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lightsaber
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Re: A330neo future bleak from COVID impact

Tue Aug 18, 2020 10:27 pm

smartplane wrote:
lightsaber wrote:
Every doubling of production decreases cost 10% to 13% (13% if automation is fully embraced, 10% just because managing higher production volumes cut costs). Many times management of declining sales aircraft reduce production in the vain hope sales will pick up later. We saw that with the L1011 (which, ironically, had a later sales spike), 767 (wait... I'm eventually going to make my point), 717/MD-80&90, A300, 747, A380, and 757.

And a reduction in production has the inverse effect, plus more.

Boeing has invested far more heavily in volume production compared to Airbus, which if as successful as claimed, translated to lower unit costs of production at higher volumes. Both OEM's are producing below their respective production sweet spots, but Airbus must now be far closer than Boeing.

Boeing have a further problem with component contractors. Great contracts for Boeing at static production levels. Even better when production is rising, with prescribed volume pricing discounts. Great flexibility for Boeing if the supplier is considered to be making too much profit, with an exit clause to bring inhouse, with prescribed compensation. Bad for Boeing, the exit clause and compensation can also be invoked by the supplier, as they discovered with the 748 and MAX.

Boeing conundrum. Inflate component orders and stockpile - buys time, and allows Boeing to move inhouse or find a new supplier. Or risk triggering an exit. Or re-negotiate the contract.

We are discussing the A330NEO at 2/month, was to be 6 month:
https://leehamnews.com/2019/02/04/ponti ... -emirates/

So at this time, the A330NEO is going down the line at a third of the planned rate. Now investment in automated production, including 3D printing, has a process payoff. Neither plane will undo production process gains. So the downside actually has less penalty in costs than the upside if automation was used.

The issue will be for both to cut labor (yes, sad and painful). You cannot have the staff to produce 62 on payroll for 25 per year. In some specialties, you drop from 9 to say 5 workers while Boeing would drop from 21 to say 9. Airbus dropped A330NEO production to minimal skillset retention, there is little cost savings in cutting production any more.

Ironically, the shared engines are helping both. If the A330NEO had a custom engine, that program would be bankrupt.

Yes, the 787 dropped from 14 to soon 6 per month (big production chains cannot drop production instantly). Boeing might be constrained by one site production (a topic for another thread).

https://www.heraldnet.com/business/trou ... ion-in-2q/

I'm afraid the A330NEO's economy of scale is dependent upon AirAsiaX with a little boost by Delta. There is a viable reason to be concerned about the A330NEO.

Lightsaber
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Aither
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Re: A330neo future bleak from COVID impact

Tue Aug 18, 2020 11:25 pm

I hope Airbus will continue to produce the A330neo.
The ceo fleet is quite young and for the short medium haul routes the ceo already works better than any other aircraft.
It has not been overengineered for long distances and it is easy to maintain.

I think before the covid some airline ceos just wanted the newest aircraft. When orders will come back maybe these ceos will be more pragmatic...
Never trust the obvious
 
JayinKitsap
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 12:42 am

SEPilot wrote:
The A330NEO was launched when Boeing was deeply entangled in the 787 problems. They had a huge backlog, we’re having difficulty getting planes out the door and costs were out of control. And no customer could get one quickly if needed. Airbus saw this as an opportunity; produce a quick and dirty re-engine of the A330 and steal a bunch of orders that would have otherwise gone to the 787. This strategy relied on two things. First, that Boeing would not quickly solve their production problems. And second, that Boeing would not be able to slash their costs so as to be able to sell the 787 for what they could sell the A330NEO. But they lost out on both; Boeing got their production problems solved long before the A330NEO got certified, and at the same time slashed production costs to where they can match or beat Airbus’s prices. And at that point the A330NEO really has no advantage in any metric over the 787. The matchup is not as bad as the one between the 77W and the A346, but it is the same scenario at a smaller scale. With both manufacturers struggling over the COVID situation, the A330NEO is certainly the most vulnerable program of either manufacturer, now that the 747 has been axed. It almost certainly would have soldiered on had COVID not hit, but I would be surprised if it survives now. I expect Airbus to tell customers to take them as scheduled or lose them, and to cancel the program.


Great points:

At the very reduced rate of 2/month they bought a bit of time to learn and understand the post - COVID market over the next 2 years to either garner a chunk of orders or begin to announce the wind down. This is time where the current backlog can be shaken out, possibly getting the customer to cancel in a manner most beneficial for Airbus. Only the ones with solid commitments will get built. It will be a very challenging market.

From here on the A330neo is facing stiff competition from new B787 and A350's, but also 10+ old used B787's and A330ceo's, and much newer models of the same that have come back to the lessors, needing a new home. To win over that will take discounts larger than needed pre-Covid, it will be hard to obtain the orders even at a break even position.

