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travelhound
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 2:49 pm

Quoting seahawk (Reply 298):
There must be more to it imho

This is a very interesting point.

I'd suggest if there is a business case for an A330NEO it will based upon it being competitive with the 787 on a capital/operating cost basis. A lower capital cost base would also result in lower opportunity cost (or higher opportunity).

As per my reply 295, if the 787 costs substantially more to build than an A330, than Airbus might actually have something going with an A330NEO.

Remember the original 787's production output of ten per month was based upon a single line at Everett, not two lines at Everett and one line at Charleston where a whole new assembly hall was required to be built.

I just can't see any other way an A330NEO could remain competitive with an aircraft two generations younger in the 2020-30 period.
 
nomadd22
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 2:50 pm

Quoting chiad (Reply 293):

Another article of the same subject (from Flight Global).
http://www.flightglobal.com/news/art...mand-for-1200-39a330neos39-399900/

With a forecast of more than 1000 frames it seems like this is a given success.

Not if 500 of those frames come from 350 sales.
Anon
 
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KarelXWB
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 2:59 pm

Quoting travelhound (Reply 300):
I just can't see any other way an A330NEO could remain competitive with an aircraft two generations younger in the 2020-30 period.
Quoting travelhound (Reply 300):
As per my reply 295, if the 787 costs substantially more to build than an A330, than Airbus might actually have something going with an A330NEO.

The A330neo will also sell on availability. The demand is so large that even at 16 787s per month, Boeing will not be able to meet the demand. The 787 line has to feed both 200-300 seat and 300-400 seat markets.

Quoting nomadd22 (Reply 301):
Not if 500 of those frames come from 350 sales.

In the end, I believe Airbus will sell more wide-body jets with the A330 and A350 together than with the A350 alone. Both types complete each other, and the A350 alone can never meet the demand.
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Burkhard
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 3:07 pm

Quoting RickNRoll (Reply 291):
Where does the massive gap come from? A358 sales are minimal, but A330N sales will be huge?

Because the world market for planes with a range above 8300 miles is tiny?
 
travelhound
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 3:20 pm

Quoting KarelXWB (Reply 302):
The A330neo will also sell on availability. The demand is so large that even at 16 787s per month, Boeing will not be able to meet the demand. The 787 line has to feed both 200-300 seat and 300-400 seat markets.

Based upon Boeing's 20-year market forecast, which is a little bit more generous on sales than the Airbus forecast, at current anticipated production rates (2018 - 787 = 16/month, 2020 - A330 = 4/month) production capacity will be sufficient up till 2024.

There has to be more to this than the current market forecasts. If there is a business case for an A330NEO I'd suggest it would have to include a bit of a re-shuffle of the market with the A330 Regional winning orders away from Boeing's and Airbus's narrow body offerings.

It just might be the case, with the success of the A320NEO, with orders and options taking production past 2023, Airbus might be playing it's hand to win more orders in a traditional narrow body market.

Time will tell!
 
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KarelXWB
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 3:30 pm

Quoting travelhound (Reply 304):
2018 - 787 = 16/month, 2020 - A330 = 4/month

The 787 should hit 14 per month by the end of the decade, there are currently no plans for 16 frames per month. That's where the A330neo at 6 per month / 60-70 per year fits in.
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Shenzhen
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 4:19 pm

The 330neo could be similar to the 747-8i. Older model airplanes available (over 100 A330s coming off lease second half of the decade) for a much cheaper price, while new airplanes, both smaller and larger offering better value. 777 / 747-400 / 747-8i / 380.
 
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Stitch
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 4:26 pm

Quoting Shenzhen (Reply 306):
The 330neo could be similar to the 747-8i.

Different situation, really,

What hurts the 747-8, IMO, is that the trip costs are little better than the 747-400 even with the significantly lower fuel burn because of her greater size. So you have to fill those seats to make more money flying a 747-8 over a 747-400. If you can't, the 777-300ER is the better choice (lower trip costs even with lower loads) and if you can, the A380 is the better choice (higher trip costs, but higher capacity so better overall revenues).

The A330-300neo will have lower trip costs than an A330-300 because of the lower fuel burn (as each is (effectively) the same airframe, the trip cost delta is solely down to fuel burn*). So at the same load factors, the A330-300neo will generate more profits (same revenues, but lower costs).


* Yes, there may be some maintenance cost delta between a Trent 700 / GE CF6-80 and a "Trent 1700" / "GEnx-1A", but that should not be much.
 
tortugamon
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 5:20 pm

Quoting Stitch (Reply 297):

I don't believe that the 787 will have a backlog of greater than five years within two-three years from now. I don't think a two-three year availability advantage of an A330neo is as significant as some make out. Valuable sure.

