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Reddevil556
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 12:10 pm

Something I have been pondering is if airlines like CX will return with high density routes by cutting frequency. It’s been beaten to death, but will the market recover with point to point flying or will it come back with more of a hub and spoke system? Prior to the crash it was all about point to point of efficient aircraft. Crashes have a way of disrupting business models. Maybe VLAs will come back, maybe they won’t. Needless to say it will be interesting to see how the market recovers and what aircraft fall out of favor and which remain or become popular.
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brindabella
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 1:04 pm

astuteman wrote:
Revelation wrote:
mig17 wrote:
In the end, like you said, I am not even sure the market wants in huge numbers frame as large as the 77W in the future, even to replace it.

Which doesn't bode well for A35K either, it's claimed superiority doesn't matter if airlines simply don't want planes that big. Project Sunrise is kind of a hollow victory, no money is changing hands...


Possibly not.
The A35K IS lighter and cheaper to operate than the 777X of course, and has a smaller sibling allowing flexibility with the fleet, so there is some measure of differentiation.

But the real issue under discussion here I guess is that the A35K struggling is inconvenient for the A350 programme.
The 777X struggling puts the entire programme at risk.

Rgds


Hmmm.

Not sure.

Would hypothesize that the "X" has few production contracts at this stage. So the stretching-out of the "X" intro. has few external penalties.

Whereas the 35K has set contracts.

cheers
Billy
 
trex8
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 1:11 pm

[quote="sxf24"]
Boeing advance payments are typically 25-30% of catalog price, though subject to negotiation. Boeing could be motivated to cancel if they didn’t think the airline would accept the delivery.
[quote="sxf24"]

CI financials viz their A359/77W purchases

https://www.china-airlines.com/us/en/Im ... 2-3155.pdf
pg 71

Commitment
a. In January 2008, the Company entered into a contract to buy fourteen A350-900 planes from Airbus, with the option to buy six more A350-900 planes, with aggregate purchase prices of US$3,933,235 thousand and US$1,802,645 thousand, respectively. Excepted delivery slots of aircrafts are from 2016 to 2018. Prepayments for aircraft purchases were as follows: December 31, 2013 December 31, 2012 January 1, 2012 US$ 315,859 thousand US$237,194 thousand US$119,197 thousand
b. In December 2012, the Company entered into a contract to buy six 777-300ER planes from the Boeing Company, with the option to buy six more 777-300ER planes, at aggregate purchase prices of US$2,067,261 thousand and US$2,213,015 thousand, respectively. Expected delivery slots of aircrafts are from 2015 to 2016. The board of the Company has resolved to transfer the purchase right of the confirm orders for six aircrafts to the aircraft leasing company then lease back. Prepayments for aircraft purchase were as follows: December 31, 2013 December 31, 2012 US$ 163,786 thousand US$26,673 thousand

So 8% to Airbus 4 years after contract, 8% to Boeing after a year and only 1.3% by the end of the month they signed for the 77W



https://www.china-airlines.com/us/en/Im ... 2-3222.pdf
pg69

34. COMMITMENTS AND CONTINGENT LIABILITIES As of December 31, 2014, the Company had commitments and contingent liabilities, as follows:
a. In January 2008, the Company entered into a contract to buy fourteen A350-900 planes from Airbus, with the option to buy six more A350-900 planes, with aggregate purchase prices of US$3,933,235 thousand and US$1,802,645 thousand, respectively. Excepted delivery slots of aircrafts are from 2016 to 2018. Prepayments for aircraft purchases were as follows: December 31 2014 2013 US$ 449,216 US$ 315,859 thousand thousand
b. In December 2012, the Company entered into a contract to buy six 777-300ER planes from the Boeing Company, with the option to buy six more 777-300ER planes, at aggregate purchase prices of US$2,067,261 thousand and US$2,213,015 thousand, respectively. Expected delivery slots of aircrafts are from 2015 to 2016. The board of the Company has resolved to transfer the purchase right of the confirm orders for six aircrafts to the aircraft leasing company then lease back. - 68 - Prepayments for aircraft purchase were as follows: December 31 2014 2013 US$ 418,325 US$ 163,786 thousand thousand

So a year later, end 2014, they have paid another 255 million to Boeing and first deliveries of planes ordered directly was mid 2015
Assuming the "aggregate purchase price " is what they "paid" ultimately, seems "deposit" was 8% price and 5 months before delivery of their first plane ordered from Boeing and 13months before their last they paid an additional 12% of the contract price only

As for the A359s, 18months before first delivery they had paid 8% deposit and only another 3% since deposits .

So almost ¾ of price paid in last year or even less??
 
majano
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 3:44 pm

trex8 wrote:
sxf24 wrote:
Boeing advance payments are typically 25-30% of catalog price, though subject to negotiation. Boeing could be motivated to cancel if they didn’t think the airline would accept the delivery.
sxf24 wrote:

CI financials viz their A359/77W purchases

https://www.china-airlines.com/us/en/Im ... 2-3155.pdf
pg 71

Commitment
a. In January 2008, the Company entered into a contract to buy fourteen A350-900 planes from Airbus, with the option to buy six more A350-900 planes, with aggregate purchase prices of US$3,933,235 thousand and US$1,802,645 thousand, respectively. Excepted delivery slots of aircrafts are from 2016 to 2018. Prepayments for aircraft purchases were as follows: December 31, 2013 December 31, 2012 January 1, 2012 US$ 315,859 thousand US$237,194 thousand US$119,197 thousand
b. In December 2012, the Company entered into a contract to buy six 777-300ER planes from the Boeing Company, with the option to buy six more 777-300ER planes, at aggregate purchase prices of US$2,067,261 thousand and US$2,213,015 thousand, respectively. Expected delivery slots of aircrafts are from 2015 to 2016. The board of the Company has resolved to transfer the purchase right of the confirm orders for six aircrafts to the aircraft leasing company then lease back. Prepayments for aircraft purchase were as follows: December 31, 2013 December 31, 2012 US$ 163,786 thousand US$26,673 thousand