Models near their end have orders dry up: 757, 767 (it came back), 747, Q400, CRJ, A340, and A380. After a few years with no or low orders it becomes time to make a change. It would be nice if the A330neo keeps forging ahead, but as you said it is the most exposed program in Aviation. (OK I mentioned the Q400 and CRJ, basically both of these are already ending. I would love to see DHC make the Q400 work, but how can it compete against the 40+ frames already looking for new homes.)
 
ewt340
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 2:04 am

Jetport wrote:
Scotron12 wrote:
Dutchy wrote:
A shame really, but the A330NEO was a stop-gap measure anyway. Airbus probably made some money out of the production run of around 175-200 and kept the prices of the Boeing 787 "honest'. Goal achieved.


I think the A330neo is a lot better than most think. Covid is not helping, but most airframes, not just the A330neo, are effected.

I wouldn't be surprised if EK take 40 A330neos seeing as the 779 is now delayed until 2022, and EK seems to be assessing their fleet away from 777 & A380s.


Why wouldn't EK just order 787's if they want aircraft the size of the A330neo? The 787 is better in every way, the exact same size and can be had for essentially the same price. Unless the Consortium is willing to sell them at huge losses (Delta Orders?), no airline in their right mind would choose an A330neo over a 787 now that there is no availability issue with the 787.

The 777X has no direct competitor, the A330neo has a superior direct competitor.


They might order both A330-900neo and B787-9.
The main reason why they could order both is because they order too much A380 and B777X. These A330-900neo and B787-9 would be a conversion rather than a new order.

It's a good gain for A330neo backlog, but B787 is already a success, so it wouldn't affected them much.
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 6:42 am

Aither wrote:
I hope Airbus will continue to produce the A330neo.
...


Do you think there is any other option?
The only widebody aircraft Airbus produces are A330neo and A350.

Unless they decide to launch a new widebody it seems they don't have any choice but to continue the production of A330neo at any cost.
 
Noshow
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 6:53 am

There are plenty of used wide body twins airplanes available now for cheap. Both because of corona and the generation change to A350s and 787s.
While it was worth it for Airbus to put pressure on the 787 by offering both the A350 and A330neo I see the latter in some dilemma: Expensive because of the new engines but not fully capable being "old technology".
 
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flee
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 7:26 am

lightsaber wrote:
I'm afraid the A330NEO's economy of scale is dependent upon AirAsiaX with a little boost by Delta. There is a viable reason to be concerned about the A330NEO.

Lightsaber

I don't know what production levels need to be to achieve economies of scale for the A330neo. I doubt Airasia X and Delta's delivery streams amount to more than 12-15 aircraft p.a. That is only approximately 1 aircraft per month.
 
Noshow
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 7:47 am

The old A330/A340 line must be written off? So it should be cheap to build new A330neos compared to new high tech lines with expensive technologies and teething troubles.. Experienced final assembly staff is available as well that is far down the learning curve. It doesn't get much better than this.
 
jeffrey0032j
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:01 am

Noshow wrote:
The old A330/A340 line must be written off? So it should be cheap to build new A330neos compared to new high tech lines with expensive technologies and teething troubles.. Experienced final assembly staff is available as well that is far down the learning curve. It doesn't get much better than this.

As explained above, the 787 has managed to erase the A330 cost advantage, the 787 is also a mature product with almost all the teething problems resolved for quite a few years now, plus production issues have been ironed out long ago - the 787 is more available than the A330 now if you ordered a brand new one now. The only problem left for the 787 is the RR engine issue, which affects only a minority of the 787s due to dual engine choice. Airbus has a higher exposed risk to potential RR issues as they are pure RR on the widebody front.

Basically, you get a newer tech plane at the same price or cheaper than an A330neo.
Last edited by jeffrey0032j on Wed Aug 19, 2020 8:03 am, edited 1 time in total.
 
tommy1808
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:02 am

Jetport wrote:
Scotron12 wrote:
Dutchy wrote:
A shame really, but the A330NEO was a stop-gap measure anyway. Airbus probably made some money out of the production run of around 175-200 and kept the prices of the Boeing 787 "honest'. Goal achieved.


I think the A330neo is a lot better than most think. Covid is not helping, but most airframes, not just the A330neo, are effected.

I wouldn't be surprised if EK take 40 A330neos seeing as the 779 is now delayed until 2022, and EK seems to be assessing their fleet away from 777 & A380s.


Why wouldn't EK just order 787's if they want aircraft the size of the A330neo? The 787 is better in every way, the exact same size and can be had for essentially the same price. .


if you look at seat maps the A339 is bigger than the 789. Virgin flies the 789 and A333 with the same seat total, but the Airbus has 13 more premium economy seats on board ..... about 4 ~12 seats more effectively.

no airline in their right mind would choose an A330neo over a 787 now that there is no availability issue with the 787


Considering VS is an 789 operator AND ordered A339 that means VS went crazy then i guess? They seem to think its sufficiently better to justify a 2nd type in virtually the same size, and in VS network, range category.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
jeffrey0032j
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:06 am

tommy1808 wrote:
Jetport wrote:
Scotron12 wrote:

I think the A330neo is a lot better than most think. Covid is not helping, but most airframes, not just the A330neo, are effected.

