Airbus (May's) Net Order Numbers Lag Boeing's April

Airbus has 111 net orders for 2018. It is in a real dogfight for order supremacy with Boeing during 2018. Single-aisle is 108 and Widebody class is a net 3 orders for 2018. Farnsborough is coming in July and it could all change. The lead could increase for Boeing.

Airbus Widebody thru May 2018 Net Orders

The GAO-18-321 F-35 Fix It !!! Report

“No more bullets” are required by the GAO on the F-35 program. Elmer Fudd says has 111 class I deficiencies of which 47 are under the hood fixing at this time but that’s a lot of untouched class I’s. It also has about 855 class II’s fix it before the 2019 full rate production deadlines are reached. Or it’s a fix it before you buy it call-out.

No more money unless it is fixed says the GAO. 

Here is the summary F-35 GAO Sh** list

Fuel Prices Driving The Airline Business In "The Blue" Period.

An eye trained on the rearview mirror is watching aviation fuel prices going upward. Many years ago (2014) the axiom was established, "The lower the price of crude oil the older the airplane in your fleet is best". In fact, many airline fleets sought after the used airplane market for a lower purchase price thus allowing for a greater fuel burn when Jet A was cheaper.

It was fashionable for airlines to go after inventory from lessors or others who were seeking to unload old inventory to anyone with a fat checkbook. So the axiom grew out of opportunity and Boeing suffered additional sales loss for its super-efficient 787 products due to low fuel prices. In fact, airline fleets had to dust off its opportunity math models considering cash flows and profits while operating older equipment versus buying more expensive equipment like the 787.

Recently it was said by Randy Tinseth, Boeing’s vice president of marketing, 

"Aircraft replacement makes sense for airlines when oil reaches $65 a barrel." 

As of Tuesday morning, the price per barrel of Brent Crude was more than $74.

That all being true, a pent-up energy has grown from old equipment getting older while ignoring efficiency becomes the ban of having higher fuel prices. I'll call the high price of crude the "Blue period", signaling a market shift from having old airframes to having more expensive and efficient new aircraft. The factors to consider is the savings obtained from a more efficient aircraft burning less fuel as compared with an older aircraft burning more fuel. At this time it could be up to 25% fuel volume savings using higher priced fuel. Or a 30% maintenance improvement 

Cash flow models are humming away in some computer under a desk supporting a huge screen for office meetings. The old fuel model may have had $1.99 per gallon fuel price. The new model may have a $3.99 a gallon price for Jet A, worldwide. The old (767-300) aircraft burning 12,000 gallons, going far, with full fuel load will compete against an efficient model that burns 3,000 gallons less than an older aircraft on the same route. At a $2.00 a gallon price variance from old to new fuel price, the new having a 3,000-gallon advantage, therefore, saves an airline $6,000 a trip not counting the new technology maintenance savings found on the ground, or in the avionics. The savings could easily reach a $10,000 in savings going long one-way.

Buying new equipment may make more money than hanging onto older and cheaper equipment if fuel prices rise higher than $65 per barrel of crude oil. The financial performance models in an office building near an airport may scream, " buy new equipment" such as Randy Tinseth suggests in above comment.

Old equipment has the following conditions:

·      Lower capital (purchase price)

·      Lower interest costs (loan costs)

·      Higher maintenance cost per trip

Naming a few 787 costs conditions:

·      Higher Capital outlay (purchase)

·      Higher interest costs (loan costs)

·      Lower Maintenance expense

·      Lower Fuel Costs

·      More efficient operational functions (such as onboard smart routing tools)

If a new 787 goes 500 trips a year saving fuel costs over old equipment then it may save $1.2 million a year in operational costs which would contribute towards an advantage over buying old equipment flying on cheaper fuel which no longer exists at this time. Randy Tinseth, stated an obvious market condition. Airlines will have to buy new equipment sooner which is better than later as fuel prices rise.

The Airbus A-330 Program Has Some Concerns

Its an A-330 market crumble. They had customers but few in number relative to the few orders received. In fact, the A-330 book stood at 300 units in its backlog after Hawaii canceled its batch with Airbus. Then the Iran deal and Trump closed off another 32 A-330 NEO 900's and another 4 of its CEO A-330-200s. Out of 36 A-330 booked it will have snuck two units out for delivery to Iran before the embargo began.