So 8% to Airbus 4 years after contract, 8% to Boeing after a year and only 1.3% by the end of the month they signed for the 77W



https://www.china-airlines.com/us/en/Im ... 2-3222.pdf
pg69

34. COMMITMENTS AND CONTINGENT LIABILITIES As of December 31, 2014, the Company had commitments and contingent liabilities, as follows:
a. In January 2008, the Company entered into a contract to buy fourteen A350-900 planes from Airbus, with the option to buy six more A350-900 planes, with aggregate purchase prices of US$3,933,235 thousand and US$1,802,645 thousand, respectively. Excepted delivery slots of aircrafts are from 2016 to 2018. Prepayments for aircraft purchases were as follows: December 31 2014 2013 US$ 449,216 US$ 315,859 thousand thousand
b. In December 2012, the Company entered into a contract to buy six 777-300ER planes from the Boeing Company, with the option to buy six more 777-300ER planes, at aggregate purchase prices of US$2,067,261 thousand and US$2,213,015 thousand, respectively. Expected delivery slots of aircrafts are from 2015 to 2016. The board of the Company has resolved to transfer the purchase right of the confirm orders for six aircrafts to the aircraft leasing company then lease back. - 68 - Prepayments for aircraft purchase were as follows: December 31 2014 2013 US$ 418,325 US$ 163,786 thousand thousand

So a year later, end 2014, they have paid another 255 million to Boeing and first deliveries of planes ordered directly was mid 2015
Assuming the "aggregate purchase price " is what they "paid" ultimately, seems "deposit" was 8% price and 5 months before delivery of their first plane ordered from Boeing and 13months before their last they paid an additional 12% of the contract price only

As for the A359s, 18months before first delivery they had paid 8% deposit and only another 3% since deposits .

So almost ¾ of price paid in last year or even less??

This reference was raised by another poster previously. The real difficulty with it is believing that CI, a very good Boeing customer could pay USD 344mper 777. Same with the A350, USD 280m is very high.

If we accept the reference at face value, i.e. the aggregate purchase price is ultimately what CI paid, we can all agree that the deposit paid to both Airbus and Boeing was 8% despite the fact that the A350 was still in development and the 777W a proven performer.

Progress payments are made, from what I have learnt on A-Net, as the construction of the aircraft and its various components progresses. So, it should not be surprising that the 777W had more in progress payments at the end of CI's 2014 FY: contract was entered into 3 years from delivery whilst the A350 was ordered a good 8 years from expected delivery. Again, A-Net teaches us that some of the long lead items are built a good 2 years away from delivery.

What I would find interesting is how close to actual delivery the A350 was at the end of CI's 2014 financial year.
 
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Revelation
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 4:36 pm

blooc350 wrote:
CX will probably delay the 77X. They WONT walk away from it. This plane is to be their new Flagship aircraft with their next generation on board products.

It does seem like CX was going to make the 77X their flagship. It has the room for a heavy premium cabin and 10 across in economy. The real question is when will the market support the capacity and when will the airlines be able to pay for the benefits of a new aircraft with high efficiency and a maintenance holiday vs just patching up the old airplanes till they can't fly any more.

Some people are thinking that recovery will involve bigger airplanes flying lower frequencies to get load factors up, but the bigger airplanes always come with higher trip cost thus more risk if they go out with empty seats. I think we'll still see a lot of "right sizing" i.e. matching airplane size to demand and using yield management to balance load across popular and less popular flights.

smartplane wrote:
sxf24 wrote:
Boeing advance payments are typically 25-30% of catalog price, though subject to negotiation. Boeing could be motivated to cancel if they didn’t think the airline would accept the delivery.

Depends on the customer and build stage of each aircraft.

Milestone payments are often deferred, or more protracted for new aircraft under development, as the build rate is so low, and starts at zero, especially for launch customers.

Take a theoretical 20 aircraft order, in say two tranches of 10.

On a new model, depending on the urgency with which the aircraft are required, and OEM's willingness to guarantee performance (or compensate for under performance), it's likely tranche 1 will go unconditional while tranche 2 will remain conditional until early deliveries of production aircraft are received / assessed by the customer (or the OEM, with real data, will guarantee higher levels of performance).

When the 20 aircraft order is conditional, the deposit will be at most 1%, fully refundable.

When tranche 1 goes unconditional, the deposit will increase to a maximum of 5%, and still refundable, but not 100% if taken as cash. This is the last time all 10 aircraft will be invoiced at the same time.

All subsequent payments are due on reaching milestones, with each aircraft billed separately.

When the OEM is ready to order long lead items (not always engines, as these may be negotiated and paid for separately by customers, with their own unique set of milestone payments), the first non-refundable payment falls due. The deposit on the specific aircraft is also no longer refundable.

Further milestones are roll out minus xx days, rollout, engines ready to ship or delivered (rollout and engines may not be in order), engine installed / run, acceptance / delivery, and finally withheld payment.

The way OEM's incentivise airlines to take their full order, is by offering retrospective credits, which are back end loaded. The downside of this, is that cancelling when no aircraft have been delivered is very inexpensive for customers, compared to when 25% or more have been delivered. Of course airlines want the credits to be at least even or front end loaded (the latter will never happen).

Take a hypothetical 20 aircraft order, where the OEM negotiates a 40% retrospective credit, with say the first 5 units attracting 1%, units 6-15 2% and 16-20 3%, though it can be much more pronounced where the OEM has low confidence of order completion. When aircraft 1 is delivered and paid for, the airline receives a 1% credit, which will be more than offset by the final withholding payment. When aircraft 2 is delivered and paid for, the airlines receives a 2% credit on aircraft number 2, and a further 1% on aircraft number 1, and so on.

OEM credits have a dollar value. More than 100% for purchasing a new aircraft model, 100% for purchasing existing OEM aircraft, products and services, 80-90% for OEM distributed products and services, 50-75% for cash, and somewhere in between if traded between customers (though depends how they are to be used).

For a new model under development, everything is negotiable. Even though some frames have already been completed and others are under construction for launch customers, it's likely milestone payments have been deferred and / or discounted, reflecting they are far from ready for delivery.

EK will have likely used credits from 777's delivered (though some may be shared with lessors) and 737's for FZ for X deposits.

Long story short. New model order, at this stage of development, behind schedule versus, part delivered order with accrued credits. Cancelling the latter = big cost to customers. Cancelling the former = less cost compared to cancelling the latter.