Quoting travelhound (Reply 300):

The 787 line will be down to two production lines within two years. At 14-16 per month production costs should decline. Engine costs should be similar to the A330 NEO. 787-9 should be lighter with similar engines so on short missions it should still have a fuel burn advantage even if it is long range capable.

Quoting KarelXWB (Reply 305):

16 per month has been discussed by Boeing openly to the media. Not committed to but if the A330neo has demand for 1k+ planes I doubt Boeing would ignore the investment. In my model I have them hitting 16 per month around 2020. I think it's likely.

tortugamon
 
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KarelXWB
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 5:23 pm

Quoting travelhound (Reply 304):
production capacity will be sufficient up till 2024.
Quoting tortugamon (Reply 308):
16 per month has been discussed by Boeing openly to the media. Not committed to but if the A330neo has demand for 1k+ planes I doubt Boeing would ignore the investment. In my model I have them hitting 16 per month around 2020. I think it's likely.

Those figures also includes the 787-10, that aircraft sits not in the 200-300 seat market.

The Boeing 20-year market forecast shows a need for some 4,500 wide-body jets in the 200-300 seat market. That is A330-200/300, 787-8/9 and A350-800 territory. That's a demand for 225 jets per year or some 18 jets per month. Boeing will produce the 787 at 14 frames per month by the end of the decade, and might increase that figure to 16 per month in the next decade. However, that number also includes the 787-10 for the 300-400 seat market. Something will have to give: either produce a lot of 787-8/9's or produce a lot of 787-10's.

If we play a little bit in a spreadsheet, the breakdown post 2018 could be as follows:

> 787-8: 2 per month
> 787-9: 8 per month
> A330-200neo: 0.5 per month
> A330-300neo: 6 per month

Total: 17.5 per month. As you can see, without the A330, Boeing will not be able to meet demand in the 200-300 seat market, they also need capacity for the 787-10.

The A330 is not going to steal orders away from the 787, it will sell on availability.
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travelhound
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 5:40 pm

Quoting tortugamon (Reply 308):
The 787 line will be down to two production lines within two years. At 14-16 per month production costs should decline. Engine costs should be similar to the A330 NEO.

But the question is can Boeing reduce production costs of the 787 to a level where it has an effective cost similar to an A330.

My supposition is that if the 787 costs a lot more to produce than first envisaged, this may have created the opportunity for a relatively straight forward A330NEO to be competitive with the 787.

The advantage isn't about similar operating costs, but the delta between the two sell costs of these aircraft and a market (short regional routes) where fuel operating costs (fuel burn) represents a smaller proportion of overall operating costs.

If Airbus are talking up 1000 + planes (and Leeham have suggested similar numbers) than there would has to be something a little bit more to this business case than just the A330.

That "little bit more" could be the 787 is an expensive plane to build!
 
travelhound
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 6:39 pm

Quoting KarelXWB (Reply 309):
The Boeing 20-year market forecast shows a need for some 4,500 wide-body jets in the 200-300 seat market.

... but if we also allow for growth in market of 3% with 2024 being the mean, at current production rates the market will be in a fundamental oversupply situation until the 2024 period.

For example, in 2014 both Boeing and Airbus will produce close to 230 A330/787's where the Boeing forecast (with 3% compounding growth) shows underlying demand of 171 aircraft.

This trend of oversupply continues up to 2019/2020 (if Airbus cut production back to 40 A330's a year) where production equals demand.

... but, the oversupply situation doesn't correct itself until the 2024/25 period where the amount of aircraft produced will equal the underlying demand (assuming compounding growth of market at 3%). From this time forward both Boeing and Airbus will have a market for more than 225 aeroplanes a year peaking in year 2033 where there will be a requirement for just over 300 aeroplanes a year.

If Airbus start producing an A330NEO in year 2020 at a rate of 100 aircraft per year (and Boeing maintains production at 14 787's per month), than by my numbers the market would still be in an oversupply situation in year 2033 by over 300 aircraft.

Either (1) the market for small narrow bodies has to be adjusted upwards (to account for use of these aircraft regionally), (2) production of the 787 will need to decrease or (3) there just isn't a business case that supports 1000+ A330NEO's over the next two decades.

If Leeham are stating they see a potential market for 1000+ A330NEO's than something extraordinary is happening here. I'd suggest it could be the high cost to manufacture the 787 has some very real competitive disadvantages. So real, that Boeing may need to cut production of the 787 in the 2020-25 period!
 