If Airbus makes fifty A-330's a year with this standing order book the program closes its doors in four years provided it gains more orders and doesn't lose any more orders. The pinnacle moment was when the Iran deal closed out 34 orders already booked by Airbus. Dropping those dead orders lowers the 300 unit cushion it had made down to 266 units for filling until its end. The notion Airbus will sustain this program by selling hundreds of A-330 in future years becomes a risky notion. 

More customer may convert orders over to Boeing if it announces its own NMA this year. The A-330 has had only one order in the first four months of 2018 which signals an ailing program unless Airbus has more bookings yet announced or unrevealed during the month of May.

Airbus cannot withstand a sub 50 unit order year for the A-330. A  trend has started with Boeing as it low balls its 787 fleet offerings against anything Airbus offers. If the current market trends are maintained for another several years, then the A-330 NEO program becomes a big Airbus failure.  

What Has The 787 Accomplished For Boeing

The market is important, so much so it drives decisions and those decisions drive the stock and Boeing's stock is riding high. Having said that, the long ago Boeing strategy came before the 787 even before it flew its first flight. Boeing devoted so much of its resources to its strategy, it forgot about its single-aisle 737. Airbus did what it could and it worked well. The A-320 and A-330 took off. The first order of widebody business was to stop the A-330 bleeding of the 767 program. Hence the 787, was a necessary evil of capital expenditure. Boeing's secret technology was cash and it spent like it was the holder of the world's currency. Even before it was a Trump idea, it was a Boeing strategy of spending the dollar on the 787 program.

·      Build something Airbus couldn't match

·      Bracket the widebody market

·      Kill off Airbus Programs one by one

·      Nullify Airbus Strategy

Boeing began building something Airbus couldn't copy, the 787. The family had two big goals.

·      Unify all Boeing programs under the 787 common denominator thus making those aircraft a commonality of excellence the Boeing denominator as well.

·      Bracket Airbus programs into submission such as the Airbus two family members, the A-350, and the dying A-380.

The A-350 and A330 are losing the 787 order war. The A380 is in the aviation morgue but not yet buried. Boeing is seeking the 797 dual aisles offering to kill off the A-321NEO.  

The Airbus strategy is close to being nullified as it cannot answer all Boeings offering at once. It took Boeing 15 years to get to this point with the 787 being the center point. In five year Airbus will become like its A380 program, order less.

Boeing had a hole in its strategy which it is now just addressing. What to do with the A-321 success and its place disrupting the Boeing bracketing campaign?

Now the A-330 program is withering under the 787 weight. Recently, Hawaiian Airlines switch out an A-330 longstanding order changing it to the 787. American Airlines ordered billions of 787 totaling 47 of its type. Today, in India, it finalizes an outstanding negotiation with Vistara, a Singapore Airline affiliate for about 10 787’s instead of going with A-330’s. Recent news stories display a daily erosion of Airbus confidence from the 787 onslaughts.

The A-350 and A330 are losing the 787 order war. The A380 is in the aviation morgue but not yet buried. Boeing is seeking the 797 dual aisles offering to kill off the A-321NEO. It’s a one by one snipper targeting onslaught conceived before 2005 to piece out the Airbus idea with devastation, which is just now appearing to work its way through the Airbus programs. The Airbus strategy is close to being nullified as it cannot answer Boeings offering all at once. It took Boeing 15 years to get to this point with the 787 being the center point. In five year Airbus will become like its own A380 program, order-less!

The A-350 doesn't match the 787 in its market while the Airbus  A-350-1000 or A-380 won't match the 777X in its up and coming market segment.

Boeing has built everything emanating out of the quantum 787 techno leap as it has put all its eggs into its sea change during the last 15-20 years, and now comes the 797, after that, a future single-aisle which should finish this Boeing aviation campaign with Airbus.