I wouldn't be surprised if EK take 40 A330neos seeing as the 779 is now delayed until 2022, and EK seems to be assessing their fleet away from 777 & A380s.


Why wouldn't EK just order 787's if they want aircraft the size of the A330neo? The 787 is better in every way, the exact same size and can be had for essentially the same price. .


if you look at seat maps the A339 is bigger than the 789. Virgin flies the 789 and A333 with the same seat total, but the Airbus has 13 more premium economy seats on board ..... about 4 ~12 seats more effectively.

no airline in their right mind would choose an A330neo over a 787 now that there is no availability issue with the 787


Considering VS is an 789 operator AND ordered A339 that means VS went crazy then i guess? They seem to think its sufficiently better to justify a 2nd type in virtually the same size, and in VS network, range category.

best regards
Thomas

Different airlines spec their planes differently, at a certain Asian airline, their 787s seat more than their highest capacity A350.

Furthermore VS is in trouble, it is one of the airlines mentioned in the Leeham article explaining why the A330 is at risk.
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:11 am

tommy1808 wrote:
...
Considering VS is an 789 operator AND ordered A339 that means VS went crazy then i guess? They seem to think its sufficiently better to justify a 2nd type in virtually the same size, and in VS network, range category.


We do not know what kind of deal (financing, services, engine related concessions etc ..) they got, do we?
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:15 am

jeffrey0032j wrote:
As explained above, the 787 has managed to erase the A330 cost advantage, the 787 is also a mature product with almost all the teething problems resolved for quite a few years now, plus production issues have been ironed out long ago - the 787 is more available than the A330 now if you ordered a brand new one now.


This keeps being repeated as is if it fact, there is no evidence to support that the true cost of building a 787 is lower than the A330, especially now with all the investment that was made to have two lines producing high volumes and volumes now not even enough to support a single line.

All of the real estate, buildings, machinery, tooling and staff costs are being spread over way fewer airframes.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
tommy1808
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:24 am

jeffrey0032j wrote:
tommy1808 wrote:
Jetport wrote:

Why wouldn't EK just order 787's if they want aircraft the size of the A330neo? The 787 is better in every way, the exact same size and can be had for essentially the same price. .


if you look at seat maps the A339 is bigger than the 789. Virgin flies the 789 and A333 with the same seat total, but the Airbus has 13 more premium economy seats on board ..... about 4 ~12 seats more effectively.

no airline in their right mind would choose an A330neo over a 787 now that there is no availability issue with the 787


Considering VS is an 789 operator AND ordered A339 that means VS went crazy then i guess? They seem to think its sufficiently better to justify a 2nd type in virtually the same size, and in VS network, range category.

best regards
Thomas

Different airlines spec their planes differently, at a certain Asian airline, their 787s seat more than their highest capacity A350.


And your point is? As i pointed out the A333 has the same number of seats, 264, with the same number of C and 13 *more* Premium economy seats, i.e. its bigger. Its the same airline with the same seats at the same densities, the same outfitting philosophy, not your apple and oranges high capacity regional vs. premium heavy long haul.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:25 am

zeke wrote:
jeffrey0032j wrote:
As explained above, the 787 has managed to erase the A330 cost advantage, the 787 is also a mature product with almost all the teething problems resolved for quite a few years now, plus production issues have been ironed out long ago - the 787 is more available than the A330 now if you ordered a brand new one now.


This keeps being repeated as is if it fact, there is no evidence to support that the true cost of building a 787 is lower than the A330, especially now with all the investment that was made to have two lines producing high volumes and volumes now not even enough to support a single line.

All of the real estate, buildings, machinery, tooling and staff costs are being spread over way fewer airframes.

In the same vein, there is also no evidence to support A330neo's cost advantage, especially given the lack of demand and poor production rates even before Covid struck.
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 8:29 am

zeke wrote:
...
This keeps being repeated as is if it fact, there is no evidence to support that the true cost of building a 787 is lower than the A330, especially now with all the investment that was made to have two lines producing high volumes and volumes now not even enough to support a single line.

All of the real estate, buildings, machinery, tooling and staff costs are being spread over way fewer airframes.


As of end of July 2020, Boeing has delivered 977 units of 787.
It is obvious that at this stage the unit production cost of the 787 is not as expensive as some people out there think.
 
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zeke
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 9:02 am

jeffrey0032j wrote:
In the same vein, there is also no evidence to support A330neo's cost advantage, especially given the lack of demand and poor production rates even before Covid struck.


The A330/A340 production line was fully amortised a long time ago. Producing an additional frame isn’t required to pay off new real estate, machinery, tooling etc.


VV wrote:
As of end of July 2020, Boeing has delivered 977 units of 787.
It is obvious that at this stage the unit production cost of the 787 is not as expensive as some people out there think.


