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Revelation
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Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 9:17 pm

Interesting comments from Boeing's CEO:

Boeing aspires to split the narrowbody aircraft market evenly with Airbus after losing ground to the European airframer as a result of the nearly two-year grounding of its 737 Max.

I want to split that market,” Boeing chief executive David Calhoun says during the company’s first-quarter earnings call on 28 April. “I can’t make up for the production gap that we created for that entire year [of the aircraft’s grounding].”

I am not going to try to regain that ground, I simply am going to hold our ground,” he adds.

Ref: https://www.flightglobal.com/airframers ... 09.article

Oh, how the industry misses John Leahy, I bet he'd have a colorful response to the above.

So, Calhoun would "like" to split the narrowbody market going forward, but is that realistic with the successful A321XLR above the MAX10 and the A220 below the MAX7?

Can he just treat 2019 and 2020 as an extended "lost weekend" and ignore the planes they should have made and sold in that time frame?

Realistically, how else can he deal with the recent past except to focus on the future?
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Opus99
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 9:44 pm

I listened in on that call. It was very funny to me, especially when Calhoun was asked about the problems with 777X, 737 MAX, 787 and KC46 failures whether BCA was giving enough resources to execution.

Anyway... I think I agree with his comments. He eventually wants to get back to 50-50 with Airbus over the longer term. Airbus has gone far ahead in the market share and market share won’t shift much until Boeing brings that next plane online. And I think he’s accepting that he can’t gain what was lost in that grounding in the short term. But his quote was 50-50 in the long term

Calhoun gave a “no point crying over split milk” vibe when he answered that question.
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 9:53 pm

Opus99 wrote:
I listened in on that call. It was very funny to me, especially when Calhoun was asked about the problems with 777X, 737 MAX, 787 and KC46 failures whether BCA was giving enough resources to execution.

Anyway... I think I agree with his comments. He eventually wants to get back to 50-50 with Airbus over the longer term. Airbus has gone far ahead in the market share and market share won’t shift much until Boeing brings that next plane online. And I think he’s accepting that he can’t gain what was lost in that grounding in the short term. But his quote was 50-50 in the long term

Calhoun gave a “no point crying over split milk” vibe when he answered that question.

It reads to me as "if restart the clock from right now, I am aiming for 50:50 market share going forward".

I think it's more that he's saying we just took a hit that we're never going to make up, we need to accept that and move forward from here.

I don't think the rest of the industry or the followers here are going to grant him that reset of the clock.

I'm also dubious about the 50:50 going forward part.

I think they're going to be at less than 50:50 and manage based on revenue per airplane rather than market share.

I think he's setting himself up for failure by drawing the focus onto market share.

They were already losing the market share battle before mcas and covid, but they were still making large amounts of money.

Now they don't have anything to change the market dynamics and are dealing with large debts, so it's not likely they can move the market in their favor.
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keesje
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 10:00 pm

It would be interesting to do a projection for the next 20 years. Based on current backlogs, further orders based on replacements, growth. The launch, development and ramp up of a new aircraft (10 yrs?) and a response by Airbus a few years later.
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Vladex
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 10:04 pm

All of that was their stated goal from the beginning of the ill fated MAX era and like so many businesses , they want to try harder to dig the hole that they are already in. Aviation is a government enforced duopoly so 50/50 is the norm , it's not a goal.
 
WayexTDI
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 10:18 pm

Opus99 wrote:
I listened in on that call. It was very funny to me, especially when Calhoun was asked about the problems with 777X, 737 MAX, 787 and KC46 failures whether BCA was giving enough resources to execution.

Anyway... I think I agree with his comments. He eventually wants to get back to 50-50 with Airbus over the longer term. Airbus has gone far ahead in the market share and market share won’t shift much until Boeing brings that next plane online. And I think he’s accepting that he can’t gain what was lost in that grounding in the short term. But his quote was 50-50 in the long term

Calhoun gave a “no point crying over split milk” vibe when he answered that question.

Even without the MAX grounding, the narrowbody market share was not 50:50, but rather 66:34 in favor of Airbus. It has nothing to do with the MAX grounding, but all to do with the frame offering.
 
iamlucky13
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 11:14 pm

Calhoun's actual words, at least as quoted by Flightglobal, were not quite as explicit as "evenly." It looks like Flightglobal added that word. He said "hold our ground."

From a deliveries standpoint, holding their ground actually is very even. For both the 5 and 10 year histories leading up to 2018 (using Wikipedia's comparison, for convenience, rather than official sources), the average delivery split was 49% 737 and 51% A320 family.

If looking at the 5 year history ending in 2018, holding their ground could mean a 49% / 51% division of deliveries. That's a really even matchup.

Backlog is less even. I looked late at 2018 to get a snapshot prior to the MCAS-related turmoil, and late 2013 for another snapshot while the MAX and NEO were in development. I didn't have data readily available for prior to the announcement of the NEO and MAX.

Overall, considering where they are right now, I would think that if Boeing manages above 40% of the share of the combined 737 + A320 sales, they should consider that even enough to be happy.

Is it realistic? I don't know, but as far as I can tell, Boeing does have a pricing advantage that should help them cope with not having as well-rounded of a product family.

Revelation wrote:
I don't think the rest of the industry or the followers here are going to grant him that reset of the clock.


I don't understand what you're trying to say here. If the 737 "only" matches the A320 sales 1:1 (or even 1:1.25 as I speculate), what is the industry going to do that amounts to not "granting a reset of the clock?"

Or are you suggesting that Boeing won't be able to achieve 1:1 because airlines will refuse to buy at that collective ratio regardless of the basic competitive factors as a punitive response to the accidents and groundings?
 
Opus99
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 11:17 pm

Revelation wrote:
Opus99 wrote:
I listened in on that call. It was very funny to me, especially when Calhoun was asked about the problems with 777X, 737 MAX, 787 and KC46 failures whether BCA was giving enough resources to execution.

Anyway... I think I agree with his comments. He eventually wants to get back to 50-50 with Airbus over the longer term. Airbus has gone far ahead in the market share and market share won’t shift much until Boeing brings that next plane online. And I think he’s accepting that he can’t gain what was lost in that grounding in the short term. But his quote was 50-50 in the long term

Calhoun gave a “no point crying over split milk” vibe when he answered that question.

It reads to me as "if restart the clock from right now, I am aiming for 50:50 market share going forward".

I think it's more that he's saying we just took a hit that we're never going to make up, we need to accept that and move forward from here.

