The A-350-1100 Must Beat The New 777X Proposals In order to Fly.

Qatar recently indicated it would consider an A-350-1100 if it would beat the new 777X proposition. Looking at the statement suggests Airbus would have to build a super efficient twin engine behemoth. 

There are the normal metrics such as seat mile efficiency, Big body pricing, and capacity for the airplane propose. Currently, Airbus has several models in this arena as shown below in the bullet points. Customer's final configuration requirements will affect both seats and range capability.

• A-350-900  325 seats, range- 8,100 miles
• A-350-1000 366 seats,  range 8,000 miles
• 777-8  350 seats, range 8,700 miles est.
• 777-9  400 seats, range 7,700 est.

If both are proposing unannounced models then that proposal targets where the final battle will occur and what Airbus must do in order to beat is the theoretical 777-10X. It's a thin market for the 777-10X capability based on seats alone. The range becomes a big item for both makers for these ultimate types.

• 777-10X  450 seats, range unannounced
• Wing Length for 7778X & 7779X(unfolded) 235 ft
• A-350-1100X must jump-up with 80-100 seats from its A-350-1000 standard 366 seating.
• Wing length for current A-350's is 212.4 feet

Boeing won't announce a 777 10X until its proof of concept (777-9X) goes to market in 2020. The answer with this competition comes as several more airshows pass through without an ultimate twin engine announcement. 

Expect Boeing to go for a new GE engine performance for its 777-10X, before selling the concept to customers. The thin market for super-big aircraft with long range is only for several hundred aircraft and a few customers that may want it. 

Airbus will have to address its wing length for an A-350-1100 as it will be confined with its current A-350 terminal slots. If expands the wing length, it will have to find different parking spaces that would allow longer wings. Boeing thought this problem through as it earlier patented a folding wing tip.

A folding wing tip is the new norm for getting into every substantial airport available with a very big duo aisle aircraft. Airbus will have to come out with a telescoping wing tip for its A-350-1100 unless Boeing already patented such technology😉.

The 777X wing stands at 467 sq. meters and could go longer within an extended folding tip portion by several feet of length if it needs for a proposed 777-10X. The Airbus wing currently has 442 sq. meters, leaving the Boeing 777X wing 5% larger. When Airbus decides if it will go with an 1100 it will need to add some sq. meters to its current wing for meeting flying specifications for something so large. 

The A-380 has a wing area of 845 sq. meters as a comparison. It gains fuel burn efficiency from a massive wing area. Airbus must go large-wing with a A350-1100 if it wants to remain competitive with the 777X regarding fuel burn efficiency.

Having a 212 foot long wing won't cut it for hauling 450 passengers as it needs to compete with a 777-10X. The A-350-900-1000 wings have maximized the engineering in the current models offered. The cost of scaling upward for an 1100 type would not allow Airbus enough worthwhile profit, if they could even sell 200 frames for this type.

Is Boeing On The Verge Of A 787 Gold Rush?

The question becomes obvious after Turkish Airlines announced its recent 787-9 order for $11 Billion in 787-9 Airplanes. With Japan announcing it was the owner of a prior unidentified order for four, Boeing appears its on the verge of some sort of airplane gold rush to order. The indicators have been sounding off as if it is a metal detector. The shovel ready production projects are nearing completion in Everett, Wa. for its 777X program and Charleston presses on with the 787-10. The whole Boeing landscape is a buzz with activity, if it were unloading supplies for the Klondike.

The first "Gold" exclamation came when Boeing announced it was going for producing 14 787 a month instead of its guided 12 a month pace it had announced in previous years. At that time a loud "Ka-ching" hit the factory floor as it were a cash register making a big sale. Boeing had hoped for even making 16 a month 787 in some kind of fiendish glee heard in a meeting room near a water cooler/vending machine set-up. That brief omission was for stock-holder confidence, but no one believed that was possible. However, stock-holder investment rose significantly as if a runaway bull in the exchange was named Boeing instead of Boo-Boo.

