United Airlines May Be Deal Making Its A350's Away

After pondering the United Airlines dilemma of what to do with its 25 A350-900's converted to A350-1000 and another 10 A350-1000 it had ordered, an idea came forward. The total book value of the two orders equals $12.6 billion at list prices. The total order contracts are estimated for about $6.3 (50% of list) billion for which United is on the hook for and it would like to move forward with another plan. Its 747-400's are in need of retirement and United is back filling the jumbo with 777-300ER's. So far the tally is eighteen 777-300-ER purchased to four A350-1000's delayed, moving those back to a later date for delivery.

The smoke signal is plain. United  has other plans for its planes. How can United get out from under a long standing order without financial mishap?

• Trade out $12.6 billion in orders to other airlines.
• The trade out may amount to $6.3 billion in actual United contractual book orders(based on 50% of list price).
• Seek out A350 customers who need an Airbus build position
• Seek out Airbus customers who would agree in a three way deal with Airbus for other types.

The above short list can get more innovative as time marches on. United has signaled a bailout on its Airbus wide body orders with the four delayed A-350's and more 777's taken into United's fleet. The game is afoot with its unwilling Airbus partner, but having some victory is better than no victory for Airbus.

The log jam starts with slow A-350 sales in the market place, and then a slow production start as compare with Boeing's own problematic 787 start-up. United may have to rely upon Airbus customers trading for a mix of single aisle A320-321's, A-330's and A-350's which takes time to arrange equaling about $6 billion in trade on United's books. That number represents a lot of single aisle, like a 117 of the A-320's ordered by an Airbus customer at list price. United must find both A-320 and A-350 customers to get out of order hell while convincing a not so happy Airbus to go along with this type of suggestion. It is not known at this time what it would cost United Airlines just to burn its order up it has from Airbus. 

There lies the United conundrum, whether to trade away orders with others in a three way deal with Airbus or just pay Airbus some agreed upon amount for dropping the Airbus order.

Another United option is sale and leaseback for its 35 A-350 on order and then cut away leases one by one as its 747 fleet ages out. This would be over a decade worth of selling to lessors and leasing back its A-350's over time. United must have a fleet plan for such a leaseback strategy. It would eventually cause a Boeing back-up on 777 delivery and handcuff United options into an Airbus wide body fleet. 

A permanent solution is selling its A-350 order to other Airbus customers at United contract price with Airbus. This last option is what United Airlines could be doing, and it maybe why they are incrementally pushing back delivery times like its first four A-350's it had ordered.

Beyond Approach Or Compare Is The F-35

5^th Generation departs from flying as a combatant and becomes a platform for deception and delivery. Russia declares superior horsepower from dubious engine reputation and a world’s best dog fighter claim. If this was World War II then what Russia makes of it is that it has a dog fighters chance, becoming a valid Russian claim. 

The Russian Su-35 or its unfinished PAK T-50 is possibly not 5^th generation. Fifth generation is not designed as an improved dog fighter but an aircraft that has the best super computer installed. The American F-35 has stubby wings and a powerful engine surrounding its computers. The dog fight or attack is fought in cyber space and Lockheed brings computers to the battle. Out of tradition it mounts a fighter pilot in a cockpit, so the pilot can monitor systems which are monitored by satellites and ground installations back the helmet.

The next time a glitch is reported in a long line of F-35 problems a sense that firm-ware or software lies beneath the problem. Because the aircraft works at computer speed and not Mach 1.6.  Pilots sometimes suffer hypoxia or lack of oxygen to the brain. This is a signal the human has not caught up to what the F-35 can do. The Russian pilot is subjected to extreme dogfight conditions as well. The Su-35 is some trick pony dancing about the sky waiting to find its incoming dance partner, a missile. 

If war became a rock fight, then the Su-35 is a marvelous dodger of rocks. If war becomes serious, then the F-35 is more deadly in a turkey shoot and the Su-35 becomes the turkey after coming from its airshows.

Can other nations duplicate American technology and its Research and development engine? The F-35 journey started over 15 years ago and possibly started in the 90’s. The concept is an open challenge not constrained by conventional thinking. The Russians and Chinese have gone down two different roads. 

