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Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 11:02 am

Please continue discussion from part 1:

Leeham: Boeing Has Lost Neo/MAX Battle (by chiad Apr 4 2016 in Civil Aviation)
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flipdewaf
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 11:21 am

Quoting a380787 (Reply 140):
Hmm shrinks have failed more often than not.

I agree with you completely that a shrink is not really a good idea compared to contemporary designs but a "simple shrink" of the NSA/MOM is not competing against contemporary designs, it is competing against a 1960's updated design if the idea is to keep the 738max in production.

If the NSA can get 15% better per seat costs over the 8MAX (if we neglect development costs, that's what I think it will have to do) then the NSA will have damned near trip costs to the 8max anyway.

The A319 is a shrink, still works over a 727.

Quoting a380787 (Reply 140):
Your idea *might* work, but the feat won't be easy. The safe choice is continue selling the max8 with periodic PIP packages to keep it up with Airbus.

But if Boeing could PiP the MAX to keep up with the NEO we wouldn't be having this conversation.

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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 11:27 am

Quoting flipdewaf (Reply 1):

Boeing can PIP the max 8 a bit. It's really the max9 that has no room for growth.

The "MOM shrink" is still competing with 320neo. That's the primary competitor, not the MAX 8.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 11:58 am

15% improvement per seat is very unlikely if you look at the same number of seats and engines of the same generation. And to be fair nobody will have engines 10-12% better than the engines mounted on the A320NEO at least until 2025- 2030.

And even this plane would need to be able to best a theoretical A320NWEO2 (new Wing + new engine) using the same engines, or coming 5 years later and using newer engines, while costing 50% in development.

[Edited 2016-04-05 05:27:49]
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 12:08 pm

Quoting seahawk (Reply 3):
15% improvement per seat is very unlikely if you look at the same number of seats and engines of the same generation. And the be fair nobody will have engines 10-12% better than the engines mounted on the A320NEO at least until 2025- 2030.

And even this plane would need to be able to best a theoretical A320NWEO2 (new Wing + new engine) using the same engines, or coming 5 years later and using newer engines, while costing 50% in development.

In other words, the A320 (NEO, NEO^2 or NWEO2) has a very bright future. It might become the DC3 of our times....
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 12:31 pm

Quoting a380787 (Reply 2):
The "MOM shrink" is still competing with 320neo. That's the primary competitor, not the MAX 8.

This is true.

Quoting seahawk (Reply 3):
15% improvement per seat is very unlikely if you look at the same number of seats and engines of the same generation. And the be fair nobody will have engines 10-12% better than the engines mounted on the A320NEO at least until 2025- 2030.

I agree that this is unlikely, change that will render the NEO out of the game even at MOM size will also relegate the MAX so there is no point keeping them on together.

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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 1:24 pm

From Part 1, sorry for my messed up formatting...

[quote=Matt6461,reply=97]

Quote:

I agree that it's hard to see Boeing doing a clean sheet until ~2019 when (1) 787 will be generating a lot of cash (2) MAX will be generating cash (3) 777X expenditures should be winding down. Even then, Wall Street will probably punish them for launching a new plane. From an investor's standpoint I'd have trouble trusting Boeing not to lose another $50bn before profit starts coming in - ~60% of the company's market value right now.

As an aviation fan and economic populist - screw the investors let's see a new plane.

What do you think, Rev?

It's hard to reconcile all that is going on at Boeing. They are slowing down production on 777 and of course 747 and are suffering from competitive pressures and the strong dollar so they feel justified in laying off workers, yet they are increasing production on 787 and 737 so will probably be hiring at some point for those lines. They know they need to get started on an expensive next generation airplane but are spending large sums of money to buy back stock which helps investors as well as executives who get large stock grants. I don't feel the right things are happening for them to prepare themselves to launch a next generation airplane any time soon.

[quote=Matt6461,reply=97]

Quote:

As an aside - maybe another thread? - what is enabling Airbus to compete so well on A350 vs. 787 price? Conner says Airbus offered the A350 for less than the 787-10. DL reportedly got the A359 for $115mn while Boeing held firm at $125mn for the 789. How is that possible for a bigger plane with more expensive engines? Granted, the USD is high right now but still... Is Airbus perhaps doing market share grabs via pricing?

My guess is they feel they need to really establish the A350 in key accounts like DL so they are willing to use the profit rolling in from the mature programs to cover any loss, and as you note the short term windfall from the rising dollar helps too.

[quote=crimsonchin,reply=99]

Quote:

Well Boeing themselves claimed the NG was enough to still beat the NEO (which I'm certain you probably didn't eye roll at), so anything is possible I guess?

What did you expect them to say? "We were throwing around NSA powerpoints so much that we got caught with our pants down and had to cobble together the best response we could over a long weekend of black coffee, asprins and cigarettes?"

It's akin to expecting a mother to say she has an ugly baby.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 1:30 pm

I think Boeing have to stop looking at a plane that will beat the A320 out of the water, but accept they will have to invest many billions in getting an airframe that can:

1. compete favourably with the A320 line in COC [pretty much a role reversal of where we are right now would be acceptable].
2. compete advantageously with the A320 line in maintenance.
3. compete advantageously with the A320 line in passenger experience [cabin storage/space].
4. compete advantageously with the A320 line in build costs [after learning curve plateau].
5. allow for upgrades to keep the airframe competitive over the next 80 years [looking at 3-5 engine changes in that time, so a potential fan diameter increase of up to 50%].