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 6:44 pm

http://www.flightglobal.com/news/art...itches-a330neo-against-787-400166/

Came across this article today. Seems like the Airbus camp is pitching the A330NEO against the 789. I would think that the 787-10's and the A330NEO are more comparable but I guess not. Thoughts?
 
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KarelXWB
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 6:53 pm

Quoting travelhound (Reply 311):
For example, in 2014 both Boeing and Airbus will produce close to 230 A330/787's where the Boeing forecast (with 3% compounding growth) shows underlying demand of 171 aircraft.

Out of curiosity: where is that figure of 171 aircraft coming from?

Quoting travelhound (Reply 311):
If Airbus start producing an A330NEO in year 2020 at a rate of 100 aircraft per year (and Boeing maintains production at 14 787's per month), than by my numbers the market would still be in an oversupply situation in year 2033 by over 300 aircraft.

But Boeing won't be producing 14 787s for the 200-300 seat market, the line feeds the 300-400 seat market with the 787-10 as well. And that market is good for another 3,300 airplanes.

Quoting travelhound (Reply 311):
This trend of oversupply continues up to 2019/2020 (if Airbus cut production back to 40 A330's a year) where production equals demand.

I'm afraid I don't understand your concern about oversupply: aren't Boeing and Airbus just delivering what has been ordered in the past?

[Edited 2014-06-06 12:20:00]
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Stitch
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 8:48 pm

Quoting tortugamon (Reply 308):
I don't believe that the 787 will have a backlog of greater than five years within two-three years from now. I don't think a two-three year availability advantage of an A330neo is as significant as some make out. Valuable sure.

Aye, but Airbus would want to maximize delivery capacity while they can. And unlike the 777X, the only thing holding back the A330neo EIS production rate would be the supply of engines.

Even if that window is 5 years, if they can continue to deliver 100+ frames each of those years, that goes a fair bit of the way to meeting SUH's total delivery projections.



Quoting KarelXWB (Reply 309):
Those figures also includes the 787-10, that aircraft sits not in the 200-300 seat market.

Maybe not in Boeing's Market Outlook, but I expect that airlines with A330-300s will be comparing the A330-300neo to the 787-10 as well as the 787-9.



Quoting travelhound (Reply 310):
But the question is can Boeing reduce production costs of the 787 to a level where it has an effective cost similar to an A330. My supposition is that if the 787 costs a lot more to produce than first envisaged, this may have created the opportunity for a relatively straight forward A330NEO to be competitive with the 787.

The advantage isn't about similar operating costs, but the delta between the two sell costs of these aircraft and a market (short regional routes) where fuel operating costs (fuel burn) represents a smaller proportion of overall operating costs.

Even if Boeing gets the 787 production cost to plan in 2015, I expect the plane is still going to cost more than the A330 to build (or Airbus will be more willing to lower A330neo ASPs than Boeing will 787 ASPs). So that will still favor the A330neo on an acquisition cost basis.



Quoting rotating14 (Reply 312):
Came across this article today. Seems like the Airbus camp is pitching the A330NEO against the 789. I would think that the 787-10's and the A330NEO are more comparable but I guess not. Thoughts?

The A330-300neo and 787-9 are almost exactly the same in terms of passenger counts (the 787-9 has an advantage in cargo volume) and the A330-300neo is optimized around missions up to 8 hours whereas the 787-9 is optimized for missions up to 16.

The 787-10 is a fair bit larger in passenger capacity and significantly so in cargo.
 
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seahawk
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 9:45 pm

But yet why are leasing companies interested. I can see why airlines, that keep the planes for a long time, would be interested, but leasing companies. A low list price transforms into a low re-sale value, so the up front advantage would turn into a problem after time. And if we consider rising fuel prices and consider the usually rumoured advantage of the 787, this plane should not interest them, not with the A340-500/600 experience still fresh.

The other question is how much lower can the the list price be, if the same engines are used? I can not see RR or GE selling their engines for less on the NEO than what they take on the 787.

So for the NEO to sell 1000+ I either think there needs to be an increase in overall demand that can not be satified by the 787+A350 alone. So either growth or faster replacement of aircrafts, although the second option would probably mean higher fuel prices, which would make the NEO less attractive, especially to leasing companies.

The only idea, I can come up with is that Airbus could sell a A333NEO for less than a 787 while offering better CASM on routes between 2500-6500nm. Maybe being close to the 789 on that routes as well. (say 4-7% fuel burn but less maintenance or something).
 
travelhound
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 9:58 pm

Quoting KarelXWB (Reply 313):
Out of curiosity: where is that figure of 171 aircraft coming from?

The figure is derived by using the 225 units per year number as the mean in year 2024 and working backwards using 3% compounding growth. If I go in the other direction I have just over 300 units per year in 2033.