The Russians choose to build superior dog fighters. 

The Chinese are emulating the F-35 at every turn. Remembering how the US industrial complex can’t figure out what it has done with the F-35, it seems hard to believe the Chinese have duplicated or exceeded America’s unrefined F-35 technology currently tested and delivered at its Initial Operational Capability (IOC).

The problem with the F-35 is that it is a twenty year project before IOC. However, the current plan is for a ten year IOC which falls short of time for how much the US is biting off with its 5^th generation fighters.

A 4+++ generation fighter is a superior dog fighter but the fifth generation fighter is a wicked adversary that remains unseen and fights before a dogfight starts, hence no need for Mach 2.0 or stunt maneuvers Russia is perfecting. Jet speed and maneuverability is not fifth generation. Computer speed and system management is the fifth gen. battle space. 

Lockheed calls it fusion with six eyes and a dozen computers or more. The pilot is there out of a traditional belief a pilot is needed to hook its brain into a helmet and becomes a vital link in its operation as its computer waits for a pilot input.

Fifth generation is not a reflection of traditional fighting because it attacks without the Marquis of Queensbury rules. Go fast enough, go long, and then shoot when invisible from any searching electronics as an undetected assassin. The theme of warfare has changed and so the chest thumping becomes a trite example of gen. 4++, or also known as a superior dog fighter. True fifth generation is not a dog fighter it is an assassin with all the bells and whistles. China can’t steal that attribute fast enough just as America can’t fix it fast enough on its F-35's.

War makes pressure which makes diamonds. The American industrial complex is in the money making mode and it is not pressurized by war. Therefore, the F-35 initial capability seems like a lump of coal awaiting a catastrophic pressure for its true purpose, that of a diamond cutting tool of war. The only saying worthy of its current condition comes from Grecian ancient times. “The mills of the Gods grind slowly but oh so fine”.

Boeing In Talks With Oman Over more Wide Body Aircraft

Airbus has 10 A330's in Oman's fleet along side 6 Boeing 787's. Oman has opened discussions with both makers in a bid for competitive pricing. The Oman fleet has a definite edge for Boeing as the 10 A-330's were chosen probably over the a waning 767 passenger model.

Airlinefleets.net data provided for the Oman Fleet chart below

Since the purchases of the A-330's from 10 years  ago, Boeing has done a lot of cooking in its industrial kitchen. Even though Oman's A-330-200 has received upgrades in its fleet a taste for the 787 spoils its fleet composition. Having a propensity for 737 NG's at 35 units, the transition for more 787's is a natural expansion for its wide body division.

An A350-900 for Oman maybe more aircraft than Oman needs and the 787-8 could be obtained for a low price when buying 9 of its type replacing any aging A-330's and seeking a fleet commonality for its single aisle division.

Oman has stated its seeking the best price in the competition and will know in three or four months what the decision will become. It is a just in time announcement for the Dubai Airshow where it can make the most publicity out of a wide body purchase.

Logic suggests a Boeing deal in the offing. Logic also says an Airbus deal is possible at the right price and Airbus is starving for sales this year for its A-350's booked. The hint is out that Boeing may have big announcements coming forward and Airbus would like to steal one from Boeing in the worst way. Boeing also is on a a "down year roll" and would like to keep the numbers coming in as it could throw sweeteners Oman's way since it has a solid 737 NG fleet. If the 787 in Oman's fleet has proven itself worthy during its operations, and Boeing makes a great deal possible for Oman's fleet line-up from single aisle to dual aisle then the wide body announcement will fall Boeing's way and Airbus can do little to stop Boeing sales momentum it has achieved during 2017.

Even though, "counting chickens before they hatch", is a silly thing to do Boeing has the leveraged position for this opportunity. Airbus will have to give away some wide body orders to win the day.

It Has Been Said, Emirates Will Buy 50-100 787's

But, the when and in what numbers are the mysteries. Based on many factors such as historical orders for Emirates, market conditions for expansion, and Boeing sweeteners for a big deal spells out opportunity for Emirates. In a humble opinion it can be stated that the mid point between 50-100 units is 75 units with options. Refining the proposition of how many 787's could be ordered, a settling number could be fifty 787-9's and Twenty-five 787-10's with another 50 options for 25 each of the 787 types making a Emirates deal. This would total 125 787's in play going forward with future options included. 

However, no one is talking about numbers only that a deal is settled upon and is to be announced at some future date. More speculation when an announcement will be made becomes the job of bloggers. Common sense and blogging sometimes becomes an oxymoron as sense and blogging are usually opposed to one another. The book count for Boeing 787's may surge in 2017 as earlier predicted by this blog. A target number in mind was for more than 50, 787's ordered in 2017. If and only if Emirates who is just down the road from Dubai shows up at its Airshow with spectacular Boeing news will the Winging It blogging finds its redemption.

Read Winging It Blog March 18, 2017 for additional predictive commentary.

Quote from Blog:

"This brings us to the point of what will happen in the wide body order market for 2017. The players are the 787, 777X and 747-8. The 747-8 is a scratch out as it fades gracefully into the horizon. The 777X has had a quiet period for some time and it will burst out 20 Singapore Airline orders with the 777-9X and then save Boeing's 787 wide body order year another of its 19 787-10's before years end. This is already written into a Letter of Commitments from customers. Only the final contract language remains to be completed with signatures included. Boeing should go plus fifty 787 orders in 2017 and then another 25 777 orders during the year. This does not even count on the Emirates order that could be completed at year's end. If it isn't confirmed during 2017, the Emirates status will be most definitely solved in 2018."

Winging It missed its prognostication of 50 and is short by 25 787's, as Boeing has booked 75, 787's YTD without even an Emirates order yet revealed.

The introductory paragraphs above is an update for the March 18, 2017 blog article. A bold prediction during 2017 orders moves toward 150 units on the books after the Dubai Airshow This indeed would be a blow to Airbus A350 aspirations at a critical time in the airplane market.

If 787 order assumptions are missed by Winging It, then the 75 787's already ordered is a great year and it troubles Airbus.

United Airline Pushes Back From Terminal Transactions.

United Airlines ordered 35 A350-1000, but it has since pushed back the delivery of its first four of the type on order.

Reading too far into the significance of this push back would be premature. A good background report is provided by:

Flight Global: 

United defers first four A350s

Considering the Boeing order fire drill is a start. United had ordered 100 Max 9's it also had ordered 65 737 Max 7's and then converted those orders with Max 8's and then converted most of its Max 9's into 100 Max 10's. The United whirlwind is a dynamic churning out orders with conversion on its mind.

The Airbus A350-1000 push back is to be expected considering trying to follow what United is trying to do. United has aging wide body 767 and 747 models. It also has a mixed fleet of Boeing and Airbus. Something has changed in its leadership thinking and has reopened consideration for other replacement strategies. Below is a view "sans" recent 737 Max orders in its fleet chart of airplanes in service and future delivery. Notice no A350-1000's or Max are listed for future delivery.

  

Fig. 1

United has 14 -747-400 units in its fleet. It also has 88 777's in its fleet. Consider the 767 and 757 as types to be dismissed from the fleet. Counting the 747, 757, and 767 units, the total is 142 units that would be replaced in the near term. The 737-10 Max sounds like it will replace the 757 fleet. The 777 fleet is vulnerable to the A350-1000 replacement. However, since the Airbus wide body order is for only 35 A350-1000 units, the 777X has emerged. The consideration for new 777-300ER are on the table for a relatively cheap price . Boeing needs to fill the 777-300-ER model production until the 777X is ready. The 777-300-ER door opens for United at a way cheaper price than taking delivery on the A350-1000. United fleet of 88 777's only has 14 777-300ERs in the mix of large body aircraft. 

The 777-200 are its oldest 777's in the fleet. There is an immediacy for replacing old 777's for which the A-350 1000 could not deliver in a timely manner for United's plans. Hence the A350 push back. What is not known at this time is how the 777X could play into United's fleet strategy. Boeing maybe offering United a wide body deal it can't refuse. The Airbus order now becomes an impediment to United's fleet replacement plans as it has yet to be delivered and Boeing would make room for a United deal if it would order some 777-300ER's by this fall. A wide body replacement flow from Boeing could retire the United inventory just as each 747 and 777 needs to go from aging considerations.