I don't think the rest of the industry or the followers here are going to grant him that reset of the clock.

I'm also dubious about the 50:50 going forward part.

I think they're going to be at less than 50:50 and manage based on revenue per airplane rather than market share.

I think he's setting himself up for failure by drawing the focus onto market share.

They were already losing the market share battle before mcas and covid, but they were still making large amounts of money.

Now they don't have anything to change the market dynamics and are dealing with large debts, so it's not likely they can move the market in their favor.

The thing is, everybody asks about market share all the time, especially now. Before MAX, I didn’t hear much about market share? Or is it just me?
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 11:20 pm

WayexTDI wrote:
Even without the MAX grounding, the narrowbody market share was not 50:50, but rather 66:34 in favor of Airbus. It has nothing to do with the MAX grounding, but all to do with the frame offering.


By what metric was the market share 66:34 prior to the grounding?

Post-grounding, even with all the cancellations and the ASC 606 adjustments, backlogs are 64:36 (or 66:34 including the CSeries).

As I noted above, prior to the grounding, it was 57:43 (or 59:41 if including the CSeries)
 
RJMAZ
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 11:47 pm

Deliveries are all that matters. Boeing had a 49% split in 2018.

Filling a backlog up to 10 years with orders from airlines with 500% growth projections does not mean much. When the time comes for the airline to pay a huge portion of orders will get deferred. So the production rate has to remain low to spread out deliveries over a longer time period.
 
iamlucky13
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Wed Apr 28, 2021 11:52 pm

Boeing was really fast about posting the transcript this time:
https://investors.boeing.com/investors/ ... fault.aspx

More context really helps me understand what we're discussing. Emphasis is mine, and some non-informative sentences are excerpted:

Douglas S. Harned, Sanford and Bernstein wrote:
So when you look at the situation today, and the 737 MAX obviously has been held back, there's still a large market for it. But Airbus has been delivering a lot of NEOs. They have a big backlog. On the last call, we talked a little bit about the A321XLR. So when you look forward now, how important is market share? Do you think about that? Is that number for narrow-bodies important? And is there a level that you would want to make sure that Boeing is at?


David Calhoun wrote:
Yeah. It's a great question. I want to split that market. Let's put it that way. That's the way it's played out historically. They do better in some segments of that market, we do better in other parts of that market with respect to the products that we field. And I'm confident we can get there.
....
So it's all a question over what period of time do you want to measure it. I'm confident that over a longer period of time, we'll get back to where we need to get to and I'm confident in the product line.


Douglas S. Harned, Sanford and Bernstein wrote:
you've been averaging a little bit more than 20 737 MAXs since it restarted. And that's clearly well below the capacity that you have to deliver them. What are the constraints here? Are they more on customer willingness to take delivery or more on your processes to get those airplanes out there and delivered?


David Calhoun wrote:
Well, it's the former.
....
And then the final and very important straw is we've got to reinstate our trade relationship in aerospace with China.


The question was asked specifically about narrowbodies, but it sounds like Calhoun answered with a goal of 50:50 overall, not just 737 vs. A320. And he's clearly talking longer term, so I suspect he means the NMA will be a part of it.

The statement was not a planned, carefully articulated strategy, but a response to a question, and therefore I think should be interpreted as reflecting the general intent, rather than an explicitly quantified goal.

It was also informative to hear confirmed that the current delivery constraint is the customers. And of course, he brought up the big political concern, which is probably more significant for Boeing than Airbus, considering the Tianjin A320 final assembly line.
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 2:25 am

Smells like Calhoun is ready to replace the 737 with the NSA in a big family raining from CS/E2 size to (hypothetical) A322 size and capabilities.
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 4:13 am

iamlucky13 wrote:
Boeing was really fast about posting the transcript this time:
https://investors.boeing.com/investors/ ... fault.aspx

More context really helps me understand what we're discussing. Emphasis is mine, and some non-informative sentences are excerpted:

Douglas S. Harned, Sanford and Bernstein wrote:
So when you look at the situation today, and the 737 MAX obviously has been held back, there's still a large market for it. But Airbus has been delivering a lot of NEOs. They have a big backlog. On the last call, we talked a little bit about the A321XLR. So when you look forward now, how important is market share? Do you think about that? Is that number for narrow-bodies important? And is there a level that you would want to make sure that Boeing is at?


David Calhoun wrote:
Yeah. It's a great question. I want to split that market. Let's put it that way. That's the way it's played out historically. They do better in some segments of that market, we do better in other parts of that market with respect to the products that we field. And I'm confident we can get there.
....
So it's all a question over what period of time do you want to measure it. I'm confident that over a longer period of time, we'll get back to where we need to get to and I'm confident in the product line.


Douglas S. Harned, Sanford and Bernstein wrote:
you've been averaging a little bit more than 20 737 MAXs since it restarted. And that's clearly well below the capacity that you have to deliver them. What are the constraints here? Are they more on customer willingness to take delivery or more on your processes to get those airplanes out there and delivered?


David Calhoun wrote:
Well, it's the former.
....
And then the final and very important straw is we've got to reinstate our trade relationship in aerospace with China.


The question was asked specifically about narrowbodies, but it sounds like Calhoun answered with a goal of 50:50 overall, not just 737 vs. A320. And he's clearly talking longer term, so I suspect he means the NMA will be a part of it.

The statement was not a planned, carefully articulated strategy, but a response to a question, and therefore I think should be interpreted as reflecting the general intent, rather than an explicitly quantified goal.

It was also informative to hear confirmed that the current delivery constraint is the customers. And of course, he brought up the big political concern, which is probably more significant for Boeing than Airbus, considering the Tianjin A320 final assembly line.


So what is the issue that MAX customers have that NEO customers don't?
Airbus managed to place nearly 60 NEO's with customers in March.

I think you're right that Calhoun's intent was 50:50 overall, not just in narrowbodys.

I wonder where the focus on revenue and profit went?

Rgds
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 4:55 am

In the light of this, Boeing should bring back the ERX project as their next airplane.
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 5:11 am

iamlucky13 wrote:
WayexTDI wrote:
Even without the MAX grounding, the narrowbody market share was not 50:50, but rather 66:34 in favor of Airbus. It has nothing to do with the MAX grounding, but all to do with the frame offering.


By what metric was the market share 66:34 prior to the grounding?

Post-grounding, even with all the cancellations and the ASC 606 adjustments, backlogs are 64:36 (or 66:34 including the CSeries).

