LONDON — Boeing provided a wide ranging update on its lineup of commercial aircraft Tuesday at the Farnborough Airshow.
In a briefing entitled “Development in Execution,” Mike Delaney, Boeing’s VP and GM of Airplane Development, clarified the company’s current mindset on topics ranging from a plane to address the so-called Middle of the Market (MoM) to a stretched 777X in the very large aircraft (VLA) space.
Delaney defends 737 MAX landing gear height decision
One main theme of Delaney’s briefing was the victory lap he took over the current success of the 737 MAX. Independent of the fundamental issues, or lack thereof affecting Airbus on the A320neo, it is undeniable that in the court of public opinion, the A320neo has been slightly dinged for mediocre technical execution (as we covered in our analysis on Sunday).
Conversely, Boeing’s technical execution on the 737 MAX has indeed sparkled, with the next milestone a firming of the 737 MAX 200’s configuration in early September.
Delaney also provided interesting color on one of the more fateful decisions that was made for the MAX program. Numerous analysts and observers have questioned why Boeing did not raise the landing gear on MAX when it was launched in 2010? Doing so would have allowed Boeing to install engines with a larger diameter on the MAX, including Pratt & Whitney’s geared turbofan (GTF) that is widely seen as having more potential for growth (in terms of both operational capability and lower fuel costs) than rival CFM’s LEAP engine family.
Delaney noted that the division was driven by consideration of trade-offs in terms of aircraft weight. “We need 42,000 pounds to fly vs 48,000 on neo, [and] we would have penalized our planes with weight [with a higher landing gear]. We can do more with less thrust… Weight and gear height are trade offs.”
There is certainly some truth to Delaney’s assertion, as the fuel burn benefits of the LEAP-1A or PW1100G (which power the neo) would have been offset for the aircraft at entry into service (EIS) due to the higher weight. Where we feel Boeing might suffer as a result is in a world where the GTF grows as an engine due to subsequent performance improvement packages (PiPs).
In the worst scenario, an A320neo might match the 737 MAX 8 for CASM despite the latter seating 12 additional passengers. Now we do not believe that this is necessarily a probable outcome, but we do worry that the A320neo will close that gap (and the A321neo will consolidate its dominance over the 737 MAX 9) as a result of likely GTF improvements.
Boeing Touts 737 MAX Value Proposition
Delaney also took the opportunity to articulate the 737 MAX’s advantages versus the A320neo. For the 737 MAX 8, he noted that the MAX 8 offers “12 more seats in the heart of market” than the A320neo, is 8% more fuel efficient with 420 nautical miles of extra range.
He also noted that the 737-800 (the MAX 8’s predecessor) has “the highest reliability of any commercial plane in history,” which Boeing expects to carry over to the MAX 8 as it is targeting 99.8% dispatch reliability (excellent even for aircraft in service for several years) at delivery.
Our independent analysis of the 737 MAX and A320neo programs confirms this assessment: the 737 MAX 8 is more capable than and offers better operating economics than the A320neo.
Delaney also attempted to debunk the 737 MAX 9’s range disadvantage against the A321neo: “We always hear the neo flies further then the MAX. We have a smarter wingtip. They have bigger engines and a fuselage so we are more efficient with less drag.” Delaney presented a chart showing the 737 MAX 9 as offering 3,605 nm of range with the A321neo at 3,205 nm and even the A321neoLR at 3,590 nm.
Our view is that this is what PolitiFact might categorize as “Mostly False” if it were uttered by a politician. Best we can tell, Boeing has taken the advertised maximum range for the 737 MAX 9, which would require several seats to be blocked off (3,600 nm is the absolute edge of the MAX 9’s capability). Meanwhile for the A321neo and neoLR, it has taken the absolute lowest end of the operational envelope that would require 50+ knot headwinds to actually be the case for both aircraft.
Applying the same rules that were applied to the MAX 9 would allow for 3,900 nm of range for the A321neo and 4,100 nm of range for the neoLR, while using the same technique as the neo for the MAX 9 would yield a range figure of ~3,050 nm. Even these figures depend on a 737 MAX 9 with Improved Performance Level that will not be available till 2021 at the earliest.
Most of all, the market response to both aircraft (commanding 75% market share for the A321neo) is simply not consistent with a MAX 9 that is more operationally capable than the A321neo.
For the record, these type of public sleights of hand when comparing aircraft are not exclusive to Boeing. Airbus’ lead salesman John Leahy would receive plenty of rebukes (some of them would have arisen yesterday), including several of the “Pants on Fire!” variety, from an aviation version of PolitiFact as well.