Emirates-Boeing Deal May Be A Feature at Dubai Airshow

Now news or evidence today suggest Boeing has closed with Emirates for a BIG wide body order not to announce until a later date. If true, and most experts believe this to be so, then Boeing will exceed taking in more than 100 787 during 2017. Winging It predicted earlier this year Boeing would go +100 with 787 orders. There are several publications with reliable sources expressing a huge order surge coming from Emirates for disclosure at a later date. The Dubai Airshow is a likely announcement venue.

Winging It Blog:

Boeing Sides with Emirates At Dubai

Post and Courier:

Analyst: Emirates' long-awaited Dreamliner order a 'done deal'

Puget Sound Business Journal: 

Boeing snares big 787 order from Emirates, aerospace analyst says

Strategic-Aero-Reseach:

“Done Deal” – Emirates Selects 787s Over A350s

Is The 797 Designed to Move More Than Passengers?

The 797 is not a incremental aircraft wedged between the single aisle Max and the dual aisle 787. It is an aircraft that has a dual purpose which the other types can't claim. Moving passenger is job 1 and then moving Airbus is Job 2. The 787 was supposed to move Airbus out and then came the A-350. 

Winging It Companion Article 7-9-2017:

If Boeing Gets The 797 Right, Then What?

However, the true impact on Airbus came at this year's airshow. Both framers had a matured WB program and a similar backlog of around the 700's in units to  be delivered. The time around Paris should of been a 50-50 split in WB orders using conventional reason. However, something changed for both makers of medium WB CRFP aircraft. Boeing flat out stole the show, and put A350 proponents to rest. Boeing out sold Airbus' medium wide body at the show and then after the show just for good measure. Both manufacturers where positioned to do something average in a so far tepid sales year.

Boeing stole the show starting with the Single Aisle announcing the 737 Max 10. Then it announce another 30, 787-9's from AerCap. After the show which a long held undisclosed commitment for 20 777-X's and 19 787-10's came in as a firm order. Airbus just ran out of aviation gas during June and it showed. The pace will quicken for Airbus as Boeing ponders its NMA and Airbus can't prepare for what the NMA will be, so it must wait until Boeing's announcement. Airbus will then react with either an A-321 Max beater, or it will have to compete with Boeing's gap-liner. The 797 won't be a rendition of the Max-10 nor will it be a dressed down 787-300. Boeing won't say and that says a lot about what predicament Boeing hopes to put Airbus into when it started with the 787 Dream.

In all, Boeing increased its 2017 order book up to 79 Boeing 787's and 33 Boeing 777's totaling,  112 wide body orders since January 2017. In contrast Airbus has booked only 33 wide body including the A-330 and A350 types. Boeing overwhelmed Airbus by 3.4 times its number of wide body during the first six months of 2017. Even though this is a snapshot look at mid year, things can change, but the change that is seen is for the 787 family of WB aircraft as orders remain strong and A350 orders have weaken during the last 36 months. Boeing is about to launch its A-321 killer where the 737-10 Max holds the A-321 in place for the killer punch that is coming. The 797 will not be an incremental change for Boeing's line of aircraft. It will be everything from Max through X! 

Every proven and established technology will be included in the 797. All that would remain is testing of pairing the 797 with its technology taken from other programs.

Airbus has a lot to think about as the A-380 counts down backlog in a waning market for double-decks with four engines. Do they build an all new Gap-liner or re-do the A-321 with everything NEO again? It waits for a Boeing announcement for that answer. 

John Leahy, Airbus Chief Salesman echos this sentiment; "We will have the luxury of sitting there, looking at what they do, and answering at a later date” with something better". 

Airbus wants to lead from the rear.

The technique Airbus uses to date is react to everything Boeing and now the American giant has caught on to the Airbus game style. Airbus does not do cutting edge well or hasn't done it since inventing the joy stick pilots fly with its family of aircraft. Boeing will build the 797 where it will expose Airbus for they pretend to be, a leading edge builder of aircraft. The 797 will kill Airbus aspirations going forward. No one foresaw Boeing receiving 112 wide body orders by June 30, 2017. Its a "market proclaimed down year" for airplane orders which also happens to be better than some "up years" for Boeing's order book.