Reality falls somewhere in between gleeful manifestation and depression. In a bi-plane/bi-polar world somewhere in between lies the answer and today it is 14 a month 787's. The formula is simple, 16+12 / 2 = 14. Checking math was given to a fifth grader and it came back as 14 -787's a month from a lengthy Boeing word problem. The work paper was given to a Winging It University (WIU) professor for final correction. The fifth-grader was correct and the problem was added to the University's math curriculum.

The professor gave a lecture last week entitled "14 a Month is an Idea Not a Concept". The following crib notes were discovered in a dumpster nearby the lecture hall. "Boeing must know something about its order book; Thanksgiving is months away, A turkey is what's for dinner, "Dubai me a river" is rising in the charts, A movement in the market is a lonely number. Boeing's campaign for Job One is a stand-a-lone concept. In order to go to 14 a month is not a bravado move, but reflects In-Orders. Net numbers is the same as never-mind."

The remaining notes on crumbled paper were indiscernible. Winging It looked up "Indiscernible" on the laptop and found out you couldn't read the remaining notes. Investigative reporting is hard work. However, a conclusion is made which should enlighten your knowledge and save time on making a decision on whether Boeing is rapidly becoming the one or just lonely (only). Airbus is having a WTF convention this week. The topic is WTF and Boeing Orders.

Back to the tittle heading. A Gold rush is the same as a perfect storm. All the elements must line-up perfectly before it can occur. In Boeing's case, is its control of its 787 backlog which is less than the Airbus A-350 backlog. Producing more wide bodies than a competitor can, would or could. Having the industry standard is better than having a more expensive alternative. Gold and cash are shadow currency to one another. Boeing is entering into the Perfect Gold Rush!
  

Boeing Raises Rate To 14 Because It Bagged Some Already

Turkish Airlines and Malaysia Airlines have both agreed to buy the 787. Turkish Airlines intends 40 787-9's and Malaysia political announcement marks 8 787 for delivery sometime in the future. If assuming, which Winging It is able to do, it raises its booked 787 orders for 2017 up to 130 units only when recorded by December 31, 2017. Usually deals like this takes months of haggling between maker and its customers. Announcements like these two recent ones takes more months before Boeing can book the orders. They await final signatures completing an order transaction.

Egad, Dubai is about eight weeks away and Emirates shrinks in stature as Boeing marches on in the wide body zone, all during a reported order down year. Boeing is pushing and shoving its way to an insurmountable lead over Airbus and its A-350 aspirations. The secret 787 sauce is popular and its not just the XWB moniker that customer's crave. 

Boeing market research is now paying big dividends as it guessed correctly with its 787 family of aircraft. Airbus has only sold 8- A-350-800's, 625- A-350-900's and about 200- A-350-1000's. Boeing beats Airbus over the head with both the its 787-8 and 787-9's and is in a parity with Airbus' A350-1000 with its 787-10 bookings. The Airbus book keeps experiencing A-350-1000 cancellation trend as customers transfer down for its more popular model A-350-900. After Dubai, Boeing will exceed Airbus overall with the Airbus family A-350's. Boeing will remain having a significant order lead.

The more important consideration is all of Boeing's sales flood a thin widebody market leaving Airbus with little or no room to expand with its XWB type with sales. 

Secondly, repeat business now favors Boeing as prior customers will add 787's to its fleets when refreshing its wide body fleets ten years into the future. Boeing customers studying the A-350 case will often more prefer the 787 when expanding its fleet inventory because it is a better business model than owning the fractured A-350 family of aircraft.




With the A-350-800 as a none starter and the A-350-1000's suffering some book changes away from the model, the business case falls apart. The 787 family is complete and customer's can step into a proven business case for owning a whole fleet of  various 787's. This is beginning to show in the latest transactions where both Airbus and Boeing were in the order fight and Boeing won those orders.

The 14 a month rate change is more about what orders are pending, and those orders that are verbally committed from reliable customers who usually follow through with its intentions. Emirate's pending order for about 70 medium wide bodied aircraft from either Airbus or Boeing is being delayed once again, and is no longer a key for Boeing's push towards 14 a month production. 