Propfans don't look like coming to fruition, therefore the next "breakthroughs" will be confined to things like (IMO):
1. CNF infused resins.
2. Increased system smart diagnostics and always on logging to OEM.
3. Built in taxi (think wheeltug).
4. Novel boarding/storage.

At least 2.5 of the above are retrofittable (the 0.5 to novel boarding/storage)
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 2:01 pm

Quoting Amiga500 (Reply 7):
I think Boeing have to stop looking at a plane that will beat the A320 out of the water, but accept they will have to invest many billions in getting an airframe that can...

Exactly my thoughts too. Create a flexible, maintenance, loading efficent, upgradable and lovable platform would take them very far indeed.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 2:40 pm

Quoting Amiga500 (Reply 7):
I think Boeing have to stop looking at a plane that will beat the A320 out of the water, but accept they will have to invest many billions in getting an airframe that can:

1. compete favourably with the A320 line in COC [pretty much a role reversal of where we are right now would be acceptable].
2. compete advantageously with the A320 line in maintenance.
3. compete advantageously with the A320 line in passenger experience [cabin storage/space].
4. compete advantageously with the A320 line in build costs [after learning curve plateau].
5. allow for upgrades to keep the airframe competitive over the next 80 years [looking at 3-5 engine changes in that time, so a potential fan diameter increase of up to 50%].

I agree. Its clear that Boeing isn't able to 'win' the narrowbody market in terms of market share and revenue any time soon. However, they can still build and sell a quality product that is reasonably competitive on a COC basis. At this stage, Boeing should surely focus on maximising margins.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 2:56 pm

From Matt6461 in the previous thread: "It's a discredit to this site and its participants when posters insult thoughtful analysts like Bjorn. He has contributed countless fascinating posts here, continues to provide us with free content, and even jumps on to referee debates once in a while. Some respect is warranted."

I must agree. I've been on this site for a very long time, and the complain I've consistently heard is that those with deep aviation knowledge have been chased off by armchair CEO's who think they know better. We all have our biases, but accusing someone who provides thoughtful analysis of being an Airbus shill simply because you disagree with their analysis is wrong and is a perfect example of why industry insiders often walk away from this site.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 3:03 pm

Reply 7
I think Boeing have to stop looking at a plane that will beat the A320 out of the water.

Personally I believe this is aiming too low. I think (whenever it happens) that the new plane must force Airbus to follow suit and start afresh.I believe this is possible.
Of course whatever second generation engines come available. (Ultrafan etc) can be used by Airbus so there is no USP there.But.
1.V High aspect, super laminar, folding wingtip, carbon wings. With the work currently being undertaken on the 777X this IMHO is a real possibility.
2.Cold cure carbon fuse.But (and this is the real unknown).Perhaps an ovoid shape as has been speculated/patented (carbon is good for this) that may allow for a 2X3X2 layout with a very similar/same drag/weight profile to the classic metal tube.The knowledge from the 787 must give Boeing a technological lead here.

Such a layout would make for an efficient family of aircraft.
A. 185-200 PAX B. 240-250 PAX C. 275 PAX (all in one class config).Shorter range requirement aircraft may be offered without the outer folding wing and be replaced with a BW.
Thus NSA and MOM would be one family.
All speculation I grant!
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 3:12 pm

Quoting parapente (Reply 11):
All speculation I grant!

Would be nice to see, but I doubt we'll see Boeing follow such a "moon shot" strategy any time soon.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 3:15 pm

Quoting parapente (Reply 11):
.But.
1.V High aspect, super laminar, folding wingtip, carbon wings. With the work currently being undertaken on the 777X this IMHO is a real possibility.
2.Cold cure carbon fuse.But (and this is the real unknown).Perhaps an ovoid shape as has been speculated/patented (carbon is good for this) that may allow for a 2X3X2 layout with a very similar/same drag/weight profile to the classic metal tube.The knowledge from the 787 must give Boeing a technological lead here.

(1) I can accept, indeed, it would be the prime differentiator, but I can't under emphasis just how good the A320 (and A330) wings were for their time.

(2) Simply won't work for shape (IMO). 7-across with 2 aisles won't beat 6-across with single aisle on COC for pax numbers less than 250.

How Irkut get on with the MC-21 will give us an idea of how mature out-of-autoclave methods are for use in PSEs.


[Forum ate the original post, somewhat annoying it can't do less than/greater than signs - and I keep forgetting!  ]
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 4:31 pm

Thanks - I had forgotten the MC 21.Just taken a re fresh.Looks like a good plane indeed and they obviously get round the twin aisle de planing aspect by a (two person) wider single aisle. Delayed timings also good.Creates time to get the P&W engine just right.This aircraft could give both A&B a real run for their money methinks.And for Boeing... yup they better get on with it!
Having said that I don't think we will see any announcement till 2017 earliest.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 4:39 pm

Lesson from the former CEO of General Electric:

"When you achieve success in business, of course the money follows, but that should not be your objective.

Your objective should be to win. Win win win. Every time. Not some of the time."

So when Airbus has 60% of the market and Boeing has 40%, Boeing failed to win.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 4:46 pm

Even if Airbus has taken a permanent lead in the current generation of narrowbodies (neo / MAX), I am not sure Boeing is going to necessarily want to near-term launch a new model. Boeing is in the process of ramping up production of the 737 family (NG+MAX) to 52 a month and even that might not be enough to meet demand (despite Boeing having "lost" to Airbus, who themselves are "only" moving to 60 per month at this time).

A new model is going to require a new production line and Renton doesn't currently have room for it, which means either the MAX is going to have to see a significant production rate cut (at least 1/3rd to free up a line) or Boeing is going to build it at Charleston or Everett (using the 747's FAL area assuming that program is ended).

I don't see an EIS for NSA for at least a decade. MAX is too much of an investment to not be at least a decade-long program. Instead, I see Boeing getting MOM into production by 2025. It would address the most immediate need - the 737-9's lackluster performance vis-a-vis the A321-200neo - and it would allow Boeing to build the FAL in Charleston to start preparing a workforce there for narrowbody production to eventually handle either NSA exclusively, or in conjunction with Renton (as MAX production winds down, they can free space to put in one or more NSA lines).
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 4:49 pm

Quoting parapente (Reply 14):
Creates time to get the P&W engine just right.

From what I gather, the issue is Airbus specific (mounting points) and not necessarily limited to P&W.

Quoting parapente (Reply 14):

This aircraft could give both A&B a real run for their money methinks

If they can get their support network right, I think the MC-21 would be the plane to smash the duopoly.

Unfortunately, I'm 99% sure they won't (due to both their own fault and politics) so it'll be niche.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 4:51 pm

Quoting Stitch (Reply 16):
It would address the most immediate need - the 737-9's lackluster performance vis-a-vis the A321-200neo -

the assumption here is that the initial -9 won't be improved during it's life and remove the differences..
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 5:04 pm

Quoting DocLightning (Reply 15):
Your objective should be to win. Win win win. Every time. Not some of the time."

A culture purely based on "winning" will start to use every means to "win". Fairness will go overboard.
Sabotaging other participants and competing in orthogonal ways is oftentimes much easier than
competing in the core domain.

competition used to be about comparing performance and not about who has the better PR department or the more devious helpers.

End the end "winning über alles" is destructive for all participants.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 5:09 pm

Quoting kanban (Reply 18):

the assumption here is that the initial -9 won't be improved during it's life and remove the differences..

It is however just as reasonable as assuming that the A321neo won't improve at pretty much the same pace, right?
The bigger fan and MTOW reserves seem to make improving the Airbus a tat easier.

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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 5:12 pm

Quoting kanban (Reply 18):
the assumption here is that the initial -9 won't be improved during it's life and remove the differences..

Fair point, but at the moment I think it's a rather safe assumption to make.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 5:17 pm

Quoting WIederling (Reply 19):
A culture purely based on "winning" will start to use every means to "win". Fairness will go overboard.
Sabotaging other participants and competing in orthogonal ways is oftentimes much easier than
competing in the core domain.

Well said!

I agree with Leeham that the battle is "lost." But Boeing did the best they could with what they had available to them. Their customers were screaming for an improved narrow body aircraft and weren't willing to wait for a clean sheet design. And Boeing needed to respond to the neo. The MAX line is not setting the world on fire, but it is selling in decent enough numbers and the 737 will soldier on for years to come.

I disagree about profits versus market share, though. Boeing needs to keep as many customers as possible within the Boeing family. Yes, the 737 profits are going to go down, but it's better to keep a customer than to try to win them back. Airbus has flipped a lot of customers over to the A320 family. As best as I can recall, Boeing has not managed to flip many of them back to the 737 family. And absolutely the last thing Boeing needs is for Bombardier to start flipping customers as well.

Boeing is in a hard place. The cash cows (737, 777) are reducing their flow. The cash drain (787 program) is reducing its drain, but the enormous pile of deferred costs is still growing albeit at a slower rate.

Boeing is making money in defense, but even there the 767 tanker is eating profits.

Throw in the strong dollar, and the guys in Seattle need to pull a rabbit out of their hat. And mind you, this is all at the top of the cycle. The order books are bulging, and both manufacturers are setting delivery records. Everybody is acting like air travel will continue to grow exponentially for the next 20 years.

History would indicate otherwise.

David

[Edited 2016-04-05 10:19:25]
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 5:26 pm

Quoting diverdave (Reply 22):
The order books are bulging, and both manufacturers are setting delivery records. Everybody is acting like air travel will continue to grow exponentially for the next 20 years.

History would indicate otherwise.

Boy ain't it the truth. Look back over any 10 year period - or even 5 year period - and has shown to be a different ballgame virtually every single time.

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-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 5:58 pm

I thought people learned something from the 787 and the A330NEO. Using lots of CFRPs does not magically make your plane better, especially as new alloys have made metal very competitive again, even more so when talking about additive construction.

Cold Cured CFRP has the potential to bring the production costs down, but it does not magically make your plane better either.