The 797 is designed to move Airbus out of the way.

Boeing Outlook, Math, and Stuff

If 0 were the center of the universe, then any number is a deviation from that center. True or not the definition of smoothing with statistics or recognizing a seasonal value against a straight line, results with a big math understanding for which all people who aspire to become decision-makers must come to know during their own educational portion of life. Without a written mechanism such as math there would be no understanding of an event occurring and why it occurs.

To further illustrate this convoluted idea, any action or reaction in nature can be measured with mathematical calculations. A rose grows 6” tall another 24” inches tall from the same plant. What will the third rose grow next to the first two? Math should tell that outcome. One person may take (24-6)/2 and then come up with a 9” Rose for the third growth. A second mathematician goes old school and uses a basic average (24+6)/2= 15”. A third mathematician from college uses seasonality and trending functions applied to the first formula, for a power point show in the Paris Airshow.

The question before the industry is, “What potential does the airline industry have for selling airplanes for the next 10 or 20 years”? 

   

What demand numbers for each class of airplane exist going forward?

Fortunate for eggheads there are computers which can store dates, data and complex math formulas for those answers. Enter in current date and then a future date to the single aisle aircraft division and the computer heats up a little producing a neatly generated report in both paper and electronic power point manner.

Boeing has just done that with the Jumbo sized aircraft. The world only has only a possible few more orders for giant passenger Jets during the next twenty years. The 747-8i has been pronounced dead on arrival.

After reading through the Boeing.com website for its 20 year 2017 airplane outlook, the numbers change in steps from the 2016 outlook it provided. Instead of 39,000 aircraft looking forward it goes forward with about 41,000 in 2017. Slight adjustments to the whole forecast as expected from YOY accounts.

What changes in the calculation are the data streams which affect things like trend lines and seasonality? The current trend direct is driven by fuel prices at this time, and it has flattened the demand for wide body orders. The seasonality issue is a factor from refined statistical analysis which is affected by world conditions where people are willing to fly or not and documenting expansions of travel routes during financial cyclic periods or driven by other factors.

Imputing data and formula bundles in the computer is a continuous process, where every day a change occurs in the market place or industry and a math adjustment follows those changes. The outcome is a snapshot in time where next month after the show those forecast numbers have become old and stale but at a small rate of change. Any change is then added to the forecast formulas thus updating what has been presented.

The conclusion to all of this mumbo-jumbo, is Boeing can chose its own data complimentary to its own goals and skew outcomes towards slighting its competition and likewise from the competitor for doing the same thing to Boeing. 

A further conclusion is the 747-8i has faded and the A-380 is rapidly following the 747 into oblivion. The rising stars are small to medium wide body and the Jumbo replacements such as the 777X family of Aircraft. Airbus has thrown down on the A-350-1000 but it will not match the Boeing 777X, however it has its own niche above the 787-9 and just below the 777-8X capacity. The 787-10 is another specialty airplane using its regional range while not having an unused long range capability like the A-350-1000 has in its own separate market zone. The 787-10 is an intercontinental people mover and the A-350 -1000 is built for World -wide travel competing for the few 777X in that market segment.

This digression of this discussion is an offshoot of the above forecasting whimsy. The Boeing data aligns with its corporate strategy without using biased assumptions for its math modeling. Boeing made a case to bury the 747-8i once and for all and pulling the A-380 down with it. This opens a door for the 797, a small mid body mid-range aircraft having a disclosed 5,000 unit market potential, as mentioned in its Paris outlook reports. 

The KC-46 Tanker Drama

Not many people has followed the Pegasus saga or it's formally known as the KC-46 Tanker as Boeing is testing and making for the US Air force. Long in the tooth is a fixed cost program coming in later than desired by the military. The first 19 were to be delivered in 2017. The Air Force has now ordered 35 without receiving its first copy. The Low Rate Initial Production (LRIP) acronym is a buzz label for building stuff in slow motion until the manufacturer gets it dialed in for Full Rate Production (FRP). The Air Force has approved through 3 LRIP orders.