Boeing can wait for an Emirates order when the airline is ready, maybe by 2018. However, Airbus finds itself in a pickle with its own production ramp-up where it will not have enough A-350 orders to keep up with Boeing's production schemes in the next five years. 

The A-350 has entered the market place and customers do appreciate the aircraft because is such an advancement over classic airplane versions, but Boeing is presenting a better business case for operating the 787 in customer's wide body fleets. 

Furthermore, when the 777X starts delivery, the market paradigm will firmly shift to a Boeing preference for a broad spectrum of customers and its family of aircraft possibilities.

F-35 Build and Buy Comparison

It has long been a curiosity of where the F-35 program stands today. Or otherwise how many F-35's have been built and how many F-35's has the government bought during its program history. The answer is hoped to be found in the chart below.

As of January 2017, about 40 F-35's have been delivered during the year. Lot 10 was recently confirmed by the DoD which brings a total of 356 F-35's under contract. However, 240 F-35's have been delivered to those parties both in the US and nations abroad. The total, indicates Lockheed has completed its commitment for the F-35 most of the way through the Lot 9 contract for 57. The next 26 or so F-35's to be delivered will complete the contract for Lot 9 and Lockheed can begin delivering on Lot 10 soon after. 

The Lockheed production line at any given time has about 45 F-35's in the assembly line located in Fort Worth Texas. Having made this observation, it would be safe to say Lockheed is already into Lot 10 work estimating about twenty out of  the ninety contracted are lot ten as WIP (works in progress) planes on the factory floor. These are only estimates, but does give a relative view of delivered vs contract progress by year and Lot number.

A final note is that congress and the military agree on monies spent for Lot Work before a contract is signed and completed, so as to not interrupt the production flow. Suppliers get paid as does Lockheed using interim dollars for a continuos flow of F-35's. Lot 10 production started before its spending contract was passed and signed. The method uses advanced funding for maintaining a continuos production flow. Monies spent in advance will be adjusted affecting the "Lot's" contract balance after its signing.

Airbus Will Hail Mary Its A-380 In China

The A-380 needs customers stat! China needs expanded transportation hubs stat! Airbus would like China having the A-380 as a solution going from city to city with 500 passengers a trip. China has its population emerging into a economic surge where air travel is a partial solution for moving about the region. Trains, planes and automobiles are the eventual winners for the honor of people moving in China. The A-380 hasn't sold to anyone for some time and Airbus will give some away pretty soon to keep its production lines open until profitable sales are found.

There is a dichotomy of travel pairs in China. Single aisle connecting large villages of a million or more and duo aisle connecting large towns for million or more. The A-380 can do people, but it can't do regional airports while China is currently building in abundance for its emerging economy. Airbus insists China will need the A-380 in numbers until Airbus turns a jumbo profit on its A-380. The A-380 would be used for intercontinental travel. Future travel pairs will run into the same trouble the A-380 currently faces. There are only so many world-wide airports for the A-380. A population of 500 Chinese travelers may board the A-380 in Shanghai, but were would it fly?

The mid body duo aisle configured aircraft can go as far as the A-380 but land pretty much anywhere in the globe, though it will carry a load from 250-300 passengers. The single aisle can virtually island hop around the Pacific ocean and can land anywhere in China. 

There are also small villages in China of 100,000 people or more and the 737 will keep those airports in mind. There are multiples of multi-million peopled cities in China and the mid wide bodies are on the case. Where would the A-380 land if it left China? Where would it land in China having A-380 capable airports? 

It obviously can find 500 enough wealthy Chinese for buying tickets and filling an A-380 everyday going somewhere. The pride thing does wonders on a government's mind set. China will buy a handful of A-380's because they can.

The emotional limit will soon be reached for China's want for super big/jumbo aircraft. The transportation plan will come down to having more flights going everywhere everyday rather than having more Super Jumbos going once everywhere everyday. That objective should make it clear for everybody.