And Airbus has produced around 1900 aircraft off the SINGLE A330/A340 line.

Can you remind me what number Boeing has targeted in their project accounting For the 787 in their statements, is it 1500 aircraft ? That number I assume assumes a certain production level across TWO production lines which would not be being met.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
Noshow
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 9:10 am

The 787 seems to be so expensive to build that Boeing has halted the planned 787-3 version. If there is such a big need for NMA why not just put a new set of custom tailored wings on the existing 787 and built some new 787-3? They don't do it even with a matured frame, economies of scale and two lines needing business it seems to not work.
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 9:14 am

zeke wrote:
jeffrey0032j wrote:
In the same vein, there is also no evidence to support A330neo's cost advantage, especially given the lack of demand and poor production rates even before Covid struck.


The A330/A340 production line was fully amortised a long time ago. Producing an additional frame isn’t required to pay off new real estate, machinery, tooling etc.


VV wrote:
As of end of July 2020, Boeing has delivered 977 units of 787.
It is obvious that at this stage the unit production cost of the 787 is not as expensive as some people out there think.


And Airbus has produced around 1900 aircraft off the SINGLE A330/A340 line.

Can you remind me what number Boeing has targeted in their project accounting For the 787 in their statements, is it 1500 aircraft ? That number I assume assumes a certain production level across TWO production lines which would not be being met.


Well I think there are currently a total of 1,510 orders since its launch in 2004, which not too bad in my opinion
In addition it is for only three models, that are the 787-8, 787-9 and 787-10.
Since its entry into service in 2011, 977 have been delivered. That's a span of 16 years from launch and 9 years from EIS.

As for the A330/A340, I think they started with A340-200 that entered into service in 1993. There have been a lot of models since then: A340-200, A340-300, A340-500, A340-600, A330-200, A330-300.

That's a span of 27 years. I cannot believe the overall cost has been lower for A330/340 program overall than for 787. I am sorry, but I do not buy it. I am sorry.
 
9Patch
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 9:34 am

VV wrote:
The issue with A330 neo is the fact it is surrounded by the A350, 787 and relatively young second hand A330 CEO.

You can find A330-300 to lease easily nowadays. The lease rate can be as low as US$ 300,000 per month.
http://www.airfax.aero/jta.htm#A34


Leeham News and Analysis has a short article on aircraft values and lease rates posted today:

Aircraft values and least rental rates for selected 5-year old aircraft fell in a six week period, some dramatically.

Airbus A330-300 lease rates dropped a staggering 45% in six weeks, Ishka reports—for a 5-year old aircraft.


Image

https://leehamnews.com/2020/08/19/hotr- ... to-plunge/
 
tommy1808
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:04 am

VV wrote:
That's a span of 27 years. I cannot believe the overall cost has been lower for A330/340 program overall than for 787. I am sorry, but I do not buy it. I am sorry.


The 787 program has spend what, ~32 billion in R&D and still has 16 Billion deferred production cost to pay off, Boeing thinks they need to make 1600 units to get the program out of the red.
https://www.seattletimes.com/business/b ... 2-billion/

They needed the first 400 units to make it for the price they sell it for and still need to recover 30 million a pop to make that work ...and barely seem able to extract that from the market.
https://www.boeing.com/investors/accoun ... tions.page

Seems in 2019 they got 27 Million USD a pop.

They may not ever turn a profit: https://leehamnews.com/2020/08/05/hotr- ... -programs/

Airbus spend 8.4 Billion in R&D on A332, A333, A338, A339, A342, A343, A345, A346 combined. .....

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:05 am

9Patch comment #120 ( viewtopic.php?f=3&t=1450501&start=100#p22376971 )

Yes, it is interesting that you can find very easily a lot of A330-300 at 230 tonnes MTOW with low lease rate.

You can compare the lease rate of an 8 years old A330-300 vs a new A330-900. The conclusion is shocking.
From Total Aircraft Related Operating Cost (TAROC or DOC) perspective, an 8 years old A330-300 at 230 tonnes MTOW is much more attractive than a new A330-900.

It is a real issue for the A330neo that is ramping up production.
In my opinion, the production rate of the A330neo will have to go down again.

Only Airbus knows what the reality is.
 
Noshow
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:10 am

8.4 billion combined? This number must be wrong and sounds way too low. No way.
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:11 am

tommy1808 wrote:
...
Airbus spend 8.4 Billion in R&D on A332, A333, A338, A339, A342, A343, A345, A346 combined. .....
...


I think this number is not right.

The A340-500 and A340-600 development alone is more than 4 billion. I do not remember exactly the number and I am not going to try finding it.
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:15 am

Noshow wrote:
8.4 billion combined? This number must be wrong and sounds way too low. No way.


I agree.

It is simply unreasonable to think that A340-200, A340-300, A340-500, A340-600, A330-200 and A330-300 over a span of 30 years can be so cheap.