Airbus won't want to be too accommodating, as this will be at their expense, and to Boeing's benefit. Smart Airbus negotiators will negotiate delivery delays and model swapping (1000 to 900), subject to the customer taking no other WB deliveries in the same time period.

Thanks for the great post!

The conclusion that it's easier to get out from an order of a newly developed aircraft that you have not taken any deliveries on versus a more mature aircraft that you've already taken deliveries on seems logical.

I never understood what you meant by retrospective credits till this post, thanks for explaining it.

Regarding the payment when long lead time items are ordered, can you estimate what percentage of final purchase price it is? I think LS suggested it's the largest pre-delivery payment yet the aircraft manufacturer still ends up paying more than they've received from the customer so it seems to be the point of highest risk for the manufacturer.
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zeke
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 7:33 pm

klkla wrote:

I don't see where that says anything about having to return advance payments, however. I am under the impression that if an airline outright cancels an order under these circumstances that money is gone. That's why it would probably be better to just defer the order.


It’s in the same section 11,

“ 11.2 Repayment of Advance Payments. If this Agreement is terminated with regard to any Aircraft by Buyer under this Article, Boeing will repay to Buyer, without interest, any advance payments received by Boeing from Buyer with respect to such Aircraft.”

Just bear in mind that CX has been through SARS and the GFC in recent history, it would be a reasonable expectation that they made allowances for such significant events in future contracts. Also it goes without saying the 77X is a new model that is already over 12 months late, a 12 month delay is normally a trigger that permits termination by the Buyer with funds returned or compensation.
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astuteman
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 8:36 pm

brindabella wrote:
astuteman wrote:
Revelation wrote:
Which doesn't bode well for A35K either, it's claimed superiority doesn't matter if airlines simply don't want planes that big. Project Sunrise is kind of a hollow victory, no money is changing hands...


Possibly not.
The A35K IS lighter and cheaper to operate than the 777X of course, and has a smaller sibling allowing flexibility with the fleet, so there is some measure of differentiation.

But the real issue under discussion here I guess is that the A35K struggling is inconvenient for the A350 programme.
The 777X struggling puts the entire programme at risk.

Rgds


Hmmm.

Not sure.

Would hypothesize that the "X" has few production contracts at this stage. So the stretching-out of the "X" intro. has few external penalties.

Whereas the 35K has set contracts.

cheers


Which presumably makes cancelling the 777X easier.
Whereas the A350-1000 contracts can be converted to -900's at a later date with little problem
Big planes going out of fashion because of a prolonged dip is far more of an issue for the 777X than it is for the A350.
That's just a fact.

Rgds
 
sxf24
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 10:07 pm

zeke wrote:
klkla wrote:

I don't see where that says anything about having to return advance payments, however. I am under the impression that if an airline outright cancels an order under these circumstances that money is gone. That's why it would probably be better to just defer the order.


It’s in the same section 11,

“ 11.2 Repayment of Advance Payments. If this Agreement is terminated with regard to any Aircraft by Buyer under this Article, Boeing will repay to Buyer, without interest, any advance payments received by Boeing from Buyer with respect to such Aircraft.”

Just bear in mind that CX has been through SARS and the GFC in recent history, it would be a reasonable expectation that they made allowances for such significant events in future contracts. Also it goes without saying the 77X is a new model that is already over 12 months late, a 12 month delay is normally a trigger that permits termination by the Buyer with funds returned or compensation.


Again, you quote in isolation without providing context.

- What are the conditions that allow CX to cancel?
- What delivery dates were contractually guaranteed?

Until you can answer those questions, your supposition is a disservice.
 
smartplane
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 10:41 pm

Revelation wrote:
The conclusion that it's easier to get out from an order of a newly developed aircraft that you have not taken any deliveries on versus a more mature aircraft that you've already taken deliveries on seems logical.

I never understood what you meant by retrospective credits till this post, thanks for explaining it.

Regarding the payment when long lead time items are ordered, can you estimate what percentage of final purchase price it is? I think LS suggested it's the largest pre-delivery payment yet the aircraft manufacturer still ends up paying more than they've received from the customer so it seems to be the point of highest risk for the manufacturer.

Chatham House Rules don't apply on this site, so no specifics.

Contract specific financial information is always redacted, even to funding participants in a closed group lease, though the lead financier will view.

The value composition of a buy / sell contract (what's included, excluded, capitalised, etc), milestones (basis and timing), discount and retrospective credits (including accrual and conversion rates), are in separate side contracts (sometimes completely separate contracts).

Everything is negotiable to the right customer, including whether some milestones are even included, let alone % payable. Smaller customers have fewer milestones, of larger amounts, incurred earlier. LL payment may be the highest / equal highest if bundled with engines, but RR generally have their own customer direct milestones. Larger customers will insist on more milestones to reflect actual supplier payments by A & B.

In one respect, customers want everything at the front end, so milestone payable are % of purchase price less discount, but OEM design to encourage application to new aircraft orders, by varying the conversion value.

Assuming engines are included (yes for GE, though EK may be unique), payment on acceptance / delivery is usually in the range of 35-45% with 5-10% (can be higher for launch customers) still withheld for warranty and performance claims.

While multiple aircraft may be covered by a single contract, prices move. There is an agreed IATA formula, so the price for each aircraft delivered say over a 3 year period, will be different. During a period of deflation (are we heading there now?), unit prices may be lower.

OEM's encourage customers to accrue credits be providing the greatest reward when applied against new aircraft orders. CX and LH will have accrued credits with Airbus for current A350 deliveries, and many more imminent with future deliveries. In contrast, virtually nothing with Boeing. EK will have credits with both, but recent engine credits predominantly with RR.
 
RJMAZ
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Re: Rumor: CX to walk away from 777X order

Sat Apr 18, 2020 11:07 pm

Reddevil556 wrote:
It’s been beaten to death, but will the market recover with point to point flying or will it come back with more of a hub and spoke system? Prior to the crash it was all about point to point of efficient aircraft.

Cutting frequency is the only short term option with reduced demand. If a route already had low frequency then it would get cut entirely forcing that destination to temporarily travel via a hub.