Time will play the A-380 out of vogue and onto the desert for a parts bin.

The plan will eventually evolve into a competitive nature. The best wide body operating in the environs of China will win. The best wide body is defined as what gives China the best deal for its economy. That is why both Airbus and Boeing want to build plants in China. The new norm is not importing into China but building foreign product in China for export. The win- win combination is a technological opportunity and a work force opportunity for the Chinese people and nation. China would like to learn how it too can build high tech aircraft for its many reasons.

Chrysler in America almost had Mercedes working with them when creating a better 300 touring car, then it left America allowing a Fiat take-over. In the aviation world there are no scenarios like the Chrysler mishaps with Mercedes and China hopes to land a major air framer long enough in order to build its aviation portfolio. Both Airbus and Boeing know this as well, but the carrot of selling wide bodies and single aisle is too much a temptation for mega makers to ignore. They hope to get in and out before China takes what it wants for stocking its own techno shelf just as Chrysler did with Mercedes. The 300 was one fine car. 

What Will Emirates Do At Dubai?

The airshow is rapidly approaching. The caveat was a wide body order many predicted, but Emirates the big player positioned itself with an order for 70 wide bodies for either Airbus or Boeing. Things change as is often the case. The recent reports is that Emirates has backed off announcing any purchases of wide bodied aircraft at this year's airshow. The reason for that assessment is that the market has slowed for this middle-east juggernaut.

The next step for any fan of any aircraft maker is to always look at the positive after losing out on an opportunity. Both Boeing and Airbus have much to gain with a major wide body order either for its 787 or its A-350 aircraft. The question is what will move Emirates towards making an order announcement at the Dubai airshow. The quick answer is a nominal order with a big option floated about. Emirates would be locking in a price going forward until its aviation market improves. Having said that, a mixing order of types would be the case. Optimism suggests 10- 787-9's and 10- 787-10's are booked with 50 frames optioned into the future. Emirates may further direct options for 20- 787-9's with another 30- 787-10's in a sprawling Boeing order book at the show. 

The pressure is on Boeing to give Emirates the "right" price in light of Airbus chomping at its heels. If Emirates were to wait for its right moment to order, it might be another seven years out before it would start receiving those aircraft and things change quickly, overnight, in some cases. The risk of waiting hangs heavy on Emirates'  buying plan. That is why ordering twenty 787 is better than just waiting. Somewhere in between is always the logical conclusion. 

An Example, Qantas Airlines for a longtime had ordered a multitude of 787's and then cancelled the order, but kept its 787 options intact as it regrouped its financials. It is just now Qantas has begun to take delivery of those former 787 options in a negotiated firming of 787-9's. It may not get all of its options sealed up for delivery but it will gain a substantial lot in the process at a decent price.

Another consideration is what the two makers are offering Emirates. Boeing may have locked a price in with Emirates if it just signs an MOU for 70 aircraft to be firmed in the next 24 months. There are many scenarios for either Boeing or Emirates with this impending order and a commitment at Dubai is more likely than having a hard order.

The American Iceberg Tipped By American Airlines

American Airlines is in talks with Airbus on its already ordered 22 A-350 wide bodied aircraft. Boeing has already placed 31 of its 787's into American Airlines hands as it has more to deliver with more in the option vault. The 787 could flood American Airlines fleet. The tally for American Airlines is 31 of the 787 delivered (20 787-8's and 11 787-9's) currently in its fleet with 13 more to go on order. It also has a standing option for 52 more 787, if it chooses. That is a large fleet of aircraft.

American President Robert Isom said, “I don’t like small fleets in an airline our size,” The Airbus deal could go large, but having a Boeing Order Book representing a possible 94 wide bodies, remains skeptical for any additional A-350's. The American Airline's wheeler and dealers say they have a place for the A-350 in its fleet. An often used ploy for incentivizing price reductions with both mega builders of air frames.