I do not know how the person got the number, but it also puts a huge question mark on the way he obtained the development cost of the 787.
 
tommy1808
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:26 am

Noshow wrote:
8.4 billion combined? This number must be wrong and sounds way too low. No way.


keep in mind that essentially all of that was spend two to three decades ago.

A332, A333, A342, A343: 3.5 Billion https://www.flightglobal.com/long-time- ... 04.article
A345/A346: 2.9 Billion http://janes.migavia.com/inter/airbus/a340.html
A338/339: 2 Billion https://www.reuters.com/article/us-airb ... QI20140610

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:33 am

tommy1808 wrote:
Noshow wrote:
8.4 billion combined? This number must be wrong and sounds way too low. No way.


keep in mind that essentially all of that was spend two to three decades ago.

A332, A333, A342, A343: 3.5 Billion https://www.flightglobal.com/long-time- ... 04.article
A345/A346: 2.9 Billion http://janes.migavia.com/inter/airbus/a340.html
A338/339: 2 Billion https://www.reuters.com/article/us-airb ... QI20140610


It is not because it is stated by flightglobal or other sources it is true.
 
tommy1808
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:39 am

VV wrote:
tommy1808 wrote:
Noshow wrote:
8.4 billion combined? This number must be wrong and sounds way too low. No way.


keep in mind that essentially all of that was spend two to three decades ago.

A332, A333, A342, A343: 3.5 Billion https://www.flightglobal.com/long-time- ... 04.article
A345/A346: 2.9 Billion http://janes.migavia.com/inter/airbus/a340.html
A338/339: 2 Billion https://www.reuters.com/article/us-airb ... QI20140610


It is not because it is stated by flightglobal or other sources it is true.


Its not because you not liking numbers makes them untrue.

You can dig through a myriad of WTO complaint related documents to pick out rock hard accounting numbers if you like.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
Noshow
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:52 am

Maybe this is not adjusted by value for today's Dollars and mixing up amounts from tens of years ago with current budgets?
 
Sokes
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:53 am

jeffrey0032j wrote:
The only problem left for the 787 is the RR engine issue, which affects only a minority of the 787s due to dual engine choice. Airbus has a higher exposed risk to potential RR issues as they are pure RR on the widebody front.

And which may be the reason Airbus won't cancel the A330Neo even if they wanted to.
GE may do further exclusives with Boeing. What if the government with it's defense spending urges GE to do exclusives?
From whom will Airbus buy engines for a competing product?
Last edited by Sokes on Wed Aug 19, 2020 10:56 am, edited 1 time in total.
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Sokes
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 10:55 am

tommy1808 wrote:
keep in mind that essentially all of that was spend two to three decades ago.

One should assume that this is obvious.
Why can't the world be a little bit more autistic?
 
Sokes
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:15 am

tommy1808 wrote:
The 787 program has spend what, ~32 billion in R&D and still has 16 Billion deferred production cost to pay off, Boeing thinks they need to make 1600 units to get the program out of the red.

From memory, might be wrong:
Deferred production cost and tooling does not include research expenditures. E. g. early frames written of as research expenses are written of in one quarter.

Even if Boeing will have to make write downs on the B787, the program may have still been profitable.
I make up numbers now:
Suppose the 200. frame cost 130 million $ to produce and was sold for 130 million $. If Boeing deferred 10 million $ of the production cost they would take 10 million $ credit, write 10 million $ as deferred production cost under assets and use these 10 million $ to buy back shares.

Boeing reduces deferred costs with speed now.
Since a few quarters I'm on. k. with their accounting/ assumptions.
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:22 am

Noshow wrote:
Maybe this is not adjusted by value for today's Dollars and mixing up amounts from tens of years ago with current budgets?


:checkmark:
Well, the A330/340 program cost is in 2001 USD, the A345/6 in the ballpark as EIS was 2002. If the neo is in 2015 USD and the 787 in 2010 you get:

5.1 Billion for the A330/340
4.2 Billion for the A345/6
2.2 Billion for the A338/9
38 Billion for the 787

in 2020 USD according to https://www.usinflationcalculator.com/

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
VV
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:27 am

9Patch wrote:
VV wrote:
The issue with A330 neo is the fact it is surrounded by the A350, 787 and relatively young second hand A330 CEO.

You can find A330-300 to lease easily nowadays. The lease rate can be as low as US$ 300,000 per month.
http://www.airfax.aero/jta.htm#A34


Leeham News and Analysis has a short article on aircraft values and lease rates posted today:

Aircraft values and least rental rates for selected 5-year old aircraft fell in a six week period, some dramatically.

Airbus A330-300 lease rates dropped a staggering 45% in six weeks, Ishka reports—for a 5-year old aircraft.


Image

https://leehamnews.com/2020/08/19/hotr- ... to-plunge/



While I understand very well why they compare the values and the lease rates all for a 5 years old aircraft, I guess the comparison would be more meaningful if previous generation aircraft is compared at older age.

