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lightsaber
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Re: The case for more aircraft production cuts/playing chicken

Fri Jan 22, 2021 7:54 pm

A good summary of the market on Aviation Week:
https://aviationweek.com/air-transport/ ... ate-demand

Some program-specific aspects are also worth considering. Boeing will want to show that market confidence is returning for the MAX, and the best way to do so is by announcing new orders, such as the one Ryanair placed. The low-cost carrier surely did not pay anywhere near list prices for the aircraft.

Airbus does not have that type of issue with the A320neo family. Yet its A330neo program is in trouble, with a weak backlog that could shrink even more. The A330neo already limits Boeing’s pricing power on the competing 787. Some further concessions are possible to keep A330neo production going at reasonable levels.


In my opinion, there is so much uncertainty, discounting will have to happen. In effect because:
1. The A220 has an advantage in cost per flight.
2. Prior posts on MAX discounts. This puts pressure on the A320NEO, but not so much the A321NEO.
3. Getting more A330NEO will impact the 787 which impacts the A350 and 777x.

To seriously discuss a market, we need more passengers and that is a ways off.
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Re: The case for more aircraft production cuts/playing chicken

Sun Jan 24, 2021 5:50 pm

Production backlogs - firm as cheesecake.

DUBAI (Reuters) - Bahrain’s Gulf Air is in talks with Airbus and Boeing to delay some aircraft deliveries as the pandemic continues to distrupt global travel, its acting chief executive said on Sunday.

State-owned Gulf Air expects Airbus A320neo deliveries to be put on hold until 2022, though it hopes to receive at least three larger A321neos this year, Acting CEO Waleed Abdulhameed Al Alawi told Reuters.


It also cancelled its order for 10 Airbus A220s, signed when it was the Bombardier CSeries.

Possible delays to 787-9s, too.

https://www.reuters.com/article/us-bahr ... SKBN29T0CX
 
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 1:21 am

I actually think the production cuts will have to remain in place for years.

My logic is that say 5% of the global fleet gets replaced each year as the aircraft wear out. With the global fleet having such little usage any aircraft that was going to be retired in say 2025 can now operate to 2026. They will not retire every aircraft a year early just to keep the manufacturers production line happy. Airbus and Boeing will then need to cut a full years worth of aircraft production straight away. This would get spread out over multiple years. Say 75% production rate for 4 years.

It gets worse. This also assumes the number of passengers goes to back to the same level. Year on year airline growth was extremely high before Covid19. Airlines had ordered to fill this growth. Passenger numbers for 2022 might be 25% below where they would have been of Covid19 didn't happen. The industry might then start growing again normally but from this lower start point. That means 2023 and 2024 will also be 25% down compared to if Covid19 didn't happen. 25% of all current aircraft orders must then disappear. This is huge. Production rates will probably have to remain at 75% of where they would have been for the next 10 years. Or most likely they will drop to below 50% rate during 2022 as no customer actually want to accept aircraft.

I do not see how the A330NEO and A350 lines can both remain open while turning a profit at such low rates. The 777X is also dead.
 
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 2:54 am

RJMAZ wrote:
I actually think the production cuts will have to remain in place for years.

My logic is that say 5% of the global fleet gets replaced each year as the aircraft wear out. With the global fleet having such little usage any aircraft that was going to be retired in say 2025 can now operate to 2026. They will not retire every aircraft a year early just to keep the manufacturers production line happy. Airbus and Boeing will then need to cut a full years worth of aircraft production straight away. This would get spread out over multiple years. Say 75% production rate for 4 years.

It gets worse. This also assumes the number of passengers goes to back to the same level. Year on year airline growth was extremely high before Covid19. Airlines had ordered to fill this growth. Passenger numbers for 2022 might be 25% below where they would have been of Covid19 didn't happen. The industry might then start growing again normally but from this lower start point. That means 2023 and 2024 will also be 25% down compared to if Covid19 didn't happen. 25% of all current aircraft orders must then disappear. This is huge. Production rates will probably have to remain at 75% of where they would have been for the next 10 years. Or most likely they will drop to below 50% rate during 2022 as no customer actually want to accept aircraft.

I do not see how the A330NEO and A350 lines can both remain open while turning a profit at such low rates. The 777X is also dead.

This is a bit much..
 
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 3:19 am

RJMAZ wrote:
I actually think the production cuts will have to remain in place for years.

My logic is that say 5% of the global fleet gets replaced each year as the aircraft wear out. With the global fleet having such little usage any aircraft that was going to be retired in say 2025 can now operate to 2026. They will not retire every aircraft a year early just to keep the manufacturers production line happy. Airbus and Boeing will then need to cut a full years worth of aircraft production straight away. This would get spread out over multiple years. Say 75% production rate for 4 years.

It gets worse. This also assumes the number of passengers goes to back to the same level. Year on year airline growth was extremely high before Covid19. Airlines had ordered to fill this growth. Passenger numbers for 2022 might be 25% below where they would have been of Covid19 didn't happen. The industry might then start growing again normally but from this lower start point. That means 2023 and 2024 will also be 25% down compared to if Covid19 didn't happen. 25% of all current aircraft orders must then disappear. This is huge. Production rates will probably have to remain at 75% of where they would have been for the next 10 years. Or most likely they will drop to below 50% rate during 2022 as no customer actually want to accept aircraft.

I do not see how the A330NEO and A350 lines can both remain open while turning a profit at such low rates. The 777X is also dead.


Agree with all, and that doesn't even mention what happens when this economic bubble collapses. That will cause even fewer airplanes to be needed.

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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 3:45 am

RJMAZ wrote:
I actually think the production cuts will have to remain in place for years.

My logic is that say 5% of the global fleet gets replaced each year as the aircraft wear out. With the global fleet having such little usage any aircraft that was going to be retired in say 2025 can now operate to 2026. They will not retire every aircraft a year early just to keep the manufacturers production line happy. Airbus and Boeing will then need to cut a full years worth of aircraft production straight away. This would get spread out over multiple years. Say 75% production rate for 4 years.

It gets worse. This also assumes the number of passengers goes to back to the same level. Year on year airline growth was extremely high before Covid19. Airlines had ordered to fill this growth. Passenger numbers for 2022 might be 25% below where they would have been of Covid19 didn't happen. The industry might then start growing again normally but from this lower start point. That means 2023 and 2024 will also be 25% down compared to if Covid19 didn't happen. 25% of all current aircraft orders must then disappear. This is huge. Production rates will probably have to remain at 75% of where they would have been for the next 10 years. Or most likely they will drop to below 50% rate during 2022 as no customer actually want to accept aircraft.

I do not see how the A330NEO and A350 lines can both remain open while turning a profit at such low rates. The 777X is also dead.

Reading the Boeing CMO and Airbus Global Market Forecast. Now Airbus didn't update their forecast in 2020. For Boeing:
https://www.boeing.com/resources/boeing ... wnload.pdf

Normally 2% to 3% gets replaced per year. The last CMO, there was a prediction that 56% of new aircraft would be for growth. Now it is 52% (due to a period of lost growth), see slide 4.

The problem is the loss of growth. Until we get back to 2019 levels of air travel, the quantity that need replacement is low. I know, a nitpick, but we need to remember, half of aircraft delivered new are for growth, if not a little more.

This is why I think the planned narrowbody production rates of a thousand a year are insane. The appendix of that link notes 25,900 aircraft in the 2019 fleet (all types, including regional).

Airbus production rates: https://www.airbus.com/newsroom/press-r ... nment.html
40 per mo (430 per year) of the A32xNEO, to 45 per mo (I estimate about 500 per year) by Q4 2021,
A220 going to 5 per month (60 per year) soon
A350 at 5 per month (s/b 53 to 56 in a year, plus undelivered)
A330 at 2 per month. I would think near 25 per year effectively due to vendor contracts.

Or Airbus is ramping up to 640 per year

Boeing is 787 at 5 per month (but I personally think it will go to 4) so at 60 per year, dropping to 50 per year (in my opinion, just my best guess).
https://www.bing.com/search?q=boeing+78 ... ORM=CHROMN
777 production is at 5 mo/going to 3 mo (36 per year).
https://leehamnews.com/2020/04/29/boein ... g-1q-loss/

767 is at 2.5 per month (30 per year) : https://www.boeing.com/company/about-bc ... 0in%202020.
MAX production is under discussion in another thread. Over a hundred but well less than 200, but mostly it will be the not taken up delivered:

viewtopic.php?f=3&t=1455923

So production by Boeing of about 275 to 300 per year, plus delivering a few hundred not taken up MAXES (quickly ramping up).

So about 930 to 950 a year combined with a big ramp planned, plus Embraer.
I right now see overdelivery of widebodies since 2017 (a few hundred surplus) plus I think in 2019, narrowbodies is going into over-delivery. Now, the quick drop in old aircraft probably took care of the narrowbody over-supply, but not the whole widebody surplus.

I think about 20% of the widebody market will go to longer range narrowbodies (not just the A321xLR). So all deliveries until we get back to 2019 capacity is replacement or more than the market needs. We won't be at 2% to 3% replacement with low utilization, it will be something less. But even if it is 2%, That is only 518 aircraft. We need growth to need the ~950 aircraft that will be produced per year and the MAX will quickly add a few hundred more to that. Once aircraft are used more, then retirements will go up to about 800 per year.