Quoting KarelXWB (Reply 313):
I'm afraid I don't understand your concern about oversupply: aren't Boeing and Airbus just delivering what has been ordered in the past?

Yes they are, but remember many airlines who recently ordered the A330 did so because of delays with the 787. So there is an overlapping supply situation here.

I know for QANTAS they took delivery of additional A330's on 6-10 year lease arrangements. Once these leases expire the leasing companies will have to find new homes for these birds.
 
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Stitch
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 10:05 pm

Quoting seahawk (Reply 315):
But yet why are leasing companies interested.

I see one of two scenarios:

The first has existing A330s coming off lease from "primary carriers" being re-leased to "secondary carriers" currently flying older widebodies (767s, A300s, A310s, DC-10s) while the "primary carriers" lease A330neos. Then, a decade or so on, those A330neos will be released to the "secondary carriers" and those older A330s converted to freighters or scrapped for parts (to support the A330neos).

The second assumes the air cargo market rebounds within the decade and existing A330s coming off lease are converted to freighters.



Quoting seahawk (Reply 315):
The other question is how much lower can the the list price be, if the same engines are used? I can not see RR or GE selling their engines for less on the NEO than what they take on the 787.

A 2014 A330-300 lists for $246 million and a 2014 787-9 lists for $250 million. Add in the new engine, and the A330-300neo and 787-9 should list for about the same.

In terms of Average Sales Price, based on current values, a new A330-300 has around 55% discount rate (effectively, if an airline took delivery of an A330-300 and immediately turned around and sold it, they could expect to get about 45% of the list price). A 787-8 has about a 48% discount rate so considering the extra value of a 787-9, let's say it would have a 45% discount rate. So we can guestimate an A330-300neo ASP at $113 million and a 787-9 at $138 million - so an A330-300neo could be upwards of $25 million cheaper, which would be 10% of the list price.

[Edited 2014-06-06 15:15:48]
 
tortugamon
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RE: A330 NEO Becoming More Likely Part 7

Fri Jun 06, 2014 11:03 pm

Quoting KarelXWB (Reply 309):
Something will have to give: either produce a lot of 787-8/9's or produce a lot of 787-10's.

I don't see 788s being produced at more than three units per month after 2020. Really it will be 789s/781s. But I understand that wasn't your primary point. I agree that there is room for the A330neo and there is a need. I have been an advocate. I do have a hard time seeing demand come 2025 though.

Quoting travelhound (Reply 310):
The advantage isn't about similar operating costs, but the delta between the two sell costs of these aircraft and a market (short regional routes) where fuel operating costs (fuel burn) represents a smaller proportion of overall operating costs.

The difference in selling price will be in large part driven off of how much money it makes the airlines and that is largely driven off of the cost difference of fuel. Production costs are certainly important but selling price is a byproduct of demand and value, not Boeing's costs.

Quoting travelhound (Reply 310):
But the question is can Boeing reduce production costs of the 787 to a level where it has an effective cost similar to an A330.

At 14+ per month it is very hard to see how production costs won't drop dramatically. It will be 40% faster than any wide body has been produced in history. The A330neo should still be cheaper but if it is at 60 per month on a per unit basis it may not be as far apart as some might think.

Quoting Stitch (Reply 314):
Even if that window is 5 years, if they can continue to deliver 100+ frames each of those years, that goes a fair bit of the way to meeting SUH's total delivery projections.

But my point is that it should never be 5 years different. By 2018 the 787 backlog should be less than five years and the minimum backlog of practically any wide body is about two years which is only a three year difference and my point is that the timing difference may not be that valuable.

Quoting Stitch (Reply 314):
Maybe not in Boeing's Market Outlook, but I expect that airlines with A330-300s will be comparing the A330-300neo to the 787-10 as well as the 787-9.

Ding ding ding. Good point.

Quoting travelhound (Reply 316):
The figure is derived by using the 225 units per year number as the mean in year 2024 and working backwards using 3% compounding growth. If I go in the other direction I have just over 300 units per year in 2033.

Demand is not linear. If Boeing could magically produce 500 units tomorrow is there any doubt that they could deliver all of those as quickly as airlines could fly them? Same with A350s. Likewise come 2033 production rates most likely will not be high either as the 787 would have been in production for 22 years at that point and its hard to see it being produced at those rates at this point.

tortugamon
 
tommy1808
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 6:51 am

Quoting Stitch (Reply 307):
So at the same load factors, the A330-300neo will generate more profits (same revenues, but lower costs).

