Article in the Financial Times today:

“John (Leahy) always used to say that when you get to 60 per cent market share that is the tipping point,” says a former colleague. “After that the whole market will get trashed and people start acting irrationally.”

https://www.ft.com/content/6a1ae943-ff2 ... 466e47c8ff

With Airbus deliveries, backlog going over 60%, hundreds of MAX standing in deserts, the 787 delivery stop having it's first birthday and 777x certification still experiencing new insights, people start to worry about a healthy market situation for the industry (incl. Airbus) long term. Airlines also are reviewing, preferring dual sources.

Airbus is asking suppliers to ramp up production in what might become an real unbalanced market situation. With all industrial and political consequences of that..

If you are linked to the loosing side things become "unfair" quickly and political driven "leveling the playing field" is around the corner.

Old school economics tend to feel market forces will correct and balance the situation. I doubt it.

FYI - Just for today - 3 November - the article should be free to read.

https://twitter.com/jburnmurdoch/status ... 88898?s=20

all of http://ft.com is free to read today, so if you like the glimpses you see on Twitter but want to go deeper, now's your chance!

Beyond Covid, read our best work on climate, politics, inequality & culture. Apparently there's even stuff on economics & finance!

In the word of Hyman Minsky stability breads instability.

Nothing new ... read any business text book.

keesje wrote:

Article in the Financial Times today:

“John (Leahy) always used to say that when you get to 60 per cent market share that is the tipping point,” says a former colleague. “After that the whole market will get trashed and people start acting irrationally.”

https://www.ft.com/content/6a1ae943-ff2 ... 466e47c8ff

With Airbus deliveries, backlog going over 60%, hundreds of MAX standing in deserts, the 787 delivery stop having it's first birthday and 777x certification still experiencing new insights, people start to worry about a healthy market situation for the industry (incl. Airbus) long term. Airlines also are reviewing, preferring dual sources.

How much of the increased market share Airbus has gained is down to the various issues at Boeing in recent years with the 787, 737 MAX and now the 777X?

For those not keeping track, Airbus is leading in deliveries but Boeing is leading in orders this year

Boeing has 710 orders (349 net) this year
Airbus has 270 orders (133 net) this year

The market appears to be correcting itself

That is partially due to MAX grounding moving forward cancellations by airlines with reassessments because of COVID and it effect on demand, Airbus has been receiving a number of these this year while last year there was an available "get out of jail free card" for those who had ordered from Boeing. Lack of competition breeds complacency and in that lies the danger.

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

I assume you are joking. Airbus has only sold 14 widebodies this year with half being resold A330neo white tails.

Weatherwatcher1 wrote:

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

I assume you are joking. Airbus has only sold 14 widebodies this year with half being resold A330neo white tails.

Compare that to Boeings 88 widebodies

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

I think Airbus is split up a bit already. The A220 is 90% an Canadian/US effort. Militairy stands apart, as well as ATR. Assembly lines everywhere, very un-concentrated. Often cited as inefficient.

The article expects COMAC to become more prominent. And there's UAC/Irkut who know their stuff & made a pretty good NB (from the numbers viewtopic.php?f=5&t=1465935) but lack the industrial power/ after market services.

Conclusion of the FT article:

By urging suppliers to go faster than ever before, Airbus reinforces the image that it is more fleet of foot than Boeing, which seems to stumble from one production challenge to another. It could also sting Boeing into accelerating production too quickly for its own supply chain.

But there are risks in goading Airbus’s US rival. An even more aggressive price war is good for neither player. More significantly, if the balance swings too far in Airbus’s favour, there may be a political backlash. It is worth remembering that the US launched its WTO battle against Airbus subsidies in 2004, the year after the European company’s deliveries overtook Boeing’s for the first time.

