Confidence/Credibility

Since the original news emerged of the Boeing 787 Dreamliner being delayed, much has been made of both Boeing’s confidence and its credibility.

Unsurprisingly, 787 customers are disheartened, annoyed or angry even that they will not be able to get their airplanes as promised.

As stated a few months back, for all airplanes, be it widebody or narrowbody, getting it into service on time is important.

Getting it right is far more critical.

Image courtesy of FS-Freeware.net

That’s where confidence emerges from - and while the setback for the 787 is, as Scott Carson put it, testing Boeing’s credibility - that is already on the path to restoration by the fact that the company did not set new targets/deadlines that may not be attained - “We don’t want to be in a position where we do this with you all again” he went on to say.

It’s equally disparaging to see that some people forget that the 787 has encountered its second delay, not third. The first was announced on October 10, 2007. The second was last week. Last time I checked, one plus one does not equal three.

Last Tuesday, prior to the conference call, Boeing stock was down quite substantially, yet reversed nearly all it’s losses on the day it announced the 787 would be another 3 months behind schedule. Doesn’t look like much credibility was lost afterall!

The other big news in the wake of the 787 delay was Airbus losing the 2007 “order crown” to US rival Boeing. Airbus’ success during last year was driven forward courtesy of the popular A320, A330 and to the revised A350 families.

In summary, after taking into account cancellations, Airbus secured 913 A32X’s, a combined total of 405 for the A330, A340 and A350 (all series) families and 23 Airbus A380’s - a total of 1,341 valued at $157.1bn.

Naturally, the critics/analysts and number crunchers were looking the Airbus 2007 order table.

One such person was Scott Hamilton, who had claimed neither site (Airbus/Boeing) listed net orders - by checking Boeing’s website here, it’s patently evident anyone could have seen that the company publishes net orders!

The “User Defined Reports” section on the site should not be used given the regular updates on net orders by Boeing.

While the User Defined Reports feature is a handy tool to track down individual order dates, specific model breakdowns and customers, the active page listing net orders is the one that should be referred to. The company updates the page each Thursday - where there are no weekly changes, the footer notes clarify that.

Analysts the globe over will likely still come to the conclusion that any downturn in the industry cycle will hit both manufacturers hard.

Image courtesy of Tim Dauber

Just as the 787 has had an excellent 2007, the bigger issue for the A350 lies a little farther out into the future.

Service entry is slated for 2013 – Qatar Airways, the launch customer has made no secret of the fact that development has been slow. Equally, there is an air of worry for the A350 making good on its promises.

Will the market punish Airbus if the A350 is delayed?

Quite probably it will – especially since it will have had almost seven years to get it right after Singapore Airlines and ILFC CEO Udvar-Hazy had neither the confidence in the rehashed A330-esque proposals or considered previous renditions to be a credible competitor to either the 787 or 777 airplanes.

“We’re not interested in a Band-aid reaction to the 787.“

Image copyrighted and owned by BOEING777 and FleetBuzz.com

By October 2008, Airbus hopes to have reached design freeze on the A350, paving the way towards full scale production thereafter.

Just as Boeing experiences a difficult time getting the 787 program on track and aims to revive the sales of the 747-8I – Airbus too will focus 2008 on various key milestones.

After a remarkable year for sales between both Airbus and Boeing, critical phases of various airplane programs will set the precedent for future news while both companies get accustomed to much lower order intakes. That in itself will set a better environment for order battles and ultimately who takes the mantle of biggest plane maker every twelve months.

Loius Gallois will have to make good on Power8 delivering the cost savings required to tackle the currency woes and labor costs and in the event the company snares the USAF tanker replacement, the pressure will be on to get the facility in Mobile up and running.

At the same time, Emirates has privately warned Airbus that it will not be pleased if the A350 is jeopardized or delayed due to funding - an area which would or could have a bearing on the ongoing WTO case. Emirates is believed to be gearing up for a new widebody order in 2008 to replace its ageing A330’s.

For both companies, celebrating the sales success of 2007 was the tip of the iceberg.

To avoid the sinking like Titanic, seeing the iceberg above the water isn’t good enough and won’t cut it with shareholders.

Ultimately, having the foresight to address the rest of the iceberg beneath the water will form the basis of a better grounding as we look forward to development of both new narrowbody jets to replace the 737 and A320 and also the long range, three way tussle between the 777, 787 and A350XWB.

5 comments January 21st, 2008