Interestingly, Delaney also positioned the newly expanded MAX 7 as a competitor to the A320neo (variant not family): “We have finalized the MAX 7 with 2 more rows than the 737-700 and the same seat costs as the A320neo.” We will have more on the stretched MAX 7 (which is ironically enough now a shrunken MAX 8) in our analysis of the type to be published later this week.
Wide body Execution is on Track
When Delaney moved on to the wide body programs under development, he once again highlighted the value proposition of the two main types still in development, the 787-10 and re-engined 777X. Delaney noted that the 787-10 had the “25% better fuel burn per seat the A330neo,” was 10% better on the same metric than the A350-900, and covered more than “90% of [current] twin aisle routes.”
787-10 development is on track, with detailed design completed two weeks ahead of schedule and major assemblies of the first 787-10 underway.
The first Boeing-built 787-10 parts actually shipped two months early and Boeing has adopted several processes and strategies reducing system complexity, cost, and risk on the 787-10 that have been backed to the 787-8 and 787-9, and remains on track for a first flight of the 787-10 in early 2017 and entry into service (EIS) in 2018.
On the 777X, Delaney claimed that it is 12% more fuel efficient than the A350-1000 per seat (our analysis shows an advantage, albeit at a lower figure). Outed the 777X as offering an all-new passenger experience and carrying over the highest reliability in its class from the 777-300ER.
That last note about re-engined products carrying over the dispatch reliability of their immediate predecessor has historically held true, though Airbus’ experience with the A320neo proves that it is far from a certainty.
777X development is also continuing apace, with the Composite Wing Center in Everett opening on May 20 and the first test spar load on June 7th. Final systems definition has been achieved, and the final round of low-speed wind tunnel testing is near complete at QinitiQ.
The first full-engine tests are also underway, with initially positive results, as are wing fabrication and validation. On the last point, Delaney took the opportunity to bat away uncertainty around the folding wingtip that will be offered on the 777-9X: “We are building a test rig [now]… This isn’t new technology.”
MoM Approach Still Up in the Air
Perhaps the most important question entering this year’s Farnborough Airshow was around how Boeing will approach the so-called Middle of the Market (MoM). Boeing pointedly defined the MoM space in a chart as a band from about 180 seats (Boeing 757-200) and 3,500 nm of range (advertising figure on the 757-300) to about 275 seats (Airbus A330-300 298T) and 6,000 nm of range.
This chart laughably placed the A321neo outside of this band, though accurate range figures for the A321neo and A321LR (which wasn’t even included in the chart) would have placed both airplanes inside of the band.
In fact, the A321neo is now the best-selling MoM aircraft in history, period thanks to AirAsia’s order for 100 aircraft earlier this year. It has now outsold the Boeing 707 (1,010 built), Boeing 757 (1,050 built), Boeing 767 (1,170 ordered & 1,088 built), Boeing 787-8 (431 ordered, 306 built), Airbus A300-600 (208 built), Airbus A310 (255 built), and Airbus A330-300 (761 orders).
Delaney confirmed in his briefing that Boeing is still in discussions with customers which has prevented Boeing from finalizing an approach: “We are having lots of conversations about the MoM with our customers,” said Delaney.
“Some want the 757 mission, some just want more range, and a majority want more range and more seats [than the existing MoM planes]… The two most important decisions in designing a new airplane are payload-range and the size of the cross section” said Delaney.
He also updated Boeing’s thinking about the various approaches to the MoM segment. “Shrinking an existing aircraft like the 787-8 into the MoM isn’t the right move,” Delaney said. “It wouldn’t serve the market. We are happy to let Airbus take that route [with the A330-800neo]. But the thing Airbus did well on the A321neo was reconfiguring the doors. That allowed them to add seats… We are still talking about a 737 MAX 10. [But] we would need more thrust on the LEAP engine and would have to raise the [landing] gear.”
He closed this segment by reiterating that Boeing is still deciding on the MoM: “We haven’t made a decision on a single or twin aisle [airplane] for the MoM. We won’t disclose our preference. The MoM could appear in middle of next decade, but we have time to make decision to proceed.”
These statements by Delaney when taken together would appear to confirm our analysis from last week that Boeing is leaning towards a clean-sheet (as opposed to shrunk 787) wide body aircraft for the MOM and is lukewarm on the 737 MAX 10.