The 737 and the A320 are so optimized right now that making as new airframe with new wings more than 3-5% better (and 5% is ambitious imho) will be a big challenge costing lots of money. Producing this new frame at the same rate will be even more of a challenge. As long as engines improve 5% in 5 years, a new airframe is only worth the effort if you have no old frame to use or if your old frame has serious drawbacks that make it no longer competitive. There are good reasons Boeing went with the MAX and there a good reason the 777X is not a 797. If you look at a new design the fuselage alone will cost you about 40% of the whole development costs, while it might improve your efficiency by 2% only. So you invest 12 billions into a new plane, the competition invests 6,5-7 into a new engine and wing (similar in efficiency to yours) and they end up 1-3% less efficient. You need very high fuel prices to make turn that into a market advantage, but with so high fuel prices the market will be growing slowly and the demand for new planes will be low. (and that assumes that you can achieve similar production costs with all your new high end technologies used, which itself is very unlikely for the first years)

If things go badly, you encounter problems in the development and problems reaching the desired production output, which means you end up 3-5 years late. Just as you have over come your problems the competition launches their up-grade, just with engines 5 years younger in design and 3% (I give your engine a 2% PiP) more efficient.

I am certain that a new design won´t EIS much before 2030 with the development maybe starting around 2023. At that point the engines alone make it a big enough improvement over the old generation airframes.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 5:59 pm

Quoting WIederling (Reply 19):

A culture purely based on "winning" will start to use every means to "win". Fairness will go overboard.
Sabotaging other participants and competing in orthogonal ways is oftentimes much easier than
competing in the core domain.

Business is a game and you play games by the rules. When you don't, you run the risk of penalties.
-Doc Lightning-

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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 6:26 pm

From the previous thread:

Quoting Mat6461 (Reply 97):
As an aside - maybe another thread? - what is enabling Airbus to compete so well on A350 vs. 787 price? Conner says Airbus offered the A350 for less than the 787-10. DL reportedly got the A359 for $115mn while Boeing held firm at $125mn for the 789. How is that possible for a bigger plane with more expensive engines? Granted, the USD is high right now but still... Is Airbus perhaps doing market share grabs via pricing? Is Boeing perhaps having trouble accepting its deferred balance as a sunk cost and insisting on too-high profit margins for 787 sales?



Three things, I think. And you mentioned two:
1) 787 deferred cost. The 787 program should by now (LN400 or so) have been very cash positive. However it is just marginally getting cash positive. And the positive trend curve isn’t looking very promising either. And that cash positive is going to balance the deferred cost for a very long time, so Boeing isn’t in a strong position to drop their selling price at production system matures.

2) Airbus has been working and building towards a much worse dollar/euro exchange rate for the better part of the last 15 years. By now that (ancient) rate is in their vanes and blood. And now they are ready to reap the benefits.


3) One should not forget that the A350 is the very first plane developed and produced by Airbus as a real commercial venture. All previous programs had some for of European-job-creation-scheme in them. While I don’t really subscribe to that line of thinking, one can’t really ignore that a lot of important decisions (some of which went all the way back to initial design and development) in terms of work share balancing between countries, have starting to hurt in commercial sense. Look no further than the A380 FAL/furnishing situation, or even the split in A320 series production between Hamburg and Toulouse (surely a Renton style set-up must be (much) more efficient and lean).

Airbus has learnt a tremendous amount of lessons and put that into excellent use in the A350 development and production system. Think for instance fuselage paneling (rather than barrels), production system that allows installation of cabin monuments before FAL. The industrialization of A350 production is so much better and well thought out without the hindrance of workshare balancing.

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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 6:53 pm

Quoting PW100 (Reply 26):
or even the split in A320 series production between Hamburg and Toulouse (surely a Renton style set-up must be (much) more efficient and lean).

I dont think without TLS/XFW they would have been as successful in setting up FALs in China and the USA.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 6:57 pm

Quoting DocLightning (Reply 15):

Lesson from the former CEO of General Electric:

"When you achieve success in business, of course the money follows, but that should not be your objective.

Your objective should be to win. Win win win. Every time. Not some of the time."

So when Airbus has 60% of the market and Boeing has 40%, Boeing failed to win.

I think this needs to be applied with context and not as a blanket statement. Boeing is winning. They are a profitable business and the 737 is without a doubt a huge money maker and profit center for them. In fact, I don't the 737 can be seen as loss or failure on any level, certainly not financially. To the A320 in terms of future order book market share? Fine, but that doesn't make it a financial (gross revenue or net income).

This site always gets lost comparing other products or businesses to Airbus vs Boeing. They have a duopoloy. An airline is either going to buy 1 or the other. No other options. There are not incentives for drastic new changes, only gradual improvement. Maximizing the efficiencies from an existing airframe. Economies of Scale are massively at play.

As soon as one order book gets to backlogged or one plane gets too pricey, airlines will order the sooner available plane or the less expensive one.

The plane with a higher OpEx will have a lower CapEx and the reverse. Etc.

Point is, with only 2 options, it is going to be a back and forth over time between Airbus and Boeing.

Oh and when this bubble bursts and travel / growth pull back (it always does) / interest rates rise- offering a fully amortized or near that 737 (or A320) for less than a radical shinny new design will fair far better for Boeing, Airbus, Airlines and passengers.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 7:00 pm

Quoting seahawk (Reply 24):
The 737 and the A320 are so optimized right now that making as new airframe with new wings more than 3-5% better (and 5% is ambitious imho) will be a big challenge costing lots of money. Producing this new frame at the same rate will be even more of a challenge. As long as engines improve 5% in 5 years, a new airframe is only worth the effort if you have no old frame to use or if your old frame has serious drawbacks that make it no longer competitive. There are good reasons Boeing went with the MAX and there a good reason the 777X is not a 797. If you look at a new design the fuselage alone will cost you about 40% of the whole development costs, while it might improve your efficiency by 2% only. So you invest 12 billions into a new plane, the competition invests 6,5-7 into a new engine and wing (similar in efficiency to yours) and they end up 1-3% less efficient. You need very high fuel prices to make turn that into a market advantage, but with so high fuel prices the market will be growing slowly and the demand for new planes will be low. (and that assumes that you can achieve similar production costs with all your new high end technologies used, which itself is very unlikely for the first years)

I know Boeing has been lambasted here on Anet for not going new when the NEO came out, but in hind sight, it was a very smart move. Yes, they are getting beat in the 180 pax segment, but they are holding their own in the 150 pax. Its just a tube with wings, and yes, sometimes putting new gen engines and wings on a 1960s tube is good enough.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 7:13 pm

Quoting william (Reply 29):
Yes, they are getting beat in the 180 pax segment, but they are holding their own in the 150 pax. Its just a tube with wings, and yes, sometimes putting new gen engines and wings on a 1960s tube is good enough.

I honestly do not understand the 9Max crisis in the first place. The 900 was not selling like hot cakes, so why should the 9MAX? It has inherited all the reasons airlines preferred the 800 over the 900 and it still has the same (or looking at the 200MAX even less) capacity delta to the 800/8Max. Sure Airbus is taking the 757 replacement market with the A321, but they did so with the CEO already.
If anybody at Boeing is surprised that the 9MAx is not doing well against the A321NEO, they must have been listening to their own marketing too often. No, the A321NEO has not allowed Airbus to catch up to the 900, the 900 was never competitive against the A321 and is even less today. But that is no surprise and should have been expected even before they launched the MAX. If they wanted to fix it, the need for a new MLG should have been plainly obvious.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 7:18 pm

Quoting seahawk (Reply 24):
The 737 and the A320 are so optimized right now that making as new airframe with new wings more than 3-5% better (and 5% is ambitious imho) will be a big challenge costing lots of money.

A new 737RS will probably need to have some radical design changes to attain 10-15% reduction in fuel use. The fuselage may need to be contoured into a partial lifting body. This is part of the design proposed by MIT that involves a reinforced tensioned, contoured, double-bubble design with top-mounted engines with boundary layer ingestion. MIT's proposal suggests a whopping 70% reduction in fuel use. Whether that's practically realistic is unclear, but it would be a major improvement even if it were a reduction as "small" as 30% per ASM.

It would be hideously expensive to develop. It would also stop the A320. In its contrails.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 7:59 pm

Quoting Amiga500 (Reply 7):

I think Boeing have to stop looking at a plane that will beat the A320 out of the water, but accept they will have to invest many billions in getting an airframe that can:

1. compete favourably with the A320 line in COC [pretty much a role reversal of where we are right now would be acceptable].
2. compete advantageously with the A320 line in maintenance.
3. compete advantageously with the A320 line in passenger experience [cabin storage/space].
4. compete advantageously with the A320 line in build costs [after learning curve plateau].
5. allow for upgrades to keep the airframe competitive over the next 80 years [looking at 3-5 engine changes in that time, so a potential fan diameter increase of up to 50%].

From what I've read it seems a 15% improvement in L/D from the A321neo isn't unfeasible. Factors that could achieve it:

-Lower wingloading for optimal initial cruise FL35 instead of FL31
-Higher AR wing
-CFRP smoothness - reduction in skin drag
-Latest FBW tech enabling smaller empennage

A321's L/D is around 18 IIRC. Matching the A330's ~21 L/D doesn't seem crazy.

An NSA/MoM that is 15% bigger than A321 should gain a bit of structural efficiency from CFRP, from empennage size, and from being optimized around ~2025 engines (lower per-pax MTOW at equal range, thus less wing, MLG, engine, empennage per pax). Say, idk, 7% better structural efficiency.

By ~2025 engines should have 15% lower SFC than today's GTF/LEAP, per Bjorn's analysis.

Combining 15% lower SFC, 15% higher L/D, and 7% better structural efficiency gets to a step change in fuel burn pretty quickly. Even if we relax those deltas to 10/10/5 we're already at ~25% fuel burn improvement.

The big question then is development cost and, flowing from that cost, necessary sales price of the new bird.

And that's where I could see Russia and/or China disrupting the market.
The tech for a new smallish plane that obsoletes the A320/737 is there; the only obstacle is development and recurring cost.
Russia is developing the MC-21 for only $4.6bn. Even if they overrun on cost that's half or a third of what A and/or B would project for a clean sheet design. http://sputniknews.com/world/2014021...Spend-46Bln-on-MS-21-Airliner.html
Their recurring costs should be lower as well.

Is the MC-21 going to obsolete the A321neo? Obviously not.
But with Russia/China cooperation on that new midhaul widebody, the path to knowledge transfer is there.
As long as there's a technical solution far short of the world technology frontier (will be true of NSA/MoM in a few years), there's always a threat that Russia/China/Brazil could upend the market by implementing well-proven tech at a lower cost than A/B.

...which might give Boeing and/or Airbus grounds to move first and head off the threat. I don't see that happening under current management but who knows...

Quoting PW100 (Reply 26):
And that cash positive is going to balance the deferred cost for a very long time, so Boeing isn’t in a strong position to drop their selling price at production system matures.

I'm just going to stick a toe in these waters... My point is that Boeing IS in a position to drop the selling price because the deferred balance is a sunk cost.* If they're not behaving rationally regarding sunk costs (i.e. ignoring them) then this is something they should change immediately, not continue. The fact that the 787 has lost a ton of money *in the past* should have no bearing on Boeing's optimal pricing strategy today.

*assuming A350 pricing for EVA and DL were not anomalous. If they are anomalous, then Boeing was probably right to cede the DL deal and bend a bit for EVA.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 8:08 pm

Quoting DocLightning (Reply 31):
A new 737RS will probably need to have some radical design changes to attain 10-15% reduction in fuel use. The fuselage may need to be contoured into a partial lifting body. This is part of the design proposed by MIT that involves a reinforced tensioned, contoured, double-bubble design with top-mounted engines with boundary layer ingestion. MIT's proposal suggests a whopping 70% reduction in fuel use. Whether that's practically realistic is unclear, but it would be a major improvement even if it were a reduction as "small" as 30% per ASM.It would be hideously expensive to develop. It would also stop the A320. In its contrails.

Wow, a 21st century Lockheed Constellation   I'll be looking forward to it   

Just note that stretches and shrinks would require much more engineering under that design mindset...
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 8:32 pm

Quoting diverdave (Reply 22):
Everybody is acting like air travel will continue to grow exponentially for the next 20 years.

History would indicate otherwise.

Predictions/projections never have disruptive events integrated.
.. and how could one. ( one could introduce some "smeared" stunting of growth?).

But projections are there to show a future. Depending on partisanship there are
over optimistic or overly pessimistic but rarely neutral disseminations around.
Murphy is an optimist
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 8:42 pm

Quoting KELPkid (Reply 33):
Just note that stretches and shrinks would require much more engineering under that design mindset...


Yeah, that's the big drawback to a non-tube design. If it's contoured, the entire contour has to change if the length changes.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 8:46 pm

Quoting airzona11 (Reply 28):
I think this needs to be applied with context and not as a blanket statement. Boeing is winning. They are a profitable business and the 737 is without a doubt a huge money maker and profit center for them. In fact, I don't the 737 can be seen as loss or failure on any level, certainly not financially. To the A320 in terms of future order book market share? Fine, but that doesn't make it a financial (gross revenue or net income).

I think that's a bit of a glib viewpoint. Yes, the 737 order book is large, but fuel prices are currently low and demand for aircraft is currently very high. That's not going to be the case forever. The MAX was the correct decision IMO, but to an extent it is just kicking the can down the road. At some point the 737 is going to run out of steam and Boeing are going to need to blink first and do a clean sheet. This gives Airbus a significant advantage.

Does this hugely matter now? Of course not; the 737 is still generating plenty of money. It does matter 15-30 years from now though, and the right decisions need to be made today to ensure Boeing is able to prevent this decline in market share from becoming a trend. Right now, with the layoffs and share buybacks, I'm not sure they're doing that.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 9:10 pm

Quoting zckls04 (Reply 36):
Right now, with the layoffs and share buybacks, I'm not sure they're doing that.

Boeing says they do not plan any involuntary layoffs at this time. I agree stock buybacks are a poor use for capital.

David
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 9:21 pm

Quoting diverdave (Reply 37):
Boeing says they do not plan any involuntary layoffs at this time.

That may well be true (although it's also true that involuntary layoffs are nearly always prefaced with the same claim), but from the vibes coming from Boeing, this just doesn't feel like part of a long-term strategy. It feels like a knee-jerk move to cut costs to pacify the shareholders. Voluntary redundancies are also a great way of letting go of the most talented people in your organization.
Four Granavox Turbines!
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 9:32 pm

Quoting airzona11 (Reply 28):

I think this needs to be applied with context and not as a blanket statement. Boeing is winning. They are a profitable business and the 737 is without a doubt a huge money maker and profit center for them.

In that case, there is no game since both sides are always winning.
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 9:41 pm

Quoting DocLightning (Reply 39):

In that case, there is no game since both sides are always winning.

Well, that's the danger inherent in a duopoly: stagnation. We've seen it in other industries...and that's why I think that there desperately needs to be a third viable contender in A and B's game  
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 9:51 pm

Quoting Matt6461 (Reply 32):
Combining 15% lower SFC

Also available to a competitor.[/quote]

Quoting Matt6461 (Reply 32):
15% higher L/D, and 7% better structural efficiency

replace and with or in this statement. The two do kind of play off against each other, I would be very surprised to get a15% better l/d and 7% less weight per pax.

