Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- The Boeing 767 Cross Section, Part 1 November 24, 2022
- Movie Review: Devotion November 21, 2022
- China will accelerate development of its commercial aerospace sector November 21, 2022
- Bjorn’s Corner: Sustainable Air Transport. Part 46. eVTOL comparison with helicopter November 18, 2022
- The economics of a 787-9 and A330-900 at eight or nine abreast November 16, 2022
USTR on subsidizing the A350
US Trade Rep. Ron Kirk was in Seattle this week and Aubry Cohen of The Seattle P-I has this story about the prospect of further European subsidies (or Reimbursable Launch Aid in Airbus jargon) for the A350.
KC-X’s latest twist: Contract after the election
Update, May 5:
The Pentagon denied the Defense News story. Here’s Defense News’ own report.
Original Post:
In a move that probably surprises no one, the Defense Department says it will issue the contract for the KC-X on November 12, which just happens to be after the November elections.
Here’s the story from Defense News.
Gollleeee. Whoda thunk it?
Tit for tat on KC-X
Stephen Trimble of Flight Global has EADS’ opening shot on talking point in Congress. It is brutally frank and takes off the gloves often kept on by Northrop Grumman in the KC-X competition.
We’ve seen–but do not yet have–Boeing’s resp0nse. We’ll post it when obtained.
Update: Boeing’s response is after the jump:
787, A350 “way over-ordered,” says UBS
In an analysis that might create heartburn for any number of people at any number of levels, David Strauss and his aerospace team at UBS Securities issued a report Tuesday (April 27) that concludes the next-generation of airplanes–the Boeing 787 and Airbus A350–are “way” over-ordered.
The “good” news (tongue-in-cheek, for those who don’t pick up on our odd humor) doesn’t stop there. UBS concludes that the Boeing 777, Airbus A330 and Airbus A320 are also over-ordered.
The Boeing 737 is under-ordered, in the UBS view, but this doesn’t relieve the concerns about this order-book, either, according to UBS.
KC-X: price dumping and assessing risk
Now that EADS said it will bid after all for the KC-X contract, questions have been raised about the possibility EADS will offer pricing that is below its costs (or “price-dumping”) to win the contract. Boeing supporters, and Boeing itself, have raised this concern.
On the other side, EADS is focusing on the fact its KC-45 is in production and in flight tests while Boeing’s proposed KC-767 NewGen is a conceptual airplane that is a riskier prospect.
How are these two particular concerns dealt with?
EADS confirms KC-X bid
Update, 500 PM PDT: Innovation Analysis Group has a 24 minute podcast on this development featuring Flight Global defense writer Steve Trimble, TEAL Group aerospace analyst Richard Aboulafia, IAG’s Addison Schonland and us.
Original Post:
EADS North America and Airbus have scheduled a press conference for 2pm EDT today. EADS NA CEO Sean O’Keefe, former EADS-NA CEO Ralph Crosby (who remains in charge of obtaining the KC-X contract) and Airbus Americas Chairman Allan McArtor are scheduled to appear.
Clearly this is the kick-off for the return of EADS to the competition.
Update, 0945AM PDT: Boeing already is on the offense, issuing a statement that the WTO ruling that Airbus, and the A330-200 on which the KC-45 is based, benefited from illegal subsidies should be considered. The Department of Defense has stated repeatedly that the WTO ruling will not be considered.
The WTO Interim Report on the EU case against Boeing is expected to be issued in June, ahead of the extended deadline of July 9 for proposals to be submitted. It is widely anticipated that Boeing will likewise be found to have benefited from illegal subsidies.
We have all along cautioned about focusing on the subsidies issues because we believed both parties will be found to have violated WTO trade rules. The Airbus report is out and the Boeing report is coming. Boeing and its supporters already have said any Boeing violations will “pale” in comparison with launch aid provided Airbus.
Whether it does or doesn’t remains to be seen, but since the underlying thesis of Boeing and its supporters is that any WTO violation should disqualify a company seeking this contract, then any violation by Boeing would disqualify Boeing. This, of course, won’t happen and therefore neither should it happen with respect to EADS (or Northrop before it withdrew).
Furthermore, DOD has reaffirmed over and over that it will not consider the WTO rulings, so all this is for Congress. This makes a sham of the DOD procurement process. The debate should be on the technical and operational merits of the offerings.
The press conference begins: