Speaking at the JP Morgan Transportation and Defense conference today, Boeing Commercial Airplanes President & CEO Jim Albaugh recapped what was a mixed year for the company in 2009 alongside the challenges that lay ahead for 2010.
The biggest focus, as expected is what the company will do to the 737 and 777 families (click here for more) - both of which saw record deliveries last year. The setting of the 737 and 777 Advanced Development teams headed by Mike Bair and Lars Anderson point to a dual examination of midlife upgrades to both airplane families, as well as weighing up the possibility of all-new replacements.
Boeing had noted at last summers Paris Air Show (and on numerous other occassions too) a variety of options to enable the 777-300ER to be improved against the perceived threat from the A350-1000, which to date has suffered sales stagnation with little customer interest in the type while the 777-300ER is available.
With Airbus poised to make an annoucement on its new engine efforts for the A320 family, the failure of the CSeries to gain any serious market traction after six years on sale means that Boeing will not be rushing to make a decision on the 737 until the end of the year.
Image courtesy of Boeing
A summary of the call can be found below:
· Aim to achieve BCA/DSS balance
· Well into flight test programs (FTP) of 787-8 and 747-8F
· 787 will change the way people travel
· Focus on execution, functional excellence and growth
· Engineer leadership for better program oversight
· Aim to avoid issues seen on 787 in future
· Brought back icons of Boeing company
· Focus on business development
· Backlog circa 3,400 airplanes
· Traffic growth continues to climb
· Airlines back in the marketplace by 2012
· 787 gonna be a challenge (for 2010)
· Aggressive FTP in front of us
· Aim to fly 787s for 90hrs/week
· Ramp up to 2.5 787s by Aug 2010
· Ramp up to 10/month by 2013
· Gonna make darn sure we meet commitments
· 787 not profitable enough for the investment made into it
· Improving productivity will help profitability
· Decoupled FTP for 787 and 747-8F
· Staffed for both programs
· Didn’t feel it got enough value for potential orders in 2009
· 737 & 777 foundation of BCA
· 737: soon be crowded marketplace – no longer a duopoly
· Do we re-engine, do we go with all new airplane?
· Do not want a “me-too” airplane (in 737)
· Focus on value, not price
· Talking with all engine makers
· 787 technology scaled down & applied to 737
· No 737 decision at Farnborough
· Want to be in first place
· Have to deliver airplane that delivers more value
· Guarantee that wont happen (i.e. exiting the single aisle market)
· Need to address ageing workforce
· Good variety in model mix
· 737 Sky Interior debuts with FlyDubai in October
· 777 – looking to improve fuel burn, MZFW
· Looking at options for engine capability for Rolls-Royce/General Electric (on 777)
· 787 – strong market demand
· More confidence to meet guarantees for customers
· Good info flow between 787-8 and 787-9
· Working to take weight out of 787-9, further block point improvements on 787-9 to cut weight
· 40% of flutter tests completed
· Achieved Mach 0.97 in a dive – “solid as a rock”
· Remained pressurised at 6,000ft when at 40,000ft
· Month-and-a-half of contingency in FTP
· ZA003 flies this Sunday (March 14th 2010)
· 747-8F – three weeks late into FTP
· First flight of third 747-8F on March 15th, 2010
· First flight of fourth 747-8F on March 17th, 2010
· 747-8F got both range and payload
· Decision on 747 production rate this summer
· Remains sold out through 2012
· 777 rate decision due next month
· Execution on 787 and 747-8F
· Retired risks, lots of risk still ahead
· Solid teams in place
· Both 737/777 gonna be under attack
· Looking to expand margins on 787 and 747-8F
· Rebuilding market leadership
· Aim to deliver more airplanes in FY11 than Airbus
· Anticipate 777 orders in near term
· Rate change effective in 2011
· Need to be able to stay at higher rates
· A350 will be a good airplane
· Lots of good years of 777-300ER production
· Better turnarounds on 787 in FTP
· Type certification due to allow engineers/FAA on board during certification
· Not many customers want to defer orders
Amazingly, both Airbus and Boeing are talking about increasing rates.
Airbus mentioned it today on the A320 and now Boeing on the 777 as well as the 737.
The 777 rate cut hasn’t event started yet and now they want to increase. How times change so swiftly!
Boeings strong cash position will help them finance whatever airplane they develop next.
Indeed! Very interesting news. The A320 increase is confirmed to be implemented from Dec 2010 and after calling/predicting a 30% cut in production + total doom, Dick Aboulafia is gonna end up with an egg on his face. Oh well, so much for an analyst.
On the bright side, EADS withdrawl from the tanker contest means they’ll have more resources for their commercial jet projects
That can only be good for their A350 and competition with us.
Although Im not happy that Albaugh appeared to fluff his lines a little too often for comfort!
With Albaugh openly talking about Boeing looking at scaling down 787 technologies to the 737RE, I wonder whether this could give a vital advantage over Airbus in this segment circa 2016. There’s more to this than just whacking some new engines on the wing and with Airbus looking very likely to have A350XWB delays, they won’t be able to scale this down as readily as Boeing can with the 787.
I’m personally hoping that Boeing does a complete surprise by announcing a 797 narrow body replacement (CFRP, of course) and blows right past whatever Airbus has in mind for the 320.
It seems the Boeing plan for the future is better thought out when you compare it to the plan EADS/Airbus has. It seems that every new airplane design since the B-777 initial and follow-on improvements has been delayed, measured in years, except the A-330-200F.
Both OEMs have their work cut out for them in the future NB market, and Airbus is taking the easy and low road by only reengining the A-32X. This give Boeing a little time to decide on a reengined B-737NG or a new “clean sheet” airplane.
I think Boeing is leaning towards a new “clean sheet” NB airplane to replace the B-737NG. They could do this and be flying in a FTP by about 2018, and do not have to decide on such a program until the end of 2011.
Small and incremential improvements for the B-777-300ER will keep the anemic A-350-1000 sales at bay for a few more years.
So Boeing may not need to use the “B-797″ model name at all, and can fully go into a more modern model name beginning with the B-808, for the B-737NG replacement and B-818 for the B-777 replacement, currently known as the Y-1 and Y-3 projects. The number “8″ is seen as a lucky number in the Asian markets.
Expanding the markets for the B-747-8F/I and B-787-8/-9 is the key to Boeing’s future success. They have to concentrate efforts there, for now, then go onto replacing the B-737NG and NB airplane market. They can begin that process by working with long time B-737NG NB customers such as WN, AA, DL, and CO, and also invite some A-32X customers like UA, US, and B6 for their input, too. Even though US is forever tied to Airbus because Airbus bailed them out of bankruptcy, Boeing may still be able to win them over.
The B-777-200LR/-300ER replacement and B-747-8I needs to be able to show economics to forever “kill” the economics of the A-380-800, and a possible follow-on design, the A-380-900. Boeing has already done this once, essentially, by introducing the B-777-200LRF and B-747-8F, which sealed the future fath of the A-380-800F.
On the B-787 front, Boeing no longer needs to introduce a B-787-10 model, as a replacement B-777 will essentially do that for them. It can be in an FTP by 2020.
But both Boeing and EADS/Airbus needs to break out of the “delay rut” each has suffered in the last 15 years on almost every new model, military or civilian. This will take years to do that for each, so, infortunately, the A-350 series is still stuck in an engineering and management induced vacumn.
- 787 gonna be a challenge (for 2010)
- 787 not profitable enough for the investment made into it
- 737: soon be crowded marketplace – no longer a duopoly
- Do not want a “me-too” airplane (in 737)
- Have to deliver airplane that delivers more value
- Working to take weight out of 787-9, further block point improvements on 787-9 to cut weight
- Both 737/777 gonna be under attack
- Looking to expand margins on 787 and 747-8F
- A350 will be a good airplane
At least he seems more honest / realistic then his predecessor. That is hopefull.
Keesje I’m sure it just thrills you. My question is why a kloggy like yourself hates Boeing so much? What did Boeing ever do to you? Or is it that you are aspiring to be one of the Fokker people that have infected Airbus Deutschland, and cost billions with that whole GLARE fiasco? I mean seriously, doesn’t being an uber fanboi just get old after a while? Even inspite of the string of disappointmetns Airbus has handed you, you still cling to them like a drowning man to a twig. What’s up with that?
No doubt the 787 has many challenges. Most of them stemming from previous incompetent managment. Even with that, perhaps in spite of it, the 787 seems to be meeting all of the guarantees to the airlines. I know that must disappoint you immensely, but too bad for you, and too bad for Airbus. We’ll just have to wait and see how they do with the A350, though… indications are not good. Looks like another disappointment for the Fanboi’s.
Ed,
I agree with you that Boeing has the most sensible business strategy at this point. My feeling is that they should do one all new aircraft either 737 or 777 and one derivative. I really don’t know where they should focus their resources but my vote is for an all new 737 replacement around 2016 and a refresh to the 777 design. Whichever, route they choose I think Airbus’ current predicament is a good indication of the path not to follow. Namely they should focus on the market needs and not on attacking Airbus in a too direct manner.
If people would remember those great Airbus adds from about 10 years ago that showed a seamless airplane family from the A318 up to the A340-300 that is what Boeing needs to focus on. Airbus had a great market based strategy when it looked at areas of the market that were undeserved and it strove to meet the needs. Where they went wrong was their leave no redoubt for Boeing and attack them where ever they are strong strategy.
Since the beginning of the decade they have taken two shots against the 747 in the form of the A340NG and the A380 and both failed miserable and cost them dearly. They launched the A400M as a plane that could replace both the C17 and C130 and have failed at that, if they had designed a smaller plane to compliment the C17 it is doubtful they would be having the problems they are now with the A400M. Finally, their vain quest to take the tanker market from Boeing has just ended up saddling them with another expensive money looser, and cost them opportunity to compete with the Boeing products they should be competing with namely the Wedgetail and P-8 Poseidon, which are the types of aircraft for which their is a large need outside of the US and a good market for Airbus.
Since, the A340NG Airbus has squandered the momentum they had with the A320 and A330 and they have been struggling to plug one gap in their line after another, much like the Dutch Boy sticking his fingers in the dike. Boeing should learn from this and if the market is filling up with me too clones of the A320/737 in the form now the Bombardier C-Series, Russian MS-21, Chinese Comac C919 and a re-engined A320 Boeing needs to do something to distinguish itself in this marketplace and provide something the other guys aren’t.
@JMBEE ,
“if they had designed a smaller plane to compliment the C17 it is doubtful they would be having the problems they are now with the A400M”
Why do you think that would have been any different? They may have had access to an existing engine, that may not have had the fuel performance required, but apart from that I really have problems seeing what would have been significantly different.
“my vote is for an all new 737 replacement around 2016″
A new engine is expensive. A fully new model is several times more expensive. As I understand it the only major cost advantage a frame for that period may bring is lower maintenance but even that is questionable. They may size the frame a bit different to improve loading of passengers and freight but that is likely to be detrimental to fuel performance. Can you please explain why you think it makes sense to bring out a new frame over a re-engined at that point in time.
@Erik Bloodaxe,
Per above even Boeing thinks the “A350 will be a good airplane”, all airlines have said the A380 is meeting all the performance guarantees.
It is very disappointing how Airbus missed on delivering the A380 on time and how they are still having production problems and the A400M is another big disappointment but are they that different to Boeing’s problems with 787, 747-8, Italian tankers, the Mexican fence, wedgetail, C-17 being on life support? I think both OEM’s have plenty of problems to deal with and fortunately both are fighting to get over them and bring out better products.
As to fanboy, yeah keesje is a big Airbus supporter. Still the Boeing fanboys are in vast majority at this place. Look at the “Close The Door On The Way Out, Northrop!” entry if you want to see blind followers. One line slogans that can’t be supported seems to be the standard of them. keesje, at least tends to explain how he reaches conclusions, even though I often have problems agreeing with them. I’ve certainly seen some pretty out there statements from yourself, though you seems to have become more reasoned lately.
I think it’ll be great to watch airbus developing their own technology(like a400 fadec),game on
“keesje, at least tends to explain how he reaches conclusions,”
Hm, thats debatable!
As far as the narrowbody-short-range aircraft is concerned, my opinion is that both Airbus and Boeing could reengine or do anything else as far as the resulting product is better than the current one.
I still remember some aircraft programs in the past were designed to “break even” at relatively small number like 300 or 500. That was also applicable for the 737 or the A320. Today, 400 is roughly the annual production of the A320.
There must have been much changes on the profitability criteria today. But in my opinion it is conceivable that with 1,000 delivered units you can still make money. So what’s 1,000 units? It’s only about three years of production.
It looks like short range aircraft have become a commodity. Maybe the high level of demand for short-range aircraft now justifies a different approach than the one we have had during the last twenty years. This is a question that has been in my head since some time.
Hi Bloodaxe
I hoonestly think Jim Albaugh is bad news for Airbus. He indentidifies real problems names them and probably take action. Much better then continue to base plans on schedules everybody knew were unrealistic. As far as my relation to Boeing; I was a projectmanager on major 737, 767 and 747 projects and had numerous laughs. dinners, and drinks with many Boeing collegaes in Hotel bars all over the world for more then 10 years. I’m always happy when the opportunity arises to have another chat / beer / discussion / dinner / project with the folks from Seattle..
