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chiad
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Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 11:35 am

Leeham says "Boeing has lost neo/MAX battle; time to refocus goals."

http://leehamnews.com/2016/04/04/boe...-neomax-battle-time-refocus-goals/

Sorry .. I can make the link work properly. You'll have to copy and paste.

Quote
* Airbus has won the single-aisle competition with the A320neo family. Boeing has no hope of catching up in the next 10 years.
* Airbus is competitive in wide-body sales (excluding freighters). This is the new battleground.
* Boeing should “maintain” 737 market share and focus on margin across the 7-Series instead.
* Boeing’s hope to regain the leadership in the single-aisle sector is the next generation aircraft.

[Edited 2016-04-04 04:37:41]

[Edited 2016-04-04 04:38:48]

[Edited 2016-04-04 06:12:04 by qf789]
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 11:43 am

Quoting chiad (Thread starter):
Airbus has won the single-aisle competition with the A320neo family.

"Won" - is there a trophy? What does "won" mean, exactly?
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 11:50 am

Quoting EA CO AS (Reply 1):
"Won" - is there a trophy? What does "won" mean, exactly?

Reductio ad absurdum  
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 11:56 am

Quoting EA CO AS (Reply 1):

Quoting chiad (Thread starter):
Airbus has won the single-aisle competition with the A320neo family.

"Won" - is there a trophy? What does "won" mean, exactly?

My thoughts exactly, whether the share is 50/50, 45/55 or 47/53 hardly matters. Both manufacturers are churning out ludicrous numbers of single aisle planes as it is
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:04 pm

Quote:
Airbus already has won the neo/MAX battle. This is a battleground Boeing will not retake for the lives of these airplanes.

Correction - until Boeing gets a new plane.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:08 pm

With more then 3000 orders by the time of its first flight, this loss doesn't seem TOO dramatic. Actually sales are very good, just a bit lagging behind Airbus lately.
That being said, Boeing needs to look at some issues sooner then later. They are losing the 190-250 seat medium haul market to Airbus with the 739 too shortlegged and the 788 too big and expensive. Discussed all the time, let's not repeat that here.
So far we see almost all major 737NG operators ordering the MAX while the 320 operators stick to Airbus. Airlines jumping ship are few but can show a trend. It should be a bit worrysome that some major 737NG operators like ANA, JAL, Qantas, Malaysia, SAS and KLM haven't commited to the MAX. Alaska Airlines might like the Airbuses they get via Virgin, but it would be a moral boost if they quickly ditch them and replace them with more MAXes. Boeing won back Air Canada and Monarch from the Airbus camp and will certainly try to lure a few more.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:16 pm

Well I haven't seen a more classic A vs B thread in a while. Leeham must think that the narrowbody sales market is like a primary race in a presidential election in a winner take all state. Apparently Airbus won because they got more than 51% and Boeing should give up and move on?

I think the Leeham guys are too caught up in the A vs B battle. The goal of the Boeing Company is not to beat Airbus. Their goal is to earn a profit for its shareholders. Airbus won the marketshare battle for narrowbodies. While I think they would have liked to see a market share lead over Airbus, the overall corporate goals aren't about winning market share. They are about profitably delivering airplanes.

Is the A320neo family better than the 737MAX family? I don't know if we know that answer before anyone can really compare them as families side by side with in service numbers. The two families operating costs and fuel burn are so close that it depends on many factors including purchase price. The one clear advantage is Airbus has the biggest plane in the narrowbody market now. Boeing could have probably won 10% more of the MAX/NEO orders if they did what they did for United with 737-700s and sold rock bottom price 737 MAX airplanes. However that is probably not in the best way to profitably return money to their shareholders. The MAX and NEO should have healthy profit margins. They are offering significant improvements. Selling at 3% profit margin to chase market share would be foolish.

I agree that market share below 40% is a problem. There are some saying that Boeing should go clean sheet new design. I understand that perspective, but am not sure about that working. I think Leeham like many on A.net is focused on A vs B and forgetting that the 737MAX has a higher backlog on the 737 than they have ever had before and are working on profitably executing that program to earn profits.

[Edited 2016-04-04 05:23:45]
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:22 pm

Quoting EA CO AS (Reply 1):
"Won" - is there a trophy? What does "won" mean, exactly?

Won means selling your product in large numbers at acceptable margins.

Lost means either not selling your product in significant numbers or not selling your product at acceptable margins.