American Airlines has its needed goals and objectives in a secret place. If Airbus would just give away its airplanes then a deal would be made with the airline. 

It would be easy to cancel its options for 52-787's, but a move in that direction may cost American Airlines (dollars lost) from breaking up its commonality efficiency with Boeing. 

On the other hand Airbus cancellation penalties exists for any order cancelled from the airlines order of 22 A-350's. American Airline is less interested in having a big mixed fleet than just a small fleet of anything, so the stakes rise for both makers. 

By this time American has worked out several scenarios. 

• One, in which what it would cost American cancelling the  Airbus order?
• Second, a mixed fleet cost of operations can have a big financial impact.
• Finally, going all-in on with Boeing or Airbus is in its objective goals.

American now knows the cost of cancellations, and that will probably cost them the equivalent of one or two aircraft delivered. Boeing may cover the cost of the Airbus penalty with the remaining 52 on option. In fact, American Airlines may find a lessor in a sell lease back arrangement thus avoiding an Airbus cancellation penalty and utilizing 22 of the A-350 over time as a fleet supplement until all 787's are delivered going forward. Point number one above is a "bite the bullet" moment and American is seeking the least financial impact during its continued negotiations with Airbus.

The American Airlines president has essentially stated, American is a "Big One Fleet" airline company casting a light on cancelling the Airbus order, and it is already positioned for having a Big Boeing Fleet inventory. The negotiation with Airbus could be taken for minimizing its cancellation penalty from the Airbus maker.

Going all-in is the obvious outcome as American has already set up a massive 787 fleet in the books and it would be an efficiency drag to its operation having the A-350 in operation, where the 787-9 and 787-10 could do the job well if the 787-10 is ordered by American after these negotiations. 

Expect another loss for Airbus where some A-320 single aisle are parleyed into any remaining Airbus deal, as a face saving announcement. The talks will continue during the balance of 2017. Any book changes will occur during the first of 2018. Boeing is too embedded into American Airline's DNA. I can say this because I'm retired 😊!

Boeing Books 6 777-300-ER

The Boeing Tally below adds 6 Aeroflot 777-300-ER's and 1 BBJ.

Reading The Tea Leaves 787 will Go To 14 per Month

The old Star Trek episode said, "Make it so number 2". Dennis Muilenberg, Boeing's number one had long since held back the "Make It So" order. The why's of that command are as varied as one can imagine. The itemized list of things that happens with such an order from the top requires a what's in the tea leaves analysis from a solid Winging It perspective.

The first item up is future orders. Boeing knows something big is coming this way.

Muilenberg:

“We expect to add 100 airplanes to the 787 block. That will factor in to the financials and is accretive to our margins,”

Financial Definitions: "Accretive"




An accretive acquisition will increase the acquiring company's earnings per share (EPS). Accretive acquisitions tend to be favorable for the company's market price, because the price paid by the acquiring firm is lower than the boost that the new acquisition is expected to provide to the acquiring company's EPS. As a general rule, an accretive merger or acquisition occurs when the price-earnings (P/E) ratio of the acquiring firm is greater than that of the target firm.

In finance, accretion is the change in the price of a bond bought at a discount to the par value of the bond. Accretion can be thought of as the antonym of amortization.

• YTD, the order book nets 78 units for the 787. That number is twenty-two short of the magical 1,300 unit number in the current accounting block. A 100 unit increase would suggest moving the block out to 1,400 units. Boeing is already making money for each 787 delivered while each unit contributes to the reduction of its set aside deferred costs of $27 Billion. Boeing's job one, is to eliminate the deferred cost of about $27 billion.

• The second Item up is cash, Boeing will increase its cash inflow by two more 787 units a month when making revolutions for fourteen units a month pace. The current twelve a month pace stands at 144, 787 units a year delivered. Moving to 14 units a month suggest about 166 units delivered each year into the foreseeable future. If Boeing sells each unit for about 150 million at "deal"  prices it will add an additional $3.6 billion a year to its cash coffers. An important stockholder indicator indeed.

The third item up is Suppliers.