So you might be just a wee bit optimistic on the 10 year. However, CMO is 18,350 new aircraft. I'm having trouble coming up with the ground up analysis for that many. I hope to be proven wrong. But we need growth and significant growth for even the current production (which is really light at Boeing and must increase to 400+ per year on the MAX just for economics of scale to compete in the narrowbody market).

We have interesting times ahead. In particular as I didn't include ARJ-21, C919, SU100, and MS-21 production.
I hope, as per the CMO I linked, the domestic and short haul markets recover quicker than I anticipate.

Lightsaber

PS,
For the record, it is odd being more pessimistic than the CMO. If you were to go through my prior posts, you would find me noting that the CMO usually underpredicts market growth. I think for the 20 years it is about spot on, I just think the next decade has a shallower recovery than predicted. Please let me know if Airbus releases their Global market forecast.
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 12:37 pm

The head of Avalon doesn't think Airbus should go above 40

https://www.flightglobal.com/orders-and ... 00.article
 
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 3:17 pm

fcogafa wrote:
The head of Avalon doesn't think Airbus should go above 40

https://www.flightglobal.com/orders-and ... 00.article

Two good quotes from that link.
“I think that’s good,” said Slattery. “I would encourage them to even taper it back to the current levels of 40.”

He says this would not be a “V-shaped” recovery but rather a “steady recovery” that could start in the second half of 2021.


While the article notes pent up demand will "snap up", I believe it will be to a level 20% to 25% below the prior demand. This is based on:
Increased taxes (less discretionary spending)
Debt taken on
Loss of income
Lingering fear

The last is from my therapist friends:

When people worry about something long enough, new institutions and cultural patterns form, making it easier and more likely for them to worry about the same thing in the future.
https://theconversation.com/how-lingeri ... rts-138588
There is also a lingering impact on children born during a pandemic. While this time will be different, somehow, I think we will see a long term negative:

https://marginalrevolution.com/marginal ... demic.html

I can only speak anecdotally. Some of my friends who used to travel a bunch, won't be able to afford to for a few years. Myself and a few friends won't attend mass sporting events as... when is it safe? Not to mention the activities stopped being entertainment and were something else last year (I have gone 8 and a half weeks without watching TV and I do not plan to go back. I won't be flying to watch sports for years, if I ever do again.)

Behaviors changed. There will be some snap back, but not for everyone. Does anyone expect business conventions to be back to normal by say 2024? I don't. Nor a bunch of amateur conventions (e.g., Comiccon, many beloved comic books and shows were cancelled in favor of product that... hasn't found a sufficient market).

Or... cruise ship were scrapped in mass:

https://www.cruiseindustrynews.com/crui ... o-for.html

I personally think that because of the recession we are in, business travel will be slow to return. I think 20% to 35% of business travel will be replaced by zoom or other video conferencing. Yes, a huge range as I do not know enough to be more precise.

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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 5:13 pm

Leeham ( https://leehamnews.com/2021/01/25/ponti ... s-squishy/ ) points out that Airbus had told vendors to "protect" rate 47 for 2021H2 and now that is pushed into 2022. Not too big a difference, IMO, but at least worthy of note. Also Airbus's widebody rates are described as "squishy" based on the language used in Airbus's press release.

Also in https://leehamnews.com/2021/01/25/small ... ter-covid/ we read with regard to A220/E2:

Summary:
  • Regional jets and smaller single-aisles have higher unit costs.
  • High costs require higher unit revenue to be profitable.
  • Business travel likely slow to return, with some permanently impaired.
  • Smaller jets previously used for routes now in danger of demand fragmentation.

I think the points can be supported, but also it kind of contradicts the earlier report that shows A220 production rate is increasing, yet that could just be because contracts are signed and sealed. It will be interesting to see if the big network carriers that have bought into A220 (DL, AF, AC) will see the predicted demand fragmentation and revenue shortfall in the future.
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 5:42 pm

Revelation wrote:
Summary:
  • Regional jets and smaller single-aisles have higher unit costs.
  • High costs require higher unit revenue to be profitable.
  • Business travel likely slow to return, with some permanently impaired.
  • Smaller jets previously used for routes now in danger of demand fragmentation.

I think the points can be supported, but also it kind of contradicts the earlier report that shows A220 production rate is increasing, yet that could just be because contracts are signed and sealed. It will be interesting to see if the big network carriers that have bought into A220 (DL, AF, AC) will see the predicted demand fragmentation and revenue shortfall in the future.

Doesn't demand fragmentation and overall reduced demand favour smaller jets?

I don't see why long haul is predicted to move towards smaller aircraft (789, A359) while short haul is expected to remain focused on standard narrowbodies and/or upgauge to the A321/737-10. The fundamental mechanics remain the same.
  • Smaller single-aisles have lower trip costs.
  • Lower costs permit higher profits when load factors are down.
  • Smaller aircraft are easier to shift to new markets.
 
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 6:21 pm

mxaxai wrote:
Revelation wrote:
Summary:
  • Regional jets and smaller single-aisles have higher unit costs.
  • High costs require higher unit revenue to be profitable.
  • Business travel likely slow to return, with some permanently impaired.
  • Smaller jets previously used for routes now in danger of demand fragmentation.

I think the points can be supported, but also it kind of contradicts the earlier report that shows A220 production rate is increasing, yet that could just be because contracts are signed and sealed. It will be interesting to see if the big network carriers that have bought into A220 (DL, AF, AC) will see the predicted demand fragmentation and revenue shortfall in the future.

Doesn't demand fragmentation and overall reduced demand favour smaller jets?

I don't see why long haul is predicted to move towards smaller aircraft (789, A359) while short haul is expected to remain focused on standard narrowbodies and/or upgauge to the A321/737-10. The fundamental mechanics remain the same.
  • Smaller single-aisles have lower trip costs.
  • Lower costs permit higher profits when load factors are down.
  • Smaller aircraft are easier to shift to new markets.

I interpreted the Leeham article that it was the planes with higher cost per passenger. My opinion is the A223 has almost the same cost per passenger as the A320NEO and a lower cost per than the A320CEO.

It will be the jets that need business traffic premiums that suffer: A221, E2-190, E175, and all the 50 seaters. The revenue premium is temporarily gone. When there is no revenue premium, then drop to reduced frequency a la Allegiant, Volotea, and soon Breeze (2x to say 4x per week).

The A223 is the bottom of the "not small" jets, in my opinion. The regional market is really bad right now as that was so business oriented.

Delta seems to be transitioning to the larger aircraft, but fewer flights per week. The plan is CRJ-200 retirement in 2023. I doubt Delta will leave all those small markets; I envision a future with 2x to 4x per week on a narrowbody (it could be an 220) instead of 2x or 3x per day on a 50 seater. Yes, I am predicting a seat reduction for the smaller stations.

CRJ retirement link:
https://onemileatatime.com/delta-retiring-crj-717-767/

Business demand will be permanently impaired. The question is by how much.

The easy shift is to move aircraft around. For example, one aircraft 4x per week hub to A and 3X per week to B and aircraft #2 2x week to C, 2x week to D, and 3x per week to E. The high cost per seat markets will be hit due to lack of business demand.

Lightsaber

Late edit: part of the issue is that all offered turboprops and regional jets are at least a generation behind and none received the PiPs the 737NG and A320 did. For example, a minor CFM PiP (CF34 was always marginal on fuel burn and had no fuel reduction PiP).

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2175301
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Re: The case for more aircraft production cuts/playing chicken

Mon Jan 25, 2021 8:03 pm

lightsaber wrote:


I agree that business travel will be permanently affected. I doubt that it will go above 50% of the previous for at least several years after we are past the Covid-19 crises (most people vaccinated - and hospitalizations/deaths greatly reduced to perhaps perhaps 2-3% above the pre-covid normal levels).

I also think that we have yet to see the real start of the economic depression/recession that Covid-19 will cause, and that will likely reduce recreational travel significantly for 3-5 years after the Covid-19 Crises.

Personally, I'd be surprised if we get back to previous travel levels by 2027, and not surprised if we don't get back to such levels until 2030 or beyond.

Both Airbus and Boeing will survive. Not sure on the Regional aircraft makers... At least one should survive.

It will not be fun for anyone.

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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 5:47 am

lightsaber wrote:
Or... cruise ship were scrapped in mass:

https://www.cruiseindustrynews.com/crui ... o-for.html

Lightsaber

As monetarism says: Cheap money makes stupid investment.
Reminds me of the never ending A380 discussion.

Anyway something to think about.

If daily regional jets are replaced with less frequency I see a bright future for the A220-300.
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 7:58 am

Currently most in the industry still believe in a good to best case recovery, which becomes less likely each day, as the economy crumbles, firms go out of business and so on. In addition some virus mutations could not be neutralized by the vaccines. Imho the realistic scenario is now a slow recovery starting Q3/21, but what comes afterwards will not be V-shaped, it will be a long and low recovery, with a high likely hood of bumps on the way. I would not be too surprised if we do not see 2019 passenger numbers before 2029 again. The replacement cycles for existing frames will be extended simply by the fact, that many fames were stored for 1-2 years and old planes have the nice advantage that they cost little, if you need to park them again, as they are written off.
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 9:07 am

2175301 wrote:

Personally, I'd be surprised if we get back to previous travel levels by 2027, and not surprised if we don't get back to such levels until 2030 or beyond.

Both Airbus and Boeing will survive. Not sure on the Regional aircraft makers... At least one should survive.

It will not be fun for anyone.

Have a great day,


I agree that the economic recovery can take a decade. However, in terms of air travel, different countries will see different patterns. In the US, the current trend of leaving the cities may result in larger numbers of smaller planes for airlines like Cape Air. In China and India, however, there might not be a significant change as more and more people join the middle class and air travel more. In China, presumably, the economy has been recovering, even if not fully yet.
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 9:15 am

seahawk wrote:
Currently most in the industry still believe in a good to best case recovery, which becomes less likely each day, as the economy crumbles, firms go out of business and so on. In addition some virus mutations could not be neutralized by the vaccines. Imho the realistic scenario is now a slow recovery starting Q3/21, but what comes afterwards will not be V-shaped, it will be a long and low recovery, with a high likely hood of bumps on the way. I would not be too surprised if we do not see 2019 passenger numbers before 2029 again. The replacement cycles for existing frames will be extended simply by the fact, that many fames were stored for 1-2 years and old planes have the nice advantage that they cost little, if you need to park them again, as they are written off.


While I agree with you, the only thing I can see that will somewhat help manufacturers is government aid. The longer this drags on, the more dire the situation of airlines. The more governments get involved politicians will see the state aid as an employment program, and will demand the direction towards ordering new aircraft to keep jobs in manufacturing, and to score "green" points.

Especially Europes governments could push towards this direction, especially AFKLM and LH. Some voices in the AFKLM sphere already suggest 320/321NEO orders for the group. To keep workers in France I also see an 339 order for AF at least. Also in the LH group, if the German government has to be more heavily involved. IB is another candidate due to Airbus presence in Spain.

I am no so strongly involved in US business and politics but I guess if the US government gets involved there might also be orders for Boeing aircraft pushed for US airlines (even if it is only through the backdoor by stimulating fleet renewal to score green points).
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 9:39 am

FluidFlow wrote:

While I agree with you, the only thing I can see that will somewhat help manufacturers is government aid. The longer this drags on, the more dire the situation of airlines. The more governments get involved politicians will see the state aid as an employment program, and will demand the direction towards ordering new aircraft to keep jobs in manufacturing, and to score "green" points.

Especially Europes governments could push towards this direction, especially AFKLM and LH. Some voices in the AFKLM sphere already suggest 320/321NEO orders for the group. To keep workers in France I also see an 339 order for AF at least. Also in the LH group, if the German government has to be more heavily involved. IB is another candidate due to Airbus presence in Spain.

I am no so strongly involved in US business and politics but I guess if the US government gets involved there might also be orders for Boeing aircraft pushed for US airlines (even if it is only through the backdoor by stimulating fleet renewal to score green points).


I don't think that will happen. In the US, it is much more likely to invest in high-speed trains and electric cars. Same in Europe even though there are more trains there. The greener type of aviation involves bigger planes and less frequency so you may see government penalties if airlines do not achieve certain targets of emissions per passenger.
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 9:49 am

mxaxai wrote:
Revelation wrote:
Summary:
  • Regional jets and smaller single-aisles have higher unit costs.
  • High costs require higher unit revenue to be profitable.
  • Business travel likely slow to return, with some permanently impaired.
  • Smaller jets previously used for routes now in danger of demand fragmentation.

I think the points can be supported, but also it kind of contradicts the earlier report that shows A220 production rate is increasing, yet that could just be because contracts are signed and sealed. It will be interesting to see if the big network carriers that have bought into A220 (DL, AF, AC) will see the predicted demand fragmentation and revenue shortfall in the future.

Doesn't demand fragmentation and overall reduced demand favour smaller jets?

I don't see why long haul is predicted to move towards smaller aircraft (789, A359) while short haul is expected to remain focused on standard narrowbodies and/or upgauge to the A321/737-10. The fundamental mechanics remain the same.
  • Smaller single-aisles have lower trip costs.
  • Lower costs permit higher profits when load factors are down.
  • Smaller aircraft are easier to shift to new markets.


I think there are two opposing dynamics - generally bigger planes have lower CASM and smaller planes have lower trip costs:

In long haul, the new generation of smaller planes mean that the lower CASM of larger planes is no longer enough to justify the increased risks of not filling a larger plane => trend to smaller planes. In addition, if there is sufficient demand for larger planes, increasing frequency with smaller planes can drive better fares.

In short haul, the lower CASM of larger planes is the more dominant factor (the gains of the neo and max apply both to small and large end) => trend to larger planes. Offering more frequency in short haul doesn't offer the same ticker price gains as long haul as there is already plenty of frequency

WRT to the A321XLR stealing share from WB, this will happen, but whether it kills the A330neo remains to be seen as the smaller WB (A330 and 787) will lose to the XLR, but will gain from the downgauging of larger planes (777 and A35K and any remaining A380s and 747s). The A350-900 and 787-10 are probably sufficient CASM killers to survive being larger.
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 12:51 pm

People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 1:45 pm

Opus99 wrote:
People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry


I am pretty sure most international travel is done on narrow bodies. Almost all European international travel is done on NB. Same for US to Canada, Mexico and the Carribean. Heck even to South America there is a lot of NB international flying and it will grow even more. In Asia besides trunk routes a lot of international travel is by NB aircraft. In Africa I would say 95% of international routes are NB served. Only on intercontinental routes WB are dominant.
 
Opus99
Posts: 1936
Joined: Thu May 30, 2019 10:51 pm

Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 1:58 pm

FluidFlow wrote:
Opus99 wrote:
People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry


I am pretty sure most international travel is done on narrow bodies. Almost all European international travel is done on NB. Same for US to Canada, Mexico and the Carribean. Heck even to South America there is a lot of NB international flying and it will grow even more. In Asia besides trunk routes a lot of international travel is by NB aircraft. In Africa I would say 95% of international routes are NB served. Only on intercontinental routes WB are dominant.

I meant long haul. of course most international travel is done by narrowbodies. the country next door is international.
 
Capricorn
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 2:12 pm

Opus99 wrote:
People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry


Well, assuming that passenger demand remains more or less constant for some time (at 2019 levels some years after C19), then if there is more flying between secondary cities, that essentially means hub bypassing will increase. This will lead to down gauging from larger WBs to medium sized WBs on some routes.

What again often gets forgotten when talking about the potential impact of the XLR is, that the plane potentially allows a whole group of airlines to fly further, that would otherwise be limited as they do not want to operate WBs for one reason or another. These are namely U2, NK, 6E, G4, F9, W6, B6 and so on. (Once Boeing designs the new NB, which I suspect will have one variant that has similar capabilities to the XLR, FR, AS and DY, if they manage to survive, might join as well). This additional competition will further decrease the demand for WBs.
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 2:56 pm

We do need to talk the economic conditions. Handouts only spread the money around, they do not increase the production. Thus, overall, they will not stimulate traffic.

Even when oil was $140/bbl, old aircraft flew profitably. If there is one thing I've learned in my time on a.net, old aircraft persist.

Upthread I posted on grown fuel. If you want to push to more fuel efficient aircraft, start with 30% grown fuel required. That will reduce CO2 by about 20% too, but will increase fuel costs. That favors new.

However, zero interest rates will cause mal-investment. That will eventually reduce demand. We need infrastructure. For aviation, that is expansion (e.g., already happening at DEN, IAD, Daxing, Navi Mumbai, Navi Delhi, IST, SVO, and dozens more I missed).

FluidFlow wrote:
Opus99 wrote:
People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry




I am pretty sure most international travel is done on narrow bodies. Almost all European international travel is done on NB. Same for US to Canada, Mexico and the Carribean. Heck even to South America there is a lot of NB international flying and it will grow even more. In Asia besides trunk routes a lot of international travel is by NB aircraft. In Africa I would say 95% of international routes are NB served. Only on intercontinental routes WB are dominant.

Have a look at the payload range chart

Image
from:
https://epsilonaviation.wordpress.com/2 ... %20%200%20

From the above, the most exciting take away is that the non-Mint JetBlue configuration would have TATL range with the xLR. :hyper: That is 500nm further than the venerable 752. For the first time since 752 EIS, we have a narrowbody dramatically expanding the payload/range envelope.

The A321xLR is more than one set of missions. We have a thread on Frontier engine choice, but the interesting bit is they are buying 18 xLR. Just as widebodies are bought for payload at range, so us the xLR. One reason the A321CEO sold only so-so until Sharklets and engine fuel burn reduction PiPs (that also cut maintenance) was a poor payload at range (vs. say 752). The A321NEO improved that and the xLR improves it further.

viewtopic.php?f=3&t=1457067

So while the A321xLR isn't for many missions, it is a far better aircraft than the 752, A321LR (or just plain NEO), or, in my opinion, 767-300ER for:
Hawaiian traffic.
Feed for IST, ME3, nearby SIN, and near TATL.

The stall in sales of small widebodies is in part due to the NEO and MAX.

Those making good money off cargo will keep the current widebodies. There is a surplus.

I personally think the recovery will snap up to some fraction of previous air travel (say 65% to 80% of prior) and then grow 3.5% to 5.5% per year.

The advantage of the A321xLR is that it allows A320 opperators to grow into new niches as well as majors:
Indigo
Frontier
JetBlue
American
JetStar
Peach
Air Arabia
Aer Lingus
TAP Portugal
Air Astana

Boston will reach deep into Europe for JetBlue. Dublin will reach deep into the USA for Aer Lingus. Air Arabia substantially grows their route map without the risk if a new type. Indigo will expand dramatically thanks to the xLR.

While the xLR will open routes, it will also take over the marginal widebody routes in its payload/range envelope. More routes will happen without a connection or with a better connection.

Narrowbody range, excluding the rather expensive to fly 752, has gone from (since 2000):
2850 nm (A329CEO pre-sharklets and engine PiPs) TCON with winter fuel stops or payload restrictions

3100 nm 737-800 with winglets: (Hawaii to West Coast US, with winter payload restrictions)

3600 nm Opened up a few new routes with NEO/MAX

4000 nm (A321 LR) opened up a few routes (e.g., further inland from Hawaii). But while better economics than the 752, the sacrifice in payload volume and weight limited the application.

4700nm with xLR. Integrated fuel tank cuts weight and improves cargo volume opening up the. I think most will be < 4300 nm to improve payload at range.

It always starts with a few airlines taking advantage of the range and then goes to a mission shift.


I estimate 20% to 25% of widebody traffic (passengers) will go to the A321xLR. On one hand not huge, on the other game changing. If I'm wrong, it would be more flights on narrowbodies (say 30% if JetBlue and Aer Lingus grab a greater share if TATL).

This will help the narrowbody recovery, it will hurt the widebody recovery.

Lightsaber

Late edit, I did a few range circles for UA at EWR, Aer Lingus at DUB, IST, and SIN with 752, A321LR, and A321xLR. Wow does the xLR open the route map!

http://www.gcmap.com/mapui?R=3230nm%40e ... 95nm%40ewr

http://www.gcmap.com/mapui?R=3230nm%40d ... 95nm%40dub

http://www.gcmap.com/mapui?R=3230nm%40i ... 95nm%40ist

Ok, for SIN, mostly payload at range:
http://www.gcmap.com/mapui?R=3230nm%40s ... 95nm%40sin
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Opus99
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 2:58 pm

Capricorn wrote:
Opus99 wrote:
People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry


Well, assuming that passenger demand remains more or less constant for some time (at 2019 levels some years after C19), then if there is more flying between secondary cities, that essentially means hub bypassing will increase. This will lead to down gauging from larger WBs to medium sized WBs on some routes.

What again often gets forgotten when talking about the potential impact of the XLR is, that the plane potentially allows a whole group of airlines to fly further, that would otherwise be limited as they do not want to operate WBs for one reason or another. These are namely U2, NK, 6E, G4, F9, W6, B6 and so on. (Once Boeing designs the new NB, which I suspect will have one variant that has similar capabilities to the XLR, FR, AS and DY, if they manage to survive, might join as well). This additional competition will further decrease the demand for WBs.

These are very good points. i'm more intrigued by the second one. the first one can be countered if it means the jet is focused on connecting new cities with hubs. Looking at the airlines who have ordered AA, IB, Qantas etc. the jet will operate out of hubs there...so just feeding more hubs.

What is more interesting is the prospect of new competition, How much of an impact will it have on legacy carriers? Will these airlines be able to operate into Hub airports, i doubt they want to do that but they are hubs for a reason...Then theres the propisition, many don't mind an LCC for 3hrs but for 7-8 hrs? these are some of the factors, thoughts?
 
FluidFlow
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 4:49 pm

lightsaber wrote:
We do need to talk the economic conditions. Handouts only spread the money around, they do not increase the production. Thus, overall, they will not stimulate traffic.

Even when oil was $140/bbl, old aircraft flew profitably. If there is one thing I've learned in my time on a.net, old aircraft persist.

Upthread I posted on grown fuel. If you want to push to more fuel efficient aircraft, start with 30% grown fuel required. That will reduce CO2 by about 20% too, but will increase fuel costs. That favors new.

However, zero interest rates will cause mal-investment. That will eventually reduce demand. We need infrastructure. For aviation, that is expansion (e.g., already happening at DEN, IAD, Daxing, Navi Mumbai, Navi Delhi, IST, SVO, and dozens more I missed).

FluidFlow wrote:
Opus99 wrote:
People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry




I am pretty sure most international travel is done on narrow bodies. Almost all European international travel is done on NB. Same for US to Canada, Mexico and the Carribean. Heck even to South America there is a lot of NB international flying and it will grow even more. In Asia besides trunk routes a lot of international travel is by NB aircraft. In Africa I would say 95% of international routes are NB served. Only on intercontinental routes WB are dominant.

Have a look at the payload range chart

Image
from:
https://epsilonaviation.wordpress.com/2 ... %20%200%20

From the above, the most exciting take away is that the non-Mint JetBlue configuration would have TATL range with the xLR. :hyper: That is 500nm further than the venerable 752. For the first time since 752 EIS, we have a narrowbody dramatically expanding the payload/range envelope.

The A321xLR is more than one set of missions. We have a thread on Frontier engine choice, but the interesting bit is they are buying 18 xLR. Just as widebodies are bought for payload at range, so us the xLR. One reason the A321CEO sold only so-so until Sharklets and engine fuel burn reduction PiPs (that also cut maintenance) was a poor payload at range (vs. say 752). The A321NEO improved that and the xLR improves it further.

viewtopic.php?f=3&t=1457067

So while the A321xLR isn't for many missions, it is a far better aircraft than the 752, A321LR (or just plain NEO), or, in my opinion, 767-300ER for:
Hawaiian traffic.
Feed for IST, ME3, nearby SIN, and near TATL.

The stall in sales of small widebodies is in part due to the NEO and MAX.

Those making good money off cargo will keep the current widebodies. There is a surplus.

I personally think the recovery will snap up to some fraction of previous air travel (say 65% to 80% of prior) and then grow 3.5% to 5.5% per year.

The advantage of the A321xLR is that it allows A320 opperators to grow into new niches as well as majors:
Indigo
Frontier
JetBlue
American
JetStar
Peach
Air Arabia
Aer Lingus
TAP Portugal
Air Astana

Boston will reach deep into Europe for JetBlue. Dublin will reach deep into the USA for Aer Lingus. Air Arabia substantially grows their route map without the risk if a new type. Indigo will expand dramatically thanks to the xLR.

While the xLR will open routes, it will also take over the marginal widebody routes in its payload/range envelope. More routes will happen without a connection or with a better connection.

Narrowbody range, excluding the rather expensive to fly 752, has gone from (since 2000):
2850 nm (A329CEO pre-sharklets and engine PiPs) TCON with winter fuel stops or payload restrictions

3100 nm 737-800 with winglets: (Hawaii to West Coast US, with winter payload restrictions)

3600 nm Opened up a few new routes with NEO/MAX

4000 nm (A321 LR) opened up a few routes (e.g., further inland from Hawaii). But while better economics than the 752, the sacrifice in payload volume and weight limited the application.

4700nm with xLR. Integrated fuel tank cuts weight and improves cargo volume opening up the. I think most will be < 4300 nm to improve payload at range.

It always starts with a few airlines taking advantage of the range and then goes to a mission shift.


I estimate 20% to 25% of widebody traffic (passengers) will go to the A321xLR. On one hand not huge, on the other game changing. If I'm wrong, it would be more flights on narrowbodies (say 30% if JetBlue and Aer Lingus grab a greater share if TATL).

This will help the narrowbody recovery, it will hurt the widebody recovery.

Lightsaber

Late edit, I did a few range circles for UA at EWR, Aer Lingus at DUB, IST, and SIN with 752, A321LR, and A321xLR. Wow does the xLR open the route map!

http://www.gcmap.com/mapui?R=3230nm%40e ... 95nm%40ewr

http://www.gcmap.com/mapui?R=3230nm%40d ... 95nm%40dub

http://www.gcmap.com/mapui?R=3230nm%40i ... 95nm%40ist

Ok, for SIN, mostly payload at range:
http://www.gcmap.com/mapui?R=3230nm%40s ... 95nm%40sin



Only at the phone right now but so I cant to gcmap but from memory the XLR from Iceland covers all of Europe and the US and Canada. That would be the most interesting application in my opinion.
 
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Revelation
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 6:00 pm

FluidFlow wrote:
Only at the phone right now but so I cant to gcmap but from memory the XLR from Iceland covers all of Europe and the US and Canada. That would be the most interesting application in my opinion.

Interesting, indeed:

http://www.gcmap.com/mapui?R=3230nm%40R ... 95nm%40REK

Yet the geographic position alone wasn't enough to make FI a power house using 752s.

As noted the EU legs were/are short enough that they can be flown readily by 738/7M8 and A320/A32N so A321XLR is not a game changer for those flights.

