Boeing comes out swinging

So we finally know the answer. For months now, it appeared that Boeing was unable to commit itself to a concrete strategy on the future of its single-aisle product, while Airbus racked up more than 1,200 orders for its re-engined A320neo in the nine months since the programme’s launch.

2nd Sep 2011


Boeing comes out swinging


So we finally know the answer. For months now, it appeared that Boeing was unable to commit itself to a concrete strategy on the future of its single-aisle product, while Airbus racked up more than 1,200 orders for its re-engined A320neo in the nine months since the programme’s launch.
At the end of August, Boeing scored a double-whammy of major announcements. First came the US and European certification of its revolutionary new 787 twin-aisle twinjet, which promises operators unprecedented operational efficiency through the use of cutting-edge technology. Then, just days later, the company unveiled its re-engined 737 MAX family, launching the programme on the back of 496 order commitments from five, still-unidentified airline customers.


Boeing’s alternative option was to commit to an all-new, clean-sheet design that would have lagged five or more years behind the 2016 in-service target of the A320neo. For the price of that delay, Boeing would have potentially been able to offer far more dramatic improvements in performance, efficiency and economics, but the risk would have been greater.
The US manufacturer and its European rival both have recent, bitter experience of the difficulties of bringing an all-new aircraft to market with a raft of radical new technologies. The 787 has experienced no less than seven delays for a slew of different reasons, while Airbus had its own share of troubles with getting production of its A380 – the world’s largest jetliner – underway.
If an all-new aircraft were dependent on a radical new technology to offer the promised performance benefits – for instance, if it was supposed to be powered by unducted fan engines – then the risk of delay, or even of failure to meet performance promises, would be high.


Weighed against the risks represented by such radical new technology, a 15 percent fuel-burn saving in an aircraft such as the A320neo – which, according to Airbus, has 95 percent airframe commonality with current A320-family jetliners – may seem far more appealing to airlines than an all-new product that is far less likely to meet its promised development schedule.
Up until fairly recently, Boeing was scoffing at the idea of offering a re-engined version of its 737 line, insisting that its customers were not seeking such a solution. The company seemed to be sticking to this line for some time after the launch of the A320neo, even as Airbus raked in more and more orders, culminating in 667 commitments gathered during June’s Paris Air Show.
In 2010, Airbus’s top salesman John Leahy predicted that if a re-engined A320 were launched late in 2010, Boeing would immediately respond with an all-new design for 2020 launch. It now transpires that he was mistaken, but it took Boeing long enough to come to its decision.
Some industry observers still think Boeing’s move was the wrong one, complaining that the decision to re-engine constitutes a short-term “quick fix” instead of the bolder, potentially more rewarding step that would be better for the industry. Some accused Boeing of being too “risk-averse”, while Morgan Stanley analysts claimed just before the announcement that there was little support for a re-engined solution.


But such complaints ring hollow when matched against the flood of orders and commitments that greeted the A320neo. And indeed the 400-plus commitments from five customers Boeing already had for the 737 MAX at its launch.
As pointed out by Teal Group analyst Richard Aboulafia, the aviation industry appears largely divided into two camps, which are often – not always – mutually exclusive. ‘Technologists’ think of the industry as technology-driven, while ‘economists’ see technology as a means to achieve profitability, which they see as the ultimate goal. Those griping that Boeing should have been bolder fall into the technologists’ camp.
Aboulafia points out that the A320neo’s success demanded a competitive response from Boeing by 2018 at the latest, no matter how great the benefits of post-2020 technology could be.
One question still to be answered is – what does this mean for Bombardier’s CSeries? Airbus’s chief salesman John Leahy argued last year that the A320neo kills the business case for Bombardier’s planned single-aisle airliner. The Canadian manufacturer of course rejected the outspoken Airbus executive’s comment, saying it came as “no surprise”.
Bombardier argues that its planned 2013 entry-into-service date for the CSeries gives the company a substantial “first-mover advantage” over the re-engined A320, which will not be delivered until 2016.


But now there’s yet another offering to contend with – and compare the market’s response to the A320neo and the surge of interest in the 737 MAX with Bombardier’s CSeries order book: just 133 firm orders three years after launch.
Oddly, the all-new CSeries is the only single-aisle offering that includes all the cutting-edge technology available for such an aircraft today, such as primary structures made of carbon-fibre composite. The technological advantage is clearly Bombardier’s – as is the timing advantage. Yet potential customers seem unimpressed.
It appears that, for now, the advantage seems to lie with the economists.


 

Asian Aviation at a glance