Quoting Matt6461 (Reply 32):
Even if we relax those deltas to 10/10/5 we're already at ~25% fuel burn improvement.

Actually turns out more like 0/5/5 - 0/10/0. Even if you do get to 15% reduced fuel burn you have capital costs to take into account. An accounting block of 3000 and development costs of $20bn you add about $6-7m per frame which on a $50m standard NB plane is about 15% more capital for 15% less fuel burn. We see why Boeing didn't make the leap ( no pun intended).

Fred

PS my phone keeps auto correcting Boeing to boing, so sorry if it reads funny.
Image
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 10:03 pm

Quoting flipdewaf (Reply 41):
I would be very surprised to get a15% better l/d and 7% less weight per pax.

Fair point. A higher AR and lower wing loading costs weight.

Nonetheless, on a per-pax basis, I could see a plane optimized around new engines and larger capacity being lighter per seat than the A321neo, as well as having better L/D. This is because the wing and span-loading *per pax* will be lower if optimized for lower mission fuel burn and thus lower operating weights. A NEO2 could have the same engine but won't be optimized for the mission weights. Plus I've read that a clean sheet would have smaller empennage due to relaxed stability enabled by FBW.

Quoting flipdewaf (Reply 41):
Even if you do get to 15% reduced fuel burn you have capital costs to take into account. An accounting block of 3000 and development costs of $20bn you add about $6-7m per frame which on a $50m standard NB plane is about 15% more capital for 15% less fuel burn. We see why Boeing didn't make the leap ( no pun intended).

Right. That's my point, though. If the only obstacle is development cost, while the technological path is clear, at some point Russia/China/Brazil could probably implement the tech, maybe minus 2-3% fuel efficiency, and steal the market. Their developments costs appear to be lower and, for China and Russia at least, government subsidy is more available.

...IMO the U.S. should just cancel the new bomber and fund the NSA, MoM, and Y3.  
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 10:19 pm

Quoting KELPkid (Reply 40):
Well, that's the danger inherent in a duopoly: stagnation. We've seen it in other industries...and that's why I think that there desperately needs to be a third viable contender in A and B's game  

I agree. Something needs to disrupt the duopoly of commercial airliners.

Quoting DocLightning (Reply 39):
In that case, there is no game since both sides are always winning.

That is the perfect summary, in my opinion. Obviously we are all aviation enthusiasts on this site, but it is the same as iOS vs Android, each claiming to be first mover/faster/sexier/simpler, but they are really only stealing business from each other at this point.

Not to go too far down the rabbit hole, but realistically, there is no technological (yes there are regulatory reasons) reason, that cockpits cannot be standardized (software that is agnostic to Airbus/Boeing) so that pilots can fly both, type ratings not needing to be manufacturer specific. Then we get to a really drab future: Airbus and Boeing partner and build planes together.
 
trex8
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 10:39 pm

Quoting airzona11 (Reply 43):
Then we get to a really drab future: Airbus and Boeing partner and build planes together.

Well B did approach the parent companies of A in the 90s to build a new VLA.
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Tue Apr 05, 2016 11:11 pm

Quoting diverdave (Reply 22):
Everybody is acting like air travel will continue to grow exponentially for the next 20 years.

The middle class is expected to add 3 billion. India, Indonesia, Africa, and South America. Look at the trade growth of Vietnam. Why do you say otherwise?

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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Wed Apr 06, 2016 12:01 am

Quoting Stitch (Reply 16):
Even if Airbus has taken a permanent lead in the current generation of narrowbodies

I think the problem with the current arguments is that they are based upon our observation of orders received in relatively short space of time.

We also haven't considered the types of contracts used by each OEM and how each OEM promotes its value equation for the customer. We only have to look at recent comments by Alaska Airlines stating the VX A320NEO order has very favourable cancellation provisions ($26 million) to understand that an order for 40 aircraft comes with relatively low risk.

The question I keep asking myself is how can it be possible for so many airlines to order aircraft in numbers that are totally unrepresentative of their current fleet size. We have quite a few airlines who have ordered more aircraft than what they currently operate. Sure, some airlines will take all of the ordered aircraft, but to expect all of the airlines to take all of the aircraft ordered is just a little over optimistic in my opinion.

For example, if we look at the current situation with AirAsia who have a current fleet of 180 aircraft and outstanding orders for 41 A320CEO & 300 A320NEO we have an airline that has orders for aircraft 1.9 times larger than its current fleet. Even if we consider a ten year replacement cycle and 3% compounding growth we still have an order cycle with deliveries in the 2025-2030 period. As has been reported in the media recently AirAsia currently has quite a few liquidity issues, being over exposed to its franchises in Indonesia, Philippines and Thailand where it not only supplies their aircraft (through its holding company), it has also provided loans that in all probability the franchise airlines will not be able to repay. If AirAsia has a financial turn of events like TigerAir experienced, it will not be taking new aircraft for a very long period of time.

The A321/B737-9 battle is interesting and again I don't think we have all of the data to come to concrete conclusion on the outcome. I do see these aircraft being in two very different market segments and as such we are not comparing apples with apples. For instance the B737-9 is a smaller aircraft and is less optimised for longer flights. I'd suggest part of the A321 success story is based around there being a real segment for an aircraft in the 757 size and range space and that the A321NEO is the only aircraft that currently fills this void. The question becomes, as many analysts have already asked, how big is this space?