• Boeing cannot announce going 14 a month without going to each supplier and gaining a commitment for every part provided will be there without delay. A big part, the jet engine, is an example. It is probably the most complex and expensive part on the 787. Both mega suppliers, Rolls Royce and GE, also have high tech suppliers stretched all over the world when it provides an engine for its customers. It seems Boeing has checked the supplier resource off its to-do list and can go 14 a month by 2019. Therefore, its seat makers are on-board by 2019.

There are many more subset items when announcing a rate increase from 12 to 14 787 production capability. The trickle down impact is big on workers, plant and equipment.

The tea leaves read in all this, 

...is that Boeing would not make this announcement from the top unless it has the orders already "bagged" even though not announced or publicly confirmed. Forecasting a demand is not a significant enough reason for increasing its production output. Something concrete has already occured while not announcing the who-what-when and where details.  Even though the close of 2017 is near and the order scramble has started for both mega air frame makers, Boeing had started earlier this year scrambling towards a robust 787 order year. 

Malaysia MOU's Boeing For Eight 787-9.

Boeing just agreed with Malaysia's most recent deal making via MOU and has become a Trump PR moment as he gains traction with 100's of thousands aerospace voting workers throughout Boeing and the supplier's land. It won't be booked until... well we'll say by years end just to be coy with Airbus, as it usually does when it dramatically comes up with orders busting Boeing's order bubble at the last minute. Airbus has some work to go at its order book stands at 215 units where Boeing lists 426 net orders. 

The Malaysia MOU only bumps Boeing's book by eight 787-9's and eight 737 Max eights. This is just the sweetener. It is also reported a total of 25 Max were in the talks with another 25 Max flying in the background. The 8-787/50-737 order mix includes 737-Max 10's. 

Airbus was also in the works for this order, but Boeing appears to lodge its foot first in Malaysia's Air big hanger doors. Trump of course was right there with Malaysian Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak in talks at the White House today.

The MOU was all they could present for the cameras, but it is well known up to Ten Billion (US) in orders are in play.

Since John Leahy announced his impending retirement this fall, Boeing is on the order rampage. The 777-9X family recently doomed the A-350-1000 as a second chair offering within the aerospace marketplace.

The 777X is an actual Super Jumbo downsize fitting in at every major hub. The A-380 has reached its white elephant potential and Airbus scrambles on what to do! An A-350-1100 prospect has a thin market with the 777X already absorbing most of the potential sales. Euros are hard to come by when considering  any A-350-1100 do-over in light of its A-380's aging. The Airbus Top end is vulnerable.

Boeing once again got aggressive on the big chess board when it quickly moved forward with the 777X. It simply "Castled" with its 777X and took the Airbus queen's pawn in the process. The A350-1000 is now a lost leader in the market place. Airbus must do a moon shot at this time or gradually lose its place chasing Boeing.

Back to Malaysia Airline. It has aging A-330 and the 787-9 MOU explains the A-330's fate. The Max order is a key signal when having the single aisle turn of events going to Boeing and not Airbus. For every Max ordered is not a NEO ordered. The battle is in the trenches and Boeing has become aggressive in those proverbial trenches. The gap closes between the two mega makers of single aisle backlog. 

The first Max to hit the market place will now sell the majority of Boeing's future single aisle aircraft. Politics aside, as it can only go so far. President Trump cannot tip the balance for Southwest Airlines into buying more 737's nor can President Emmanuel Macron of France convince Indigo to buy more A320 NEO's. It's a business plan thing and politics is a four year cycle in the US.

Time is a sand shifting wind. Over time no one knows how any airline will play its hand for prosperity's sake. Indigo may collapse under its own weight or Southwest could merge with a bigger fish like United, causing some sort of change to occur. Currently, Boeing won a big one today with Malaysia's tip of its hat towards both the 787 and Max. The trend line is a dog fight between the two giant manufacturers as no outcome can be predicted. At this time Boeing has the high ground over Airbus in the 2017 dog-fight.