Airbus and Boeing must at this moment be giving more praise than ever for their evergreen cash producers, the A320 and 737 series. With these having high delivery rates and long order books the manufacturers will be wondering just how long they can spin them out without having to go through the cash drain of developing real sucessors.Airbus said at Shanghai that they will re-engine the A320 but if Boeing were to trump them with a true 737 replacement how long could a re-engined 1970s design hold its own before they would have to take the same expensive route? At the same time the airlines will be asking themselves how long they can order more of existing models without finding themselves to be the last customer before shiny, new and more economical replacements overtake them?
For now though these cash machines are the saviour of both companies, enabling them to absorb the A380's very slow production buildup and the 787 "Nightmareliner"'s ongoing delay into service, three years late and counting.
How long can the customers hang on? The A380's delivery rate which was at last about to reach 20 in a calendar year could be hit again by the need to redistribute new build engines to replace ones affected by the recent uncontained failure. This could knock on into at least the first part of 2011. The 787 meanwhile looks to be sliding towards a late 2011/early 2012 service introduction.
For the A380 the blip may not be too serious as the slow production has meant that these are early days for the type and the backlog is healthy despite the dearth of recent new confirmed orders. The type is also young as its massive wing shows it to be in effect the "SP" of the series,- the smallest version of what could become a much larger aircraft. Emirates and Cathay in particular want to see the -900 sooner rather than later. The 787,particularly the -8,faces a different problem. Airlines tend to go for an aircraft whose size will be optimum at about midpoint of its front line service life. Had deliveries started on time three years ago the -8 would have been fine. Now,assuming a planned 10-12 years front line service, we are already 20-30% into that. Meanwhile projected growth will have pushed the midlife capacity requirement higher. OK,-there is the -9 to cover that. Fine for the original -8 customers who can make the switch but what next for the existing -9 ones? Boeing are reluctant to prematurely shorten the life of its other cash cow, the 777, by stretching the 787 still further and even if they did that would only achieve the capacity of the -200 model, leaving the -300 slot uncovered and very vulnerable to the A350. For the first time in its jet history, Boeing faces having a gap in its product range and being outflanked by Airbus with the A350 and 380 covering all needs from about 240 seats upwards. How did this happen? Management upheavals?Industrial strife? Managing extensive production outsourcing? Too many distractions?
For the airline strategists and planners the A380 delays may be irritating but are manageable as the aircraft is unchallenged in its very large aircraft slot. The 747-8 might attract a few sales at the bottom of its capacity range but Boeing has nothing above that. In some cases, despite all the noise, the global financial problems have meant that the delays are almost certainly welcome. The late arrival of the 787, originally a 767/A310 replacement poses different problems and some opportunities. Again, Boeing may be less well placed to deal with and benefit from this situation than Airbus.Airbus can offer a package of reasonably priced A330s,probably shorn of already amortised development costs ,now and A350s later ,whereas few would be interested in adding new 767s with low eventual resale values to plug the gap until 787s actually arrive. Refurbishing existing 767s is a possibility and may have to be done, but unless paid for by Boeing the payback time is too short to stack up financially.
Both of these possibilities produces further headaches down the track.The semi-widebodied 767s will simply have very little market in three to five years time unless Boeing buys them back for tanker conversions, while fleets of relatively new A330s flooding into the used market would mean low prices and the opportunity for low cost and niche competitors to buy them cheap, offsetting higher operating and engineering costs against low ownership costs.Scrapping them to keep them off the market is an option but an expensive one so would require a very low initial aquistion cost. Engine and component manufacturers wouldn't like that either as they need aircraft to age so as to make their money on spares.
All round then it looms like something of an Alka-Seltzer year end but on the face of it Airbus may be a bit more cheerful than Boeing.For the airlines, some clever footwork will be required but for the wise and nimble all is not lost and there could be some creative opportunities out there. Do we hear another "Ouch" from the manufacturers? They might consider stopping wasting time and money on suing each other over alleged subsidies and instead focus simply on producing quality aircraft on time and on spec.