Beyond 3500nm the A330neo will be able to carry more payload, at least if the MZFW is increased to compensate for the heavier engines. For Airlines that have higher density seating, Air Asia X hauls almost 40 tonnes of Passenger and Bags, that might be a significant extra revenue. And an increased flexibility due to the higher design range will also give higher revenues (no blocked seats on longer sectors, additional cargo, more extra bags can be sold, new destinations formerly out of range). I guess a Neo would yield 500 to 1000nm more range depending on the load.

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seahawk
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 7:27 am

Quoting Stitch (Reply 317):
I see one of two scenarios:

The first has existing A330s coming off lease from "primary carriers" being re-leased to "secondary carriers" currently flying older widebodies (767s, A300s, A310s, DC-10s) while the "primary carriers" lease A330neos. Then, a decade or so on, those A330neos will be released to the "secondary carriers" and those older A330s converted to freighters or scrapped for parts (to support the A330neos).

The second assumes the air cargo market rebounds within the decade and existing A330s coming off lease are converted to freighters.

But by that time the first NEOs will be ready for secondary carriers the early 787 will also coming of lease. And, as we see be the A340NG, capability is king when it comes to the rates you can get for those planes. Imho, and as yopu already said, the NEO makes sense, when you get a A333 for the price of a 787-8, with the A333NEO having better CASM than the 787-8 for a large type of missions. If Airbus can do this, imho the business case for the A333NEO is sound.
 
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 8:57 am

Quoting seahawk (Reply 298):
A330NEO in the form we expect it to perform has too many theoretical drawbacks for a lessor:

And yet they are clearly interested - a behaviour that carries its own message...

Quoting nomadd22 (Reply 301):
Not if 500 of those frames come from 350 sales.

What if they come from 787 sales ?   ....

Quoting Shenzhen (Reply 306):
The 330neo could be similar to the 747-8i.

How does that work?

Quoting seahawk (Reply 315):
But yet why are leasing companies interested. I can see why airlines, that keep the planes for a long time, would be interested, but leasing companies

And yet they clearly are. They obviously see benefits that outweigh your counterarguments

Rgds
 
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seahawk
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 9:37 am

Quoting astuteman (Reply 321):
And yet they clearly are. They obviously see benefits that outweigh your counterarguments

That is why I am wondering what those benefits could be. Even a lower price is not that interesting considering the low interest rates today. So there must be something more to it.
 
travelhound
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 9:39 am

Quoting tortugamon (Reply 318):
Demand is not linear. If Boeing could magically produce 500 units tomorrow is there any doubt that they could deliver all of those as quickly as airlines could fly them? Same with A350s. Likewise come 2033 production rates most likely will not be high either as the 787 would have been in production for 22 years at that point and its hard to see it being produced at those rates at this point.

Demand is not linear, but growth in market largely is. My point is current production rates suggest demand is front loaded when compared to growth in market.

You also make a good point about the 787 being 22 years old in 2033, but at a guess I think where the 787 differs from the 767 and it A330 is that is fuselage diameter is properly optimised to 9 across seating. This will go a long way in keeping the aircraft competitive into the future.

Also the current 787 is really a first generation composite aeroplane. One of the positive attributes of composites is that the manufacturing process can quickly adapt to changes in design, where as aluminium design often requires a fair amount of redesign in tooling.

Once Boeing have more data on the 787 in service I'd suggest they will have a fair amount of opportunity to take weight out of the frame.

This will bode well for its future.
 
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 1:13 pm

Quoting rotating14 (Reply 312):
Seems like the Airbus camp is pitching the A330NEO against the 789. I would think that the 787-10's and the A330NEO are more comparable but I guess not. Thoughts?

Airbus has thrown the gauntlet and is daring Boeing to make its move. I guess Boeing wouldn't bother if it was against the 788 but going after its expected volume moneymaker might have crossed the line. Either they cut the 788's list price or (however far-fetched) launch their own midsize NEO project and undercut the A330neo on price and availability. There must be a more compelling reason that people are now saying there's room for another engine on the A330neo other than that the favored OEM cannot supply all of the demand.
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Someone83
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 1:30 pm

Quoting Devilfish (Reply 324):
Either they cut the 788's list price

Not that easy consider the full cost of producing the 787
 
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JerseyFlyer
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 2:42 pm

Quoting astuteman (Reply 321):
Quoting nomadd22 (Reply 301):Not if 500 of those frames come from 350 sales

Yes if they sell the 500 350s again
 
tortugamon
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 4:43 pm

Quoting jetblueguy22 (Thread starter):
Quoting travelhound (Reply 323):
Demand is not linear, but growth in market largely is. My point is current production rates suggest demand is front loaded when compared to growth in market.