As I noted above, prior to the grounding, it was 57:43 (or 59:41 if including the CSeries)

66:34, 64:36, same difference: it was to say roughly 2/3:1/3.
I calculated that number a while ago, obviously the numbers were pre-grounding; my mistake.

57:43 is closer to 50:50; but still not there. On a 12-month basis, the difference is basically 1.5 months of pre-COVID, pre-grounding deliveries; not insignificant.
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 5:36 am

TWA772LR wrote:
Smells like Calhoun is ready to replace the 737 with the NSA in a big family raining from CS/E2 size to (hypothetical) A322 size and capabilities.


If the goal is 50:50 I would say it smells like doing nothing at all.
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 5:54 am

RJMAZ wrote:
Deliveries are all that matters. Boeing had a 49% split in 2018.

Filling a backlog up to 10 years with orders from airlines with 500% growth projections does not mean much. When the time comes for the airline to pay a huge portion of orders will get deferred. So the production rate has to remain low to spread out deliveries over a longer time period.


The A32X family has had more deliveries every year since 2003 with the exception of 2015 (495 vs 491), so I'm not sure where you're going with this 'low production rate'. The ambitious airlines may defer or not take their whole order, but they do still take plenty. If you really think that the huge amount of deliveries to the fastest-growing airlines 'doesn't mean much' then I'd suggest you have a bit of an axe to grind.
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 6:39 am

The answers seem to me like normal exec spin on bad news. It will take at least 1 year, if not more until Boeing will reach again todays production rate of A320s. Yes Boeing might be able to deliver stored MAX over the next 2 years but they do not bring in positive cash flow as we have learned.

To get back to that 50:50 in deliveries will take a lot of financial pain for Boeing because it will also need financial support for the suppliers to bring capacity back up.

If the market recovers fast, Airbus will be going back to Plan A with what, 80 A32X produced a month?, Boeing is in no position to match those numbers any time soon.

So the only way Boeing can split the market evenly in deliveries and backlog is to launch another NB offer. If Calhoun is serious about the 50:50 and it is not just exec spin, than we might see the new Boeing aircraft being a narrow body, what would make most sense long term.
 
Virtual737
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 6:59 am

A goal to be "the same as our competitors" is not a goal I think I've ever heard in my commercial life, unless it was acknowledged that the competitors were superior (in terms of product, cost etc, not just current sales).

However, a goal should also be achievable - maybe tough, but still achievable. It's too easy to see the negatives in a "we want to be just as good as our competitor", so I'd love to have an insight into the mindset.
 
Aither
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 7:07 am

What about COMAC...?
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 7:23 am

Aither wrote:
What about COMAC...?


What about them? The C919 was launched in 2008 and according to Wiki, they've built six through end 2019. They don't even show up on the pie chart.

Yeah, they have 300 orders and 700 "commitments" (most of those commitments are from Chinese banks you've never heard of and 200 from HNA). The "big three" have firm orders for five each!

I'll eat my hat if they ever deliver more than 200.
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DL220MSP
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 7:38 am

First Ryan´s "Airbus only tries to catch up with the A321" statement and now this. Did some reality sunk in the PR department?
 
astuteman
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 7:41 am

Aither wrote:
What about COMAC...?


COMAC? Deliveries are what really matters, we hear on here (sidestepping that a prerequisite of deliveries is, er, orders..)

I think it will be a very long time before COMAC can deliver any volume domestically, and internationally?

Watch this space. But don't hold your breath, would by my view :)

Rgds
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 8:27 am

MrHMSH wrote:
The A32X family has had more deliveries every year since 2003 with the exception of 2015 (495 vs 491), so I'm not sure where you're going with this 'low production rate'.

10 years of deliveries before the Max problems.

Boeing 737 Vs Airbus A320
2009: 372 Vs 402
2010: 376 vs 401
2011: 372 vs 421
2012: 415 vs 455
2013: 440 vs 493
2014: 485 vs 490
2015: 495 vs 491
2016: 490 vs 545
2017: 527 vs 558
2018: 580 vs 626

4552 Vs 4882 deliveries

48.3% Vs 51.7%

According to airlines.net the A321 is running away with the sales and Boeing is doomed so they have to launch a cleansheet replacement :lol:

The 737 was doing fine before the Max grounding and it is highly like Boeing will deliver 600+ 737 aircraft in every year from 2022 right to 2030.
 
Noshow
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 8:42 am

Boeing has no money to start a single aisle family now. Airlines have no money to order it. Engine manufacturers have no new game changer engines compared to what the A321neo has.
This is NOT the moment to launch some NSA.
Boeing will do it in some years but not now.
 
VSMUT
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 8:43 am

RJMAZ wrote:
Deliveries are all that matters. Boeing had a 49% split in 2018.


:thumbsdown: That is the mentality that got Boeing mired in the 787 mess. An excellent world beating aircraft, sold so cheaply that they still haven't made money on it. Market share is not everything, they have to focus on profit as well (especially given that at this point, the entire Boeing portfolio consists of well matured aircraft and derivatives of older designs).
 
Gremlinzzzz
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 8:43 am

RJMAZ wrote:
MrHMSH wrote:
The A32X family has had more deliveries every year since 2003 with the exception of 2015 (495 vs 491), so I'm not sure where you're going with this 'low production rate'.

10 years of deliveries before the Max problems.

Boeing 737 Vs Airbus A320
2009: 372 Vs 402
2010: 376 vs 401
2011: 372 vs 421
2012: 415 vs 455
2013: 440 vs 493
2014: 485 vs 490
2015: 495 vs 491
2016: 490 vs 545
2017: 527 vs 558
2018: 580 vs 626

4552 Vs 4882 deliveries

48.3% Vs 51.7%

According to airlines.net the A321 is running away with the sales and Boeing is doomed so they have to launch a cleansheet replacement :lol:

The 737 was doing fine before the Max grounding and it is highly like Boeing will deliver 600+ 737 aircraft in every year from 2022 right to 2030.
There are only two OEM's in this market that have significant say. If Boeing was not getting close to 50% of the market, then they are doing something insanely wrong.

They should be able to book orders in regardless of what Airbus does. This does not mean that they have a great product line because they are lacking in some segments. There is nothing to compete with the A220, there is nothing to compete with the A321 at extended ranges. These are customers that they might be competing for but can never attract because there is nothing in their portfolio that fits these needs.
 