Take your pick as to which applies to each OEM.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:26 pm

Quoting Amiga500 (Reply 7):
Won means selling your product in large numbers at acceptable margins.

Lost means either not selling your product in significant numbers or not selling your product at acceptable margins.

Take your pick as to which applies to each OEM.

I agree. Winning is selling your product in large numbers and at acceptable margins. It is possible for the respective shareholders at both Boeing and Airbus, that both the 737MAX and A320NEO are winning. If you want to do an A vs B lineup on market share, then Airbus is winning narrowbodies and Boeing is winning widebodies.

The one company that appears heading in the direction of losing is poor little Bombardier. With Boeing and Airbus aggressively going after each other on price, Bombardier looks like it is losing big time. It might cost them their entire aviation business.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:28 pm

Quoting Amiga500 (Reply 7):
Won means selling your product in large numbers at acceptable margins.

We know the "numbers" (number of airframes sold) but we don't know the "margins". I think this makes it difficult to start a substantial discussion.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:28 pm

Quoting roseflyer (Reply 6):
The goal of the Boeing Company is not to beat Airbus

Riiiiiiiight...

A certain individual, who runs his blog on Boeing web site will beg to differ...

 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:35 pm

Quoting EA CO AS (Reply 1):
"Won" - is there a trophy? What does "won" mean, exactly?

Well, Boeing used to be market leader, so Airbus won the Top spot. Whatever that is worth.

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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:39 pm

Quoting chiad (Thread starter):
Sorry .. I can make the link work properly. You'll have to copy and paste.

You have to delete the "s". I often forgot this as well so I have now my own personal memory hook for this issue: when posting on a.net you are not allowed to have s..... !"     
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:41 pm

"win" means directional dominance in the marketplace. Sorta the same way the 737-300/400/500 "won" over the MD-81/82/83/87/88 in the '80s. The short/medium range jet is the bulk of the commercial jet business and while its not as high a margin business as the long-haul/widebody market, it creates huge economies of scale for the business. Airbus' significant sales advantage either justifies a much larger sales/customer service force (to lead for better relationships) or conversely dramatically reduces the sales and marketing overhead per frame.

It also creates a huge installed customer base.

But no it doesn't mean Boeing is going anywhere but it does make it harder for Boeing to keep their dominance in the marketplace. For years many in the aviation business (and here I am mostly speaking about comments from MX and Engineering folks I know) would say how the DC-9/MD-80 was superior to the 727 and 737 but yet Boeing's overall market dominance made it harder for Douglas, Lockheed and later Airbus to make sales. Now the comparison isn't the same extreme: It looks like we're shaping up to a 40-45 to 55-60 world for the 737MAX to the 320NEO. Plus the total universe is huge (and we're taking Bernie/Trump sized "YYuge") compared to the older world of 737/320/MD80. But it means that the 320 will be cheaper to sell and for many customers cheaper to maintain as the parts market will be much larger. That all makes the hill harder for Boeing. Of course, there are other factors (like longevity) that help Boeing's case, but if you aren't DL/WN and don't like to run planes to the end of their life, then the A320 may very well be a more compelling purchase for you.

Long story made short (and something that should make most on this site very happy): Boeing really needs to push forward with Y1.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 12:54 pm

Quoting BlueSky1976 (Reply 10):
Quoting roseflyer (Reply 6):
The goal of the Boeing Company is not to beat Airbus

Riiiiiiiight...

A certain individual, who runs his blog on Boeing web site will beg to differ...

I agree that the sales team would have a different goal. However the goal of any corporation is profit. Boeing could chase market share at the expense of profit. So far they haven't done that and I don't think they will. If 51% or greater market share is your definition of win and loss, then Boeing lost.  
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 1:04 pm

Quoting EA CO AS (Reply 1):
What does "won" mean, exactly?

Going by the last bullet in the thread started, I'd suggest it is about "market leadership", as opposed to profits.

Quoting roseflyer (Reply 6):
Well I haven't seen a more classic A vs B thread in a while.
Quoting roseflyer (Reply 6):
I think the Leeham guys are too caught up in the A vs B battle.

Perhaps you would be doing so as well, if your business was selling subscriptions to a newsletter or getting fees as a consultant.

Quoting roseflyer (Reply 6):
The goal of the Boeing Company is not to beat Airbus. Their goal is to earn a profit for its shareholders.