Leahy was mindful of that 60/40 split for good reason. Faury should be too.

 
https://www.ft.com/content/6a1ae943-ff2 ... 466e47c8ff

Well when your only competition has its mainstay aircraft grounded for over a year, their current new generation widebody stopped production, and its next generation widebody unable to get certified. I think 60% is pretty low.

I am still confused what role the A220 is intended to play within Airbus? Will only the A321neo survive and the A220 be grown to be the next A319 and A320? A separate family with different cockpit? Does this make sense?
Boeing will need to come up with something serious for the mass market soon. Some 787-style 737 follow on. Not sure about when it's next generation engines might become available? If Boeing is too late the Chinese will take over as number 2. Russia not so much.

Weatherwatcher1 wrote:

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

I assume you are joking. Airbus has only sold 14 widebodies this year with half being resold A330neo white tails.

No was not joking but you have a good point.

Maybe A320 and A330 line one company, and A220 plus A350 another

Ebb and flow of business, Boeing is down now, but wasn't that long ago we thought the same about Airbus. It eventually evens out.

Weatherwatcher1 wrote:

For those not keeping track, Airbus is leading in deliveries but Boeing is leading in orders this year

Boeing has 710 orders (349 net) this year
Airbus has 270 orders (133 net) this year

The market appears to be correcting itself

Boeing might be ahead a few hundred so far this year thanks to UA & SW, but is a few thousand behind in overall global backlog.
Selling because a competitor is sold out now isn't a strategy. Loyal Boeing WB customers are now knocking the doors at Boeing too.

Easy solutions / market forces might not be enough to restore balance on the market. Airlines want at least two options for every requirements. For some market segments that preference is pressured. As e.g. IAG indicated.

“During a webcasted panel session at the ACI Europe annual congress in the Cypriot city of Limassol on 26 June, Walsh noted that there had been ‘concern’ within the airline group for some time that it was becoming too reliant on the European airframer,” reported Flight Global, who went on to attribute Walsh saying that it was “Unhealthy” to rely only on one manufacturer.

https://simpleflying.com/iag-airbus-captivity/

LDRA wrote:

Weatherwatcher1 wrote:

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

I assume you are joking. Airbus has only sold 14 widebodies this year with half being resold A330neo white tails.

No was not joking but you have a good point.

Maybe A320 and A330 line one company, and A220 plus A350 another

No. That's not how that works.

LDRA wrote:

Weatherwatcher1 wrote:

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

I assume you are joking. Airbus has only sold 14 widebodies this year with half being resold A330neo white tails.

No was not joking but you have a good point.

Maybe A320 and A330 line one company, and A220 plus A350 another

How should Boeing split up then?
Embraer could buy 787 line, maybe. US government can bail out military branch...

william wrote:

Ebb and flow of business, Boeing is down now, but wasn't that long ago we thought the same about Airbus. It eventually evens out.

I somewhat agree though Airbus hasn't really been down, just caught up with Boeing in the early 2000's. The current situation could be temporary but Airbus should have an avantage in narrowbodies until EIS of MAX (and possible NEO) replacement ... so for a long time.

With new entrants of the C919, MC-21, and one could argue E2, there is plenty of competition.

Airlines cut MAX orders during Covid19 lockdowns because they could. Bummer for Boeing, but a rational decision. Bummer the c-series needed to be thrown away to.

The market will correct. Recall Douglas was once a powerhouse.

Lightsaber

I believe one of the two companies better go all-in with their next product. Maybe a hydrogen-ready Narrowbody or something like that.

Instead they seem to opt for mass producing legacy products to bring the costs down.

chiad wrote:

william wrote:

Ebb and flow of business, Boeing is down now, but wasn't that long ago we thought the same about Airbus. It eventually evens out.

I somewhat agree though Airbus hasn't really been down, just caught up with Boeing in the early 2000's. The current situation could be temporary but Airbus should have an avantage in narrowbodies until EIS of MAX (and possible NEO) replacement ... so for a long time.

