We’re back from what we had planned as a holiday hiatus. This was interrupted by the IAM-Boeing 777X contract issue, of which we felt compelled to initiate some special posts.
This leads off our 2013 Year in Review.
IAM-Boeing 777X Contract
Although it was not voted by Readers as the most important story of 2013, nor did it even make the Top Three, its importance can’t be understated. The relationship between the IAM 751 District, which represents Boeing “touch labor” workers in Puget Sound (and in limited numbers, in Oregon and elsewhere), is to put the best face on it, dysfunctional. Relations hit a lot point in 2008, with a 57 day strike, and 2009, when Boeing elected to put 787 line 2 in Charleston. We thought, as did many others, that 751 and Boeing entered a new era in 2011 when an agreement was reached extending the 2012 contract to 2016 in exchange for locating the 737 MAX construction in Renton. As it turns out, this guarantee had less promise to it than was thought; Boeing is using this assembly as a stick (or a carrot) in the current 777X contract proposal.
If the 777X is not assembled in Washington, this will likely mark the beginning of a serious migration of Boeing from Washington. What’s been happening up to down, with 787 Line 2 and a series of jobs relocations, is peanuts compared with what will happen as airplane programs wind down and Boeing has clean-sheet designs in the next decade.
Failure of 751 and Boeing to come to some accord (not necessarily one based on the January 3 contract vote) has grave implications for IAM jobs and aerospace in Washington.
Top Story of the Year
Readers voted and we agree that the top commercial aviation story of the year was the three month ground of the 787. Except for the Concorde, a special and highly limited case, there hadn’t been a grounding of a commercial jet since 1979 with the McDonnell Douglas DC-10. With only 50 787s in service at the time of the grounding, global disruption was limited but the number of 787s scheduled for delivery during this time magnified the global implications. Japan Air Lines and its rival All Nippon Airways, with more 787s in service than any other carrier, were disproportionately affected. The grounding may have helped influence JAL to break the Boeing monopoly and buy Airbus with the A350-900 order.
ANA is still considering a major order and having lost JAL to Airbus, Boeing can be counted on being motivated to cut virtually any deal on any terms and conditions to avoid losing ANA.
A350 and 777X
A mere handful of votes separated the first flight and flight testing of the A350XWB with the launch of the 777X. The A350XWB barely topped the 777X as the second most important story of 2013.
Flight testing by all accounts is going well. Airbus officials are so far sticking with an entry-into-service for next year, but when is a moving target. Officials initially said mid-year, then September then November or December. Based on customer comments, we moved EIS to 1Q2015 in our estimates months ago, perhaps January.
In mid-December, the new American Airlines did what we had expected: it dropped the US Airways order for the A350-800, swapping it into the A350-900. The days of the -800 are numbered, and we think this subtype will follow the 787-3 into oblivion as early as 2014.
Boeing finally launched the 777X in November at the Dubai Air Show. The launch was really anti-climatic: Lufthansa Airlines had already become the first customers in advance of the air show, but Dubai provided the well-expected, high-profile order of 150 from Emirates Airlines and more orders from Qatar Airways and Etihad Airlines. On December 20, Cathay Pacific Airways ordered 21 777-9s, giving Boeing some 280 orders and commitments for the airplane. How many of the commitments will actually be firmed up by the end of 2013 is something we’ll all know in early January.
CSeries First Flight and Flight Testing
Bombardier came in at a distant fourth in the Reader tally with the first flight of the CSeries. This is BBD’s attempt to leap into the Big Leagues, challenging Airbus and Boeing directly at the small end of the mainline jet market. First flight was delayed three times and the flight test program has been slow off the mark. Flight Test Vehicle 2 is behind schedule entering the program and, we believe, so is FTV 3.
Bombardier long said that EIS would be 12 months after first flight. Following the September 16 launch of FTV 1, BBD stuck with this plan publicly. This meant EIS would be September 2014.
Not a chance.
We already had moved EIS to 1Q2015 by the time BBD CEO Pierre Beaudoin told the Toronto Globe and Mail in November that EIS was still a “good year” away.
We now have EIS in 2Q or 3Q2015 in our estimates. BBD’s year-end earnings call is February 11. We expect an EIS update from the company at that time.
Other Stories
All other nominees for 2013’s Top Stories were also-rans to Bombardier. Here are the results at December 29.
Answer | Votes | Percent | |
---|---|---|---|
Airbus A350 XWB has first flight and enters testing | 168 | 20% | |
Airbus A380 gets big order boost from Emirates | 16 | 2% | |
American Airlines and US Airways merge | 39 | 5% | |
Boeing 777X is launched | 164 | 20% | |
Boeing 777X Site Selection competition | 43 | 5% | |
Boeing 787 is grounded | 258 | 31% | |
Boeing 787-10 is launched | 11 | 1% | |
Bombardier CSeries has first flight and enters testing | 74 | 9% | |
Embraer launches E-Jet E2 | 3 | 0% | |
IAM 751 rejects 777X Contract Nov. 13 | 33 | 4% | |
IAM International Forces Vote on Second 777X contract offer | 24 | 3% |
Posted on December 31, 2013 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, IAM 751, International Association of Machinists
737 MAX, 777X, 787, A350 XWB, Airbus, All Nippon Airways, Boeing, Bombardier, CSeries, Dubai Air Show, Emirates Airlines, Etihad Airlines, IAM 751, International Association of Machinists, Japan Air Lines, Lufthansa Airlines, Qatar Airways
This is self-explanatory. We’ll publish the results December 31.