Yep, and that is about to be a real problem for them as they deal with multiple assaults on their profitability, such as the strong dollar, an inability to command a strong margin for all of their mature programs, a need to invest on two new programs at the same time, their competitor having a strong product in the 777 segment for the first time, a 787 program that delivers income but not profits, and an on-going use of stock buy-backs to make the stock appeal to investors.

The ST thread I referenced in the UA 737 thread covers it all:
http://www.seattletimes.com/business...ns-put-financial-crunch-on-boeing/
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 1:10 pm

Quoting Revelation (Reply 15):
on-going use of stock buy-backs to make the stock appeal to investors.

I have always thought that a company buying back its own stock is a ridiculous use of money. Dividends make sense because that is what shareholders expect and most healthy companies pay some for of divident, but using your capital to buy stock rather than invest in your own products as well as research and development doesn't make any sense to me.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 1:14 pm

Quoting N14AZ (Reply 12):
Quoting chiad (Thread starter):Sorry .. I can make the link work properly. You'll have to copy and paste.
You have to delete the "s".

Have removed the s, so link works now
Forum Moderator
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 1:25 pm

The site mentioned does appear to me to have a bias in its reporting and opinions.

[Edited 2016-04-04 06:26:19]
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roseflyer
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 1:47 pm

Quoting USAF336TFS (Reply 18):
The site mentioned does appear to me to have a bias in its reporting and opinions.

Leeham posts many articles and provides quite a bit of commentary. There can be some good in depth analysis and news, but the majority of the articles follow the similar theme. Leeham posts lots of negative news about Boeing whether it being this article about losing the narrowbody market, the 777x advancing EIS is not actually notable, 787 is cash positive but no its not, Boeing cost cutting, etc. Leeham also posts a lot of positive news about Airbus. A350 has better range, new interior on the Airbus planes, leasing companies that already bought the A330neo love it, etc. It's not true in every article, but I view Leeham as an Airbus advertising portal. There are some good articles and not everything on Leeham is propaganda, but I don't really remember the last time that an article was truly positive about Boeing without some sort of agenda going on to paint the company or its products in a negative light or at least make positive news not sound as positive as it is. I'll be the first to admit that I am not unbiased and neutral, but Leeham certainly has some bias.

[Edited 2016-04-04 06:48:02]
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 1:55 pm

Quoting roseflyer (Reply 19):
but I view Leeham as an Airbus advertising portal. There are some good articles and not everything on Leeham is propaganda, but I don't really remember the last time that an article was truly positive about Boeing without some sort of agenda going on to paint the company or its products in a negative light or at least make positive news not sound as positive as it is. I'll be the first to admit that I am not unbiased and neutral, but Leeham certainly has some bias.

I couldn't agree more. I sometimes think Mr. Hamilton should be a bit more forthright and admit that Airbus is one of his customers, if not his largest account. Since he's under no obligation to publish his clients, I won't hold my breath, but there's clearly a very anti-Boeing sentiment in that site's reporting.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:07 pm

Quoting roseflyer (Reply 6):
Well I haven't seen a more classic A vs B thread in a while. Leeham must think that the narrowbody sales market is like a primary race in a presidential election in a winner take all state. Apparently Airbus won because they got more than 51% and Boeing should give up and move on?

I think the Leeham guys are too caught up in the A vs B battle. The goal of the Boeing Company is not to beat Airbus. Their goal is to earn a profit for its shareholders. Airbus won the marketshare battle for narrowbodies. While I think they would have liked to see a market share lead over Airbus, the overall corporate goals aren't about winning market share. They are about profitably delivering airplanes.

Yes and no. Leeham News seems to want to stir up the A vs B rhetoric for the only reason of increasing viewership of its website. That is the reason why THIS topic in particular is behind a paywall and not free to the public. However, make no mistake about it, Boeing would much rather have its foot on the throat of Airbus instead of Boeing trying to play catch up in the NB sector. Topping Airbus results in more crumbs to throw at the shareholders. Cause and effect.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:08 pm

Quoting roseflyer (Reply 6):
The goal of the Boeing Company is not to beat Airbus. Their goal is to earn a profit for its shareholders.

Precisely.

However, we have a parallel thread running at the moment suggesting Boeing sold 737's to UA with a 75% discount @ $22m per lump.

Are Boeing having to offer such 'suicidal' discounts to retain customer share, or is there any evidence that Airbus are also offering such huge discounts ?
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:11 pm

Quoting USAF336TFS (Reply 20):
I couldn't agree more. I sometimes think Mr. Hamilton should be a bit more forthright and admit that Airbus is one of his customers, if not his largest account. Since he's under no obligation to publish his clients, I won't hold my breath, but there's clearly a very anti-Boeing sentiment in that site's reporting.

Scott Hamilton is an independent consultant, but he certainly comments very highly of Airbus and not so highly of Boeing. I assume he is a member of this site, and wonder which poster he is sometimes. I think you might be right in that he could be on the Airbus payroll. He seems to get access to lots of Airbus marketing numbers and literature. Analytical numbers posted on his site are often directly from Airbus marketing presentations.

If he feels that Airbus won with the A320neo, he's free to share that on his blog and no one can debate that he is right when comparing MAX vs NEO market share. He can be rather sneaky with his commentary. In this article he says that Airbus and Boeing widebody orders have been similar over the past 10 years. Yes that is true. What is sneaky about that is that the 787 went on sale about 3 years before the A350. He probably intentionally chose to compare Airbus and Boeing widebody sales over ten years because it was almost exactly 10 years ago that the A350 went on sale. If he had chosen a different time period, the numbers would be different.

It's all fun and games in the A vs B threads. I always have a fun time trying to decipher what is going on behind some of the commentary on the surface.
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roseflyer
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:13 pm

Quoting SelseyBill (Reply 22):
Quoting roseflyer (Reply 6):
The goal of the Boeing Company is not to beat Airbus. Their goal is to earn a profit for its shareholders.

Precisely.

However, we have a parallel thread running at the moment suggesting Boeing sold 737's to UA with a 75% discount @ $22m per lump.

Are Boeing having to offer such 'suicidal' discounts to retain customer share, or is there any evidence that Airbus are also offering such huge discounts ?

Trying to offer suicidal prices against Bombardier to keep them from getting any reasonable market penetration may be benefit to their shareholders in the long run. Suicidal prices against Airbus wouldn't serve much of a purpose other than hurt both Boeing and Airbus profit margins. There are some opinions out there that Airbus has priced the A330neo at similar suicidal prices to penetrate the market. While we don't know for sure, there are some that think the prices that Air Asia X and Delta got may have little to no profit margin in them. Both sides of the Atlantic are willing to get really aggressive on price to either keep out a competitor from gaining traction in a market or to get traction for their own product.

The one thing we seem to know is that there is no Airbus and Boeing price fixing duopoly going on.

[Edited 2016-04-04 07:16:12]
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:21 pm

Quoting USAF336TFS (Reply 20):
but there's clearly a very anti-Boeing sentiment in that site's reporting.

Is it just possible that it is difficult to find much in a positive vein to say about Boeing.. The share buyback is a sop to the institutional share holders. It suggests to me that Boeing is short of ideas to create new products. I do concede that this can be a problem for them unless the engine guys are up with the play. A new advanced airframe cannot do much without an engine to move it.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:23 pm

I understand the A321 had more growth potential than 739, and it is now pretty conclusive that A321 is the winner.

But what about 738 vs A320? Granted pilots (informally polled) seem to prefer Airbus. But I thought the 738 held its own in performance and economy vs the A320. Will the NEO and MAX change the equation in the 150-160 seat segment too?
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:29 pm

Quoting roseflyer (Reply 19):
but I view Leeham as an Airbus advertising portal.

I don't know how many aerospace blogs are out there that couldn't be mistaken for some kind of advertising portal for one manufacturer or the other.

Quoting USAF336TFS (Reply 20):
I sometimes think Mr. Hamilton should be a bit more forthright and admit that Airbus is one of his customers, if not his largest account.

Anything wrong with that? After all, they've admitted that "Boeing has a sizeable license to their payside."
 
Amiga500
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:30 pm

Quoting roseflyer (Reply 24):
There are some opinions out there that Airbus has priced the A330neo at similar suicidal prices to penetrate the market.

What idiots are these?

Just so I can completely ignore their "opinion" in future.


[Note, it has been explained many times on other threads already how relatively incidental current fuel prices are over a 10 year life of an aircraft on a TATL "shuttle". Airbus easily have the capacity to discount the A330neo to a level where both the A350 and B787 cannot compete (and retain similar profit margins for both the OEM and airlines) on certain routes.]
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 2:39 pm

Quoting Erebus (Reply 28):
Anything wrong with that? After all, they've admitted that "Boeing has a sizeable license to their payside."