If we look back for the last decade when was 175 units produced in this class before? There is clearly pent up demand, its not that 2015 demand is for X units, its that ~2010-2015 the OEMs did not produce enough units of acceptable capability.

Quoting Devilfish (Reply 324):
Airbus has thrown the gauntlet and is daring Boeing to make its move. I guess Boeing wouldn't bother if it was against the 788 but going after its expected volume moneymaker might have crossed the line. Either they cut the 788's list price or (however far-fetched) launch their own midsize NEO project and undercut the A330neo on price and availability.

I do not believe that Boeing needs to respond. Their biggest problem is execution of the ramp up and driving down production costs. The market will buy whatever Boeing can produce in this segment for probably the next 10 years and the A330neo is relatively irrelevant to that picture. Maybe margins will be squeezed slightly but it doesn't really impact production rates or market demand for their products. I do not expect the A332neo to do well at all but I also don't see more than a couple hundred more 788 sales either

tortugamon
 
mjoelnir
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 6:18 pm

I think it will be very difficult for Boeing to match the A330 on price.

Let the two engines cost the same. The frame of the A330 should be less expensive to produce than the B787.

But!!!! that is not the main point. In 2015 the program cost accounting regarding the B787will have pushed about 25 billion USD ahead.
So if in 2015 the production cost of the B787 has break even than the sales of the B787 have to pay back that amount.
Even if this 25 billion USD is divided by 1,500 frames, it will amount to 16 million dollars each B787 sold.
There is no way Boeing will be able to match the A330 on price.

The B787 will be more economical, but the A330 will present the smaller investment.
 
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Devilfish
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 9:15 pm

Quoting someone83 (Reply 325):
Not that easy consider the full cost of producing the 787

Funding the forecast 1,000+ frame demand for the A330neo is equally daunting. The lessors realize they also need somebody else to finance some of those.

Quoting tortugamon (Reply 327):
The market will buy whatever Boeing can produce in this segment for probably the next 10 years and the A330neo is relatively irrelevant to that picture. Maybe margins will be squeezed slightly but it doesn't really impact production rates or market demand for their products. I do not expect the A332neo to do well at all but I also don't see more than a couple hundred more 788 sales either

The market will buy but maybe not as many if there was a cheaper option that could do 80% of the missions, even though a bit less efficiently.


Quoting mjoelnir (Reply 328):
Let the two engines cost the same.

The engines will not cost the same if Boeing would use a PIPed GEnx2B vs RR Advance that wouldn't be available until the end of the decade for the Airbus A330.

Quoting mjoelnir (Reply 328):
In 2015 the program cost accounting regarding the B787will have pushed about 25 billion USD ahead. So if in 2015 the production cost of the B787 has break even than the sales of the B787 have to pay back that amount.

Wonder where the A350 program would be by then?

Quoting mjoelnir (Reply 328):
There is no way Boeing will be able to match the A330 on price.

The B787 will be more economical, but the A330 will present the smaller investment.

Not only could Boeing match the A330 price...they have two ways of undercutting it. And both will be even smaller investments still.
"Everyone is entitled to my opinion." - Garfield
 
tortugamon
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 9:47 pm

Quoting Devilfish (Reply 329):
Funding the forecast 1,000+ frame demand for the A330neo is equally daunting.

It has been estimated to take Airbus ~$2 Billion. Not a daunting investment at all. Everything else after that is recurring costs and that isn't daunting when you have the order in hand and collected a deposit. They already have the facilities to produce the aircraft. If Airbus can invest $2Billion and sell 1000 wide bodies it would be one of the best ROI in aviation.

Quoting Devilfish (Reply 329):
The market will buy but maybe not as many if there was a cheaper option that could do 80% of the missions, even though a bit less efficiently.

The point is that it won't matter. From 2018-2024+ Boeing will be selling as many as they can produce regardless of what Airbus does. I accept that Boeing may have to drop prices slightly to win some RFPs but that will come down to the delta on the fuel burn / ops costs rates. Boeing cannot satisfy 100% of the demand nor is that an ideal position to be in.

Quoting mjoelnir (Reply 328):
Even if this 25 billion USD is divided by 1,500 frames, it will amount to 16 million dollars each B787 sold.

That money is already spent. Its irrelevant to the calculus in winning the next RFP. The sales guys' job is to sell the aircraft slots for as much as they can. This isn't a cost plus margin selling price calculation.

I agree that the A330neo will be cheaper to produce and it will have to be cheaper to buy because of its higher fuel burn, lower cargo capacity, and shorter range.

Quoting Devilfish (Reply 329):
The engines will not cost the same if Boeing would use a PIPed GEnx2B vs RR Advance that wouldn't be available until the end of the decade for the Airbus A330.