Disrupt: The 2018 Aviation Word Of The Year

Often it has been stated during 2018 a new airplane model or business plan will disrupt the market. The play word "disrupt" is often used in aviation journals as if somehow it will bring readers to an understanding of that word in the aviation world. The verb tense begins with its variation which becomes disruptive in itself.

Disrupt:

Interrupt (an event, activity, or process) by causing a disturbance or problem.

"a rail strike that could disrupt both passenger and freight service"

synonyms: throw into confusion, throw into disorder, throw into disarray, cause confusion/turmoil in, play havoc with; Disruptive Technology-Aviation: In business, a Disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.  The 2018 Aviation Word of the year is... "Disruptive"

From the 787 to the A-350ULR, airplane makers are trying its best to be disruptive. The airline customer is also disruptive by employing those makers innovations and technologies within the customer's marketplace. Before the 777X even flies, it hopes to disrupt the A-380 and the A-350ULR out of the Airbus production line. At this time it remains to the 787 and 777-300ER for disrupting the Airbus line of aircraft. The futuristic 797 proposal hopes to disrupt the A-321. The Max hopes to disrupt the A320NEO and so forth.

Airlines hope to disrupt other airlines with innovative routes and destination pairings. Airlines will use whatever means available for conquering the market. Even Singapore will fly its newly delivered A-350ULR  9,000 miles in a market disruption movement. Having only 162 passengers on board any of its ULR flights for 19 hours is a tough payday. Other airlines may counter with a one-stop offering by stopping over at a glamorous setting for anything over 14 hours in the air. It may even pay for the customer's room and ground transportation within the stop-over confines. However it is presented, the goal is to become disruptive to its competition.

The Concurrent F-35 Evolves

Doublespeak is an Orwellian concept. Say one thing means another. Doublespeak!.  The F-35 was pronounced with the word concurrency. It's a process word. The F-35 will be started on the assembly line only to be fixed on the flight line. It's no way to fight a war. The second word more fitting and applicable to all former 4th generation fighters is "evolution". The F-35 has evolved out of F-35 concurrency process. The F-35 electronics suite can be dumped into a formidable air superiority fighter, called the F-15. Which can fly faster and outmaneuver most of any adversarial found in the world. The F-35 concurrency has become a secret weapon of fourth generation fighters.



Evolution is what the F-35 is undergoing at this time. Its countless problems solved during its development have opened up an American technological playbook. The F-35 already flies behind others without being seen. It just needs longer-range missiles. It needs satellite intel from space during a mission. The ultimate high ground is space, where airplanes don't want to go. The F-35 is evolving because of what it can do well. Within ten years a Su-57 or a Chinese J-20 could enter the F-35 airspace undetected out its own technological evolution. The satellite can put a target into an F-35 defense system. The F-35 reports to all its assets and chooses a laser deployment from somewhere and poof the adversary is no longer an item within the system's detection. It fights without a dogfight, The F-35 has evolved. That was the defense department, DARPA's dream, for the fighter. Concurrency, it's just a diversion for anyone foolish enough to spy upon it.

Stop thinking dogfight and start thinking system superiority fighter. The F-35 has become an air superiority weapon without turning 9G's, only constantly evolving and is concurrently updated.

American Airlines Validates Before Buying

Watching the firm order books of an airline tells the story of its heart. American has 89 787 ordered and 35 of its types delivered according to Allthings787 website coming from its charts. Counting the 22 787-8's, American firmly claims it is buying 25 more 787-9's for its fleet of wide-body. United likes what it already has and it needs a fleet renewal process including replacing A-330's, 767's, and 777-200's.

American already has 35 787's in its fleet and now has 54 more 787's in a delivery backlog when including the 22 787-8 and 25 787-9's it just ordered. The analysis of this order is a Winging It attempt of making market sense out of this order:

·      It' fleet replacement only

·      It's staying with what works best for American after thousands of hours of service

·      It's about fleet and ground efficiencies, hence fleet commonality

American should not look at the 777X or 787-10 until the 777X goes to market and there are more than only four 787-10's in service with Singapore Airlines. American is risk adverse but pro-Boeing. It gave Boeing a "solid" with this order and Boeing knows the message was received. After about 20 787-10's have flown several years and the 777X starts demolishing the A-380 market, American may step up and replace its 777 fleets with the new 777X variants. It could go for a 777-8/777-9 by 2030 after its market performances are measured and evaluated. American is that risk adverse so no new Boeing aircraft hence it administered a time deferral on its 40 single-aisle it had ordered from Boeing.

