 and Max 9 will have to rely on other important aspects found in the aircraft to win Airbus customers over.. Once again a NMA would break this single body log jam.

However, it is not always as simple to just build an airplane and they will come into the field of dreams. Boeing will have to slip the NMA model in its back door of its overarching plans. Airbus is waiting and watching Boeing's move with great intensity at its decision. They will re engineer the A321 and then the A330 NEO make-over, even if Boeing comes out with a completely different frame type. The potential Boeing customer will have to love the NMA as the "best thing since sliced bread".

The complexity of the mater is creating a long or quick timeline. The 737 MAX 10 pleases Boeing customers more than Airbus customers and stops the bleeding when loyal Boeing customers even consider the A321NEO. Boeing can offer a deal "they won't refuse". A long timeline suggests waiting Airbus out until it over commits onto something else, and a quick timeline is a rush to market before the competitor can react. Quickness was the Airbus maneuver when it ushered forth the whole NEO family of aircraft. The chess board move now suggests a double move is in the works with Boeing on the heels of the 777X project. Airbus may counter one but could not counter a 2nd move by Boeing.

Where would a second move come from? The super Jumbo is dying and the "gap" is filling. The 777X is going to be a legacy aircraft in time. Boeing has little options but to move in with an all original NMA going to market in five years. The 737-Max-10 is a program place holder for its own customers. A NMA is a market breach into competitor territory. The second shoe dropping is a whole new single aisle family from all the lessons learned during the last twenty-years.

Boeing Has A New Medium Aircraft Stealthier Than an F-35

The Boeing New Medium Aircraft (NMA) has over the last 10 years been dodging, hiding, and going invisible as if were stealthier than the F-35. The only thing missing is a photo op of a NMA model. The tease is effective or more so than an Ad campaign concocted out of a Madison Ave. Ad agency. The world hungers for a NMA brainstormed by Boeing's "Idea Guys and Gals". 


Four Corners Of The Window Bullet Points

• Demographics
• Statistics
• Timing
• Technology

The announcement date is driven by demographics and statistics more than want. The demographic must must align with the stars. There must be at least two dozen "A" list airlines from the likes of Japan, England, and China. There must be some all Boeing customers and some split fleet customers in the announcement mix. A half dozen smaller airplane customers as well. Boeing is not there yet but is closing in on its customer objectives. The demographics are almost complete.

The statistical side of the equation consists of an ever moving target as the industry expands and contracts on a periodic basis. Boeing is looking for the statistical sweet spot. It announced a 5,000 unit need for the NMA over the next decades.

Plueger: ALC Quote: from Leeham

“For the Boeing product line, I think there is a gap. It’s probably fair [to say the Boeing gap is from the 737-8 to the 787-9].”

Does Boeing have to do the NMA?

“I think it’s an important step for Boeing. The issue is one of cost. With all the talk about NMA, what is really boils down to is price,” he said. “That will determine whether the airplane sells 5,000 units, or 3,000 or whatever. That’s something the engine manufacturers have to know pretty shortly.

“I think the whole effort can be produced at a point that makes sense.”

Timing is the art of the deal. Coming to market at the right moment can optimize the affect it has on its competitors. The three Bears story book account says it best. The market is too cold, the market is too hot and the market is just right. Airbus has its resources hog tied for the next five years and are in the too cold soup bowl.  Boeing has its own problematic resource drain with the 737 MAX , 777X through the 787-10 implementations. Therefore, the time is right when two or more programs are completed. The 737 MAX started delivery, and the 787-10 is in flight testing. When its flight testing is complete and first delivery of the 787-10 is made, Boeing should shortly announce the NMA depending on 777X risk retirement. 

Technology is locked up in R&D and design. The 787 program made many new technological concepts a reality in the wide body. Boeing does not have to re-invent, it just has to implement. The NMA will certainly mold into the Boeing family of aircraft using everything paid for from the Boeing money pit out of the deferred cost monkey barrel. What the New Medium Aircraft will add to the techno pile will be announced at the "Announcement".

As Plueger, from ALC, stated earlier (paraphrased), the NMA announcement will come from what makes sense and not sooner. What makes sense is the opportunity window that develops from the above bullet points. All elements pointed out above have positioned itself closer to that window of announcement than ever before. 