However that probably doesn’t fit your good guys / bad guys reference world so you better forget/ignore this reply
Keesje,
Actually on of the best comment’s you’ve made. The surest way to fail is too assume that you have all the answer’s and there is nothing to learn from the competition. If Boeing supporters had to pick out a time when they failed it might be right after their acquisition of McDac and they were delivering 600+ airplanes a year and assumed they had 66 percent of the market. This turned out to be a very costly and arrogant assumption on their part and it has taken a decade for them to recover. For Airbus I would say the tenure of Noel “No Bad News” Forgeard was a low spot. Since, even though Airbus became the number 1 producer of aircraft under his tenure, his arrogant assumptions of the competition and their likely responses cost Airbus very dearly and ruined the momentum his predecessor’s had built up.
Falcon,
What’s the big deal here, I explained my assumptions, Boeing can afford to do 1 new design and 1 derivative in a given time period. No different from what Airbus is current working on, 1 new design (A350) and they will shortly start on 1 derivative (A re-engined A320). Is there anything outlandish with this assumption? If Airbus can do it Boeing can and vice versa, so what’s the big deal?
Many observers have made this same assumption about the development capabilities of both companies, there is nothing outlandish or unexplained here, it’s a pretty standard run of the mill assumption. That though certainly doesn’t mean Boeing won’t defer the cost of a new plane and go with a derivative, only that the 1 new and 1 derivative formula is well within their capabilities. After all they are doing exactly that right now with the 787 and 747-8
As far as the A400M goes, yes the engine contributed over a year to it’s delays according to EADS, also, it’s my opinion, but I really think the export market will more readily support a smaller plane than the A400M. Carrying medium sized armored vehicles is nice, but most nations who are buying export models don’t really have this requirement and a C-17 is much better for this role anyway. Also, I think a plane in the 25 ton category that could adequately carry a Stryker without competing too directly with the C-17 would have a better chance at a US sale. Or at least Airbus could probably find a suitable American Turboprop to support it’s bid, without an American engine there is no chance of a North American sale for the type.
Again you are welcome to disagree, but I don’t think the export sales of the A400M to date disprove anything I said.
Actually Foregard’s tenure at Airbus was nothing but disaster. He coasted on the hard work of the giants of European industry that was placed in his incompetent hands. People like Jean Pierson, Arnaud Lagardere (whose son is an idiot when it comes to airplanes), and Franz Josef Strauss, built Airbus into what it became, not Foregard. Foregard did NOTHING for Airbus, except almost destroy it, he had the inverse Midas touch. Everything he touched turned to shit. It will take Airbus probably a decade or more to fully recover.
On the Boeing side, the Merger or Reverse take over of Boeing by McDac and the subsequent reign of terror by Stonecipher was disaster. Boeing only recently has begun to pull out of that nose dive, but the putrid effects linger on in the form of 787 supply chian concept, poisoned relations with suppliers, employees, and customers. The penultimate failure of the Stoneciper reign was the dumping of Wichita.
Keesje, you still failed to answer the question. Why do you hate Boeing and why do you treat everything from Airbus as solid gold? Thanks for the clarity, you ARE a Fokker guy, or ex-Fokker guy.
Falcon, to categorize the C-17 as a failure is rather a bit of a fanboi-ish leap of logic. It’s been an extremely successful program, and can continue to be so going forward. Foreign sales are doing rather well right now, and there will likely be more in the future. The 747-8 and 787 have had problems, but those are now apparently under control, and more importantly have been admitted to. Airbus is still playing the Foregardian game of “nothing wrong, all is well” on A350, despite several credible reports otherwise, and their own admission of schedule compression and “no margin” left. Eventually they will have to fess up. You want to talk tanker problems, then look also at the Aussie A330 which is now more than a year late. Seems that the 767 has actually delivered to Japan, Italy will be this year, very very late, but still before the A330.
I thought this year, I’d sit back and watch the commentary here – and, it’s been worthwhile. Especially with this blog entry – great history lessons – and quite interesting folks, certainly more than I thought. Keep it coming!
With regard to the reign of terror of Harry Stonecipher & Noel “No Bad News” Forgeard – these fiefdom occurred simultaneously / congruently / concentrically – and we see that poor leadership on both sides has had the effect to balance the relationship – neither side wins / losses. In my opinion, both were arrogant leaches that added no value to anything – like this post – and really disturbed me everytime they said anything.