Southwest Airlines fleet of 737 Max may push American Airlines into a decision if the Max delivers its promise after a few years. It's well on track for making a market splash with dependability and performance. The biggest problem for American is ordering after Boeing builds a massive backlog of all its types American desires. The recent American order for 47 787's may have secured an American place in the production line no matter what and when it makes future orders.

The risk adverse American Airlines rears its head in the case of new airplane types ordered. Using this premise for American Airline's caution for new aircraft types, the 797 would be a 2030+ type of order and not a launch customer type of risk taker. United and Delta are Northern Hemisphere risk takers making them having 797 launch customer potential with Boeing.

The A-380 Looks Over Its Shoulder At The 747?

In real estate or business, timing is everything. The A-380 came to market out of pride and not from any common sense. It could seat 550 plus paying customers at a time as if it was a convention load of party goers. However, conventional wisdom says there are only so many conventions? The "we will build it when you come" airport authority is flummoxed over the concrete and asphalt costs imposed by contractors who need to fill the swampland the airport needs for an A-380. Boeing went with "If the shoe fits wear it" motto, hence the 777X folding wing appears with copyrights and all.

The A-380 arrived twenty years too early and the 777X is coming with its widebody market mop bucket. Airbus spent money and it shows. Nice airshow, Airbus, I really like watching tonnage fly over the hot dog stand at the show.

The metrics are in. Two 777X's can fly more profits than one A-380 could. The Boeing 777X can get off the ground from any existing airport configured for the current 777-300ER. It will go in two different directions at a 700 passenger clip, which is more than an A-380 can do in one desert landing and it will also use less fuel while selling way more revenue tickets. 

"Pride cometh before the fall", as Airbus begs for more A-380 sales, Emirates comes forward and buys 36 at a fire sale price. Airbus can now build 36 more A-380's since Emirates penned an order in early 2018. If Airbus drops production to 6 a year it can build 108 backlogged units over 18 years before shuttering its A-380 program.



In 18 Years the 777X will be cranking up its order book to 1000 units or more and will be delivering about 60 a year. A two for one airplane option for commercial airlines will entice the market with more orders once the last 777-300ER and first 777X is delivered in no particular order. This little nuance goes noticed by stockholders.

Airline Report Photo

The DDG 1000 Becomes A Prototypical Hole In The Water

Laughter could sink a rowboat:

The money pit goes to sea as in the USS Zumwalt. It's all holster and no gun. It's as effective as a knife in a gunfight. The hull, at least slices through the water like a knife and fights like a ship no bigger than a fishing boat, or as some have some said of its radar profile. On the "Three Amigos", it was said, "I don't see no stinking railgun". Nor does it have a punch of a 5" shell going 67 miles because the round goes for $800,000 a shot. That's the same price of a one bedroom condo in the bay area of California. Therefore, no gun for the ship's holster. It can sneak up on other ships, well maybe it can after ten years of adversarial radar standards upgrading, but it can find an armed fishing boat.

The DDG 51 series was resurrected and now it faces an end of its build run as it approaches Block III DDG 120, making a Naval bookmarker for the Arleigh-Burke class destroyer program. The three-ship naval blockade of the Zumwalts will pour more money into that hole found in the ocean than the Titanic could even hold in its sunken mass. More trees are cut down each year in the Amazon jungle for making US currency while paying for Zumwalt's prototypical mishaps. The demise of the paper-making Amazon forest may destroy the breathable atmosphere and become one of the Zumwalt's biggest secret weapon.

The biggest Zumwalt mishap to date is letting too many Naval experts into the same room during the Zumwalt's planning phase. Whatever happened to good ole American garage know how? Now I'm worried that if some off-the-shelf drone could lead a cruise missile into its $8 Billion hull.

Zumwalt is surrounded by Fishing Boats it missed in the fog