It could bring in a bunch more of the US side cities and the economics are so much better than 752 for long flights that overall it's a big plus.

Yet it will largely have to compete with the entrenched TATL carriers with 787s and A350s with lots of non-stop or one-stop offerings.

In my case I was considering BOS-CDG and the cheapest choice was BOS-IST-CDG! I had no interest being on a plane that long so I declined. Second choice was BOS-REK-CDG with plane changes in the middle of the night at REK and pretty tight seating pitch on both legs.

In the end I did BOS-CDG non-stop, the price delta was not big enough to justify the plane change in the middle of the night in both directions. The BOS-REK-CDG routing adds hundreds of miles to the routing and the time needed to descend, change planes and climb out, so it has added cost for the airline and added inconvenience for me.

Basically the main benefit of the IST and REK routings was to keep some price pressure on the non-stop offering. The entrenched TATL players are going to do everything they can do to make life difficult for FI.

Ref: http://www.gcmap.com/mapui?P=BOS-REK-CD ... 95nm%40REK
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Capricorn
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 6:04 pm

Opus99 wrote:
Capricorn wrote:
Opus99 wrote:
People need to relax on this A321XLR revolution. every aircraft has its purpose. It's a fantastic jet but will it be doing the bulk of international travelling? absolutely not because it can't do everything, it actually can't do most things a wide-body can do besides fly across the atlantic from east cost cities comfortably. IMO most international travel will still sit with the 359 and 789 especially as demand comes back and those jets continue to get performance improvements. The 321XLR will open up a lot of new routes and secondary city pairs that wide-bodies were never doing anyway. The smaller WB e.g. 330-800neo was not even selling anyway so whatever market the 321XLR takes up, it never belonged to it anyway. the 787-8 has sort of stalled in sales anyway. The 321XLR can't break 200 seats by the time you put in proper business class seats, what of cargo? routes that are currently at maximum utilisation or even close to it being operated by widebodies will not move to a 321XLR and i assume that is most routes with most airlines because you have to be as operationally efficient as possible in this business.

Like i said the 321XLR will have its place, connecting secondary city pairs or hubs to secondary cities (wide-bodies were actually never doing this). Opening up some new routes from africa to the middle east etc.

Unless of course theres no recovery at all, then i think the 321XLR will have bigger fish to fry


Well, assuming that passenger demand remains more or less constant for some time (at 2019 levels some years after C19), then if there is more flying between secondary cities, that essentially means hub bypassing will increase. This will lead to down gauging from larger WBs to medium sized WBs on some routes.

What again often gets forgotten when talking about the potential impact of the XLR is, that the plane potentially allows a whole group of airlines to fly further, that would otherwise be limited as they do not want to operate WBs for one reason or another. These are namely U2, NK, 6E, G4, F9, W6, B6 and so on. (Once Boeing designs the new NB, which I suspect will have one variant that has similar capabilities to the XLR, FR, AS and DY, if they manage to survive, might join as well). This additional competition will further decrease the demand for WBs.

These are very good points. i'm more intrigued by the second one. the first one can be countered if it means the jet is focused on connecting new cities with hubs. Looking at the airlines who have ordered AA, IB, Qantas etc. the jet will operate out of hubs there...so just feeding more hubs.

What is more interesting is the prospect of new competition, How much of an impact will it have on legacy carriers? Will these airlines be able to operate into Hub airports, i doubt they want to do that but they are hubs for a reason...Then theres the propisition, many don't mind an LCC for 3hrs but for 7-8 hrs? these are some of the factors, thoughts?



Well the leisure oriented airlines in Europe have not necessarily a much better Y class in their WBs (DE, TUI) compared to some NB LCCs (U2). If the prices are right customers can (and most likely will) be conditioned to the LCC seating for 8h flights. As Y class passenger I rather fly 8h LCC but direct instead of 12h+ on a legacy.

I think the application of the XLR varies from airline to airline. Legacies probably want to serve additional airports that are not yet served (like HAM, BER and so on), so the main purpose is probably to network expansion or to increase frequency on existing routs. New entrantLCCs can serve additional leisure destinations on a sub weekly basis or VFR heavy routs. (From West-Europe the likes of PUJ, SEZ, MCT, ZNZ as well as more secondary Indian/African airports). As I am not from the US I don't know the best application for US based carriers, but I can imagine that LCCs can chase the VFR traffic to the Deep South region, as well as more secondary European airports (with heavy leisure demand) and serve Hawaii from more US cities on a sub weekly basis (AFAIK Hawaii is not yet served by an LCC with the exception of WN) Maybe AS could fly from ANC to Asia in case Alaska can establish itself as a leisure destination in Asia or serve other Snowbird destinations like CUN from ANC.
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 6:13 pm

I just posted this link, Raytheon Technologies (mostly Pratt) has cut employment by 21,000. There is no quick rebound expected:
https://www.msn.com/en-us/travel/news/r ... r-BB1d702j

This is despite Pratt announcing a big order.
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FluidFlow
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 6:44 pm

Revelation wrote:
FluidFlow wrote:
Only at the phone right now but so I cant to gcmap but from memory the XLR from Iceland covers all of Europe and the US and Canada. That would be the most interesting application in my opinion.

Interesting, indeed:

http://www.gcmap.com/mapui?R=3230nm%40R ... 95nm%40REK

Yet the geographic position alone wasn't enough to make FI a power house using 752s.

As noted the EU legs were/are short enough that they can be flown readily by 738/7M8 and A320/A32N so A321XLR is not a game changer for those flights.

It could bring in a bunch more of the US side cities and the economics are so much better than 752 for long flights that overall it's a big plus.

Yet it will largely have to compete with the entrenched TATL carriers with 787s and A350s with lots of non-stop or one-stop offerings.

In my case I was considering BOS-CDG and the cheapest choice was BOS-IST-CDG! I had no interest being on a plane that long so I declined. Second choice was BOS-REK-CDG with plane changes in the middle of the night at REK and pretty tight seating pitch on both legs.

In the end I did BOS-CDG non-stop, the price delta was not big enough to justify the plane change in the middle of the night in both directions. The BOS-REK-CDG routing adds hundreds of miles to the routing and the time needed to descend, change planes and climb out, so it has added cost for the airline and added inconvenience for me.

Basically the main benefit of the IST and REK routings was to keep some price pressure on the non-stop offering. The entrenched TATL players are going to do everything they can do to make life difficult for FI.

Ref: http://www.gcmap.com/mapui?P=BOS-REK-CD ... 95nm%40REK


The thing is, while you are tight for east coast cities, the long range can add cheap one stop options from almost every city to LAX, SFO or YVR for example. That could be interesting because I think PRG REK LAX is as interesting as PRG AMS LAX, especially if you can offer it for 400$ return, because I believe with 200pax at 400-600$ return + LCC extra charges you can make that work with modern aircraft.
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 7:58 pm

lightsaber wrote:
I just posted this link, Raytheon Technologies (mostly Pratt) has cut employment by 21,000. There is no quick rebound expected:
https://www.msn.com/en-us/travel/news/r ... r-BB1d702j

This is despite Pratt announcing a big order.

It's not like Raytheon is running short of cash either, it's a sign that they think the industry as a whole is shrinking so they're better off matching supply with demand and giving themselves and their other share holders a nice pay out:

Raytheon is flush with cash, reporting $8.8 billion on its balance sheet, with about $3 billion from divestitures from its portfolio of businesses. Hayes said the company will boost the dividend and plans a share repurchase.

“We don’t think we need $9 billion on the balance sheet,” Hayes said.

That will be reduced to about $6 billion, which will give Raytheon flexibility in pursue small mergers or acquisitions or more share buybacks, he said.

Shares jumped nearly 5% in morning trading, to $69.50.

----

FluidFlow wrote:
The thing is, while you are tight for east coast cities, the long range can add cheap one stop options from almost every city to LAX, SFO or YVR for example. That could be interesting because I think PRG REK LAX is as interesting as PRG AMS LAX, especially if you can offer it for 400$ return, because I believe with 200pax at 400-600$ return + LCC extra charges you can make that work with modern aircraft.

http://www.gcmap.com/mapui?P=PRG-REK-LA ... 95nm%40REK

The AMS itinerary is probably going to be a lot nicer, presumably avoids the plane change in the middle of the night. The AMS-LAX leg can be flown by high efficiency A350-900/1000 or B789/10 due to network effects filling seats and strong loyalty programs at either side. The bigger planes let them offer a wider range of seating options, and let them make some money from cargo too. The network carriers won't want to give ground to a startup, they will react.