The GEnx1B is what appears on the 787. The 2B is on the 748. I think most of us think that Airbus will use the Trent TEN and not the advance. I agree that the Advance would not be the same price as it would be more expensive than the Trent TEN or the GEnx1B.

I see the engine price between the frames as a wash.

tortugamon
 
mjoelnir
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 10:38 pm

Quoting tortugamon (Reply 330):
That money is already spent. Its irrelevant to the calculus in winning the next RFP. The sales guys' job is to sell the aircraft slots for as much as they can. This isn't a cost plus margin selling price calculation.

That money is spent but not written off. It is planned, according to the accounting for cost system, to write it off against future deliveries. So the margin of sales price calculation has to include the money needed to pay down the accumulated deferred cost.

So on one hand you have the A330, all production facilities and the design fully written off with perhaps a new investment in the engine change of 2 to 3 billion USD, and on the other hand the B787 program with accumulated deferred production cost of 25 billion USD.
No way Boeing can match the A330 on price and earn money.
 
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Stitch
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 10:42 pm

Quoting mjoelnir (Reply 331):
So the margin of sales price calculation has to include the money needed to pay down the accumulated deferred cost.

Boeing will sell the planes for what they have to to win the deal, whether or not that price covers the deferred inventory, for Boeing always has the option of declaring a forward loss on the program at some (well in the) future point.
 
travelhound
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 11:29 pm

Quoting mjoelnir (Reply 331):
No way Boeing can match the A330 on price and earn money.

The problem for Boeing is two fold.

The first is the earlier frames were sold at such a discount that have very little chance of recovering development costs with these sales.

We are probably talking at 300+ frames.

The second is the accounting block of 1200 frames (based upon current production estimates) takes us up to years 2022-2025.

If the NEO enters service in the 2018-2020 period, Boeing will have a real problem trying to compete with NEO's in the 2020-2024 period.

They will have three options. Write off the value of development, extend the accounting block to cover a greater amount of frames or NEO the 787 so the business case for an A330NEO is undermined.

... but than we come to a more substantial problem. What is the delta between the 787 and A330NEO direct manufacturing costs? I suspect with the 787 being a first generation composite frame its costs would be substantially higher than the A330's.

So what was once a open and shut case for ordering the 787 over the A330 has now become a little bit more complicated.
 
trex8
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RE: A330 NEO Becoming More Likely Part 7

Sat Jun 07, 2014 11:30 pm

Quoting Devilfish (Reply 329):
Not only could Boeing match the A330 price...they have two ways of undercutting it. And both will be even smaller investments still.

care to enlighten us as to how they will do that?
 
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seahawk
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 9:05 am

You can MAX a 787 around 2025 at best. Before that there will be no engines offering enough fuel burn reductions. And even then it might be close.

T700 - Advance (2020) = ~ 20%
T700 - Ultrafan (2025) = ~ 25%

Now if the 787 engines are 12-15% better than the T700 (which they need to be to make the NEO sensible)

T700 = 100
Trent Ten = 85
Advance = 80
Ultrafan = 75

Which means you need the Ultrafan generation for an engine up-grade to make sense and that is without product improvements.
 
astuteman
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 9:31 am

Quoting seahawk (Reply 335):
Which means you need the Ultrafan generation for an engine up-grade to make sense and that is without product improvements.

Agree with all of that.

Trent TEN or similar should give about 13% better SFC than the current Trent 700
I expect the RR Advance to be 6%-7% better than the Trent TEN

That's just not enough to re-engine the 787.
it doesn't need it anyway.
It has an inherent c 4% fuel burn advantage over the current A330 without the SFC gain - hence the 17% or so fuel burn difference.

Ultrafan would give c. 11%-12% difference on a 787.
This may be worth doing.

rgds
 
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seahawk
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 9:50 am

But then the "Advances Low-Pressure System" (ALPS) fan is already being tested on the Trent Ten (flight tests on the 747 this year), which could mean it improves more than expected. RR confirmed that this new solution easily matches the current low pressure unit and it also saves 345kg weight. So I would not be surprised they will put it into a pip. I would not even be surprised if it is on the NEO right from the start.

[Edited 2014-06-08 02:53:57]
 
StickShaker
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 11:19 am

Quoting travelhound (Reply 333):
They will have three options. Write off the value of development, extend the accounting block to cover a greater amount of frames or NEO the 787 so the business case for an A330NEO is undermined.

Writing off 787 R&D and extending accounting block cover are little more than paper shuffling exercises. They don't change the underlying cost to build a 787 in terms of resources and manpower.

I think Boeing will struggle to undermine any business case for the 330Neo just as they have struggled to undermine the case for the current 330 - it will long be a painful thorn in Boeing's side.