The medium term solution would be to put smaller aircraft on the routes and maintain frequency. It would never return to the hub and spoke model. This means putting a 787 on a route instead of a 777. This is why the largest aircraft have been parked first around the world. Most of the A380's may never fly again as the smaller widebodies will return to service first. If there isn't enough demand left then these larger aircraft will be retired for good.

Good news for Airbus is the A321XLR will be the only aircraft that an Airline can downgauge say a typical 787-8 route. Airlines have shown that long thin routes are highly profitable. If a route can no longer support a 787 then the A321XLR will allow that high profit route to remain open.

This is why I think 777X production is at risk. If demand is down 50% through 2021-2022 and down 30% through to 2025 then the 777X is doomed. There is not enough bums on seats and the largest aircraft gets cut first.
 
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par13del
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 2:23 am

RJMAZ wrote:
This is why I think 777X production is at risk. If demand is down 50% through 2021-2022 and down 30% through to 2025 then the 777X is doomed. There is not enough bums on seats and the largest aircraft gets cut first.

Hopefully Boeing would be able to convert those 777X orders to 787's, which is their only viable alternative. Do we know if Boeing has completed porting the 9 enhancement to the 8 to simplify production?
 
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flee
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 5:24 am

par13del wrote:
RJMAZ wrote:
This is why I think 777X production is at risk. If demand is down 50% through 2021-2022 and down 30% through to 2025 then the 777X is doomed. There is not enough bums on seats and the largest aircraft gets cut first.

Hopefully Boeing would be able to convert those 777X orders to 787's, which is their only viable alternative. Do we know if Boeing has completed porting the 9 enhancement to the 8 to simplify production?

We have seen many rumours of a heavier 787-10 but so far, nothing. Perhaps, now is the time for Boeing to offer a higher MTOW 787-10 to CX to avoid 777x cancellation?
 
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AirlineCritic
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 6:24 am

I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)
 
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enzo011
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 8:17 am

AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)



One of the airlines that will need the frame is EK, but I don't know if they will need the 115 or so they have on order. The question then is, will EK only be enough to keep the product line alive? Very much like the A380 was dependent on EK as well and we saw how that worked out in the end. The problem is that the next biggest frame is not a one off family member like the 777X (I know, the 778 is still on offer but it has been delayed and who knows when it will be looked at again even if the 779 survives this crises) but the A35K which is part of a successful product so airlines that are looking at less capacity will have an extremely competitive frame to fit into the role while still having lots of seats for airlines as well.

Timing has been the bane of many companies and products that have not survived and the delays to the 777X coupled with the slowing down of demand already for large widebody aircraft before the Covid-19 outbreak means that this could be the end for the product. Add into the equation the 737MAX grounding eating into Boeing income and lower 787 production (that surely has to be announced some time soon once work starts up again in the US) which will hurt the finances as well, well if it happens it will be commented on as the prefect storm that hit the model.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 9:41 am

flee wrote:
We have seen many rumours of a heavier 787-10 but so far, nothing.


That rumour has been persistently pushed by one member here for nearly a year. Not a peep from Boeing.
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flash330
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 9:51 am

blooc350 wrote:
CX will probably delay the 77X. They WONT walk away from it. This plane is to be their new Flagship aircraft with their next generation on board products.


I think they are more concerned with avoiding bankruptcy than deploying the next generation of on board products.
Any products already designed can be adapted for existing 777W and A350 if needed.
 
RJMAZ
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 10:14 am

AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)

That would be a very hard pill for Boeing to swallow. All that new infrastructure to build their own carbon wings. I'm not sure what a cancellation could look like.

Will they suspend flight testing and force airlines to switch to the 787? Doubtful.

If the flight testing then gets done then some airlines will definitely get aircraft delivered. Will the 777X get built at such a low rate that it makes a loss on every frame?

Will Boeing keep making them at a loss for years hoping for a market recovery? I think this is what they will do.

One thing is for certain the 777X will never break even as a program.
 
JayinKitsap
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 10:15 am

RJMAZ wrote:
Reddevil556 wrote:
It’s been beaten to death, but will the market recover with point to point flying or will it come back with more of a hub and spoke system? Prior to the crash it was all about point to point of efficient aircraft.

Cutting frequency is the only short term option with reduced demand. If a route already had low frequency then it would get cut entirely forcing that destination to temporarily travel via a hub.

The medium term solution would be to put smaller aircraft on the routes and maintain frequency. It would never return to the hub and spoke model. This means putting a 787 on a route instead of a 777. This is why the largest aircraft have been parked first around the world. Most of the A380's may never fly again as the smaller widebodies will return to service first. If there isn't enough demand left then these larger aircraft will be retired for good.

Good news for Airbus is the A321XLR will be the only aircraft that an Airline can downgauge say a typical 787-8 route. Airlines have shown that long thin routes are highly profitable. If a route can no longer support a 787 then the A321XLR will allow that high profit route to remain open.

This is why I think 777X production is at risk. If demand is down 50% through 2021-2022 and down 30% through to 2025 then the 777X is doomed. There is not enough bums on seats and the largest aircraft gets cut first.


Routes have capacity step by each flight and the capacity of the plane. For NB's it steps at 150 to 200 per plane. So if a route has 900 pax daily right after this crisis 6 planes could handle it. An airline that can capture the majority of these can dominate and be ready for the increase in travel. Routes below this capacity get tricky as a change of 1 aircraft steps the capcity by 20%. Routes with thousands the step gets small and easier to cover.

Hubs like SEA is for Alaska will still work because the SEA O&D is sufficient, but MEM is not becoming a hub again. Networks like WN's have good efficiencies, low demand cities get a route or two, a mid one has like a dozen routes.

On long distance where one plane can RT in a day provides daily flights, longer ones it is alternate days. Cargo becomes important. Yes going to a smaller frame helps adjust but it gets tough with seasonal variations to aviod low load factors. Airlines may prefer using their current 77W's rather than add the 779. An airline like EK wil need the 779, but they have probably 40 too many 77W and 75 too many A380's so it will be several years for EK to unwind its mess.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 11:16 am

AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)



It don’t see the 777X be cancelled. Boeing is too far along with development of it.
I do see it have a similar fate to the 747-8i, which just a handful airlines picking it up as their main aircraft (Emirates?) and a one-digit amount for some trunk routes (LHR routes come to mind, though with Virgin Atlantic potentially going bust there should be enough new slots up for grabs. So who knows.)
Last edited by calstanford on Sun Apr 19, 2020 11:22 am, edited 1 time in total.
 