If we consider the A320 and 737-8 models have been selling in similar numbers, the MAX200 is a relatively new model in the MAX lineup and still has sales opportunities in front of it, we start to see the see-saw nature of the NEO/MAX battle.

To throw a curve ball into the picture, if we consider the growth of LionAir and specifically the growth of its affiliates in Thailand and Malaysia, we actually have a situation where an LCC airline is able to grow by stealing market share away from established LCC's instead of the legacy carriers. This is important, because once the LCC/Legacy carrier mix normalises LCC's will be competing with each other instead of the legacy carriers for market share. There is anecdotal evidence LionAir who predominantly operate the current generation 737-900NG have been able to compete (clip their wings) at the expense of established LCC's operating the A320CEO. The difference could well be the 737-900NG has a unique position in the market where it has a CASM advantage that does not overly affect its turn times, making it a formidable competitor in the short haul LCC space.

Time will ultimately tell!

[Edited 2016-04-05 17:04:55]
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Wed Apr 06, 2016 12:07 am

Quoting lightsaber (Reply 45):
The middle class is expected to add 3 billion. India, Indonesia, Africa, and South America. Look at the trade growth of Vietnam. Why do you say otherwise?

3 billion - Interesting.

In any case, I'm skeptical because the future is rarely as rosy as growth projections. I'm no Thomas Malthus, but everything can't grow to the sky.

I would love to find it on-line, but I remember a Thomas Sowell column from some years ago. He worked at a large corporation (I think AT&T) and as I recall, he ended up working with the folks who projected that corporation's business into the future. The unit had been doing this for quite a while, and Thomas suggested that the unit dust off their old projections and compare them to what actually happened. He said they looked at him like he was from Mars. He then realized that the unit knew their projections bore no resemblance to what actually happened, but they did them anyway as that was their job.

Another GFC or oil shock or a nasty recession could take a bite.

David
 
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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Wed Apr 06, 2016 12:30 am

Boeing has more employees per airplane built. They'll have to correct that. I'm skeptical of the LEAP-1B low turbine efficiency, but far from writing off the type.

Airbus improved their relative efficiency vs. their major competitor. That will help their sales. But how much is the weak Euro helping fund R&D?

I'm a Pratt fan, but it is *far* too early to call the decision with the HUGE backlogs out there. We'll get to debate for years.

Quoting travelhound (Reply 46):
and 737-8 models have been selling in similar numbers, the MAX200 is a relatively new model in the MAX lineup and still has sales opportunities in front of it

I agree, the 200 MAX is in a unique position. There will be a huge number sold.

Quoting diverdave (Reply 47):
The unit had been doing this for quite a while, and Thomas suggested that the unit dust off their old projections and compare them to what actually happened. He said they looked at him like he was from Mars.

I started a thread showing how Boeing's 1996 CMO wasn't optimistic enough. Over and 20 year horizon, history has show faster growth than the CMO. If you have data otherwise...

Trip Down (Narrowbody) Memory Lane: 1997 CMO (by lightsaber Apr 3 2016 in Civil Aviation)

Some industries grew during the great depression.

Quoting diverdave (Reply 47):
Another GFC or oil shock or a nasty recession could take a bite.

Oil shock with Iran entering the market?!?
GFC? Probably will happen again. As long as trade is allowed, aviation growth will happen.
GFC=nasty recession. So already answered.

In general, optimistic businesses outgrow pessimistic and thus have the resources in a downturn.

There will be further *spectacular* airline failures. There aircraft found homes in the past and will in the future.



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RE: Leeham: Boeing Has Lost Neo/MAX Battle Pt 2.

Wed Apr 06, 2016 5:32 am

15% better than todays engine by 2025 - sorry but no.

The next generation expected to be ready for EIS around 2020 might give 5% better than current engines just entering service, but 3% at best compared to the pip´ed engine available by the time.

By 2025 we might find another 5%, which then translates to 10% max and probably 6-7% compared to the pip´ed engine.

By 2030 there is the next step and that is where it starts to get interesting when you look at max 15% improvement and well over 10% in reality. (which is only true if nobody does a larger up-date on the GTF, a new hot section could change this dramatically)

One should really be realistic, the CFM56 first flew in 1974 and the GTF (with all other NEO mods) beats it by up to 20%. And now engine should beat this GTF by 15% in just 10 years? And this delta is always careful to use pre Tech56 and pre CFM56 "Evolution" standard engines.

Same thing with the magic CFRP smoothness. Well that simply is no factor. If I want to I can place drag reducing foil on the metal frame and be even better. But this has been tried and the normal dirt (insects) sticking to a plane makes this kind of moot. This is no different for a CFRP plane.

Neither has CFRP so far shown the idealised weight reduction it promises. If you look at the 787 and compare it to the early 1980ies design of the A330 it is not impressive for the effort.

Imho it obvious that there is no option to move before the early 2020ies for Airbus or Boeing when it comes to an new single aisle design and the EIS will be close to 2030. Only then they will have the engines and the production technology to make a new single aisle work. (and that means producing it at acceptable costs and in needed numbers - which means mature production technologies)

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