Cheers,
StickShaker
 
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EPA001
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 1:12 pm

Quoting tortugamon (Reply 330):
If Airbus can invest $2Billion and sell 1000 wide bodies it would be one of the best ROI in aviation.

It would be for sure. But first the aircraft needs to be launched and the up to 1,000 orders would have to materialise. But if that happens it is the next cash cow for Airbus.  
 
packsonflight
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 3:13 pm

This discussion reminds me a lot about the pre launch 320 NEO discussions,

Anybody care to guess how many 330NEO launch orders Airbus will announce at the Farnborough?
 
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Stitch
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 4:51 pm

Quoting StickShaker (Reply 338):
I think Boeing will struggle to undermine any business case for the 330Neo just as they have struggled to undermine the case for the current 330 - it will long be a painful thorn in Boeing's side.

Delivery delays of the 787 have done far more to help the A330's sales than differences in production costs and ASPs have.

Just as the A350-1000 not being available have helped the 777-300ER's sales (and the 777 is an expensive plane for Boeing to build - hence the automation being developed for the 777X).
 
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Revelation
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 5:19 pm

Quoting tortugamon (Reply 330):
I think most of us think that Airbus will use the Trent TEN and not the advance.

That is what AvWeek has suggested and I am very interested in seeing if they are right. Given that this is all about the new engine option, I'm really looking forward to what we learn about what kind of deal RR put onto the table to get this program launched.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
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KarelXWB
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 5:32 pm

Quoting tortugamon (Reply 330):
I think most of us think that Airbus will use the Trent TEN and not the advance. I agree that the Advance would not be the same price as it would be more expensive than the Trent TEN or the GEnx1B.
Quoting Revelation (Reply 342):
That is what AvWeek has suggested and I am very interested in seeing if they are right.

With it's thrust class of 75 - 115 klbf, the Advance is more an engine sized for a 777 or A380 jetliner.
What we leave behind is not as important as how we've lived.
 
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Stitch
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 5:37 pm

Quoting KarelXWB (Reply 343):
With it's thrust class of 75 - 115 klbf, the Advance is more an engine sized for a 777 or A380 jetliner.

I still think time to market is too late for the Advance on the A330neo.

Timeframe wise, it strikes me as really being an engine for the A380neo, 787neo, A350neo and Y3/NLA (true 777 replacement).
 
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KarelXWB
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 5:40 pm

Quoting Stitch (Reply 344):
Timeframe wise, it strikes me as really being an engine for the A380neo, 787neo, A350neo and Y3/NLA (true 777 replacement).

Well, this was the engine RR proposed to Boeing to fit on the 777X. With Boeing now exclusively going forward with GE and no other suitable platform available before 2020, there is no reason to EIS the engine earlier (or perhaps the Advance could not meet the schedule Boeing wanted to have).

[Edited 2014-06-08 10:41:59]
What we leave behind is not as important as how we've lived.
 
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Stitch
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 5:49 pm

Quoting KarelXWB (Reply 345):
Well, this was the engine RR proposed to Boeing to fit on the 777X. With Boeing now exclusively going forward with GE and no other suitable platform available before 2020, there is no reason to EIS the engine earlier (or perhaps the Advance could not meet the schedule Boeing wanted to have).

Could be. Boeing does seem to be trying to accelerate the 777X's EIS.

GE might also be willing to pick up some of the tab on the 777X as they did on the LR777. Or that engine customers already have so many GE90s in their 777-300ER fleets that lack of engine choice is not the issue it was back when the 777-300X was being mulled and customers then had fleets of 777-200(ER)s with P&W or RR power.
 
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seahawk
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RE: A330 NEO Becoming More Likely Part 7

Sun Jun 08, 2014 6:53 pm

Quoting Stitch (Reply 344):

I still think time to market is too late for the Advance on the A330neo.

I think Trent Ten + ALPS fan. The weight reduction of the fan is too good to miss for the NEO. As they are testing it already and will be flying it this year, they should have no problem meeting the EIS of that modification.
 
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KarelXWB
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RE: A330 NEO Becoming More Likely Part 7

Wed Jun 11, 2014 8:49 am

A Farnborough launch is still not certain.

Quote:
Airbus may not make an A330neo decision by Farnborough, Leahy said

http://twitter.com/R_Wall/status/476638204775645185
What we leave behind is not as important as how we've lived.
 
parapente
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RE: A330 NEO Becoming More Likely Part 7

Wed Jun 11, 2014 8:56 am

Quote:
Airbus may not make an A330neo decision by Farnborough, Leahy said

Bet he does  
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