Nope nothing wrong with at all., But it would be nice to have a "Fair Disclosure" statement to add context to some of the articles presented.

[Edited 2016-04-04 07:46:11]
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 3:25 pm

Quoting SelseyBill (Reply 22):
However, we have a parallel thread running at the moment suggesting Boeing sold 737's to UA with a 75% discount @ $22m per lump. Are Boeing having to offer such 'suicidal' discounts to retain customer share, or is there any evidence that Airbus are also offering such huge discounts?

The 737-700 is the least-popular model by a long ways so that could explain the "suicidal" pricing.

As for Airbus, I believe the A319-100 is at -1 orders for 2016 (Gulf Air cancellation) so maybe they need to start slashing the wris---er, prices---on that model, as well, to generate interest as I believe United didn't even consider that model in the RFP Boeing won.
 
Amiga500
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 3:29 pm

Quoting Stitch (Reply 31):
As for Airbus, I believe the A319-100 is at -1 orders for 2016 (Gulf Air cancellation) so maybe they need to start slashing the wris---er, prices---on that model, as well, to generate interest as I believe United didn't even consider that model in the RFP Boeing won.

Airbus **seemingly** don't need to slash prices as their lines are full for both bridging to neo and the neo ramp itself. Why sell a 319 for $X million when you can sell a 320 off the same line for $X+20 million?


The question the rabid fanbois need to ask themselves is; why do Boeing have free slots to fill and why do they have to cut to the bone to fill them?
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 4:07 pm

Quoting roseflyer (Reply 6):
Apparently Airbus won because they got more than 51% ...?

No, because they got the 60% of the market they said they would and Boeing did not get the 50% they said, they would...

Also Boeing has to discount the MAX more than the NG in the past.
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parapente
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 4:17 pm

Childish article - sad piece of writing.
Boeing are doing just fine.Yes of course at some point they will have to replace the 737.Hardly news.They will - when the business environment is right.As above 3,000 pre first flight and more to come.They are doing just fine.As in so many previous threads its the timing/technology issue that will (I think) be foremost in their minds.
Whatever they design should last 40+ years. So they should wait till as many 'unknowns' are 'known'.Particularly as Airbus will have to follow suit (if they have done their job properly - and they tend to do so) so have the luxury of copying.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 4:19 pm

Quoting Amiga500 (Reply 29):
Airbus easily have the capacity to discount the A330neo to a level where both the A350 and B787 cannot compete (and retain similar profit margins for both the OEM and airlines) on certain routes.

Actually the ST article linked above is saying Airbus is pricing the A350 at a point where the 787 cannot compete:

Quote:

He recounted how the chairman of EVA Airways of Taiwan told him last year that Airbus was offering EVA its A350-900 at a price “significantly lower” than Boeing’s 787-10.

“The chairman told me, ‘Look, this is too big a price gap,’ ” Conner said, according to an official transcript of his address to employees, “and they started to go down that path of actually going to buy the A350-900.”

To head off the prospect of losing a loyal all-Boeing customer, Conner lowered the price to win the order.

----

Quoting Stitch (Reply 31):
The 737-700 is the least-popular model by a long ways so that could explain the "suicidal" pricing.

I don't think it has anything to do with the model, it's all about keeping BBD out of the market. Conner himself admits that.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 4:21 pm

A bit early when the MAX is not in service yet and when the GTF seems to be a very problematic engine.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 4:28 pm

Quoting USAF336TFS (Reply 30):
But it would be nice to have a "Fair Disclosure" statement to add context to some of the articles presented.

There are a multitude of analysts around that urgently require some "Fair Disclosure" stating that "I get dined and wined by Boeing" to avoid lying than a basically objective site like Leeham.

My impression over the years is that Boeing seems to hand out CheatSheets for eager publicists use.
Murphy is an optimist
 
ferpe
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 4:30 pm

As Scott doesn't have an account, here is what he has asked me to post re our article referenced in the OP:


The post was in response to Ray Conner’s Feb 10 employee webcast, extensively quote by Dominic Gates of the Seattle Times, that Boeing is losing market share to Airbus on the A320neo. He’s right. Behind the paywall, I make the argument that Airbus has such a significant lead that the battle is lost to regain market share (the basis of Conner’s Feb. 10 comments) when the time comes for an entirely new design to replace the 737 and 320. In the meantime, I argue that the goal should be to maintain margin (as commenters here suggest) and pursue a new design as fast as Boeing can to leapfrog Airbus. (There is also commentary about the technical challenges and the Airbus response.)