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 8:53 am

Noshow wrote:
Boeing has no money to start a single aisle family now. Airlines have no money to order it. Engine manufacturers have no new game changer engines compared to what the A321neo has.
This is NOT the moment to launch some NSA.
Boeing will do it in some years but not now.


If you have a product that can not compete on an even footing, than you have to bring a new product or accept to be the smaller producer.
 
Noshow
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 9:00 am

China's market will be the deciding factor anyway. Boeing cannot do much about this. It is about big politics.
Maybe they should focus on the MAX 8 and build it at ultra high rates in some cheapo standard configuration and attack Airbus by price? Boeing cannot fight the A321neo but it can attack the A320neo.
 
mjoelnir
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 9:19 am

If we look at orders and keep to A320neo family against 737MAX family. Backlog, though Airbus has the bigger one, is deceiving as Airbus has build and delivered significantly more neo than Boeing MAX. Airbus has nearly 1,700 frames delivered while Boeing slightly over 500 with a big part of them still or again grounded.

So let us look at the sold frames. Airbus has sold 72 A319neo, 3,852 A320neo and 3,448 A321neo. Together 7,372. We can assume that some of them will not be delivered, leaving about 7,000 frames delivered or to be delivered.
Boeing has 4013 unfilled orders about 500 frames delivered, that makes it 4,500, But of this 4,500 Boeing does not expect to deliver more than 3,720 frames in all.

Both families can expect further orders, but the 737MAX has experienced four years of net cancellations, while Airbus sold more A320neo family frames through those years.

There is talk about the 737-8 holding it's own against the A320neo. But the sales of the A320neo nearly matches the sales of the whole 737MAX family. So the parts of the 737-7, 737-9, 737-10 in the sales are either minuscule, or the 737-8 does not match the A320neo in sales.
 
Noshow
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 9:41 am

I don't dispute that Boeing has a weaker position. But if some recovery or just containment is planned Boeing needs to use the strongest elements it has. That is not the MAX 10 or MAX 7 but the MAX 8. Airbus customers are moving up in size, taking A321neos. This leaves room below. Manufacturing is or used to be a strong point of the 737. If they can bring the rate up radically they might be able to lower the cost, offering some aggressive pricing. This would affect the A220 market as well making some Airbus A220-500 stretch less likely to happen.
Boeing has really messed up several programs. 747, KC-46, 777, 737 and 787. Even the cash cows don't seem to make money anymore or just barely so. Not because of lack of demand but by constant program hick ups to say it politely.
 
Gremlinzzzz
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 10:05 am

Noshow wrote:
China's market will be the deciding factor anyway. Boeing cannot do much about this. It is about big politics.
Maybe they should focus on the MAX 8 and build it at ultra high rates in some cheapo standard configuration and attack Airbus by price? Boeing cannot fight the A321neo but it can attack the A320neo.
They cannot simply offer the plane at a vastly cheaper price point when you consider the amount of debt that they have.

Does the board have the balls, if things are going badly to issue more shares to try and better manage the financial situation? Would short term vulture investors at Wall St. even tolerate this? Boeing is between a rock and a hard place and for once, ever since the merger, they need people up top that think about the long term ramifications of their actions as opposed to short term personal gain.
 
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Momo1435
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 10:07 am

mjoelnir wrote:
Both families can expect further orders, but the 737MAX has experienced four years of net cancellations, while Airbus sold more A320neo family frames through those years..

How do you count years?

Only 2019 and 2020 had more cancellations then new orders, 2021 so far is positive.

You really don't have to make incorrect claims to show that Airbus is currently in a much better situation then Boeing when it comes to the narrowbody aircraft market share.


And let's be fair, it should be Boeing's ambition to come back to a 50/50 split. But they can only do that when they improve on the quality control issues they have right now. Jumping into a new project straight away without fixing the issues they have now is a recipe for even more trouble.
 
JonesNL
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 10:30 am

Momo1435 wrote:
mjoelnir wrote:
Both families can expect further orders, but the 737MAX has experienced four years of net cancellations, while Airbus sold more A320neo family frames through those years..

How do you count years?

Only 2019 and 2020 had more cancellations then new orders, 2021 so far is positive.

You really don't have to make incorrect claims to show that Airbus is currently in a much better situation then Boeing when it comes to the narrowbody aircraft market share.


And let's be fair, it should be Boeing's ambition to come back to a 50/50 split. But they can only do that when they improve on the quality control issues they have right now. Jumping into a new project straight away without fixing the issues they have now is a recipe for even more trouble.


Looking at it from the current situation; It would be an dream scenario if Boeing could go back to 50/50 deliveries. The supply chain has shrunk drastically, QC problems are still occurring, airlines are not taking the planes so ramp up is not possible. Boeing going back to 500 deliveries per year within 3 years would be nothing short of an miracle.

While the frequently touted orders are nice, nothing beats deliveries…
 
Noshow
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 10:31 am

Airbus will (very likely) increase the rates. Boeing must not only follow but top them to stay competitive. Waiting it out won't help.
787 and 737 are meant to deliver the future income but both are at low rate or momentarily stopped. This won't work this way.
 
DL220MSP
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 10:38 am

RJMAZ wrote:
MrHMSH wrote:
The A32X family has had more deliveries every year since 2003 with the exception of 2015 (495 vs 491), so I'm not sure where you're going with this 'low production rate'.

10 years of deliveries before the Max problems.

Boeing 737 Vs Airbus A320
2009: 372 Vs 402
2010: 376 vs 401
2011: 372 vs 421
2012: 415 vs 455
2013: 440 vs 493
2014: 485 vs 490
2015: 495 vs 491
2016: 490 vs 545
2017: 527 vs 558
2018: 580 vs 626

4552 Vs 4882 deliveries

48.3% Vs 51.7%

According to airlines.net the A321 is running away with the sales and Boeing is doomed so they have to launch a cleansheet replacement :lol:

The 737 was doing fine before the Max grounding and it is highly like Boeing will deliver 600+ 737 aircraft in every year from 2022 right to 2030.


If you feel better with that market share figure...But you cannot ignore orders. No deliveries without orders.
 
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scbriml
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 11:02 am

RJMAZ wrote:
According to airlines.net the A321 is running away with the sales


So which single-aisle plane is selling better than the A321neo over the last few years (long before MAXgate started)? Comparing historic deliveries to try to disprove current sales trends is an interesting tactic.

DL220MSP wrote:
If you feel better with that market share figure...But you cannot ignore orders. No deliveries without orders.