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I think, one thing I’ve learnt about the way Boeing plays the market is that Boeing likes or emphasizes market demand (and priorities) over whatever it is that Airbus may or may not be doing. This came to the fore back in 1999-2000 when the company was juggling the 747-400X & -400X Stretch, 777-200X & 777-300X (which became the 777-200LR & -300ER), 737-900, and finally the 767-400ER.
Of course, with hindsight you can draw all kinds of exact conclusions as to why certain programmes moved ahead, and why others didn’t – and why others have finally gained traction now.
In my opinion, the 777-300ER was the result of a need to significantly up the performance of the basic 777-300 – rather than a direct assault on the A340-600. The 787 on the other hand, probably taking the fight to the competitor – as Apple did with the iPhone against Nokia’s N95 for example. Of course they did their homework and their product is clearly distinguishable. (However late it may be, it should be noted that the after market support for the N95 closes the gap (& still exceeds) with the early iPhones.)
Bloodaxe I’m not a Fokker or ex-Fokker guy. Anyway who cares? If you want to see a real blatant one sided, uncivilized, small world fan girl, just take a look in the mirror.
@JMBEE ,
Value proposition is the big deal.
I have little doubt Boeing can find the money and resources to design and produce a new plane by 2016, i.e. I do not question the part you address.
What I question is if the new model will be good enough to justify the billions spent developing it, i.e. will Boeing make more profit by developing a brand new model compared to a re-engine of the current? From what I have seen the answer is a new model will be less profitable because the development cost is high but the premium airlines are prepared to pay for the new features is low.
As to the A400M lets split it in two parts as I may have misunderstood what problems you meant in the original post. It was my understanding you meant the problems in developing a plane to spec and at budget. My comment was that I think they would have essentially the same problems fulfilling specs and staying on budget with a smaller plane.
Reading your latest comment I think you mean they would be able to sell more planes with a smaller model, is this correct? If so I sincerely doubt it. A smaller plane would have made it a direct, or close to direct, competitor to the C-130. It would probably be significantly more expensive but less costly to operate. Sadly, I don’t think the lower operating costs would be enough to make it attractive. To tigh it in with the NB discussion, the value proposition isn’t there.
@Erik Bloodaxe,
You misunderstood me because I certainly didn’t call the C-17 a failure, i.e. shove the stupid fanboy argument. I did call the C-17 a problem and I stand by it.
The only reason the C-17 line isn’t already closed is because Boeing managed to lobby congress to treat it as a jobs program and order frames the USAF said they did not want. Boeing is poised to get another order for 10 but the price was higher this time as it came with a note that there can be no future lobbying.
Because of the backlog situation Boeing has decided to reduce the production rate ~33%. It means the cost per frame is going up and the margin down. The hope is that this will buy enough time for additional orders but apart from one from UK it is basically down to Saudi.
As it stands Boeing has orders till some time in 2013 but with long lead time items being over two years a decision to extend the line must be taken soon.
The ripper is closing in and with no replacement product in the pipeline I call that a problem.
As to the tankers for Italy I certainly hope they will be delivered soon, they are significantly more delayed than even the worst predictions for Australia’s KC-30s. Do you know what caused this last years delay? Allegedly Italy had people over for delivery testing last summer and they must have found something that caused this extra year, but what?
The original C-17 buy was supposed to be 210 frames. In 1990, Dick Cheney (as SecDef) cut that in half to 120 frames.
So in a way, the USAF is getting the number of frames it originally wanted with the 223 currently contracted.
Why they’re carping about that now instead of smiling is because it takes money away from other toys they want to spend money on.
I think the Italian 767 problem was flutter.
Worse problem than the flutter my wife has at the races, and a lot more expensive.
USAF 30 year acquisition plan highlights:
■ KC-X: The service is set to spend about $30 billion through 2020 to develop and buy 109 new tankers.
■ Intra-theater airlift: The Air Force should continue to buy C-130J Hercules to replace older C-130 E and H models. The study projects buying 63 C-130Js through 2020 for about $6 billion.
■ Strategic airlift: The service wants to maintain an fleet of 314 large cargo planes, a mix of 223 C-17s and 91 C-5s. The report recommends the Air Force begin development of a new cargo jet starting in 2015.
So, the recommendation is development of a NEW (as in not the A400M) cargo jet by 2015. This can only be disappointing to those thinking that the USAF will be “forced” to buy the airbus transport.
Here’s the link:
http://www.defensenews.com/story.php?i=4527338&c=AIR&s=ALL