I guess time will tell if we see LCC airlines offering attractive enough prices to offset what I see to be their disadvantages. The XLR may be offering the LCCs better economics than 752 did, but the network carriers are now retiring 752, 763, 744, 777, A380 in droves and replacing them with 787 and A350.
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Jetport
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 9:21 pm

Alaska thinks recovery will be quite fast, 80% of 2019 capacity this summer. Looks like a very well run US domestic airline disagrees with most of the pessimistic armchair airline analysts on this thread. Also saw interview on CNBC with Alaska President that was very upbeat. He was very excited about the Max reducing costs through fuel savings, reduced maintenance costs and fleet simplification (retiring the A320's). Alaska's recent and Southwest's previous experiences with mixed fleets sure make the Anet argument that running mixed fleets doesn't add too much cost look silly.

https://newsroom.alaskaair.com/2021-01- ... ar-results

https://simpleflying.com/alaska-airline ... -capacity/
 
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 10:38 pm

Jetport wrote:
Alaska thinks recovery will be quite fast, 80% of 2019 capacity this summer. Looks like a very well run US domestic airline disagrees with most of the pessimistic armchair airline analysts on this thread. Also saw interview on CNBC with Alaska President that was very upbeat. He was very excited about the Max reducing costs through fuel savings, reduced maintenance costs and fleet simplification (retiring the A320's). Alaska's recent and Southwest's previous experiences with mixed fleets sure make the Anet argument that running mixed fleets doesn't add too much cost look silly.

https://newsroom.alaskaair.com/2021-01- ... ar-results

https://simpleflying.com/alaska-airline ... -capacity/

Other than the flames, what point are you trying to make? One airline with 5.7% of the US domestic market ( ref: https://www.statista.com/statistics/250 ... -airlines/ ) taking MAXes while retiring A320ceo doesn't have much influence on global aircraft production.
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mxaxai
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Re: The case for more aircraft production cuts/playing chicken

Tue Jan 26, 2021 10:58 pm

lightsaber wrote:
Upthread I posted on grown fuel. If you want to push to more fuel efficient aircraft, start with 30% grown fuel required. That will reduce CO2 by about 20% too, but will increase fuel costs. That favors new.

Considering this, it should come as no surprise that Boeing is pushing for 100% bio-fuels by 2030. https://www.businessgreen.com/news/4026 ... -fuel-2030

The US plane manufacturer said the development of planes that can run entirely on SAFs would be critical if the carbon-intensive aviation sector is to meet its climate goal of cutting carbon emissions by 50 per cent by mid-century.
...
Boeing commercial airplanes president and chief executive Stan Deal said SAFs were "the safest and most measurable solution" to curb aviation sector emissions in the short term. "We're committed to working with regulators, engine companies and other key stakeholders to ensure our airplanes and eventually our industry can fly entirely on sustainable jet fuels," he said.
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 3:04 am

Jetport wrote:
Alaska thinks recovery will be quite fast, 80% of 2019 capacity this summer. Looks like a very well run US domestic airline disagrees with most of the pessimistic armchair airline analysts on this thread. Also saw interview on CNBC with Alaska President that was very upbeat. He was very excited about the Max reducing costs through fuel savings, reduced maintenance costs and fleet simplification (retiring the A320's). Alaska's recent and Southwest's previous experiences with mixed fleets sure make the Anet argument that running mixed fleets doesn't add too much cost look silly.

https://newsroom.alaskaair.com/2021-01- ... ar-results

https://simpleflying.com/alaska-airline ... -capacity/


The forecast for 80% of 2019 passenger volume relatively soon after the pandemic comes under control has been kicked around a lot. It is impossible to have much confidence in it due to the circumstances, but I think more airlines than Alaska are giving it at least credibility, but not for summer.

The specific wording I see in an unofficial transcript indicates the 80% figure they discussed is not a passenger volume forecast, but Alaska's individual capacity plan:

we anticipate operating capacity of approximately 70% of 2019 levels in Q1 and 80% by summer.


Their operational figures show Q4 ASM's at 58% of 2019, and they had 45% load factor. They hope to get 40-45% load factor, so they seem prepared for the possibility of being further over-capacity

It sounds like they intend to continue to ramp up in capacity as the weather improves, which in addition to increasing vaccination, is expected to correlate with a significant decline in COVID-19 case rates. This seems aggressive, but deliberately considered:

Q4   -  Q1    - Q2
58%  -  70%   - 80%


Edit - A more clear quote was later on in the transcript.
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 6:54 am

It is a scenario and one they should prepare for, but it is one of the best case ones. You can also have a scenario with a faster spreading virus mutation against which the current vaccines are not working. In the end everyone is guessing and which scenario will come to pass is fully outside the control of the airlines.
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 6:55 am

Revelation wrote:
FluidFlow wrote:
The thing is, while you are tight for east coast cities, the long range can add cheap one stop options from almost every city to LAX, SFO or YVR for example. That could be interesting because I think PRG REK LAX is as interesting as PRG AMS LAX, especially if you can offer it for 400$ return, because I believe with 200pax at 400-600$ return + LCC extra charges you can make that work with modern aircraft.

http://www.gcmap.com/mapui?P=PRG-REK-LA ... 95nm%40REK

The AMS itinerary is probably going to be a lot nicer, presumably avoids the plane change in the middle of the night. The AMS-LAX leg can be flown by high efficiency A350-900/1000 or B789/10 due to network effects filling seats and strong loyalty programs at either side. The bigger planes let them offer a wider range of seating options, and let them make some money from cargo too. The network carriers won't want to give ground to a startup, they will react.

I guess time will tell if we see LCC airlines offering attractive enough prices to offset what I see to be their disadvantages. The XLR may be offering the LCCs better economics than 752 did, but the network carriers are now retiring 752, 763, 744, 777, A380 in droves and replacing them with 787 and A350.


From a passenger point yes but from a pure cost per seat point it will be hard for KL (DL) to offer the same prices for a basic economy seat. Being a network carrier (FSC) is expensive as we see right now. There is a reason Allegiant is almost breaking even at the moment and will probably make money in 2021 before every one else does. If they add the odd XLR to serve holiday destinations further away they will automatically take passengers from network carriers.

This will happen just because with the XLR now narrowbody operators have the unique chance to actually challenge network carriers on routes previously not possible. There is a reason Ryanair and Easyjet are so big in Europe. Same goes for LCCs in the US. They will grow and the XLR will enable them more destinations for the a little pricier A321NEO. It is a fail safe addition. If the long route does not work you can add it on your longest NEO route and still fly profits. If you add a 787 you are doomed to make profit on long routes because it is hard to make a 787 run profitably on BOS to MIA year round. With the XLR that should be no problem. So for the first time it is actually possible for many carriers to tap into the long haul market without the risk of wide bodies. That is massive.
I discount the 752 here on purpose because it had no commonality to any smaller family member where it was interchangeable. You still needed a second fleet for other routes where the 752 was too much air plane. It worked for big carriers also operating the 767, but for single 752 operators it was hard to really shine. Some holiday airlines made it possible but in general it did not fit into single aisle only operators. The XLR will.
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 9:50 am

lightsaber wrote:
Airbus production rates: https://www.airbus.com/newsroom/press-r ... nment.html
40 per mo (430 per year) of the A32xNEO, to 45 per mo (I estimate about 500 per year) by Q4 2021,
A220 going to 5 per month (60 per year) soon
A350 at 5 per month (s/b 53 to 56 in a year, plus undelivered)
A330 at 2 per month. I would think near 25 per year effectively due to vendor contracts.


I'm a bit puzzled the announced A220/A320 production increase distribution by Airbus. The pre-COVID plan for the A220 was to go to 14 a month. Back to 4 was a 71% reduction relative to that figure. 40/month for the A320 is only a 40% reduction compared to the planned pre-COVID increase to 67/month.

This surprises me for two reasons:
1 The A220 has been the plane that has most consistently been in the air since COVID.
2 It would seem COVID would have provide Airbus a "free" opportunity to redistribute production rate and the economy of scale cost between the A220 and the A320.

Economy of scale on the A220 was something they were very keen to achieve anyway pre-COVID. Why announce a 5/month increase for the A320 when industry insiders warn against it, instead of keeping the A320 at 40 for a bit longer and instead doubling the A220 from 5 to 10/month? Providing a huge economy of scale improvement for the A220.

Is Airbus missing an opportunity by so severely delaying the ramp up for the A220? With a stronger ramp up they would allow for significant capacity for a 2025/2026 EIS of an A220-500. In turn freeing capacity for new A321 variants and development models by switching A320 capacity to A220-500. One would expect that it is easier for Airbus to accelerate the increase of the A320 rate at a later stage than it is to increase the A220 rate. The former was a known quantity and the capacity is there coming from 60/months. That's not the case for the A220 and increasing the rate for economy of scale and for significant numbers of A220-500 (significant in order to meaningfully free up A320 slots) will be much harder.

Would it be political pressure inside the EU or is cash preservation such a priority that it's hurting mid term strategic planning?
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JonesNL
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 10:00 am

Taxi645 wrote:
lightsaber wrote:
Airbus production rates: https://www.airbus.com/newsroom/press-r ... nment.html
40 per mo (430 per year) of the A32xNEO, to 45 per mo (I estimate about 500 per year) by Q4 2021,
A220 going to 5 per month (60 per year) soon
A350 at 5 per month (s/b 53 to 56 in a year, plus undelivered)
A330 at 2 per month. I would think near 25 per year effectively due to vendor contracts.


I'm a bit puzzled the announced A220/A320 production increase distribution by Airbus. The pre-COVID plan for the A220 was to go to 14 a month. Back to 4 was a 71% reduction relative to that figure. 40/month for the A320 is only a 40% reduction compared to the planned pre-COVID increase to 67/month.