Feel free to nominate other stories in Reader Comments.
Posted on December 23, 2013 by Scott Hamilton
Airbus, Airlines, American Airlines, Boeing, Bombardier, CSeries, Embraer, IAM 751, International Association of Machinists, US Airways
777X, 777X site selection, 787, 787 grounding, 787-10, A350 XWB, A380, Airbus, Boeing, Bombardier, CSeries, E-Jet E2, Embraer, IAM 751, International Association of Machiniists
Update: Ray Conner, CEO of Boeing Commercial Airplanes, issued a letter to employees today. It is reprinted in full below the jump.
Original Post:
COMAC’s C919: This is China’s entry to compete with Airbus and Boeing in the 150-175 seat market sector. Aviation Week has a long report about the difficulties COMAC will likely have getting certified in the West and suggests that the airplane will largely be confined to flying by Chinese airlines.
IAM-Boeing, continued: In what has become a daily ritual, here is more news about the ongoing IAM-Boeing saga.
The case for the CRJ: Aviation Week has an interview with Bombardier’s Guy Hachey about the future of the CRJ. Flight Global has this story about the anticipated prospects of the CSeries in China.
Posted on December 17, 2013 by Scott Hamilton
How did Boeing win the Air Canada mainline 150-200 seat jet order when only a couple of weeks ago Flight Global reported the Airbus won the deal?
We, too, heard that Airbus seemed to be the favorite, but the information was soft. We’re not rapping Flight Global—undoubtedly it was confident in its sourcing, but this just shows that a situation can change dramatically and quickly.
We’ve been following the competition for months, behind the scenes, and here are factors we understood that were involved.
Posted on December 11, 2013 by Scott Hamilton
Air Canada snubbed Airbus with its mainline jet fleet renewal and ordered up to 109 Boeing 737 MAXes. The initial order is for the 8 and 8 MAX, with the ability to swap for the 7 MAX. The deal includes the provision for Boeing to purchase up to 20 Embraer E-190s, which would be replaced by the 7 MAX, apparently.
But Air Canada is keeping open the prospect of replacing the other 25 E-190s with a new jet or to keep operating them. Bombardier hopes to win this segment of the order.
This is a big win for Boeing and one of the rare times Boeing has displaced Airbus in the MAX v NEO competition of an incumbent Airbus operator.
The Air Canada press release is below the jump.
Posted on December 11, 2013 by Scott Hamilton
From EADS’ Investors Day 1: Airbus parent EADS is having two days worth of briefings for aerospace analysts. Here’s initial news coverage from Day 1:
Reuters: EADS strategy stresses Airbus
Reuters: EADS IDs new dividend policy, A350 target
Illinois and 777X: Add the Prairie State to those submitting bids to Boeing for the 777X assembly site. Illinois was previously not included in any list that we saw.
Air Canada: The airline’s Board of Directors meets today to ratify staff recommendations to replace the Airbus A319/320/321 fleet. Airbus and Boeing are competing with their A320neo and 737 MAX families. This competition is said to be only for the 150-200 seat sector. A separate decision for the 100-149 seat sector is expected to come next year. Bombardier hopes to win that part of the deal.
Update, 10:30 PST: The Wall Street Journal says Air Canada and Boeing are negotiating a deal for 50 737 MAXes.
Update, 11:15am PST:
LOT gets $33m from Boeing: Reuters reports that LOT Polish Airlines will receive $33m from Boeing for the 787 problems. Payments will be in cash, the news agency says.
Posted on December 11, 2013 by Scott Hamilton
There are some key events to follow today through Thursday:
December 10: The Requests for Proposals for the site selection of the 777X are due into Boeing today. Media will be trying to find details, but Boeing certainly won’t be talking. Nor do we expect states to be doing much talking, either.
Boeing says there will be a decision early next year; we are hearing the end of January, but this information is very soft.
December 11: EADS, parent of Airbus, begins two days of its Global Investors Day briefings.
Air Canada’s Board of Directors is to meet to decide on replacing its large, aging fleet of Airbus A320/321s. Airbus and Boeing are bidding. Flight Global earlier reported staff had selected the Airbus, but Air Canada denied a decision had been made. But, as with all denials, this could be carefully crafted: the Board hadn’t approved a deal, so no “decision” had been made.
We understand, but are not 100% certain, that the fleet renewal for the 100-149 seat sector remains open. This means Bombardier and its CSeries could still win a deal–or Air Canada may decide to retain its Embraer E-190 fleet.
December 12: EADS’ investors day continues, with guidance and information about the next 12 months and beyond for Airbus.
