Friday, July 25, 2014

Airbus and Boeing Finalize Their Future Widebody Plans and One Looks Better Than the Other

With the recent launch of the A330neo, it seems that both Airbus and Boeing have almost fully formed their planned portfolios for the long haul, widebody market. Both companies have created three aircraft families that are expected to serve every airline’s needs. But from a capacity perspective, it looks like Boeing has the more comprehensive option. Airbus might still need some work.

Boeing and Airbus Widebody Capacity

We’ve seen a lot of this come together over the last year. Most recently, Airbus launched the A330neo, but the enhanced Boeing 777X line only firmed up late last year. And the 787-10 didn’t become official until last June. Let’s take a look at how these are supposed to compete with each other.

787 vs A330neo
At the smallest end of the widebody market, we have both the 787 and the A330neo. Originally, Airbus was going to try to use the A350-800 to compete with the smaller 787, but it became very clear that Airbus wasn’t getting a lot of orders and had no interest in making that airplane. So at the Farnborough Airshow, Airbus announced it would spiff up its A330 and offer that to customers. The A330neo will basically take the A330-200 and -300, add -600 to each, and then put on a few more seats. Throw on some new engines, make a few changes to the airplane, and you have a winner. The end result is an airplane that competes with the 787-8 on the small end and falls between the 787-9 and -10 on the upper end.

To me, this move makes sense for Airbus, because now it can go ahead and kill the A350-800 (though that hasn’t officially happened yet). It’s still not perfectly competitive, however. The 787 is a brand new, slightly more efficient airplane. So the tradeoff has to be that an A330neo will cost less than the 787 to make it more attractive. (There are probably also earlier delivery slots available on the A330neo since the 787 has such a big backlog.) Airlines that already operate A330s will be interested. Also, low cost carriers that need an efficient airplane but want lower capital outlay at the beginning will also probably like this plan.

But there’s one other issue for Airbus. The A330-900neo is just about the same capacity as the A350-900. Why have that kind of overlap? The tradeoff here is between price and range. The A330-900neo costs less than the A350-900 but its range is also a short 6,200nm (nautical miles) versus the A350′s 7,750nm. If range matters, you’ll buy the A350. If price matters, you’ll buy the A330. And of course, it also depends on what other needs you have, whether going bigger or smaller, to see which family fits best.

787 vs A350
When the A350 launched, the -900 was bigger than Boeing’s biggest planned 787 (the -9). And then Airbus had the A350-1000 which was going to push into the 350+ seat range. Boeing had a gap, but it wanted to protect sales of the 777, so it wouldn’t grow the 787. Boeing has finally given into pressure and last year committed to the 787-10. At 323 seats, it’s still smaller than the A350, but that’s because Boeing has a bigger airplane that can compete with the A350 on the upper end. We’ll get to that in a minute.

This does hurt Boeing’s chances of selling the smaller 777-200s that exist today, but let’s face it. Those are pretty much dead anyway. Both Airbus and Boeing have good families here, but Airbus serves a slightly larger market.

777X vs A350
Here’s where the biggest issue lies in the Airbus portfolio. Boeing has decided to go forward with the new 777X, and that will be its big widebody twinjet. The -8 will seat 350, about the same size as the A350-1000. But the -9 will seat 400. This gives Boeing a bigger airplane to which Airbus has no answer. Of course, the 777X will be a derivative of the original 777 design so it’s not likely to be the most efficient option at 350 seats.

The A350-1000 should be a rock star in that regard, but if you want something moderately bigger, Airbus has nothing to offer. Just look at Emirates. The airline canceled its order for 50 A350-900s and 20 A350-1000s last month. Then it turned around and ordered 35 777-8Xs and 115 777-9Xs. Emirates, like a lot of airlines, wants to have a mix that skews toward bigger jets. Airbus didn’t have anything to offer in that area. (I’m talking moderately bigger. We’ll get to the behemoths later.)

There’s been plenty of talk about Airbus moving into an A350-1100, and that would compete. But none of that is official at this point. It also remains to be seen if the A350 can be stretched that far and still be an efficient airplane. It wasn’t designed to be that big so there could be some real structural changes required to make it work. I don’t know, but I’m sure the engineers over there do.

747 vs A380
Up at the top end of the market, we still have the A380 and 747-8 lumbering along. Frankly, I don’t see a big future for either of these airplanes. Airbus continues to make noise about lowering raising the floor to allow for more seats. And this whole idea of an A380neo seems crazy to me, though Emirates obviously likes that idea. Other than Emirates, however, there’s just not a ton of demand at the high end. The same goes for Boeing and its 747-8, which hasn’t sold many of those in passenger configuration.

At this point, both airplanes are in production so they should try to sell the heck out of them. But they should realize that there’s a limited shelf life for both. Further development efforts should go into smaller airplanes.

In the end, we have two manufacturers with good options. The only thing that really seems to be lacking is an Airbus twin that can compete with the new 777-9X. If Airbus develops the A350-1100, that solves that problem. Then both manufacturers will have pretty much every tool they need to appeal to nearly every airline. And airlines will be happy to make them beat each other over the head as part of the negotiating process.

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