Very often airline owned aircraft is not sold before 10 years. In addition the first lease term, especially on sale and lease back deal, is usually quite long, say of eight or ten years.

It means that it may not be easy to find 5 years old A330-900 whereas there are a plethora of 8 years old A330-300 to lease.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:29 am

Sokes wrote:
tommy1808 wrote:
The 787 program has spend what, ~32 billion in R&D and still has 16 Billion deferred production cost to pay off, Boeing thinks they need to make 1600 units to get the program out of the red.

From memory, might be wrong:
Deferred production cost and tooling does not include research expenditures. E. g. early frames written of as research expenses are written of in one quarter..


those are separate items, they spend that R&D money *and* racked up the deferred production cost. All is included in the accounting block, so 1600 Units delivered until the ink gets a new color for the program. From the Boeing accounting we can see quite well how much deferred production and tooling costs are going down per plane. They need 30 million, in 2019 they didn´t get that.

Even if Boeing will have to make write downs on the B787, the program may have still been profitable.


Hence i wrote it may not ever make money, not it won´t.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:32 am

Noshow wrote:
The 787 seems to be so expensive to build that Boeing has halted the planned 787-3 version. If there is such a big need for NMA why not just put a new set of custom tailored wings on the existing 787 and built some new 787-3? They don't do it even with a matured frame, economies of scale and two lines needing business it seems to not work.

There is no engine for the plane you propose.

From carbon fiber cost alone I wonder if you are right. A220 doesn't sell like hotcake.
And Airbus didn't even need to spend money for development. Embraer can do without it and for the thousands of narrowbodies on order neither manufacturer considers a new carbon wing worth it.

Now if one holds a carbon fiber bicycle attachment in the hand, carbon fiber looks like the obvious choice for wings. It's outrageous lightweight.
Apparently it's not so obvious. How to explain beside cost?
Last edited by Sokes on Wed Aug 19, 2020 11:37 am, edited 1 time in total.
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:33 am

VV wrote:
It means that it may not be easy to find 5 years old A330-900 .


it would be a freaking miracle to find one considering the oldest doesn´t even have two years in service.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:37 am

Noshow wrote:
The 787 seems to be so expensive to build that Boeing has halted the planned 787-3 version. If there is such a big need for NMA why not just put a new set of custom tailored wings on the existing 787 and built some new 787-3? They don't do it even with a matured frame, economies of scale and two lines needing business it seems to not work.

The 783 was cancelled not because the 787 was too expensive to build but rather because it wasn’t a particularly great aircraft. After something like 600nm the 788 was more efficient than the 783.

Issue with a making a rewinged 787 for NMA is the main competition is not another wide body, but rather the risk that Airbus would just stretch the A321 more. So Boeing was looking at a clean sheet so they could hopefully fully optimize both design and production to generate a wide body that would be competitive with a narrow body.
Last edited by Polot on Wed Aug 19, 2020 11:41 am, edited 1 time in total.
 
Noshow
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:39 am

And why is it not considered now as the (to be modified) base for another try? Because production costs are too high per frame.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:43 am

Noshow wrote:
And why is it not considered now as the (to be modified) base for another try? Because production costs are too high per frame.

I added that in a late edit.

As to why Boeing is not looking at that at this particular moment...it should be fairly obvious. Neither Boeing nor Airbus are committing to new programs during the present situation.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:46 am

VV wrote:
tommy1808 wrote:
...
Considering VS is an 789 operator AND ordered A339 that means VS went crazy then i guess? They seem to think its sufficiently better to justify a 2nd type in virtually the same size, and in VS network, range category.


We do not know what kind of deal (financing, services, engine related concessions etc ..) they got, do we?


I can think of several reasons alone why the A330neo is a compelling option for VS even without knowing what sort of deal they got...

1. VS already operate 14 A330ceo's and only disposed of their final A340's this year (plus A350's are continuing to be delivered), so there's far less cost in training existing Airbus-rated pilots and crew on A330neo's compared to training them all on 787's. They've been operating Airbus aircraft for over 25 years now, so knowledge of their aircraft is well entrenched within VS

2. The A330neo is capable of operating to any destination on their existing network

3. Deliveries are/were due to commence in 2021 which coincides with the first of the ceo's being returned to the leaseco's, but I accept we don't know whether Boeing could have delivered 787's in the required timescales

Also bear in mind that the VS 787 fleet are all-RR and were affected by the engine issues - something that finally fully resolved in May. It's the reason why they took on the ex-Air Berlin A330-200's. They could have gone with GE engines for another batch of 787's, but obviously it's not ideal having 2 engine types for the same fleet. For all we know, RR could have factored in the 787 disruption into the deal for the A330neo engines. They, like many other airlines, were also impacted by the EIS delays and only took first delivery in 2014 almost 3 years later than planned. It also meant the A340-300's soldiered on until 2015.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 11:48 am

tommy1808 wrote:
VV wrote:
It means that it may not be easy to find 5 years old A330-900 .


it would be a freaking miracle to find one considering the oldest doesn´t even have two years in service.