It's not only a NB challenge anymore, although many seem to resist the new situation on WB's. 787 deliveries stopped Okt 2020 and 777x is delayed 4-5 yrs (tbd).
https://simpleflying.com/boeing-100-dre ... eliveries/

If you are one of the many happy long term operators of Boeing 777-200ER and 777-300ER aircraft, flying (also) to/from Asia, you might be sending out an RFP for 50x 300-350 seat aircraft to replace your 777s. At this stage Boeing comes back with smaller 787-9s, oversized/ uncertified 777-9s and non TPAC (with cargo) 787-10's. Versus advanced proven A350-900/-1000s.

What are the best replacements for your 777 fleet flying on Asia ? Ask big 777 operators SQ, CX, BA, DL, AF, QR or JAL. What should KLM, ANA, UA or AA order? Things changed since 10-15 years ago.

It doesn't make much sense to see how we got here, most have ideas, but there needs to be a roadmap ahead. Airlines are keen to order Boeing aircraft, but they need to fit the bill.
- https://www.reuters.com/business/aerosp ... a%20decade.
- https://australianaviation.com.au/2017/ ... -widebody/
- https://boeing.mediaroom.com/2014-07-09 ... -150-777Xs

Weatherwatcher1 wrote:

For those not keeping track, Airbus is leading in deliveries but Boeing is leading in orders this year

Boeing has 710 orders (349 net) this year
Airbus has 270 orders (133 net) this year

The market appears to be correcting itself

Now do that for last 2 years, where Boeing way in the negative net, while Airbus is positive.

keesje wrote:

chiad wrote:

william wrote:

Ebb and flow of business, Boeing is down now, but wasn't that long ago we thought the same about Airbus. It eventually evens out.

I somewhat agree though Airbus hasn't really been down, just caught up with Boeing in the early 2000's. The current situation could be temporary but Airbus should have an avantage in narrowbodies until EIS of MAX (and possible NEO) replacement ... so for a long time.

It's not only a NB challenge anymore, although many seem to resist the new situation on WB's. 787 deliveries stopped Okt 2020 and 777x is delayed 4-5 yrs (tbd).
https://simpleflying.com/boeing-100-dre ... eliveries/

If you are one of the many happy long term operators of Boeing 777-200ER and 777-300ER aircraft, flying (also) to/from Asia, you might be sending out an RFP for 50x 300-350 seat aircraft to replace your 777s. At this stage Boeing comes back with smaller 787-9s, oversized/ uncertified 777-9s and non TPAC (with cargo) 787-10's. Versus A350-900/-1000s.

What are the best replacements for a 772ER or 773ER fleet on the Pacific? Ask big 777 operators SQ, CX, BA, DL, AF, QR or JAL. What should KLM, ANA, UA or AA order? Things changed since 10-15 years ago.

It doesn't make much sense to see how we got here, most have ideas, but there needs to be a roadmap ahead. Airlines are keen to order Boeing aircraft, but they need to fit the bill.
- https://www.reuters.com/business/aerosp ... a%20decade.
- https://australianaviation.com.au/2017/ ... -widebody/
- https://boeing.mediaroom.com/2014-07-09 ... -150-777Xs

Fortunately decisions on replacing 77Ws isn't extremely time sensitive with the first aircraft being delivered in 2004 and most aircraft being less than 10 years old. As for the 77E replacement AA seems keen to continue bringing 789s on property and looking at the seating on both the 789 has more Y seats but less J seats.

IMO the biggest risk to Airbus' competitors of rate 75 is that by the middle to end of the decade it's going to result in Airbus having an enormous pile of cash to start developing the eventual A320/A321neo replacement with. If Airbus is the one to move first in this space, it will be devastating for their competitors. Especially if the narrowbody replacement is developed alongside a small widebody.

For Airbus the long term risk is complacency - just because you've got the superior narrowbody aircraft now doesn't mean that you will forever - and in the short term supply chain. I'm sure they'll take the feedback from suppliers into account and will be proactive about ensuring a smooth production rate increase.