Indeed, but whatever supports the claimed position works.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
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MrHMSH
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 11:08 am

RJMAZ wrote:
MrHMSH wrote:
The A32X family has had more deliveries every year since 2003 with the exception of 2015 (495 vs 491), so I'm not sure where you're going with this 'low production rate'.

10 years of deliveries before the Max problems.

Boeing 737 Vs Airbus A320
2009: 372 Vs 402
2010: 376 vs 401
2011: 372 vs 421
2012: 415 vs 455
2013: 440 vs 493
2014: 485 vs 490
2015: 495 vs 491
2016: 490 vs 545
2017: 527 vs 558
2018: 580 vs 626

4552 Vs 4882 deliveries

48.3% Vs 51.7%

According to airlines.net the A321 is running away with the sales and Boeing is doomed so they have to launch a cleansheet replacement :lol:

The 737 was doing fine before the Max grounding and it is highly like Boeing will deliver 600+ 737 aircraft in every year from 2022 right to 2030.


Moving the goalposts there, you said that deliveries were all that matter, yet the figures still show that the A32X has done better. Also missing the context that on many of those deliveries Airbus has been able to charge a meaty premium for the A321s, it may be masked somewhat by the overall figures and the success of the -800/MAX8, but make no mistake, leaving a gap that big in which the competitor has free reign is not something Boeing should be comfortable with. The fact that the MoM has been researched and offered (informally) is a pretty big indication that Boeing does see that space as a massive weak point and wants to change that. Just because the financial and market realities have hurt the MoM, doesn't mean it wasn't needed in some shape or form.

The 737 is doing fine, but little better even ignoring the stonking great elephant in the room.
 
mjoelnir
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 12:13 pm

Momo1435 wrote:
mjoelnir wrote:
Both families can expect further orders, but the 737MAX has experienced four years of net cancellations, while Airbus sold more A320neo family frames through those years..

How do you count years?

Only 2019 and 2020 had more cancellations then new orders, 2021 so far is positive.

You really don't have to make incorrect claims to show that Airbus is currently in a much better situation then Boeing when it comes to the narrowbody aircraft market share.


And let's be fair, it should be Boeing's ambition to come back to a 50/50 split. But they can only do that when they improve on the quality control issues they have right now. Jumping into a new project straight away without fixing the issues they have now is a recipe for even more trouble.


2021 is negative through Mars. In regards to April we do only know about orders, but not cancellations and ASC 606 adjustment. Deliveries of the stored frames are very slow. Airlines not taken their ordered frames does not bode well for the viability of the backlog.

If Boeing wants to come back to 50/50 in narrow bodies, they have to come with a frame that is competitive.
 
Sokes
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 12:18 pm

Noshow wrote:
China's market will be the deciding factor anyway. Boeing cannot do much about this. It is about big politics.
Maybe they should focus on the MAX 8 and build it at ultra high rates in some cheapo standard configuration and attack Airbus by price? Boeing cannot fight the A321neo but it can attack the A320neo.

I agree. Airbus will not try to pick a quarrel with the US government by aiming for 70% market share. It's much better to aim for 60% with higher profitability.

Flag carriers may be encouraged to buy Maxes.
For many airlines the -8 capacity may be enough. In this case the -7 and -8 may be more attractive than A319Neo and A320Neo. I wouldn't be surprised if the -7 sells better than now in the long run.

All this may not be great for Boeing shareholders. But it may be good enough for employees and suppliers.
Let's hope for Boeing that a new war will start soon.
Why can't the world be a little bit more autistic?
 
mjoelnir
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 12:49 pm

RJMAZ wrote:
MrHMSH wrote:
The A32X family has had more deliveries every year since 2003 with the exception of 2015 (495 vs 491), so I'm not sure where you're going with this 'low production rate'.

10 years of deliveries before the Max problems.

Boeing 737 Vs Airbus A320
2009: 372 Vs 402
2010: 376 vs 401
2011: 372 vs 421
2012: 415 vs 455
2013: 440 vs 493
2014: 485 vs 490
2015: 495 vs 491
2016: 490 vs 545
2017: 527 vs 558
2018: 580 vs 626

4552 Vs 4882 deliveries

48.3% Vs 51.7%

According to airlines.net the A321 is running away with the sales and Boeing is doomed so they have to launch a cleansheet replacement :lol:

The 737 was doing fine before the Max grounding and it is highly like Boeing will deliver 600+ 737 aircraft in every year from 2022 right to 2030.


As it is we are talking about the 737MAX compared to the A320neo family. And that is about 500 to about 1,700. 23% to 77%. Of course there was the grounding, but the Boeing delivery numbers for the 737MAX since the grounding was lifted are not overwhelming.
 
MIflyer12
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 1:03 pm

Gremlinzzzz wrote:
They cannot simply offer the plane at a vastly cheaper price point when you consider the amount of debt that they have.


Some people might make the effort to read an income statement. Figure out balance sheets, too.

Boeing's interest expense 1Q21 was $679 million. That is not excessive for a firm its size.

https://s2.q4cdn.com/661678649/files/do ... elease.pdf

Boeing is not capital-constrained in developing a new narrowbody. Whether the engine tech is ready to make the investment worthwhile this decade is a different question, although not a question firms addicted to launch aid, or fanbois addicted to all shiny and new, bother to consider.

Given the uncertain outlook, Airbus won’t ramp up aircraft deliveries this year. The company said it expected to deliver 566 aircraft on back order from airline companies, the same number as last year.

https://www.nytimes.com/live/2021/04/29 ... oronavirus
 
RJMAZ
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 3:04 pm

mjoelnir wrote:
As it is we are talking about the 737MAX compared to the A320neo family. And that is about 500 to about 1,700. 23% to 77%. Of course there was the grounding, but the Boeing delivery numbers for the 737MAX since the grounding was lifted are not overwhelming.

The 737MAX first flew and entered service 16 months after the A320NEO.

So at 600 aircraft per year production rate 16 months is an 800 aircraft headstart to Airbus. To make things fair you should either add 800 737NG to the Boeing delivery total or exclude 800 from the Airbus delivery total.

Either way that's only 30% more A320NEO aircraft delivered which is amazing considering the 737MAX has spent more than half of its service like grounded or in the largest aviation collapse in history. It won't be long until Boeing is at 600+ 737MAX deliveries per year. In 10 years time the grounding will be just a small dip in the long term totals.
 
Gremlinzzzz
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 3:08 pm

MIflyer12 wrote:
Gremlinzzzz wrote:
They cannot simply offer the plane at a vastly cheaper price point when you consider the amount of debt that they have.