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flee
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 11:20 am

flash330 wrote:
blooc350 wrote:
CX will probably delay the 77X. They WONT walk away from it. This plane is to be their new Flagship aircraft with their next generation on board products.

I think they are more concerned with avoiding bankruptcy than deploying the next generation of on board products.
Any products already designed can be adapted for existing 777W and A350 if needed.

Yes, most airlines are fighting for survival and the first casualties will be new aircraft orders and deliveries. CX may well take the remaining deliveries that have been built and defer any the rest of their scheduled deliveries.

The 777X order looks very vulnerable as Boeing has delayed it by over 12 months. Better for CX to cancel without penalties while it can. If it really needs them in future, they can always re-order as the queue for this plane should still remain quite short.
 
StTim
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 11:31 am

I fear that the 777X is going to suffer from many deferments and cancellations as the travel landscapes is going to take a long time to recover from the corona virus. Just take my situation. I was deep into planning a long holiday in India for November this year when the virus put paid to it. Fortunately for me no money had changed hands. We would not consider such a long haul until there is definite vaccine and herd immunity.

So the earliest would be Nov 2021 but most likely 2022 - if ever.

Even if the long haul travel does start to recover - getting up to the levels pre Corona virus will be a long long haul.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 11:35 am

JayinKitsap wrote:
RJMAZ wrote:
Reddevil556 wrote:
It’s been beaten to death, but will the market recover with point to point flying or will it come back with more of a hub and spoke system? Prior to the crash it was all about point to point of efficient aircraft.

Cutting frequency is the only short term option with reduced demand. If a route already had low frequency then it would get cut entirely forcing that destination to temporarily travel via a hub.

The medium term solution would be to put smaller aircraft on the routes and maintain frequency. It would never return to the hub and spoke model. This means putting a 787 on a route instead of a 777. This is why the largest aircraft have been parked first around the world. Most of the A380's may never fly again as the smaller widebodies will return to service first. If there isn't enough demand left then these larger aircraft will be retired for good.

Good news for Airbus is the A321XLR will be the only aircraft that an Airline can downgauge say a typical 787-8 route. Airlines have shown that long thin routes are highly profitable. If a route can no longer support a 787 then the A321XLR will allow that high profit route to remain open.

This is why I think 777X production is at risk. If demand is down 50% through 2021-2022 and down 30% through to 2025 then the 777X is doomed. There is not enough bums on seats and the largest aircraft gets cut first.


Routes have capacity step by each flight and the capacity of the plane. For NB's it steps at 150 to 200 per plane. So if a route has 900 pax daily right after this crisis 6 planes could handle it. An airline that can capture the majority of these can dominate and be ready for the increase in travel. Routes below this capacity get tricky as a change of 1 aircraft steps the capcity by 20%. Routes with thousands the step gets small and easier to cover.

Hubs like SEA is for Alaska will still work because the SEA O&D is sufficient, but MEM is not becoming a hub again. Networks like WN's have good efficiencies, low demand cities get a route or two, a mid one has like a dozen routes.

On long distance where one plane can RT in a day provides daily flights, longer ones it is alternate days. Cargo becomes important. Yes going to a smaller frame helps adjust but it gets tough with seasonal variations to aviod low load factors. Airlines may prefer using their current 77W's rather than add the 779. An airline like EK wil need the 779, but they have probably 40 too many 77W and 75 too many A380's so it will be several years for EK to unwind its mess.


This would mean that non USA markets adopts to USA model with less big airplanes and a bigger number of NB and smaller WB.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 12:08 pm

calstanford wrote:
AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)



It don’t see the 777X be cancelled. Boeing is too far along with development of it.
I do see it have a similar fate to the 747-8i, which just a handful airlines picking it up as their main aircraft (Emirates?) and a one-digit amount for some trunk routes (LHR routes come to mind, though with Virgin Atlantic potentially going bust there should be enough new slots up for grabs. So who knows.)


There's no guarantee that EK will enjoy the super connecter status that DXB gave them pre covid. Yes, they are a big airline and will require a large fleet, but not all will be large WBs

Was proven last November when they ordered 787 and 350s and reduced their 777X orders.

Covid maybe the catalyst to reduce them further.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 12:43 pm

I very much agree with you. Just when I think of anyone taking more than a handful of this plane it would be EK to replace their A380s.
Frankly A359/A35K and/or 789/10 would potentially suffice too.
 
VSMUT
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 2:45 pm

calstanford wrote:
AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)



It don’t see the 777X be cancelled. Boeing is too far along with development of it.
I do see it have a similar fate to the 747-8i, which just a handful airlines picking it up as their main aircraft (Emirates?) and a one-digit amount for some trunk routes (LHR routes come to mind, though with Virgin Atlantic potentially going bust there should be enough new slots up for grabs. So who knows.)


:checkmark:

99% of the money has already been dumped into the development of the aircraft. Completing whatever orders they end up having will inevitably recoup more of Boeing's costs than if they just throw it away here and now, plus it leaves open the possibility of gaining more at a later point (however likely or unlikely that is).

IMO, the biggest risk to Boeing is that they will have to shut down the production too early because they run out of orders. The demand for big planes will return when the glut of 777-300ERs need to be replaced. The downside to that is that the 777-300ER fleet is still very young. 600 of them are less than 10 years old, another 220 or so are between 10 and 16 years old. If airlines are willing to eke out 20 years of their existing 777s, that means Boeing has to keep the 777X line alive for a decade whilst competing against the A350-1000, for a minuscule total demand of 200-ish planes. Actually even less, because many of those early 777-300ER operators (ANA, JAL, Emirates, SIA, Qatar) have already placed their 777X or A350-1000 orders. I'm guessing they will have to build it at a rate of no more than 2 a month.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 2:45 pm

RJMAZ wrote:
Good news for Airbus is the A321XLR will be the only aircraft that an Airline can downgauge say a typical 787-8 route. Airlines have shown that long thin routes are highly profitable. If a route can no longer support a 787 then the A321XLR will allow that high profit route to remain open.