Noshow wrote:

I am still confused what role the A220 is intended to play within Airbus? Will only the A321neo survive and the A220 be grown to be the next A319 and A320? A separate family with different cockpit? Does this make sense?
Boeing will need to come up with something serious for the mass market soon. Some 787-style 737 follow on. Not sure about when it's next generation engines might become available? If Boeing is too late the Chinese will take over as number 2. Russia not so much.

It exist for Airbus so the A225 won't exist, until it makes sense to exist.

To paraphrase someone famous, the pending demise of Boeing is being greatly exaggerated. Rough times, no doubt about it. They really screwed themselves with the whole Max fiasco. That appears to be nearing it's end. The ongoing problems with the 787 line and the delays on the 777X program will also work themselves out.

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

Did you call for the Boeing/MDD merger to be undone when Boeing had 66% of the market share (delivery wise) in 1999?
It's funny how, when Boeing wins it's OK, but when Airbus wins it's not... Biased much?

ILNFlyer wrote:

To paraphrase someone famous, the pending demise of Boeing is being greatly exaggerated. Rough times, no doubt about it. They really screwed themselves with the whole Max fiasco. That appears to be nearing it's end. The ongoing problems with the 787 line and the delays on the 777X program will also work themselves out.

Nobody knows for sure. I suspect MAX, 787 and 777X struggles are the tip of an iceberg.

kalvado wrote:

ILNFlyer wrote:

To paraphrase someone famous, the pending demise of Boeing is being greatly exaggerated. Rough times, no doubt about it. They really screwed themselves with the whole Max fiasco. That appears to be nearing it's end. The ongoing problems with the 787 line and the delays on the 777X program will also work themselves out.

Nobody knows for sure. I suspect MAX, 787 and 777X struggles are the tip of an iceberg.

We are drifting off topic but the tanker quality issues and the space capsule problems point to a pretty widespread malaise at the company.

Boeing will survive but it is going to take time and how it is after recovery remains to be seen.

StTim wrote:

kalvado wrote:

ILNFlyer wrote:

To paraphrase someone famous, the pending demise of Boeing is being greatly exaggerated. Rough times, no doubt about it. They really screwed themselves with the whole Max fiasco. That appears to be nearing it's end. The ongoing problems with the 787 line and the delays on the 777X program will also work themselves out.

Nobody knows for sure. I suspect MAX, 787 and 777X struggles are the tip of an iceberg.

We are drifting off topic but the tanker quality issues and the space capsule problems point to a pretty widespread malaise at the company.

Boeing will survive but it is going to take time and how it is after recovery remains to be seen.

That's why it may make sense for the airlines to consider more E2 in order to maintain fleet diversity. Even if that means issues with scope clauses - those may need resolution.
Other options are much more shaky

Publicly traded companies are forced to live on short-term gain in many cases, Boeing and Airbus are no exceptions. Hence the "lack of vision" and "mass production on legacy types". I personally don't believe they want to go this way, but it's not entirely up to them to decide.

kalvado wrote:

StTim wrote:

kalvado wrote:

Nobody knows for sure. I suspect MAX, 787 and 777X struggles are the tip of an iceberg.

We are drifting off topic but the tanker quality issues and the space capsule problems point to a pretty widespread malaise at the company.

Boeing will survive but it is going to take time and how it is after recovery remains to be seen.

That's why it may make sense for the airlines to consider more E2 in order to maintain fleet diversity. Even if that means issues with scope clauses - those may need resolution.
Other options are much more shaky

the only practical scope clause resolution i suspect is mainline crews, the big three are so full of guys who did a lot of hard time at the regionals that alpa is very militant on scope these days especially after pay was recovered but scope wasnt

Airbus, engine OEM's, other suppliers, and customers have no interest in seeing Boeing fail, or even permanently impaired. Obviously there has to be a significant degree of self-help.