Therefore, a combination of things need to occur before a formal announcement and all are driven by time itself. It won't be two years nor five years. It will be when the soup is just right and no sooner nor later. The key is everything is almost ready to go and is just waiting for the go order from Boeing's art department.

Boeing 787 June Recap 2017

The post Paris Airshow numbers may not include all June  787 numbers until Boeing.com updates its website. Below are best information numbers which may not include all order transactions, but is correct on the production count. June made Boeing 787 count jump ahead of its book to bill ratio at a 1.15 rate exceeding the 1 to 1 desired ratio Boeing seeks for its 787 program. 

Boeing booked more orders for the year than it delivered to date. This ratio should go sub 1 ratio when more deliveries may exceed orders booked for the remainder of the year. Since 2012 Boeing has had a respectable Book to Bill ratio of .900 rounded. It has booked 57 less 787 than delivered during this span of time. 

Fig. 1

Below, Boeing missed its 12 units a month delivered guidance over 90 days of tracking, but did deliver 33 of its 787 during the 2nd quarter. The average fell below 12 down to 11 during the last 90 days. A good effort since the first half of the year is usually slower than the second half and Boeing has slowed its Charleston production while starting its testing of the 787-10 models after its various assembly line 787-10 first assembly interruptions.  

Fig.2

Fig. 3 The book to bill relationship quarter by quarter YTD 2017

Below is the 787 Program snapshot year by year where 710 are currently in backlog at this time.
Fig. 4

Fig. 5

The chart below reflects the growing production units where the 787-9 is taking hold of the program as the premier product for this family of wide bodied aircraft.

Fig. 6 Is another program snapshot of works-in-process and delivered units. A preponderance of 787-9 with 24 production units signals its dominance over the 787-8. The 787-10 has not yet begun its production run while it is still in testing. The 787-9 should remain the top contributor to this program throughout the 787 life cycle.

Boeing's Single Aisle Aficionado Michael O'Leary, Ryanair-Ancillary

Learn what ancillary means and understand the future of airline bottom lines. Typically an airline relies on the ticket prices. Passenger wonder how come they can fly to and from Europe to the US for under a "C-note" (€100)?  

Primary ancillary definition:

"providing necessary support to the primary activities or operation of an organization, institution, industry, or system."

Press Quote:

"Mr O'Leary has previously speculated that one day Ryanair passengers would be able to fly without having to pay for their tickets, with the airline generating all its revenue from ancillary services."

So how can airlines reduce ticket prices competing in the busy origin and destination air travel market? 

Answer: By ancillary revenue stream complimenting ticket prices and offsetting ticket price reduction.

Ancillary means services from the primary product. A hotel will often contain restaurants, barber and gift  shops supplanting room rates in a competitive market place. Disneyland Anaheim, California has "The California Experience" with its hotels, food establishments and gift shops. Not forgetting external revenue streams from movie making, special events and conventions. The Ryan Air executive sees a way to fly across the Atlantic on the back of ancillary projects. The ticket price could be supported by fees, service opportunity and terminal markets.

Photo Below: Dublin's Terminal 1 floor space awaiting O'Leary's idea for ancillary centers targeting passengers coming and going. 



Brain Storming Session Begins:

Ryan Air could lease-on to airport terminal space which would include its passenger market place on Ryan's Air's turf. It could make partnerships with hoteliers for room bookings. 

Dublin Terminal 1 a blur of passengers seeking to unload revenue.

Restaurants in or near an airport may be owned by an airline. Clothing shops would be on a Ryan Air ancillary wish list. Once having a mega web of Ryan Air ancillary market places which are designed for its passengers, then possibly ticket prices will fall further. The strategy is to get people on a seat so they will be exposed to other Ryan Air profit centers. 

A profit synergy exist and O'leary is shopping its potential. The key is free seats so Ryan Air passengers will spend  money on Ryan Air ancillary and convenience profit centers.

"People, just don't stand there, spend money you are flying free today!

Long Range ancillary goals:

• Resorts (destination)
• Lodging (origin and destination)
• Amusement ( destination)
• Business centers (destination)
• Convention halls (destination)

Short Term Ancillary Goals/Terminals (origin and destinations):

Ryan Air Tickets is an automatic discount for each profit center transaction.