It'd be better news if XLR was available sooner than 2023. It might end up later due to production rate cuts.

RJMAZ wrote:
That would be a very hard pill for Boeing to swallow. All that new infrastructure to build their own carbon wings. I'm not sure what a cancellation could look like.

Will they suspend flight testing and force airlines to switch to the 787? Doubtful.

If the flight testing then gets done then some airlines will definitely get aircraft delivered. Will the 777X get built at such a low rate that it makes a loss on every frame?

Will Boeing keep making them at a loss for years hoping for a market recovery? I think this is what they will do.

One thing is for certain the 777X will never break even as a program.

"Never" is a long time, but you are probably right.

Yet the money for the new wing plant is spent, GE has spent most of the money needed to develop GE9X, the tooling for the FAL is bought and paid for, the first flight has happened.

So you are probably right Boeing will see it through and probably never make money at a program level but keep cranking them out if they can convince themselves there will be positive cash flow.

Heck they still find a way to convince themselves that building 747s at one every two months makes more money than just canceling the orders so stranger things have happened.

Given that the first frames have been produced, it'd be very interesting to know if Boeing collected the long lead time deposits from any of the early customers. We saw before COVID that EK and LH both complained about the dates being changed. I wonder if this is because they had meaningful amounts of money on the table already.
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StTim
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 4:35 pm

We all know the first frames produced cost many times that of later production frames. These days it seems to take multiple 100's of frames to get beyond this break even point. I am thinking of 787 and A350 as examples. It should be less for the 777X as it is a derivative - But there are substantial changes to the production process. These were practised to some extent on the 777 frames but there will still be much to learn.

In that case Boeing will lose more to go forward from this point.
Last edited by StTim on Sun Apr 19, 2020 4:53 pm, edited 1 time in total.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 4:40 pm

So if we assume that Cathay Pacific is obliged to take delivery of some of their 777x order, what's the smallest sized 777x fleet that an airline who already operates a lot of 77Ws could economically operate? Obviously a fleet of two or three wouldn't work? How about 8? 10? 12?

VSMUT wrote:
99% of the money has already been dumped into the development of the aircraft. Completing whatever orders they end up having will inevitably recoup more of Boeing's costs than if they just throw it away here and now, plus it leaves open the possibility of gaining more at a later point (however likely or unlikely that is).


Agreed. I can't see the program being cancelled at this stage but I can see it losing a lot of money.

Revelation wrote:
It'd be better news if XLR was available sooner than 2023.


I think it's probably a moot point for customers who haven't ordered yet since noone wants to undertake additional Capex right now. For customers with existing 321NEOs on order I'd agree though.

Revelation wrote:
It might end up later due to production rate cuts.

Why do you say that? Surely 321XLRs are in more demand than regular NEOs since everyone wants to get them operating 330/767 routes asap?
First to fly the 787-9
 
VSMUT
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 4:57 pm

zkojq wrote:
So if we assume that Cathay Pacific is obliged to take delivery of some of their 777x order, what's the smallest sized 777x fleet that an airline who already operates a lot of 77Ws could economically operate? Obviously a fleet of two or three wouldn't work? How about 8? 10? 12?


KLM has always said 10, but some A380 operators got away with as little as 6 (although it is no secret they don't make enough money that way). AFAIK, Etihad will only take 6 of the 777-9 they have on order, and like the 5 A350-1000s will probably park them immidiately.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 5:15 pm

zkojq wrote:
Surely 321XLRs are in more demand than regular NEOs since everyone wants to get them operating 330/767 routes asap?

It'll be interesting to see if that's the way it works out.

Surely XLR costs more than plain NEO or LR. I suspect flights crossing borders are going to be problematic going forward, quite possibly with quarantine awaiting on the far side. I suspect we may see domestic or inter-Shengen (sp?) flights come back earlier than international ones, and loads will be light. That may suggest airlines end up favoring A320NEO over A321XLR and wide bodies largely stay parked and the few that fly wait till they are full before they go. I think long/thin hub bypass will take a relatively long while to bounce back since minor cities won't be quarantine hosts. I think we may see big wide bodies parked, A359/789 favored for the few longhaul hub to hub flights we have, and smaller shorter ranged narrow bodies also preferred to large.
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 6:30 pm

Airlines who accepted government bail out funds may find that they can operate wide body a/c with social distancing just as easily as operating narrow body a/c.
Removing middle seats on a wide body will probably be the same number as a full narrow body without social distancing, so.....same pax load with subsidized cost.
 
LDRA
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 7:29 pm

AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)


I will make a prediction first variant of 777X family to EIS will be the freight model... Passenger version will not EIS until 2025
 
VSMUT
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 7:53 pm

LDRA wrote:
AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)


I will make a prediction first variant of 777X family to EIS will be the freight model... Passenger version will not EIS until 2025


And I will make the prediction that there will never be a 777X freighter. They will continue building the 777-200F alongside, which is a much better freighter.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 7:53 pm

LDRA wrote:
AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X. No one who currently has ordered will actually want/need it; the demand has taken a huge hit, and they will try to cope with the aircraft they already have. Even when the demand recovers, it will not do so at the level we had before Covid. It is simply too much of a plane for this decade.

(And for sure, CX will at least delay the upcoming 350 deliveries, if not cancel.)


I will make a prediction first variant of 777X family to EIS will be the freight model... Passenger version will not EIS until 2025

Interesting prediction, given that two pax models are already built and (presumably) long lead time items for others have been ordered, and the 778 has been "shelved" for a while.
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 8:36 pm

There also seem to be rumours that CX will swap out the 777x for another model and at a later delivery date. But can't confirm. besides which other model? the next big thing the 787-10 but that has limited range and going by BA's seat map sits about 260 in a 4 class config.
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 8:50 pm

Opus99 wrote:
There also seem to be rumours that CX will swap out the 777x for another model and at a later delivery date. But can't confirm. besides which other model? the next big thing the 787-10 but that has limited range and going by BA's seat map sits about 260 in a 4 class config.


781 for regional Asian routes replacing A330s and 773s around 350 seats.