Noshow wrote:

I am still confused what role the A220 is intended to play within Airbus? Will only the A321neo survive and the A220 be grown to be the next A319 and A320? A separate family with different cockpit? Does this make sense?
Boeing will need to come up with something serious for the mass market soon. Some 787-style 737 follow on. Not sure about when it's next generation engines might become available? If Boeing is too late the Chinese will take over as number 2. Russia not so much.

The main strategic goal of the A220 program appears to be to protect the lucrative A320 program. Boeing’s competitive offering kind of took care of itself. In other words, it is all about the A320. They will build as few A220 as they can without triggering the ire of EU monopoly enforcers. IMO

JKzhong wrote:

Publicly traded companies are forced to live on short-term gain in many cases, Boeing and Airbus are no exceptions. Hence the "lack of vision" and "mass production on legacy types". I personally don't believe they want to go this way, but it's not entirely up to them to decide.

Public traded companies are forced to comply to live up to regulations and restrictions. But if they invest a lot in perception management, PR, raise short term free cash flow & make debt hard to see, they can get a long way. Specially if they are national heritage, #1 exporter, supported by politics that they support.

During recent 15 years we saw, discussed so many Boeing decision that were questionable from day 1 but still implemented because it was Boeing / stock value looked great.

The current WB situation, 737 replacement, 77x certification challenges were foreseen years ago, denied & proved even worse than foreseen. viewtopic.php?t=1339277, viewtopic.php?f=3&t=1415977, viewtopic.php?f=3&t=1423759.

IMO Airbus will ok this decade, US government must put aside $25B for a new lean efficient NB and a 787-10ER. Forget market ideology, it has always been much much weaker than presented in aerospace.

What many often forget is that the 320/321 was outselling the MAX basically 2 to 1 before the MAX safety fiasco.

Airbus is the pre-eminent commercial airplane manufacturer in the world. I don't see Boeing ever recovering to greater than 50% of market share. They continue to flounder quarter after quarter, year after year, with no significant change.

Someone made the comment that Douglas was a market leader once. While true, once they started "down," they never recovered. Their product line got old and they lost market share and couldn't undo the trend.

Boeing needs an Elon Musk or Carlos Ghosn type character to take the helm. No, I don't know who that might be. But they need change....drastic change.

SteelChair wrote:

Boeing needs an Elon Musk or Carlos Ghosn type character to take the helm.

A trillionaire frat bro or an internationally wanted fugitive? Yikes...

dstblj52 wrote:

kalvado wrote:

StTim wrote:

We are drifting off topic but the tanker quality issues and the space capsule problems point to a pretty widespread malaise at the company.

Boeing will survive but it is going to take time and how it is after recovery remains to be seen.

That's why it may make sense for the airlines to consider more E2 in order to maintain fleet diversity. Even if that means issues with scope clauses - those may need resolution.
Other options are much more shaky

the only practical scope clause resolution i suspect is mainline crews, the big three are so full of guys who did a lot of hard time at the regionals that alpa is very militant on scope these days especially after pay was recovered but scope wasnt

Rate disparity is... an interesting subject to discuss. It can take us very far off topic. But I still wonder if, with A220 and E2 being a new real, there may be more urge for resolution. Fewer megahubs, smaller planes... I guess that was the narrative for 787 anyway?

Wait, wait, I still remember when Boeing used to be the dominant manufacturer across the world. Especially before A320 enter the market.

The market would correct itself because of the diverse global need. It's not a monopoly.

ewt340 wrote:

Wait, wait, I still remember when Boeing used to be the dominant manufacturer across the world. Especially before A320 enter the market.

The market would correct itself because of the diverse global need. It's not a monopoly.

Question is where the market would settle after correcting itself, and what US would say about it leading export manufacturer sales slipping down with associated loss of unionized jobs... I suspect that would be a nasty fight (and FT just fired the first round)

ewt340 wrote:

Wait, wait, I still remember when Boeing used to be the dominant manufacturer across the world. Especially before A320 enter the market.