Profit centers:

• Restaurants 
• Shops
• Kiosks
• Travel Services
• Car Rentals

These are just to name a few as O'Leary brain-storming continues. The long term goal is either as a franchisee participant or a direct ownership in selected markets. A ticket seat purchased for a nominal free such as (€50) covers the seat, luggage and on-board supplies. The seat is free (fee waived) when booking a Ryan Air hotel room or renting cars from its ground transportation division.

It can't be helped to think airlines have already explored the ancillary business model. If O'Leary is thinking this, then it has flagged that a business concept is in incubation. So far airlines sell a seat and fly. The money stream ends at arrival. Ryan Air must be looking at providing a seat as a access point for the beginning of collecting ancillary revenue. 

A further image emerges where you arrive at an airport serving Ryan Air where there are a Ryan Air concierge desks much looking like a boarding desk in the terminal. What the 'company" concierge will do is rent your car, find a room or arrange your dining at your destination's regional footprint. Of course, only with Ryan Air ancillary affiliates. Needing clothing and a haircut could be arranged within the terminal floor space, since traveling all day with just a carry-on and looking well past the 5:00 pm shadows. The whole concept is taking care of the passenger with a seamless experience allowing more time for the passenger to go do what the passenger needs to do. 

In fact if pre-package travel occurs then expect your luggage to be in your hotel room upon your hotel arrival.

The tipping can occur as ad hoc with each service rendered or it can be like a cruise ship business model where an amount can be bundled-up for all tips encountered during a trip on a company "travel card", which would be another ancillary service provided for a small fee. Its transaction card (credit card) is only good at airline affiliated point of sale centers (food or service tipping...). 

Welcome to a Ryan Air Visa card (another ancillary profit center).

Lost? no problem go to an airline terminal kiosk and summon a concierge or book a room directly (of course for airline ticket holders at a discount). The list becomes endless for what an airline like Ryan Air could build in its business portfolio. If a passenger flew free to a destination it would want to seek discounted ancillary services affiliated with the airline. Every transaction contributes to the airplane ticket price at the back-end. If a passenger goes rogue upon arrival it would experience higher costs associated with a trip on the destination street. The idea is to get the traveler/passenger onto the airline network which pays for the no cost seat as the passenger travels beyond the airport. 

Doing an European trip typically may cost €5,000 for the duration, but through the airline seat purchase it may only cost €3,500 in this example. The trip cost is incentivised with everything the airline has in its portfolio for that destination or its airports. The theme is why book with some airline other than the sponsoring airline for your travel.

Time to let your imagination take this story forward.


Bonus addendum:

A working model of what could be. Every ancillary revenue returns a 10% contribution from passengers travel expenditure to the hosting airline.

Based on seven days which contributes more money towards an airline seat cost using its ancillary services, a sliding scale for each day in travel status could be used. A per diem flight chart would charge 300 dollars for the round Trip if returning during first three day traveling, since since a passenger uses ancillary services less than three days a ticket charge is fixed amount which would not exceed €300 total round-trip ticket charge. A non participating passenger ticket would be full market fare for those not booking flight on the airline program. Traveling on day 4,5,and 6 would would slide the ticket cost downward, reducing the per diem ticket rate by €50 for each day beyond day 3. Therefore, returning on day 4 would cost €150, on day 5 €100 and day six €50. The seventh day travelling using airline ancillary services, is a return ticket with no charge return. This also assumes no charge on the first out bound leg.

Round Trip Ticket scale:

Over-night (day 1) trip ticket price using ancillary services is €300.
Night Two €250
Night Three €200
Night 4 €150
Night 5 €100
Night 6 €50
Flight day 7 No charge showing on airline credit card. the return ticket indicates airline ancillary services were used every day during a passenger's travel status, which covers the cost of an airline round trip fare. Credit account is settled during each monthly cycle with net fare showing on the passenger airline card.

A day without making an airline's ancillary service transaction (equaling a motel room or car rental), is not counted as a day in airline travel status for a trip.