As for always being negative about Boeing, there is just so much fodder to talk about. During the 2006-2008 period, Airbus was the target with their executive office turmoil, the A380, the indecision over what the A350 should be, etc. The news cycles comes and go. That said, early this year, I was positively effusive over the SPEEA contract agreement and Muilenburg’s change in approach vis-à-vis McNerney. There was analysis supporting Boeing’s production rate hike plan for the 737, a topic on which Wall Street analysts remain skeptical.

As for choosing 10 years for the wide-body, one has to pick a logical time period and the launch of the A350 seems a good one. It follows picking the launch dates of the 320neo and MAX—although a year or more ago, we did a full program analysis of the single aisles dating to the launch of the A320, thereby overlapping the 737-200, Classic, NG and MAX—and without going back to look that up, memory serves to conclude that even with this, the two companies were just about even despite Boeing’s incumbency.

As for the allegation of Airbus paying us, this has been a campaign by Boeing’s shills for years to discredit us. Airbus, like Boeing, subscribes to the paywall. We’ve been critical of Airbus and at times have been put on a “no fly” list for access. We don’t drink anyone’s Kool Aid, and in recent years Boeing has been on every corner selling flavors we don’t like.
Non French in France
 
jacobin777
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 4:59 pm

Quoting roseflyer (Reply 16):
Quoting Revelation (Reply 15):
on-going use of stock buy-backs to make the stock appeal to investors.

I have always thought that a company buying back its own stock is a ridiculous use of money.

There are some advantages of buying back stock:

1)Reduced the total "float" (available shares) and prevents share dilution.
2)Remember many employees get stock options so they do need "stock inventory" as well - again, this prevents share dilution
3)IMHO share buy backs work but only a limited amount.

I do agree that Boeing is better off using the money for R&D, etc.
"Up the Irons!"
 
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Stitch
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 5:29 pm

Quoting Amiga500 (Reply 32):
Airbus **seemingly** don't need to slash prices as their lines are full for both bridging to neo and the neo ramp itself. Why sell a 319 for $X million when you can sell a 320 off the same line for $X+20 million?

I'm sure Boeing would have preferred to sell United 65 737-800s for a much better per unit price, but the RFP was not for that model, so...



Quoting Amiga500 (Reply 32):
The question the rabid fanbois need to ask themselves is; why do Boeing have free slots to fill and why do they have to cut to the bone to fill them?

Boeing has free slots because they've been ramping up 737NG production to meet demand for the model in recent years. It is the same reason Airbus has been ramping up A320ceo production and Airbus also apparently have free slots since they have sold the nearside of 30 A320ceos this year, as well, so what should the rabid fanbois make of that?

As to cutting to the bone, the Average Sales Price for the 737NG line has been falling, but so has the Average Production Price thanks to the significant increase in production rate so margins are still close to 8% which means that even at these prices, the planes are going out above cost.



Quoting Revelation (Reply 35):
I don't think it has anything to do with the model, it's all about keeping BBD out of the market. Conner himself admits that.

I'm sure that is the main reason Boeing went as low as they did, but they could also afford to do that because nobody buys 737-700s. I do not expect Boeing to have been willing to discount so deep for the 737-800 as that makes up the majority of their sell-through and they would not want to set a precedent that would be followed across hundreds, if not thousands of frames, instead of "just" scores.
 
dc10lover
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 5:40 pm

Please correct me. Airbus has more narrow body orders while Boeing has more wide body orders. Is this true?
Why endure the nightmare and congestion of LAX when BUR, LGB, ONT & SNA is so much easier to fly in and out of. Same with OAK & SJC when it comes to SFO.
 
roseflyer
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 5:42 pm

Quoting ferpe (Reply 38):


As for always being negative about Boeing, there is just so much fodder to talk about. During the 2006-2008 period, Airbus was the target with their executive office turmoil, the A380, the indecision over what the A350 should be, etc. The news cycles comes and go. That said, early this year, I was positively effusive over the SPEEA contract agreement and Muilenburg’s change in approach vis-à-vis McNerney. There was analysis supporting Boeing’s production rate hike plan for the 737, a topic on which Wall Street analysts remain skeptical.