The market would correct itself because of the diverse global need. It's not a monopoly.

And the FT had no issue with Boeing being the world's first aircraft manufacturer with 60+% of the deliveries in 1999; but, if Airbus is in the same situation, all of a sudden it's catastrophic...

Cdydatzigs wrote:

SteelChair wrote:

Boeing needs an Elon Musk or Carlos Ghosn type character to take the helm.

A trillionaire frat bro or an internationally wanted fugitive? Yikes...

I doubt if Musk would be at all interested in an old school industry like commercial ainline manufacturing, and question whether any company would hire Ghosn at this point. But Boeing definitely needs some new DNA and some vigorous shaking up.

Opus99 wrote:

Weatherwatcher1 wrote:

LDRA wrote:

Yes there's not enough competition in the market. I think Airbus should be split up into two competing entities. Narrow body group one company and wide body group another. They should be free tp develop models to compete with each other

I assume you are joking. Airbus has only sold 14 widebodies this year with half being resold A330neo white tails.

Compare that to Boeings 88 widebodies

Which sort of puts to bed this "Airbus passing 60%" nonsense. No?
Rgds

If I recall correctly, it was sometime in the 1990s when BMW finally overtook Mercedes-Benz in terms of passenger car sales. I’m not 100% certain if it was their CEO at the time or a new CEO @ MB said in an interview, “The great thing about being number two is seeing where the goal is. The bad thing about being number one is finding and setting the goal”. Or something of that ilk.

Yes Boeing have been suffering of late due to the pandemic and, unfortunately, decisions of their own making. Hopefully, they will focus on the lessons learned and end up delivering at some point in time.

Given the legacy of the 737, I think it was a bold move to continue development on this airframe. Hindsight is always a beautiful thing and I believe had they gone down the path of a new development to compete against the A32XNeo, they may have suffered less financially, then they have to date. That being said, I doubt they’re sitting on their behinds but canvassing an opportunity to produce a new NB design incorporating modern technologies, at economical production costs.

I think the next 3-5 years should prove interesting.

Cheers.

In the end it is not Airbus reaching 60%, it is Boeing reaching 40%. The imbalance is solely created by errors committed at Boeing. If Boeing continues to fumble the certification process with the regulators and continues to fail to establish a working quality control in their manufacturing, Airbus will reach 100% market share.

The main imbalance is in one area, the A32x Neo vs the 737x-max, and the Airbus product is generally accepted (other than by Fanboys of Boeing, of course!) to be the superior product, so even if Boeing manages to sort out all the issues surrounding the max things aren't really going to change much as long as they persist with it.

Cdydatzigs wrote:

SteelChair wrote:

Boeing needs an Elon Musk or Carlos Ghosn type character to take the helm.

A trillionaire frat bro or an internationally wanted fugitive? Yikes...

You should read a little more about Elon Musk.

seahawk wrote:

In the end it is not Airbus reaching 60%, it is Boeing reaching 40%. The imbalance is solely created by errors committed at Boeing. If Boeing continues to fumble the certification process with the regulators and continues to fail to establish a working quality control in their manufacturing, Airbus will reach 100% market share.

I think with the NB's it's also the A321NEO, that has 3000 in the backlog today. It's payload-range flexibility and performance seem hard to resist for airlines.
https://groups.google.com/group/aviatio ... 0.1&view=1

All was know more than 10 years ago, Boeing endlessly kept convincing themselves this wasn't an issue.
https://worldairlinenews.com/2014/12/12 ... placement/
https://www.reuters.com/article/boeing- ... F520150113

Stockprice & cash flow looked great over the decade, anyone questioning e.g. debts didn't really fully understand & was jealous at best.
Listening to others had become an unproductive habit at Boeing, Just go with the (free cash) flow.


https://www.ccn.com/will-boeing-stock-f ... ver-again/