Some people might make the effort to read an income statement. Figure out balance sheets, too.

Boeing's interest expense 1Q21 was $679 million. That is not excessive for a firm its size.

https://s2.q4cdn.com/661678649/files/do ... elease.pdf

Boeing is not capital-constrained in developing a new narrowbody. Whether the engine tech is ready to make the investment worthwhile this decade is a different question, although not a question firms addicted to launch aid, or fanbois addicted to all shiny and new, bother to consider.

Given the uncertain outlook, Airbus won’t ramp up aircraft deliveries this year. The company said it expected to deliver 566 aircraft on back order from airline companies, the same number as last year.

https://www.nytimes.com/live/2021/04/29 ... oronavirus
I used to work in investment banking, and I know enough to spot a zombie company when I see one.

Boeing is not going to make money on the MAX, 787, or 777X. This is their product lineup. They are highly financialized company that used program accounting, thus they pocketed 'profits' early on. This often has issues in the back end.

The MAX has set them back billions, money they will never recover off the program. The 787 is never going to make money and the more time passes, the more orders the 777X loses. They cannot seem to get things right on the military or space side either. The debt that they took on now means that they are at the mercy of lender, you are looking at almost $2.5B in interest payments each year. That is significant for a company that currently is busy doing repeat work, bad credit rating and one that has been selling planes at rock bottom prices to try and gain some traction in sales.

I also want to know where people think the money for a new program is coming from. Boeing, if it is to survive will be spending money paying down debt as opposed to investing in new programs because this is what companies with bad debt ratios and negative equity tend to do. Their debt is also BBB- , a level above junk status which means that they are paying a premium on this leverage even in times when interest rates are rock bottom.

There is a fallacy that Boeing is not capital constrained, or that it may not have issues raising capital for a new program. Take a $15-20B loan/bond on top of the current debt and this company is done. Yet, this is what they need to do.
 
astuteman
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 3:41 pm

MIflyer12 wrote:
Gremlinzzzz wrote:
They cannot simply offer the plane at a vastly cheaper price point when you consider the amount of debt that they have.


Some people might make the effort to read an income statement. Figure out balance sheets, too.

Boeing's interest expense 1Q21 was $679 million. That is not excessive for a firm its size.

https://s2.q4cdn.com/661678649/files/do ... elease.pdf

Boeing is not capital-constrained in developing a new narrowbody. Whether the engine tech is ready to make the investment worthwhile this decade is a different question, although not a question firms addicted to launch aid, or fanbois addicted to all shiny and new, bother to consider.

Given the uncertain outlook, Airbus won’t ramp up aircraft deliveries this year. The company said it expected to deliver 566 aircraft on back order from airline companies, the same number as last year.

https://www.nytimes.com/live/2021/04/29 ... oronavirus


I for one don't buy into the "MAX is doomed" storyline.
The good news is that there should be well over 2,000 frames in the backlog still with good per frame profit in them, and orders still coming in

That said don't buy into the Morrisond "the stored frames will unlock a heap of cash" either, because I think most of that will have disappeared in the compensation already written down in the P/L account. I think it will be another 2 years yet before the MAX goes "significantly" cash positive on a per frame basis.

So the less good news in my view is that your $680m interest in Q1 is over $2.7Bn per annum, and the company will still likely be making a loss for another 2 years, and seeing debt grow.
$3Bn per annum is the sort of money that pays for a new aircraft programme - at least until it f**ks up (but that's a different story).
I don't think that's the sort of money you can just "shrug off" - it will definitely be a drag.

I don't see buying market share at the expense of margin as the best move whilst the company is trying to get out from underneath all that debt.
And with 3,000 odd frames still in backlog, and orders coming in, I don't think they need to.
Airbus might still have 5,500 NEO's in backlog, but they can only deliver them as fast as airlines can take them until the recovery comes about

Rgds
 
morrisond
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 3:41 pm

Gremlinzzzz wrote:
MIflyer12 wrote:
Gremlinzzzz wrote:
They cannot simply offer the plane at a vastly cheaper price point when you consider the amount of debt that they have.


Some people might make the effort to read an income statement. Figure out balance sheets, too.

Boeing's interest expense 1Q21 was $679 million. That is not excessive for a firm its size.

https://s2.q4cdn.com/661678649/files/do ... elease.pdf

Boeing is not capital-constrained in developing a new narrowbody. Whether the engine tech is ready to make the investment worthwhile this decade is a different question, although not a question firms addicted to launch aid, or fanbois addicted to all shiny and new, bother to consider.

Given the uncertain outlook, Airbus won’t ramp up aircraft deliveries this year. The company said it expected to deliver 566 aircraft on back order from airline companies, the same number as last year.

https://www.nytimes.com/live/2021/04/29 ... oronavirus
I used to work in investment banking, and I know enough to spot a zombie company when I see one.

Boeing is not going to make money on the MAX, 787, or 777X. This is their product lineup. They are highly financialized company that used program accounting, thus they pocketed 'profits' early on. This often has issues in the back end.

The MAX has set them back billions, money they will never recover off the program. The 787 is never going to make money and the more time passes, the more orders the 777X loses. They cannot seem to get things right on the military or space side either. The debt that they took on now means that they are at the mercy of lender, you are looking at almost $2.5B in interest payments each year. That is significant for a company that currently is busy doing repeat work, bad credit rating and one that has been selling planes at rock bottom prices to try and gain some traction in sales.

I also want to know where people think the money for a new program is coming from. Boeing, if it is to survive will be spending money paying down debt as opposed to investing in new programs because this is what companies with bad debt ratios and negative equity tend to do. Their debt is also BBB- , a level above junk status which means that they are paying a premium on this leverage even in times when interest rates are rock bottom.

There is a fallacy that Boeing is not capital constrained, or that it may not have issues raising capital for a new program. Take a $15-20B loan/bond on top of the current debt and this company is done. Yet, this is what they need to do.


I disagree.

Back in February the Boeing CFO did float the idea of a large Primary Issue of stock as one of the routes they go down. One analyst pegged it at $30B. The Boeing stock price barely budged that day and rose almost 30% in the weeks after. If they want to do a large equity raise to fund new programs or pay off debt that is definitely an option - the market would barely blink.