The Tanker testing and validation process is 90% complete. The tanker is configured with drogue and center line refueling points. The bigger  rigid, fly-by-wire refueling boom telescopes out to deliver 1200 gallons per minute The The tanker’s center line hose-and-drogue system and wing tip aerial refueling pods (WARP's) systems supplied by Cobham (Hall 2b E156) each offload fuel at 400 gallons per minute.Drogue lines are just like gasoline hoses at the pump but extend out at a safe distance for the war fighters needing fuel. These drogue delivery systems are currently a work in progress. The center line is ready for prime time.

Problems with design and wiring have tumbled the time to delivery backwards affecting the WARP's system. The WARP delivery phase will occur in early 2018 at this time. The Pegasus will start delivery at year's end 2017 without WARP testing complete. The first three KC-46 LRIP batches will flow forward quickly as Boeing now moves 20 in the production line at this time.

The program was 90 percent complete with the requirements of obtaining an amended type certificate from the FAA for the 767-2C baseline freighter with tanker-system provisions, and 60 percent complete toward securing a supplemental type certificate for the full KC-46 tanker.

Boeing Steps Up Delivery Plan For KC-46 Pegasus Tanker: AINonline

Wide Body Orders Who's Doing What To Whom

Winging It has taken a notion that an airline company plans its immediate fleet needs within a five year cycle. Order books have filled up the Wide Body type such as the 787 and A350. The following review attempts to remain objective in its analysis but a counter view is expected from a Boeing slant. Below is a five year cycle of gross orders from January 2012 through December 2016. Most customers expect a longer delivery wait than historical production data from manufacturers deliver performance.

A 777-300-ER is an immediate delivery within three years. The 787 family of aircraft maybe five years or longer and the same for the A350. There are model variances within the manufacturer ability to deliver in a five year time frame.

Why the five year time frame? Most customers have plans and resources which take five years to evolve and those customers try to have some kind of just-in-time fleet management which will synchronize with the aforementioned plans and resources. However, the competitive nature from customers have filled up the wait lists beyond seven years for certain models such as the 787 and A-350. Some models are in a slow order pace and can fill an order quicker such the 777-300-ER. The 777X is a lady in waiting since it won't enter service until about 2020. There are no straight lines for the delivery schedule if ordering today. 


A further examination is from a chart below which may surprise some as notions of supremacy of one framer of WB over the other where in fact it is a close contest after-all.

Five Year Ordering Chart from 1-2012 through 2016 

The above chart are wide body gross orders over the last five years and much can be analysed from the gross order number.

Gross orders are used as a guideline for an apple to apple comparison. Net number are a more accurate number set as conversions and cancellations are figured into the data. Making the analysis is simpler if using gross numbers and assumes no order changes.

Discussion Points:

• Gross Units Ordered is a common rule

• The timeline from announced new models do not always sync up with a competing model.

• Timeline for retired models do not always sync up with a competitor model actively ordered.

• Market trends for WB Models are volatile.

• Raw numbers indicate a very close competition.

Boeing has a marginal lead of wide bodies ordered over the last five years. Its 1,150 gross WB ordered is 68 more than Airbus which its lead could be wiped out in one airshow order announcement. 

Boeing announced the 787 about thirteen years ago where it amassed a considerable order book before the data started a tally since 2012. The Airbus A-350 was announced about 2006 and was in a peak  order period where it received a solid number of its A350 orders after 2012. Timing of this data is affected by program order capability.

Both the 777 and A-330 family of aircraft were sold at extreme discounts so the manufacturer could 
transition from the 777-ER to the 777X and the A-330 CEO  could transition both the A-330 NEO and A-350 models. Both manufactures were jockeying airplane model types combating each others moves in anticipation of market demand.

The above chart has provided matching of models in an attempt to best illustrate some kind of head to head WB order battle as exampled by the 787 vs the A-330 and the 777 vs the A350.

A summary account determines the following: 

The A-350 and A-380 are both stalling with its orders while the 787 and 777X have taken -off with robust ordering. 

The Airbus A-330 line-up is causing the WB competition to be very close, but it can't sustain its reach unless the A-330-9 NEO can sustain an order influx. 

As close as the gross order numbers are, Boeing has positioned itself with a strong wide-boy offering from top to bottom using freight and passenger airplane orders in combination creating an order synergy for which Airbus lacks.