That's exactly my point. The table presented by Leehamnews is only valid in three years.
It is only true if there will be 5 years old A330-900 to lease in three years or if there are a lot of 5 years old A330-300 to lease.
The production of A330 CEO is dwindling down quickly, which is normal because the A330neo is ramping up.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 1:47 pm

tommy1808 wrote:
Noshow wrote:
Maybe this is not adjusted by value for today's Dollars and mixing up amounts from tens of years ago with current budgets?


:checkmark:
Well, the A330/340 program cost is in 2001 USD, the A345/6 in the ballpark as EIS was 2002. If the neo is in 2015 USD and the 787 in 2010 you get:

5.1 Billion for the A330/340
4.2 Billion for the A345/6
2.2 Billion for the A338/9
38 Billion for the 787

in 2020 USD according to https://www.usinflationcalculator.com/

best regards
Thomas

It'd come across better if you didn't lump in one vendor's production costs when comparing both vendor's R&D spending.
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 2:20 pm

VV wrote:

Well I think there are currently a total of 1,510 orders since its launch in 2004, which not too bad in my opinion
In addition it is for only three models, that are the 787-8, 787-9 and 787-10.
Since its entry into service in 2011, 977 have been delivered. That's a span of 16 years from launch and 9 years from EIS.


The A330/A340 was a single production line with each model being made next to each other, in ball park numbers it’s 1500 A330s delivered and around 400 A340s, ball park 1900 airframes off the same production line.

The 787 ball park has had 1000 aircraft delivered over two production lines, i.e a ball park average of 500 aircraft each.

Each 787 production line therefore has only produced around a quarter of what the A330/340 line has, again ballpark numbers just to illustrate the magnitude of the difference.

If Boeing goes back to 6 787s per month, that’s only 3 airframes per production line whicH isn’t much different to 2 per month off the single A330 line.

VV wrote:
You can compare the lease rate of an 8 years old A330-300 vs a new A330-900. The conclusion is shocking.
From Total Aircraft Related Operating Cost (TAROC or DOC) perspective, an 8 years old A330-300 at 230 tonnes MTOW is much more attractive than a new A330-900.


Why wouldn’t cheap A330s available now be a much bigger threat to the 787 than A330neos ? Surely after COVID CAPEX will be restricted making cheap leased aircraft more attractive.
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 2:31 pm

Revelation wrote:
tommy1808 wrote:
Noshow wrote:
Maybe this is not adjusted by value for today's Dollars and mixing up amounts from tens of years ago with current budgets?


:checkmark:
Well, the A330/340 program cost is in 2001 USD, the A345/6 in the ballpark as EIS was 2002. If the neo is in 2015 USD and the 787 in 2010 you get:

5.1 Billion for the A330/340
4.2 Billion for the A345/6
2.2 Billion for the A338/9
38 Billion for the 787

in 2020 USD according to https://www.usinflationcalculator.com/

best regards
Thomas

It'd come across better if you didn't lump in one vendor's production costs when comparing both vendor's R&D spending.


The Seattle times piece doesn't read like they'd be talking about anything but production costs, but I did in deed miss that half was for 787 already build at that time. How many did Boeing build before September 24, 2011?

Best regards
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 2:39 pm

zeke wrote:
...
Why wouldn’t cheap A330s available now be a much bigger threat to the 787 than A330neos ? Surely after COVID CAPEX will be restricted making cheap leased aircraft more attractive.


Well, the thread is about the difficulties faced by A330neo, but since you ask it I will try to answer.

The reality is that airlines do not necessarily want to retrain pilots and so on. So, some A330 CEO customers with GE or PW engines that need more capacity will take other A330 CEOs, most probably with Trent 700 engines.
You probably know the vast majority of "young" A330 CEO are powered by Trent 700.

I have been in discussion with at least one lessor who told me there are some 787-8 that are already in the secondary market. It is very understandable considering the fact the first 787 entered into service in 2011. There are not a lot of them but there are some.

There are a lot of A330 CEO that are now coming to the second lease term. With the current situation, many airlines do not want to renew the lease and then they are offered to the market.

As for the 787, Boeing are delivering mostly 787-9 and 787-10 that are closer to A350-900 from capability perspective. So the competition is not really between A330 CEO and 787. It is more A350-900 vs 787-9 and 787-10 because it is all about the capability.

The efficiency difference between A330 CEO and A330 neo is not as great as between A330 CEO and 787.
Hence the threat from A330 CEO is really on the A330 neo.
You can also say the competition is more about A330neo vs 787-9 and 787-10.
Or worse, A330neo vs A350-900 or vs 787 or vs A330 CEO.

I think the issue with the A330neo is the fact Airbus did not stretch it a little bit. I can understand the reason because it would become too close to the A350-900. On the other hand, the fact they kept the fuselage length has an effect on the competitiveness.

Do not get me wrong, I am not biased but only explaining what I perceive. You can believe it or not, it does not matter to me.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 2:50 pm

zeke wrote:
The A330/A340 was a single production line with each model being made next to each other, in ball park numbers it’s 1500 A330s delivered and around 400 A340s, ball park 1900 airframes off the same production line.

The 787 ball park has had 1000 aircraft delivered over two production lines, i.e a ball park average of 500 aircraft each.

Each 787 production line therefore has only produced around a quarter of what the A330/340 line has, again ballpark numbers just to illustrate the magnitude of the difference.

Yet you ignored that Airbus has been delivering their planes for 27 years and Boeing has been delivering theirs for 9 years, so you're comparing a ball park to an airport.

I'm wondering why we are discussing the past production rate of A340 and A330ceo when the topic is the future of the A330neo.
Last edited by Revelation on Wed Aug 19, 2020 2:54 pm, edited 1 time in total.
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 2:54 pm

SEPilot wrote:
And second, that Boeing would not be able to slash their costs so as to be able to sell the 787 for what they could sell the A330NEO.


Could you, or anyone, provide a link or document showing that production costs are comparible for both planes please? Not doubting it, would like to read more about it.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 3:16 pm

Revelation wrote:
...
I'm wondering why we are discussing the past production rate of A340 and A330ceo when the topic is the future of the A330neo.


Exactly.

This discussion thread started when LeehamNews wrote that A330neo's future is bleak because of the COVID-19 crisis.

Some posters said that it is not necessarily because of COVID-19, but the case was inherently flawed. The crisis only accelerates the process.

Then the discussion veered to as why young second hand A330 CEO is a real threat to the A330neo. It is true that there are a lot of A330 CEO in the market nowadays.

As why there was this discussion about A330/A340 production cost vs 787 production cost, it is a mystery.
 
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Re: A330neo future bleak from COVID impact

Wed Aug 19, 2020 4:30 pm

jeffrey0032j wrote:
As explained above, the 787 has managed to erase the A330 cost advantage, the 787 is also a mature product with almost all the teething problems resolved for quite a few years now, plus production issues have been ironed out long ago - the 787 is more available than the A330 now if you ordered a brand new one now. The only problem left for the 787 is the RR engine issue, which affects only a minority of the 787s due to dual engine choice. Airbus has a higher exposed risk to potential RR issues as they are pure RR on the widebody front.

Basically, you get a newer tech plane at the same price or cheaper than an A330neo.



Other than the HA order where it seems like Boeing went all out to get the 787 in, what evidence is there that the 787 is being sold for the same price or cheaper?

Noshow wrote:
8.4 billion combined? This number must be wrong and sounds way too low. No way.


Development was 15 years before and it didn't suffer the delays that added to the cost for the program.

Polot wrote:
The 783 was cancelled not because the 787 was too expensive to build but rather because it wasn’t a particularly great aircraft


Seems like this is not what was thought in 2010. Maybe some revisionist history?

Boeing raises aircraft prices 5.2%, cancels short-haul 787

The 787-3 was designed to carry up to 330 passengers as far as 3,500 miles, compared with the 787-8’s top capacity of 250 people and 9,400-mile range. Boeing has been reviewing the model’s future after All Nippon Airways swapped its 787-3 order for another variant in January.

All Nippon had been the last carrier to hold an order for the 787-3, which was designed specifically for the Japanese market.

Boeing diverted resources from the short-haul model in 2008 as it struggled to move the long-distance 787-8 toward production amid problems with parts shortages, redesigns and incomplete work by suppliers. The Dreamliner’s entry into service is running about three years behind schedule.


I struggle to accept that Boeing's engineers were not able to work out what the constraints of the wing was compared to the 788. I think much like why they decided to have the same wing across 3 models when the plans were different, the delays and increased cost meant that reasons had to be found why they made the decisions they did. Do we really think there wouldn't have been a 783 and different wing between the models had they executed the program as envisaged?

VV wrote:
Revelation wrote:
...
I'm wondering why we are discussing the past production rate of A340 and A330ceo when the topic is the future of the A330neo.


Exactly.

This discussion thread started when LeehamNews wrote that A330neo's future is bleak because of the COVID-19 crisis.

Some posters said that it is not necessarily because of COVID-19, but the case was inherently flawed. The crisis only accelerates the process.

Then the discussion veered to as why young second hand A330 CEO is a real threat to the A330neo. It is true that there are a lot of A330 CEO in the market nowadays.

As why there was this discussion about A330/A340 production cost vs 787 production cost, it is a mystery.


You guys don't know why we are discussing the production cost for aircraft on a topic about future prospects? Unless we think the 787 will have no influence on future sales of the A330neo, impossible, then the different challenges both programs will face comes into the discussion. One of those challenges is the cost to buy a new aircraft and one of the factors is the money spent on the programs. Maybe the information being given isn't what you would like to read, but it doesn't make it off topic.

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