In the latest Quarterly report Boeing actually cited MAX deliveries as one of the reasons for the improved negative margin. Large negative cash flow in the quarter but a lot of that can probably be pinned on undelivered 787. Eyeballing the revenue line and assuming $100Million a piece for everything not MAX delivered in Q1 that leaves about $3B for the MAX in the first quarter (or over $50 Million per frame - but that is what they recognized not necessarily cash in the door on delivery). However they didn't get to where they are in debt by not paying suppliers for parts to keep them solvent for undelivered MAX's. Yes compensation credits will be used to defer some of the cash airlines have to pay - but Boeing has already set aside that money. The debt balance will reduce substantially when MAX (and 787) deliveries resume as Boeing will get the bulk of the money that comes in the door . Will it be 1 for 1 - probably not but it should be substantial. Plus they have over $20B in cash/marketable securities.

However it is really hard to figure out what is going on in the financial statements due to delivery stoppage(s). We probably won't know the real story until we get a clean quarter of 737 and 787 deliveries to see if BCA is cash flow positive/profitable again.

Boeing did say they are going to rate 31 in early 2022 - that plus the remaining backlog could put them over 600 MAX for 2022 (if the Airlines can pay for them).

The balance sheet should be in significantly better shape by the end of 2022, and cash flow should be positive.

They aren't going anywhere.
 
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Momo1435
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 3:51 pm

mjoelnir wrote:
2021 is negative through Mars. In regards to April we do only know about orders, but not cancellations and ASC 606 adjustment. Deliveries of the stored frames are very slow. Airlines not taken their ordered frames does not bode well for the viability of the backlog.

Wrong, 2021 is still positive, through through 3/31/2021 the MAX is +10.

The 737 = +21 in total after the ASC adjustments for this year, they also received 11 orders for the P-9 which is not a MAX.

Since the A320 is -29 negative so far this year we can only say that Boeing is quickly gaining back market share.... J/K.... These 3 months are only a snapshot, it doesn't paint the complete picture about what is going on.

We have seen a lot of MAX cancellations by leasing companies this last year. This were for a large part delivery slots which these companies couldn't place with airlines as the MAX was still grounded. Boeing also arranged financing deals between leasing companies and airlines with direct orders, which allowed the leasing companies to cancel their orders with Boeing while still keeping price options for future new deals. It will depend on the market if the leasing companies can firm up these options. Obviously the Corona crisis doesn't help here, I don;t expect orders to fully pick up this year. You simply can't predict how the split will be this year when it comes to orders. The split in deliveries will also be interesting with Boeing having so many MAX on the property. If the market returns quicker then expected they will be able to deliver a lot of these already built frames. There are simply too many outside factors to have a proper view of the market split this year.

Having said that. I really don't think it will be likely that Boeing will be able to take back enough market share to come back to an even split in the next couple of years. Airbus simply has the advantage that their product already has upper hand. Especially with all the MAX issues it's not likely for Boeing to come back to 50/50. They need something else, but it will not be a success if they rush another new product into the market. They need to get their act together first before they really can think about gaining market share again. But the ambition to aim for the even split should be there nonetheless.
 
DenverTed
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 4:10 pm

I think they can get 50/50 of the 738 versus the A320. The A220 they can't do much about. The A321 is pulling away from the 739/10, and in larger numbers than the A220, so that should be the priority for Boeing. Now whether that is single aisle or twin aisle is still up for debate.
 
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Revelation
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 4:36 pm

iamlucky13 wrote:
Revelation wrote:
I don't think the rest of the industry or the followers here are going to grant him that reset of the clock.

I don't understand what you're trying to say here. If the 737 "only" matches the A320 sales 1:1 (or even 1:1.25 as I speculate), what is the industry going to do that amounts to not "granting a reset of the clock?"

In essence Calhoun is asking for a "mulligan", Boeing lost a year's production (due to their own ineptitude if not malfeasance), he's suggesting that not be included when comparing figures going forward, presumably production but perhaps also orders. He's trying to draw a line under the mcas tragedy and start a new era. Yet it's not that simple, the impact of mcas is still going to be present for many years to come, fiscally as well as emotionally.

Opus99 wrote:
The thing is, everybody asks about market share all the time, especially now. Before MAX, I didn’t hear much about market share? Or is it just me?

Boeing's posturing pre-tragedy was to not focus on market share, but focus on profitability. Now it seems Calhoun is deviating from that posturing, obviously because their post-tragedy debt load means they can't focus on profitability any time soon, they won't even be at break even till next year best case. Therefore he asks for a reset of the clock so he doesn't feel the pressure of the massive hits taken during mcas and covid. Seems to me he needs to work harder at sharpening this new posture he's taking.

iamlucky13 wrote:
The question was asked specifically about narrowbodies, but it sounds like Calhoun answered with a goal of 50:50 overall, not just 737 vs. A320. And he's clearly talking longer term, so I suspect he means the NMA will be a part of it.

Thanks for posting the transcript, but sorry, I don't read it that way. He gets asked about MAX vs NEO/XLR, makes his "split the market" comment then goes into a statement that can only apply to 737 production. The "segments" comment probably refers to MAX10 vs XLR and MAX8 vs A320neo given how the question was framed. I don't see how we can justify saying he was thinking about the overall market based on the comments.

iamlucky13 wrote:
The statement was not a planned, carefully articulated strategy, but a response to a question, and therefore I think should be interpreted as reflecting the general intent, rather than an explicitly quantified goal.

It was a question he should have been prepared for, the questioner even says he asked a lead-in question on the last earnings call. The CEO needs to be able to speak to this kind of question with ease, IMO. He does need to clearly articulate strategy, it's a big part of his job.

iamlucky13 wrote:
It was also informative to hear confirmed that the current delivery constraint is the customers. And of course, he brought up the big political concern, which is probably more significant for Boeing than Airbus, considering the Tianjin A320 final assembly line.

The situation is in deadlock, and IMO not likely to be solved any time soon. China's regulators still haven't said word one about the MCAS fixes, and once they do, it's going to be months before the airlines install training programs, get them approved, get the fixes improved, and finally get back in the air. China holds all the cards.

astuteman wrote:
So what is the issue that MAX customers have that NEO customers don't?

The MCAS tragedy meant Boeing missed delivery dates, so customers had all the leverage in demanding deferrals or cancellations as covid hit. Since you can't sell an airplane that's illegal to fly, Boeing still can't deliver MAXes to Chinese airlines.

Meanwhile, Airbus customers have no built-in grounds for deferrals even though many want them, Airbus itself does not want to grant deferrals so it often doesn't, and Chinese customers have no regulatory impediments to accepting new NEOs. Their main problem is airlines like AAX who are refusing deliveries regardless of the consequences, they simply cannot cut the checks needed to make payments due to their financial situation.