This surprises me for two reasons:
1 The A220 has been the plane that has most consistently been in the air since COVID.
2 It would seem COVID would have provide Airbus a "free" opportunity to redistribute production rate and the economy of scale cost between the A220 and the A320.

Economy of scale on the A220 was something they were very keen to achieve anyway pre-COVID. Why announce a 5/month increase for the A320 when industry insiders warn against it, instead of keeping the A320 at 40 for a bit longer and instead doubling the A220 from 5 to 10/month? Providing a huge economy of scale improvement for the A220.

Is Airbus missing an opportunity by so severely delaying the ramp up for the A220? With a stronger ramp up they would allow for significant capacity for a 2025/2026 EIS of an A220-500. In turn freeing capacity for new A321 variants and development models by switching A320 capacity to A220-500. One would expect that it is easier for Airbus to accelerate the increase of the A320 rate at a later stage than it is to increase the A220 rate. The former was a known quantity and the capacity is there coming from 60/months. That's not the case for the A220 and increasing the rate for economy of scale and for significant numbers of A220-500 (significant in order to meaningfully free up A320 slots) will be much harder.

Would it be political pressure inside the EU or is cash preservation such a priority that it's hurting mid term strategic planning?


Significant ramp up like that requires big investments and/or big orders. Both are not there, the only thing that has happened is mass deferrals and minor cancellations...
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 10:38 am

JonesNL wrote:
Taxi645 wrote:
lightsaber wrote:
Airbus production rates: https://www.airbus.com/newsroom/press-r ... nment.html
40 per mo (430 per year) of the A32xNEO, to 45 per mo (I estimate about 500 per year) by Q4 2021,
A220 going to 5 per month (60 per year) soon
A350 at 5 per month (s/b 53 to 56 in a year, plus undelivered)
A330 at 2 per month. I would think near 25 per year effectively due to vendor contracts.


I'm a bit puzzled the announced A220/A320 production increase distribution by Airbus. The pre-COVID plan for the A220 was to go to 14 a month. Back to 4 was a 71% reduction relative to that figure. 40/month for the A320 is only a 40% reduction compared to the planned pre-COVID increase to 67/month.

This surprises me for two reasons:
1 The A220 has been the plane that has most consistently been in the air since COVID.
2 It would seem COVID would have provide Airbus a "free" opportunity to redistribute production rate and the economy of scale cost between the A220 and the A320.

Economy of scale on the A220 was something they were very keen to achieve anyway pre-COVID. Why announce a 5/month increase for the A320 when industry insiders warn against it, instead of keeping the A320 at 40 for a bit longer and instead doubling the A220 from 5 to 10/month? Providing a huge economy of scale improvement for the A220.

Is Airbus missing an opportunity by so severely delaying the ramp up for the A220? With a stronger ramp up they would allow for significant capacity for a 2025/2026 EIS of an A220-500. In turn freeing capacity for new A321 variants and development models by switching A320 capacity to A220-500. One would expect that it is easier for Airbus to accelerate the increase of the A320 rate at a later stage than it is to increase the A220 rate. The former was a known quantity and the capacity is there coming from 60/months. That's not the case for the A220 and increasing the rate for economy of scale and for significant numbers of A220-500 (significant in order to meaningfully free up A320 slots) will be much harder.

Would it be political pressure inside the EU or is cash preservation such a priority that it's hurting mid term strategic planning?


Significant ramp up like that requires big investments and/or big orders. Both are not there, the only thing that has happened is mass deferrals and minor cancellations...


What do you mean they don't have big orders? The have a backlog of 487. At 5 a month that is 8 years worth of production. This is without any further orders and without a possible A220-500. If we assume a conservative 60 orders a years from 2022. The backlog to fill up to and including 2025 would be 727. If we assume a production rate of 8/months (I dropped it down from 10/months) at the end of 2025 the backlog would be around 270. Again this is with very a conservative 60 a year of orders from 2022, no 2021 orders and no A220-500 orders.

About deferrals and cancellations, they ARE increasing A320 production. What I'm saying is keep A320 level a bit longer and instead increase the A220 with the same amount. Actually adding less seats to the market.
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 1:39 pm

It sounds like Boeing won't be adding too much 777 Passenger Capacity until 2024 now https://leehamnews.com/2021/01/27/big-l ... more-35721
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 1:59 pm

Taxi645 wrote:
JonesNL wrote:
Taxi645 wrote:

I'm a bit puzzled the announced A220/A320 production increase distribution by Airbus. The pre-COVID plan for the A220 was to go to 14 a month. Back to 4 was a 71% reduction relative to that figure. 40/month for the A320 is only a 40% reduction compared to the planned pre-COVID increase to 67/month.

This surprises me for two reasons:
1 The A220 has been the plane that has most consistently been in the air since COVID.
2 It would seem COVID would have provide Airbus a "free" opportunity to redistribute production rate and the economy of scale cost between the A220 and the A320.

Economy of scale on the A220 was something they were very keen to achieve anyway pre-COVID. Why announce a 5/month increase for the A320 when industry insiders warn against it, instead of keeping the A320 at 40 for a bit longer and instead doubling the A220 from 5 to 10/month? Providing a huge economy of scale improvement for the A220.

Is Airbus missing an opportunity by so severely delaying the ramp up for the A220? With a stronger ramp up they would allow for significant capacity for a 2025/2026 EIS of an A220-500. In turn freeing capacity for new A321 variants and development models by switching A320 capacity to A220-500. One would expect that it is easier for Airbus to accelerate the increase of the A320 rate at a later stage than it is to increase the A220 rate. The former was a known quantity and the capacity is there coming from 60/months. That's not the case for the A220 and increasing the rate for economy of scale and for significant numbers of A220-500 (significant in order to meaningfully free up A320 slots) will be much harder.

Would it be political pressure inside the EU or is cash preservation such a priority that it's hurting mid term strategic planning?


Significant ramp up like that requires big investments and/or big orders. Both are not there, the only thing that has happened is mass deferrals and minor cancellations...


What do you mean they don't have big orders? The have a backlog of 487. At 5 a month that is 8 years worth of production. This is without any further orders and without a possible A220-500. If we assume a conservative 60 orders a years from 2022. The backlog to fill up to and including 2025 would be 727. If we assume a production rate of 8/months (I dropped it down from 10/months) at the end of 2025 the backlog would be around 270. Again this is with very a conservative 60 a year of orders from 2022, no 2021 orders and no A220-500 orders.

About deferrals and cancellations, they ARE increasing A320 production. What I'm saying is keep A320 level a bit longer and instead increase the A220 with the same amount. Actually adding less seats to the market.


Looking only at the backlog numbers gives half the story. The order books are nice, but most deliveries are deferred to 2023 and later. Building planes and parking them for 2 years would be quite stupid. 60 orders in 2022 would be an miracle. Airplane demand always lags 2 years behind passenger demand. If we have full recovery in the A22x segment in 2022, the earliest orders would be dripping in at the beginning of 2023 if we slash the lag by halve.
If I were a betting man I would not place my bet on that...

Best case scenario is that the ramp up timeline of the A22x has moved by 2 years, I am a bit more skeptical and guess 3 years is more realistic.

Ps.: the A32x line is probably the only plane making substantial money in production in the whole industry at the moment. Decreasing that in favor of the A22x would be financially unwise.
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 2:09 pm

Taxi645 wrote:
Economy of scale on the A220 was something they were very keen to achieve anyway pre-COVID. Why announce a 5/month increase for the A320 when industry insiders warn against it, instead of keeping the A320 at 40 for a bit longer and instead doubling the A220 from 5 to 10/month? Providing a huge economy of scale improvement for the A220.

Is Airbus missing an opportunity by so severely delaying the ramp up for the A220?


I spent a lot of time in Econ classes, and in automotive production. Believe me, few people like economies of scale more than me. But you can't just assume that five more A220s a month (from 5 to 10) have the same profit impact of the A320neo going from 40 to 45. Among other reasons, Airbus has already achieved economies of scale with the A320 lines -- ramping them up further is just a half step from free money.
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 2:26 pm

JonesNL wrote:
Taxi645 wrote:
JonesNL wrote:

Significant ramp up like that requires big investments and/or big orders. Both are not there, the only thing that has happened is mass deferrals and minor cancellations...


What do you mean they don't have big orders? The have a backlog of 487. At 5 a month that is 8 years worth of production. This is without any further orders and without a possible A220-500. If we assume a conservative 60 orders a years from 2022. The backlog to fill up to and including 2025 would be 727. If we assume a production rate of 8/months (I dropped it down from 10/months) at the end of 2025 the backlog would be around 270. Again this is with very a conservative 60 a year of orders from 2022, no 2021 orders and no A220-500 orders.

About deferrals and cancellations, they ARE increasing A320 production. What I'm saying is keep A320 level a bit longer and instead increase the A220 with the same amount. Actually adding less seats to the market.


Looking only at the backlog numbers gives half the story. The order books are nice, but most deliveries are deferred to 2023 and later. Building planes and parking them for 2 years would be quite stupid. 60 orders in 2022 would be an miracle. Airplane demand always lags 2 years behind passenger demand. If we have full recovery in the A22x segment in 2022, the earliest orders would be dripping in at the beginning of 2023 if we slash the lag by halve.
If I were a betting man I would not place my bet on that...