Common sense drives this model. Use the airline ancillary services for reducing total ticket price to €0.00 if staying seven days while using the airline sponsored food, room, or car rental  each day during a passenger's travel status. Any break in the airline service use will add a premium charge of €50 to the ticket charges added to the airline credit card until airline services are used for up to seven days.

A net effect is in action. If staying in Europe a month a passenger needs only to stay on the airline ancillary system for seven days for a free ticket back home, otherwise anything less than seven days on the system would add a charge back of €50 for every day less than the seven days up to €300 when not booking a motel room or car through the service.

A passenger will earn credit by using the airline ancillary services rendered including food and other purchases at the airline discount. Points may be collected for from monetary values which will be applied to a ticket reduction up to €300.

Otherwise a round trip ticket to Europe costs €300 while each day using the airline's "primary" ancillary services credits back €50 per day until ticket price is covered during a passengers 7 day travel status.

Its Been Reported BOC buys 4-787-9's

The Chinese leasing company, BOC just filled an order for four 787-9 rated at list prices for $1.08 billion.

The bigger news is that Boeing has taken in about 112 787 firm orders booked year to-date counting PAS for 33 firm, Singapore Air (unidentified for 19 dash 10's) and the new BOC order for 4 787-9's. Adding up all the orders brings Boeing to a remarkable 787 order year with 112 orders for all its type of 787's. There is another six months to go and the Dubai airshow ahead which may enhance Boeing's 787 order book further. 

Winging It 787 numbers now stand at: 1,312 787 ordered for the program and 747 deliveries to make with 565 787's already delivered in five years.

Fig. 1 Winging It Score Card

Paris Air Show 2017 -Boeing-Checking It Twice Report

Below is a "checking it twice list" from the Paris Airshow 2017 with paper transactions and associated list price totals for each transaction type.

By the numbers:

• There were 147 direct agreements for the 737-Max 10
• There were 214 737-Max 10's converted from prior purchases/agreements, typically from previous Max 8's transactions. 
• There are 361 units of Max-10's identified at the show with paper agreements
• 56 wide bodies were purchased or agreed upon.

How was it checked? A lot of searching was done from airshow press reports where Winging It listed each report. Then it double checked with multiple sources what happened at the Paris Airshow this year without an exclusive confirmation from Boeing. Winging  It will wait for Boeing's monthly updates on its Orders and Deliveries website found at Boeing.com. Flight Global was the final choice for comparing numbers. Winging It numbers came very close to those number and it adjusted its total according to further verification from press reports to Flight Global reporting.

Below is the "Checking It Twice List" from a confusing show. So much happened and so little time during the show. This record is for future research and use for keeping track of the orders, commitments and the conversions mess encountered by Boeing during the show. There may be other sources conflicting with these totals through interpretation of what is meant by all the show notations. 

However, a new category occured called, "Identified". During some transaction coming from the past, even before the show occured, a deal was struck but the customer remained unidentified on the Boeing order book. Now a big show comes along and said unidentified customer wants exposure at the Paris Airshow 2017. They identified an already made purchases (firmed) by coming out and publicly expressing its purchase made before the show.  This action gives exposure among members of the Aviation Industry and public, thus the label "Identified"(at the show) where a classification emerges from a prior "undisclosed customer" list from Boeing's order books.

Figures are checked against Flight Global "Who Bought What" (Free subscription required) recapping PAS 2017

Fig 2. 737-10 roll call added booked units

Fig. 3 Total Units/value by model

Boeing's Website Says

Boeing just posted numbers today on its website. Link Here for what was listed. Some came from the airshow and some came from hanging orders not yet booked. A key item is the unidentified 20 777X and the 19 737-10's boosting the Boeing wide body count for 2017, and this was not part of the Paris Airshow. Singapore Air is the 800 pound gorilla in the room no one notices. The Unidentified wide body 787/777's happens to be exactly what Singapore Air ordered weeks before when it didn't show in Boeing's order books. This is a post-show boost for Boeing. Fifteen other 737's were added and presumed to be not part of the Paris show. Below is the list of Boeing.com additions from its books today.

Figure 1. Monday, June 26, 2017 Book Additions!

Boeing will now have booked 75 787's this year before the Dubai Airshow. Boeing.com has added 76 wide body aircraft to its books today.