Keep some 77Ws for 10 years and see what the market is like then as to what will replace them.
 
2175301
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 8:50 pm

Revelation wrote:
kevin5345179 wrote:
If factory is restarting and workers are getting N95, I don't see that as an excuse.

N95 means 95% effective at blocking foreign particles, 5% not effective.

I think Boeing is taking a huge risk of being sued if any of its workers get seriously ill or die.

This could all end in tears.

I think this is another example of a large corporation taking risks and thinking they can deal with the possible blowback later.

That didn't end well with the MAX, and it may not end well here.


Your definition is wrong. N95 means that it will filter 95% of all particles 0.3 microns in size, and larger. N99 will filter 99% of all particles 0.3 microns in size, and larger. N 100 will filter 99.97% of all particles 0.3 microns, and larger.

I've seen particle test results for such mask in the past (I used to be the "Safety" person at a power plant and had to decide what kinds of protective equipment to buy for what activities - I had lots of detailed information on all kinds of things). By the time you get to 1 micron in size a N95 mask is essentially 100%

How that relates to virus such as Covid-19. Viruses are typically in the 0.15-2 microns (average 0.17 microns). However, they are not individual dry particles. They are transported within water droplets of at least 5 microns in size. A N95 mask is 100% effective against 5 microns.

Here's a source for most of the critical data here

https://www.envirosafetyproducts.com/re ... rence.html

Unfortunately, even the CDC is putting out partially false information on what the OSHA safety standards really are; and the Wiki article is also not good.


As for CX and their pending 777X order. I expect that they might indeed walk away. Many 777X orders are currently in jeopardy. Some will get canceled, others will get delayed.

I expect that Boeing will bring the 777X to market and produce it at low levels for a while until demand picks up. Development cost are now likely a total write off and it's unlkely that the "Project" will break even. However, once the development and initial first few frame cost are written off I do expect that overall production cost can reach break-even long term.

"Force Majeure" will be mentioned (if not used) by all companies - including the Aircraft Mfr's with their vendors, and a cascading chain (and can be used to cancel a contract - I did so once for a multi-year coal supply contract to a power plant).

I'm sure that all it takes is a verbal mention of Force Majeure due to Covid-19 to get all companies in a contract to negotiate a relatively peaceful solution. It's wasted energy and money to do anything else.

Similar issues with other aircraft models exist as well. Every model for every company will be hurt.

Have a great day,
 
Opus99
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 8:56 pm

ZK-NBT wrote:
Opus99 wrote:
There also seem to be rumours that CX will swap out the 777x for another model and at a later delivery date. But can't confirm. besides which other model? the next big thing the 787-10 but that has limited range and going by BA's seat map sits about 260 in a 4 class config.


781 for regional Asian routes replacing A330s and 773s around 350 seats.

Keep some 77Ws for 10 years and see what the market is like then as to what will replace them.

yeah looking at CX's fleet build up that makes sense
 
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 10:06 pm

2175301 wrote:
Your definition is wrong. N95 means that it will filter 95% of all particles 0.3 microns in size, and larger. N99 will filter 99% of all particles 0.3 microns in size, and larger. N 100 will filter 99.97% of all particles 0.3 microns, and larger.

I've seen particle test results for such mask in the past (I used to be the "Safety" person at a power plant and had to decide what kinds of protective equipment to buy for what activities - I had lots of detailed information on all kinds of things). By the time you get to 1 micron in size a N95 mask is essentially 100%

How that relates to virus such as Covid-19. Viruses are typically in the 0.15-2 microns (average 0.17 microns). However, they are not individual dry particles. They are transported within water droplets of at least 5 microns in size. A N95 mask is 100% effective against 5 microns.

Here's a source for most of the critical data here

https://www.envirosafetyproducts.com/re ... rence.html

Unfortunately, even the CDC is putting out partially false information on what the OSHA safety standards really are; and the Wiki article is also not good.

Thanks for the important clarifications. Since my post we have a new thread for this topic at viewtopic.php?p=22163749#p22163749 so I will follow up there.

Thanks,
Dave
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klkla
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Re: Rumor: CX to walk away from 777X order

Sun Apr 19, 2020 10:21 pm

AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X.


Very unlikely. It's already developed and in testing.

Most likely they will let customer defer deliveries or switch to 787 and cut production down to the bare minimum (Worse case scenario 6 frames a year) until orders start to pick back up.
 
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Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 5:24 am

klkla wrote:
AirlineCritic wrote:
I will make a prediction that Boeing will cancel the 777X.


Very unlikely. It's already developed and in testing.

Most likely they will let customer defer deliveries or switch to 787 and cut production down to the bare minimum (Worse case scenario 6 frames a year) until orders start to pick back up.



So you expect 6 frames a year for the next 2-3 years? Because that is what we are looking at realistically.
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Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 5:48 am

More like 3-5 and if the demand returns to previous levels is a question nobody can answer.

I personally think 1st class is dead. Anybody able and willing to pay those fares will now probably go private jet, as it means way less contact with other persons and travelling with a controlled group of passengers.

Business traffic will be hit, with many trips being replaced by video conferences and other means even long term. Short term even more so and travel limitations will further reduce it.

In economy family and ethnic traffic will resume quickly. Holiday traffic will depend on how quickly limitations are lifted and if any remain in place. In addition it won´t return to normal lvevels until a vaccine is available.

It could be 2025-2027 before we reach passengers numbers as in 2019 again, which is a huge loss if you consider that a yearly growths of 7% was expected.
 
VSMUT
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Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 7:20 am

seahawk wrote:
I personally think 1st class is dead. Anybody able and willing to pay those fares will now probably go private, as it means way less contact with other persons and travelling with a controlled group of passengers.


First class has been on the deathbed for a while. Business class products are being de-densified with direct aisle acces for all seats and more private seats with walls and doors. Corona virus will hurry up that process.

Lets face it, many first class seats aren't even better than the latest business class seats. See Lufthansa first vs Singapore or the new Aeroflot business.
 
olle
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Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 7:25 am

Until there is one vaccine or major part of populations has been immune the travels between continents will be limited.

Any company that right now are able to walk away from major investments that probably will not be profitable should do so the faster the better.

