Saturday, July 19, 2014

Boeing Touts 787 Dreamliner Maturity as A330neo Looms

By Vinay Bhaskara / Published July 13, 2014

789 FARN-1FARNBOROUGH, UK: As rival Airbus lurches towards the launch of a re-engined A330neo, Boeing continues to tout the progress it has made on the 787 program in recovering from the challenges created by last year’s 787 battery issues. At a briefing conducted before the official opening of the Farnborough Airshow on Monday, Vice President of Marketing for Boeing Commercial Airplanes Randy Tinseth re-iterated Boeing’s belief that the 787 remains the market leader in the small widebody segment.

With 1,031 firm orders (490 for the 787-8, 409 for the 787-9, and 132 for the 787-10), Boeing certainly has an edge in terms of program base for the small widebody segment. According to Tinseth, this emerges due to the superior operating economics offered by the 787.

“The 787-10 is 30% more fuel efficient than the current generation A330 on a per-seat basis,” said Tinseth, while the “787 program as a whole offers 20-25% lower fuel consumption, 15% lower operating costs, and 30% lower airframe maintenance costs” compared to current generation airplanes.

As with all manufacturer figures, these numbers should be taken with a grain of salt. The 787-10’s 30% per-seat fuel efficiency advantage is driven in part by its higher seating capacity. Of that 30% figure, about half of the gain arises from seating capacity, and half from improved fuel burn thanks to engine and airframe improvements.

In competition with the A330neo, widely expected to launch later this week, the 787’s maintenance cost advantages are an important part of the latter aircraft’s competitiveness on a head to head basis. Indeed, it is our view that the A330neo will be extremely competitive with the 787 program, with the A330-800neo coming within 2.0% of the 787-8’s seat mile costs and the A330-900neo coming within 0.5% of the 787-9 (both figures exclusive of capital costs). Both figures offer Airbus the opportunity to match today’s 787 operating economics without significant discounting. It is our view, however, that Boeing has the opportunity to improve the 787’s economics by 3-4%, especially saving money on manufacturing processes.

Chevrons, located on the rear of the engines, provided fuel savings.

Chevrons, located on the rear of the engines, provided fuel savings.

On the same subject, Tinseth notes that Boeing plans to develop “new laminar flow technology, take weight out of the airplane, and improve on the manufacturing process” to “take cost out of the airplanes.” The competition with the A330neo’s two variants is likely to be a fierce one, and we believe that Boeing will pitch the 787-9 against the A330-800neo (perhaps at 8-abreast) with about an 8% pre-capital cost advantage, and the 787-10 against the A330-900neo with about a 5.7% pre-capital cost advantage. We will release our full A330 cost modeling upon the formal authority to offer (ATO) or public launch of the program, should it take place.

Tinseth did agree when questioned that the three variants of the 787 could all be pitched against the A330neo, but countered by saying “I don’t think it matters how you compare the airplanes. How they compliment each other…that’s what’s important. There’s a reason why we have a 55% market share in wide-bodies… we can beat [Airbus] on the lower end and the higher end”

Even with the improved passenger economics of the A330neo, Boeing may still retain an advantage in terms of the passenger experience side of the ledger. The 787, as readers are well aware, offers a superior cabin air profile and window size amongst other initiatives to improve passenger comfort. Furthermore, as environmental concerns continue to interject into the world of aviation, the 20-25% improvement in CO2 emissions and the 60% reduction in noise offered by the 787 will serve as advantages as well.

“If the 787-9 took off from London Heathrow Airport, the noise of the aircraft would be contained within the grounds of the airport,” Tinseth said, adding that the A330 and even the A350 cannot offer the same performance.

Of course with the 787, a perennial challenge remains Boeing’s execution of the project, which despite recovery since the battery-induced headaches of 2013, is still an ongoing process. Dispatch reliability has improved to about 98% and customers are happy with the jet, says Boeing, but the company is still aiming to bring reliability up to the 99+% enjoyed by the 777.

Boeing has become more proactive in recent months about fixing problems on the 787 as they crop up. According to Tinseth, ” [Boeing] worked through the 787 wing crack fix early, and worked on a solution [for battery issues] at many different levels” Tinseth declined specifics on other technical questions on the program, but did note that the first 787-9 with GENx engines had recently flown.

ANZ 789 JDL-2Of course a critical element of technical execution is meeting delivery targets, and while Tinseth declined to comment on any changes, its goal of 110 jets by year end could be a challenge. The early problems faced by cracks found in the wings set deliveries behind by double digits in the first quarter, setting up a need for Boeing to deliver at least 31 per quarter in the second half of 2014. Production levels, set for ten a month should support that, but the most the company has delivered so far in a single quarter is one less, at thirty.

Tinseth concluded his briefing by broadly touting the superiority of. Boeing’s wide body market coverage, though the graphic below certainly shrinks the seat count gaps between Airbus aircraft below the real world figures. Tinseth pointed out that the 777 and 787 programs offer commonality between 200-400 seats, a segment which Tinseth called “the heart of the [widebody] market.” The two aircraft complement each other in terms of speed and range, and critically in terms of a common pilot rating, which should incentive customers to join the 32 operators who have already done so in ordering both the 787 and the 777. Boeing also plans to fold some of the passenger experience improvements of the 787 into 777X development as shown below.

Boeing 777 vs 787 Boeing vs Airbus Boeing graphic

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Jeremy Dwyer-Lindgren contributed to this report.

Photos by Jeremy Dywer-Lindgren / Airchive
Graphics courtesy Boeing.

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