Doug Harned of Bernstein Research issued a note Monday listing a series of questions for EADS’ officials; we couldn’t sum it up better:
Posted on December 10, 2013 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Embraer
737 MAX, A320NEO, A330, A350, A380, Air Canada, Airbus, Bernstein Research, Bombardier, CSeries, E-190, EADS, Embraer
Boeing/IAM attempts: Efforts are underway to bring Boeing and IAM 751 back to the table, reports The Everett Herald. The news is not unexpected; we wrote upon the IAM’s rejection of the Boeing contract offer in connection with the 777X site location that efforts were sure to come. The Herald reports who is trying to bring the parties back to the table, and has some details about the attempt.
But as yet, Boeing is not coming back, although 751 leaders are willing to return, The Herald reports. Notably in the article, Alex Pietsch, director of Washington State’s aerospace department, is “not optimistic,” but only “hopeful.”
Efforts by other states to win Boeing’s business are accelerating. Bloomberg neatly summarizes this part of the story.
Bombardier changes gears: Bombardier changed gears yesterday when it pushed Chet Fuller out as head of sales for CSeries and replaced him with the head of its business aircraft division. The Montreal Gazette has a series of reactions to the move.
Meanwhile, a conditional order for up to 30 CS100s may be in jeopardy. The Toronto City Council appears ready to reject a request for an early decision on whether to extend the runway at the downtown Billy Bishop Airport and alter restrictions to commercial jet traffic, reports the Toronto Globe and Mail. Porter Airlines, the dominate carrier at the airport, made the request and placed the order, conditional on Toronto and the federal government agreeing to changes at the airport and its regulatory controls.
Aviation Week reports on why CSeries has flown fewer flights than other test programs, as well as the timing to reevaluate the entry-into-service.
Posted on December 4, 2013 by Scott Hamilton
A pilot’s look at Dreamlifter incident: A pilot provides some perspective how the Atlas Air crew may have landed the 747 Dreamlifter at the wrong airport in Wichita (KS) last week.
Ethiopian 787 repair: Aviation Week reports that Boeing is about 60% complete with the repair of the Ethiopian Airlines 787 damaged by fire earlier this year.
More on IAM: A Tacoma News Tribune columnist takes an analytical look at the IAM 751 vote rejecting the Boeing 777X contract.
The Missouri Times reports that IAM District 837, which represents workers at Boeing’s St. Louis plant, is maybe considering the same labor pact IAM 751 (Seattle) rejected.
Toronto may delay City Airport decision: The Toronto City Council may delay approving the Porter Airlines request to extend the runway at Billy Bishop Airport, aka City Airport. There are several reasons, including the fact that the Bombardier CSeries flight testing is still in its early stages. Porter has a conditional order for up to 30 CS100s, but the condition is that Toronto change its rules to allow commercial jets at the airport and extend the runway. The CS100’sa noise footprint is a critical issue, and this won’t be certified until at least May, according to The National Post. The deputy mayor of Toronto nonetheless urges a vote next month.
Humpback Whale: It’s not aviation, but this YouTube video of an encounter (not ours) of a humpback whale is extraordinary.
[youtube=http://www.youtube.com/watch?v=SQBxGQKYqkE&w=560&h=315]
Posted on November 28, 2013 by Scott Hamilton
Pursuing Boeing, IAM: Washington Gov. Jay Inslee told KING5 News (NBC, Seattle) yesterday that he will ask Boeing and the IAM to go back to the bargaining table to reach a deal on the contract extension that would build the 777X in Washington. This verifies our prediction the night of the IAM vote rejecting the contract with a 67% result.
We believe other politicians, such as US Sen. Patty Murray, will do likewise.
We think this will be an uphill climb for Washington to wind up with this production. A former state Legislator thinks the state should stop ponying up incentives for Boeing.
On a related issue, we’ve previously reported that Washington’s proposed environmental protection of salmon threatened to make Boeing an endangered species in the State instead. Crosscut, a political web newspaper in the State, reports today that this issue apparently has been solved.
Standing by CSeries: Bombardier’s CEO brushes off skeptics of the CSeries and its small number of flight tests compared with other programs. The Toronto Globe and Mail reports. No surprise there. But did he give a hint on the entry-into-service date? The Globe writes:
On Thursday, Mr. [Pierre] Beaudoin stood by his forecast. He noted that the company has 177 orders so far and “we still have a good year to go before our first delivery.” (Emphasis added.)
BBD has always said EIS would be 12 months after first flight, which was September 16. Beaudoin’s remark suggests this schedule has now slipped at least two months and possibly more. Most analysts believe EIS will be in the first quarter of 2015 rather than late 2014, a timeline with which we agree.
A380’s future: The Economist has an analysis of the future of the Airbus A380. Separately, Airbus explains to AIN Online why it thinks A380 sales will pick up.
Wrong landing: That landing by a Boeing Dreamlifter, operated by Atlas Air, could have impacted the 787 program if the plane had been damaged and put out of service, reports The Tacoma News Tribune.
Yank: Every once in a while we get struck by an irreverency we just can’t resist. We noted a story in The Seattle Times about research by Bill Gates (yes, of Microsoft fame) into developing new condoms. One contestant (no kidding) remarked on developing a stronger condom, “I could yank all day and it won’t break.”
Posted on November 22, 2013 by Scott Hamilton