That is a lame excuse in my opinion for posting so much negative commentary towards Boeing. Scott decides to write this article rehashing the topic of the A320neo sales lead. Meanwhile there is actual news going on with the PW1100G program in crises. Engines are delayed. There are mechanical and software problems. Airplanes are stacking up without engines. Multiple Airlines are refusing delivery, and the few planes delivered are getting later and later. Meanwhile the 738MAX is on target to deliver early to its customers. It seems odd that Scott ignores what is actually going on and instead focuses in rehashing how great the A320 sales numbers are and being critical of Boeing cost cutting. I call his blog biased for what it reports.

I don't know if I am reading your post correctly, but it sounds like you are implying that Leeham News would have been more critical of Airbus in 2006-2008. I find that amusing because Leeham news was started in 2008 unless I don't understand you correctly.

[Edited 2016-04-04 11:08:02]
If you have never designed an airplane part before, let the real designers do the work!
 
SPREE34
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 5:49 pm

Quoting Part147 (Reply 2):
Reductio ad absurdum

Love it!


BTW, which company is assembling it's airplans in the other's back yard? Not to mention 3 other countries.
I don't understand everything I don't know about this.
 
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Revelation
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 6:00 pm

Quoting seahawk (Reply 36):
when the GTF seems to be a very problematic engine

Sure, in the short term it's causing lots of headaches, but I wouldn't give up on it yet. LH complains about the teething pains but complements the economic benefits the NEO is providing.

Quoting ferpe (Reply 38):
As Scott doesn't have an account, here is what he has asked me to post re our article referenced in the OP:

Thank you ferpe for adding the post, and thank you to Scott for clearly stating your position. Personally I agree with the idea that the market tides rise and fall, and that right now in general the tide is rising for Airbus and falling for Boeing. As a former consultant, though, I have seen commercial pressures at play, so it's something to always be on guard for. Above I mentioned these pressures but in the context of how it's not unusual to see a story line get amplified in order to stimulate interest. Good on Scott for clarifying that both A and B are customers on the pay side of the paywall. Thanks to Leeham for providing some pretty interesting and detailed commentary and analysis on the free side too, it gives us lots to talk about here on a.net!

Quoting Stitch (Reply 40):
I'm sure that is the main reason Boeing went as low as they did, but they could also afford to do that because nobody buys 737-700s. I do not expect Boeing to have been willing to discount so deep for the 737-800 as that makes up the majority of their sell-through and they would not want to set a precedent that would be followed across hundreds, if not thousands of frames, instead of "just" scores.

Thanks, I see where you are coming from. I agree Boeing can say they will discount the -700 but not discount the -800, but anyone negotiating with them will surely say that they know that it doesn't cost Boeing much more to build an -800 than a -700 and will use whatever leverage they have to drive towards getting the -700 pricing.

In the past the main purchaser of the -700 has been WN, so I wonder if they were getting them at $22M/frame or not.
Wake up to find out that you are the eyes of the world
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Wake now, discover that you are the song that the morning brings
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ThReaTeN
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 6:13 pm

I don't really mind that Leeham is consistently pro-Airbus and anti-Boeing in its writing, as there is often interesting information to be found there. And had I been running a similar website it would likely have been more or less equally pro-Boeing, reflecting my own pro-Boeing leanings (you can call me a fanboy if you like, I don't really mind that either). What really baffles me are the people here in this thread (and other threads I've seen where Leeham's bias is discussed) who, apparently in complete seriousness, are arguing that "maybe Leeham News' writing is consistently anti-Boeing simply because there's not really anything positive to write about Boeing" (this is an almost verbatim quote from a couple of contributors here, see replies 25 and 38). Are these people for real? Is this also how they interpret the (politically) biased reporting of for instance Fox News or MSNBC? And if so, how did these people even manage to graduate from (the equivalent of) high school?

And while it would probably be considered becoming to add here that "let's not forget that Boeing fanboys are just as bad" or whatever, I have literally never seen the inverse case, i.e. a post where a Boeing fanboy here on A.net says something like "maybe the real reason Aspire Aviation comes off as having a pro-Boeing bias is that Airbus is a worthless pile of trash, and they're just calling it like it is". On the contrary, even people whom I would count as fanatically pro-Boeing here on this forum seem to have no problem admitting that Aspire is just as biased as Leeham is. Not really sure why this is.
 
ferpe
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 6:17 pm

From Scott:

This will be my final entry here.

In response to Roseflyer (who works for Boeing), we did report the MAX advance on EIS, noting that it (along for the time being) the EJet E2 are the only programs to be on or ahead of schedule. So we’ve got that covered. We have written about the A320GTF delays, though not in detail. As for Roseflyer’s perspective that Leeham News is biased, which others on A.Net have also opined, this is the opinion of some. Some others think we are balanced. We won’t argue with any of these, for free opinion is perfectly fine regardless of the viewpoint. There are (and have been) blogs that have been highly pro-Boeing. So be it.

Scott Hamilton
425-392-1160
www.leeham.net
Non French in France
 
Amiga500
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 6:22 pm

Quoting Stitch (Reply 40):
I'm sure Boeing would have preferred to sell United 65 737-800s for a much better per unit price, but the RFP was not for that model, so...

If Boeing had no free slots, then they wouldn't have needed to price the -700 so keenly just to make a sale and fill the slot.
They'd have told United, "why should we sell you -700s at $Xm USD when someone else already has those production slots at $Xm+20m USD, or we reckon we can sell those slots for $Xm+20m USD?"

Which should tell you loads about the pressure, or lack of, on NG slots.

Penny dropped yet?

Quoting Stitch (Reply 40):
Boeing has free slots because they've been ramping up 737NG production to meet demand for the model in recent years. It is the same reason Airbus has been ramping up A320ceo production and Airbus also apparently have free slots since they have sold the nearside of 30 A320ceos this year, as well, so what should the rabid fanbois make of that?

So have Airbus (been ramping).

It is well established that Airbus are overbooked on the ceo[1][2][3]. Any ceo slot they've sold has been coupled with moving someone off that slot and onto neo - no doubt for a hefty premium on the original slot value. Those ceo slots will NOT be going at firesale prices.


[1]http://www.flightglobal.com/news/articles/a320neo-conversions-necessary-to-handle-backlog-enders-402179/
[2]http://leehamnews.com/2015/09/07/a320-oversold-in-bridge-from-ceo-to-neo/
[3]http://aviationweek.com/commercial-aviation/airbus-eyes-a320-production-rate-rise-after-record-2013
 
ec99
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 6:24 pm

Quoting ThReaTeN (Reply 45):
And while it would probably be considered becoming to add here that "let's not forget that Boeing fanboys are just as bad" or whatever, I have literally never seen the inverse case, i.e. a post where a Boeing fanboy here on A.net says something like "maybe the real reason Aspire Aviation comes off as having a pro-Boeing bias is that Airbus is a worthless pile of trash, and they're just calling it like it is". On the contrary, even people whom I would count as fanatically pro-Boeing here on this forum seem to have no problem admitting that Aspire is just as biased as Leeham is. Not really sure why this is.

While I am not sure I would go that far defending Boeing boosters, I agree that this thread has gotten somewhat out of hand. Reading some of these posts one would think Boeing is fighting to avoid chapter 11.

Right now AB is certainly in the stronger position with the A320 being a newer product with additional growth potential and the A350 also being newer than the 787. That doesn't mean Boeing is going to have to close assembly lines for the 737 or give 777s away for 20 million dollars. Business is cyclical, one would imagine both companies will have ups and downs in both the short and long-term.
 
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kanban
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 6:29 pm

Quoting ThReaTeN (Reply 45):
On the contrary, even people whom I would count as fanatically pro-Boeing here on this forum seem to have no problem admitting that Aspire is just as biased as Leeham is. Not really sure why this is.

Probably is from our schooling/sports/upbringing that there must be winners and losers in everything.. Readers love articles that show "their team" winning at the expense of others.. think how many threads here talk about winners/losers or how some plane needs resurrection or should be buried except that the OEM is too stupid to recognize the "facts".

I'm sure if you researched all articles about the two OEMs that on the whole the split would be 50/50.. and them you get the loudmouthed "financial" experts of the moment.
 
roseflyer
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RE: Leeham: Boeing Has Lost Neo/MAX Battle

Mon Apr 04, 2016 6:37 pm

Quoting ferpe (Reply 46):
n response to Roseflyer (who works for Boeing)


You don't know where I work, but I don't appreciate you posting that even if you knew where I work. I am tired of being labeled a fan boy or whatever else, so I think I will no longer post on this website. The A vs B commentary is too much for me. What used to be a website where critical thought and analysis was shared has morphed into something far less fun.
If you have never designed an airplane part before, let the real designers do the work!

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