I see restrictions will be in place for many years partly because the trust for Chinese and other regimes that has not considered transparency as important is low and will remain low for long time.

In 2025 when we have adjusted to the new reality A330NEOs and probably 777X will be compared to 787max and 350Neo. Will they survive that comparison or will they get next gen engines? I would say for the A330Neo no. Perhaps 777X will?
 
Noshow
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Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 8:14 am

Developing, testing and certifying vaccines takes years for a reason. Waiting for vaccines (while Covid-19 might mutate) makes no sense for the air travel industry. Everybody will be dead financially until reliable vaccines are available to the public.
 
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Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 10:02 am

olle wrote:
In 2025 when we have adjusted to the new reality A330NEOs and probably 777X will be compared to 787max and 350Neo. Will they survive that comparison or will they get next gen engines? I would say for the A330Neo no. Perhaps 777X will?


What, re-engine the 777X barely 3-4 years after it entered service?

TBH, I can't see Boeing investing much more in the aircraft until it proves itself in sales.
 
mig17
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Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 10:30 am

olle wrote:
In 2025 when we have adjusted to the new reality A330NEOs and probably 777X will be compared to 787max and 350Neo. Will they survive that comparison or will they get next gen engines? I would say for the A330Neo no. Perhaps 777X will?

The 777X is already the 777 "MAX". It is supposed to have state of art engine for today's standard. The -X is in a bad place like the A380 was years ago (NEO it or end it) : not enough (potential) orders to justify more investment and without more investment it will not get appealing enough. And that was already hiting the program hard before Covid-19. It has been obvious for a year now and confirmed by engine delays, indefinit deferal of the 778, loss of Sunrise, DAS "massive" EK cancellation and no new meaningfull orders.

I think CX trying to walk away from the 777X predates the Covid even if now this decision is conforted by what is happening. Same with Lufthansa by the way. EK has already make a step back and is expected to make more. And EY is "out of the game".

So wait and see what QR does, but with both embargo and Covid striking them, also considering that with 778 shelved, 10 frame are already in limbo, I wouldn't be optimistic.

Idling the 777-X production at a few per years for several years hopping for new orders latter without new investment from now on is just losing more money on each frame even if the developpement cost are written-off. That is exactly what's ended A380 …
727 AT, 737 UX/SK/TO/SS, 747 UT/AF/SQ/BA/SS, 767 UA, 777 AF, A300 IW/TG, A310 EK, A318/19/20/21 AF/U2/VY, A332/3 EK/QR/TX, A343 AF, A388 AF, E145/170/190 A5/WF, Q400 WF, ATR 72 A5/TX, CRJ100/700/1000 A5, C-150/172, PC-6.
 
jfk777
Posts: 7353
Joined: Tue Aug 22, 2006 7:23 am

Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 11:00 am

Boeing will continue with the 777-9 program now that first flight has occurred, even with Cathay's situation they will enter a 777-9 into service with some airline. Maybe a current customer could take over some of Cathay's early order for some of their own later order. British Airways which has 777-9 om order might like to be an early operator if the price is right. BA could also retire more tired 747 for fresh 777-9, even with new 777-300ER coming. Just an idea.
 
RJMAZ
Posts: 2022
Joined: Sat Jul 09, 2016 2:54 am

Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 11:23 am

sxf24 wrote:
zeke wrote:
a 12 month delay is normally a trigger that permits termination by the Buyer with funds returned or compensation.


Again, you quote in isolation without providing context.

- What are the conditions that allow CX to cancel?
- What delivery dates were contractually guaranteed?

Until you can answer those questions, your supposition is a disservice.

Cathay Pacific were expected to get their first 777X in the second half of 2021. Boeing should be able to deliver a few 777X in 2021. Cathay could simply get moved up the delivery schedule and then they have no right to cancel. Deposits could get kept.
 
Reddevil556
Posts: 219
Joined: Thu Dec 27, 2018 2:09 pm

Re: Rumor: CX to walk away from 777X order

Mon Apr 20, 2020 11:35 am

olle wrote:
JayinKitsap wrote:
RJMAZ wrote:
Cutting frequency is the only short term option with reduced demand. If a route already had low frequency then it would get cut entirely forcing that destination to temporarily travel via a hub.

The medium term solution would be to put smaller aircraft on the routes and maintain frequency. It would never return to the hub and spoke model. This means putting a 787 on a route instead of a 777. This is why the largest aircraft have been parked first around the world. Most of the A380's may never fly again as the smaller widebodies will return to service first. If there isn't enough demand left then these larger aircraft will be retired for good.

Good news for Airbus is the A321XLR will be the only aircraft that an Airline can downgauge say a typical 787-8 route. Airlines have shown that long thin routes are highly profitable. If a route can no longer support a 787 then the A321XLR will allow that high profit route to remain open.

This is why I think 777X production is at risk. If demand is down 50% through 2021-2022 and down 30% through to 2025 then the 777X is doomed. There is not enough bums on seats and the largest aircraft gets cut first.


Routes have capacity step by each flight and the capacity of the plane. For NB's it steps at 150 to 200 per plane. So if a route has 900 pax daily right after this crisis 6 planes could handle it. An airline that can capture the majority of these can dominate and be ready for the increase in travel. Routes below this capacity get tricky as a change of 1 aircraft steps the capcity by 20%. Routes with thousands the step gets small and easier to cover.

Hubs like SEA is for Alaska will still work because the SEA O&D is sufficient, but MEM is not becoming a hub again. Networks like WN's have good efficiencies, low demand cities get a route or two, a mid one has like a dozen routes.

On long distance where one plane can RT in a day provides daily flights, longer ones it is alternate days. Cargo becomes important. Yes going to a smaller frame helps adjust but it gets tough with seasonal variations to aviod low load factors. Airlines may prefer using their current 77W's rather than add the 779. An airline like EK wil need the 779, but they have probably 40 too many 77W and 75 too many A380's so it will be several years for EK to unwind its mess.


This would mean that non USA markets adopts to USA model with less big airplanes and a bigger number of NB and smaller WB.


I don’t have any sort of premonition of what’s to come, but it will be interesting to see if the models change.
Jumped out of: C130H, C130J, C17A, C212, CH47, and UH60. Bucket list: C160, A400, C2

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