Given China's domestic airlines are pretty much back to pre-covid levels and have been for a while and Chinese airlines have huge orders on the books, Team A has a big advantage over Team B.

astuteman wrote:
I wonder where the focus on revenue and profit went?

Exactly my point. Calhoun is shifting gears, and isn't being very graceful and lucid as he does so.

FluidFlow wrote:
If the market recovers fast, Airbus will be going back to Plan A with what, 80 A32X produced a month?, Boeing is in no position to match those numbers any time soon.

Airbus peaked at rate 60, and were preparing for rate 63, when the coronavirus crisis hit.

Now, from Airbus's own lips:

The new average production rates for the A320 Family will now lead to a gradual increase in production from the current rate of 40 per month to 43 in Q3 and 45 in Q4 2021. This latest production plan represents a slower ramp up than the previously anticipated 47 aircraft per month from July.

Ref: https://www.airbus.com/newsroom/press-r ... nment.html

Clearly they are in a better situation, but not 80 per month!!!

JonesNL wrote:
Looking at it from the current situation; It would be an dream scenario if Boeing could go back to 50/50 deliveries. The supply chain has shrunk drastically, QC problems are still occurring, airlines are not taking the planes so ramp up is not possible. Boeing going back to 500 deliveries per year within 3 years would be nothing short of an miracle.

While the frequently touted orders are nice, nothing beats deliveries…

As above, they had already dipped below 50:50 deliveries before the mcas tragedy, but they were OK with it. They were making every 737 they could possibly make, they and their supply chain were MAX'd out (lol) and lots of cash and profit were being generated. That's what their corporate messaging reflected, don't focus on A vs B stuff, we're making every cent we think we can make.

Now we see them asking to change focus, and doing so without much grace. I'm still not sure what overall message we're supposed to be receiving. Granted, they are in a difficult place (even if it is largely one of their own making) so coming up with a clear message isn't simple, but I'd hope for more clarity than what we're getting.

Good point on the ramp up, supply chain and QC issues. We're going to have to see strong execution going forward, and some movement on the China situation, for them to get back into the game.
Last edited by Revelation on Thu Apr 29, 2021 4:42 pm, edited 1 time in total.
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Gremlinzzzz
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Re: Boeing aims to evenly spilt narrowbody aircraft market share

Thu Apr 29, 2021 4:38 pm

morrisond wrote:
I disagree.

Back in February the Boeing CFO did float the idea of a large Primary Issue of stock as one of the routes they go down. One analyst pegged it at $30B. The Boeing stock price barely budged that day and rose almost 30% in the weeks after. If they want to do a large equity raise to fund new programs or pay off debt that is definitely an option - the market would barely blink.

In the latest Quarterly report Boeing actually cited MAX deliveries as one of the reasons for the improved negative margin. Large negative cash flow in the quarter but a lot of that can probably be pinned on undelivered 787. Eyeballing the revenue line and assuming $100Million a piece for everything not MAX delivered in Q1 that leaves about $3B for the MAX in the first quarter (or over $50 Million per frame - but that is what they recognized not necessarily cash in the door on delivery). However they didn't get to where they are in debt by not paying suppliers for parts to keep them solvent for undelivered MAX's. Yes compensation credits will be used to defer some of the cash airlines have to pay - but Boeing has already set aside that money. The debt balance will reduce substantially when MAX (and 787) deliveries resume as Boeing will get the bulk of the money that comes in the door . Will it be 1 for 1 - probably not but it should be substantial. Plus they have over $20B in cash/marketable securities.

However it is really hard to figure out what is going on in the financial statements due to delivery stoppage(s). We probably won't know the real story until we get a clean quarter of 737 and 787 deliveries to see if BCA is cash flow positive/profitable again.

Boeing did say they are going to rate 31 in early 2022 - that plus the remaining backlog could put them over 600 MAX for 2022 (if the Airlines can pay for them).

The balance sheet should be in significantly better shape by the end of 2022, and cash flow should be positive.

They aren't going anywhere.
Boeing stock went up on one thing and one thing alone; financial engineering. The people that made a lot of money that way will lose money the moment they start offering new stock. You cannot reap the benefits of stock buybacks and expect stagnant stock prices when you re-issue stock into the market. If anything, you are likely to see the stock plummet the moment they make such an announcement.
They would also be going against the vulture investors whose every whim they acquiesced. How do you sell a long term plan to someone who only sees the next quarter earnings and/or guidance?

Secondly, Boeing's management and board are mostly short term thinkers who benefit from short term strategy. The company is where it is today because of short term thinking and I for one do not think that the people that got the company in this position are good enough to dig it out of the hole.

I also think that you underestimate just how finite a resource money is for any company that has this much debt and these many issues. Profitable companies do a few things:
i) They invest in themselves. Taking some proceeds from profits and putting them aside for future product development.
ii) They plan for the worst case scenarios, and this means having a substantial rainy day fund (see Mary Barra and GM).
iii) They invest in processes that make them more efficient, or allow them to put out a more reliable product i.e. investments in assembly plants.
iv) Give a return to shareholders.

Boeing has done more of (iv) than they have done of anything else.

Boeing is only going to be around because of their military business and because they are needed to make the balance of payments less egregious than they are. This alone ensures that if they land into issues, the US government will nationalize it. It will not be the strength of their balance sheet, or that they will be powered by really great positive cash flow.

Right now? Boeing is simply there to survive, to try and get the plane flying in areas where it is grounded and to keep banging to the Biden administration that they need to make some sales in China for it to all make sense. In the meantime, they are going to bleed cash because production numbers are down (and they bled suppliers by promising higher output), they are going to bleed cash repairing wiring and the new grounding issue and maybe they come up with a fix for majority of the delivered 787's out there. All this as they navigate cases in the courts.

Money is finite, and Boeing needs to make enough to pay its bills, keep suppliers in a state where it makes sense for them to continue, pay back the creditors and to get back to a better credit rating. They also need to invest in better manufacturing, better quality assurance and having a better culture. These cost time and a whole lot of money. Boeing as is, is in negative equity i.e. if you sold every asset and tried paying off what they owe, you would still need money. It is the definition of a zombie company and were they not in a duopoly, they would get out of business.

I am rooting for them to try and get back to being a great company because aviation as a whole needs it. Looking at everything they do, does not fill me with confidence.

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