Best case scenario is that the ramp up timeline of the A22x has moved by 2 years, I am a bit more skeptical and guess 3 years is more realistic.


A 2022 order obviously does not mean a 2022 delivery. ;) A 2022 could mean anything from a 2023 to a 2026 delivery. Which puts it right at the middle of the recovery from the COVID crisis. A crisis, as said, that hit the A220 the least of all planes. Also I obviously meant an average number of orders of 60, not exactly 60/year each year. Who says A320's won't be stored for 2 years in they are too aggressive with the ramp up?

Ps.: the A32x line is probably the only plane making substantial money in production in the whole industry at the moment. Decreasing that in favor of the A22x would be financially unwise.


I'm not saying decreasing A320, I say delay the increase. That is meaningfully different.


MIflyer12 wrote:
Taxi645 wrote:
Economy of scale on the A220 was something they were very keen to achieve anyway pre-COVID. Why announce a 5/month increase for the A320 when industry insiders warn against it, instead of keeping the A320 at 40 for a bit longer and instead doubling the A220 from 5 to 10/month? Providing a huge economy of scale improvement for the A220.

Is Airbus missing an opportunity by so severely delaying the ramp up for the A220?


I spent a lot of time in Econ classes, and in automotive production. Believe me, few people like economies of scale more than me. But you can't just assume that five more A220s a month (from 5 to 10) have the same profit impact of the A320neo going from 40 to 45. Among other reasons, Airbus has already achieved economies of scale with the A320 lines -- ramping them up further is just a half step from free money.


Look, Airbus are going to the A220 ramp up eventually anyway. What I'm saying is that doing more of that ramp up now in stead of ramping up the A320 is LESS costly now than it will be if you do it later. Ramping up the A320 is not free money if the market is not ready to take them yet. The market will more easily absorb the A220 and set's you up much better for another significant ramp up when you start preparing for the A220-500.
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 4:29 pm

About the A220/A320: I'd wager there is indeed quite a high pressure in Europe to keep jobs in Europe instead of shipping them to Canada/USA, for one, and it is quite easier to jack up back the scale on a functioning line than to foster a newer, not quite yet as good one. And the orders postponed, yeah…

About the 777X: that looks like a case of ceasing to play chicken. (deliveries postponed to 2023 at best, as per other thread)
"When I find out I was wrong, I change my mind. What do you do?" -attributed to John Maynard Keynes
 
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 4:38 pm

Aircellist wrote:
About the A220/A320: I'd wager there is indeed quite a high pressure in Europe to keep jobs in Europe instead of shipping them to Canada/USA, for one, and it is quite easier to jack up back the scale on a functioning line than to foster a newer, not quite yet as good one. And the orders postponed, yeah…

About the 777X: that looks like a case of ceasing to play chicken. (deliveries postponed to 2023 at best, as per other thread)

I'm not sure we know where the bottleneck in A220 production is. At one point we read it was wing production. It may be that BBD selling the wing factory to Spirit has caused a delay in the ramp up. Spirit is heavily invested in the MAX so it may not have the cash to fund a big ramp up.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
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Re: The case for more aircraft production cuts/playing chicken

Wed Jan 27, 2021 10:05 pm

Revelation wrote:
Aircellist wrote:
About the A220/A320: I'd wager there is indeed quite a high pressure in Europe to keep jobs in Europe instead of shipping them to Canada/USA, for one, and it is quite easier to jack up back the scale on a functioning line than to foster a newer, not quite yet as good one. And the orders postponed, yeah…

About the 777X: that looks like a case of ceasing to play chicken. (deliveries postponed to 2023 at best, as per other thread)

I'm not sure we know where the bottleneck in A220 production is. At one point we read it was wing production. It may be that BBD selling the wing factory to Spirit has caused a delay in the ramp up. Spirit is heavily invested in the MAX so it may not have the cash to fund a big ramp up.


Whichever the reason, A32x have already been produced at a much higher pace, A22x, not yet. I am of course not at all a production expert, but I'd guess that making 10 more A32x a month is much much easier than 5 more A22x. I sure do hope that A22x are a big(ger) part of the future than they are of the present. :)
"When I find out I was wrong, I change my mind. What do you do?" -attributed to John Maynard Keynes
 
JonesNL
Posts: 327
Joined: Tue Aug 06, 2019 2:40 pm

Re: The case for more aircraft production cuts/playing chicken

Fri Jan 29, 2021 12:53 pm

From Covid reference thread: HNA is bankrupt, Many subsidiaries with mostly narrowbodies that will find new homes on Chinese market. Only Hainan Airlines has big number of young WB's: 38x787, 33xA330 and 2xa350.

Current fleet of Hainan Airlines according to Wikipedia:
Aircraft names In Fleet Orders
Airbus A330-200 9 —
Airbus A330-300 24 —
Airbus A350-900 2 2
Boeing 737-800 137 —
Boeing 737MAX8 11 39
Boeing 787-8 10 —
Boeing 787-9 28 8

Wonder if the WB's will just be divided in China for other airlines...
 
Capricorn
Posts: 193
Joined: Mon Jul 27, 2020 1:11 pm

Re: The case for more aircraft production cuts/playing chicken

Fri Jan 29, 2021 1:15 pm

[photoid][/photoid]Would be interesting to know if these frames are owned by Hainan (or Chinese leasing companies) or if they are leased from International leasing companies. If it is the later then the WB market and especially the 787 get flooded with many frames. That does not bode well for both OEMs. And I suspect HNA will not be the airline that goes out of business as a consequence of the C19 crisis.

Edit: If the subsidiaries are affected as well then there a potentially many more ACs on the market. Not a good day.....
 
MIflyer12
Posts: 9312
Joined: Mon Feb 18, 2013 11:58 pm

Re: The case for more aircraft production cuts/playing chicken

Fri Jan 29, 2021 2:20 pm

Taxi645 wrote:
Look, Airbus are going to the A220 ramp up eventually anyway. What I'm saying is that doing more of that ramp up now in stead of ramping up the A320 is LESS costly now than it will be if you do it later. Ramping up the A320 is not free money if the market is not ready to take them yet. The market will more easily absorb the A220 and set's you up much better for another significant ramp up when you start preparing for the A220-500.


Early last year they were talking about A220 breakeven in the highly non-specific 'mid-decade' on a production rate of 10+ per month.

https://www.flightglobal.com/programmes ... 53.article

'We're losing money on every frame. Let's make more!' is not always a sensible path. If it's just a problem of spreading fixed overheads over more production (and the demand is there with customers who have money, as you assert), why haven't they boosted production already? Their losses may be a problem of labor productivity that doesn't go away with higher production rates; it may be a pricing problem of purchased components (and they need time to arm-twist or re-source); it may be a problem of constrained supplier output as suggested by Revelation.

You need to accept the fact they rolled back the output increases. Just how they see that as profit-maximizing may remain a bit of a mystery to you and me.
 
Jetport
Posts: 210
Joined: Thu Apr 02, 2015 4:23 pm

Re: The case for more aircraft production cuts/playing chicken

Fri Jan 29, 2021 4:42 pm

MIflyer12 wrote:
Taxi645 wrote:
Look, Airbus are going to the A220 ramp up eventually anyway. What I'm saying is that doing more of that ramp up now in stead of ramping up the A320 is LESS costly now than it will be if you do it later. Ramping up the A320 is not free money if the market is not ready to take them yet. The market will more easily absorb the A220 and set's you up much better for another significant ramp up when you start preparing for the A220-500.


Early last year they were talking about A220 breakeven in the highly non-specific 'mid-decade' on a production rate of 10+ per month.

https://www.flightglobal.com/programmes ... 53.article

'We're losing money on every frame. Let's make more!' is not always a sensible path. If it's just a problem of spreading fixed overheads over more production (and the demand is there with customers who have money, as you assert), why haven't they boosted production already? Their losses may be a problem of labor productivity that doesn't go away with higher production rates; it may be a pricing problem of purchased components (and they need time to arm-twist or re-source); it may be a problem of constrained supplier output as suggested by Revelation.

You need to accept the fact they rolled back the output increases. Just how they see that as profit-maximizing may remain a bit of a mystery to you and me.


MIflyer12 is on to something here. Airbus makes lots of money on every A319 and A320, they lose money on every A220.

The A220 has some major hurdles to overcome to ever be a successful aircraft program. Development costs are irrelevant now, but there are several other hurdles which may spell doom for this program. The A220 costs way too much to make. With full carbon fiber construction they may never be able get costs low enough to make money on this aircraft. Most of the A220's sold so far were at prices far too low to make money, maybe even at 10/ month.
With competition from below from the E190/195 E2 and from above from the 737/A32X Airbus just doesn't have the pricing power to charge what they need to to make the A220 a profitable program. Even though it is very efficient, based on what I have read about the A220 the only way it makes sense at profitable prices for Airbus is if you can't fill the 737/A32X or if you have very long flights vs. the E190/195 E2. I assume Airbus is sticking with this program even though it is burning cash because they are hopeful they can make a future cost breakthrough or they can drive the E190/195 E2 from the market.

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