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Industry Prepares Widebody Entries as Market ‘Rebalances’

 - June 14, 2017, 11:09 AM

A downward trend in sales has hardened projections of persistently weak demand for widebody airliners at a time airframers prepare to introduce several new and derivative models to the market. Although analysts predict airlines’ seemingly insatiable hunger for new narrowbodies to continue, the category of airplanes that historically produced the highest per-unit profit margins has struggled to maintain the sales momentum manufacturers had expected following impressive volumes of launch commitments.

In the case of the Boeing 777, for example, not only has the new 777X struggled to build upon an initial spate of orders that accompanied its launch at the Dubai Airshow in 2013, Boeing has failed in its original intent to sell enough legacy 777s to sustain production at last year’s rate of 8.3 per month. Now building seven of the big twins per month, Boeing expects to slow the rate to five by August, which effectively translates to a 3.5-airplane delivery rate with its plan to “fire blanks” down the line as part of “Lean” implementation and dedicate some airplanes to 777X flight-testing.

Still, Boeing vice president of marketing Randy Tinseth prefers to characterize the current environment as one marked by a “rebalancing” of demand following a period in which deliveries spiked for both major airframers in the wake of disruptions caused by delays to the 787, A350 and A380 programs. In fact, Boeing delivered the 500th Dreamliner last December to Colombia’s Avianca, just five years and three months after sending the first 787-8 to All Nippon Airways, setting a new record time to 500 deliveries for twin-aisle aircraft. But before Dreamliner deliveries started and accelerated in earnest, production upticks of other twin-aisle models filled a gap left by the 787’s extended development.  

We went through a period in which airplanes like the A330 and 777 went up in production to fill some of the spots that were left by delays in other programs,” explained Tinseth. “I would say we’re probably in a place of more normal demand because we’ve done our catch-up work in the marketplace.”  

Although Boeing’s 787 lines haven’t felt the same sort of effect of what Tinseth characterized as a return to normalcy, Boeing’s rate hikes for the Dreamliner appear to have entered a period of moderation, likely holding at 12 per month until the end of the decade, when it hopes to see enough demand to raise the rate to 14. The latest member of the series, the 787-10, flew for the first time on March 31 and by that time had drawn firm orders for 149 copies from nine customers, a number Boeing considered acceptable for a derivative that won’t likely reach the market until the middle of next year.

I think we have opportunity for [sales of the 787-10] to grow. Long term we look at the 787-9 and 787-10 being probably more the heart of the 787 market,” said Tinseth. “But the -10 is going to be the growth vehicle for the -9, so the -9 is just establishing itself. We especially think the -10 will be great with its economics and range for Asia and for China.”

For Airbus, the A350 XWB series has just entered the phase of production acceleration the company had hoped to achieve early last year. Unfortunately, supply-chain problems associated mainly with seats and lavatories forced it to play its own game of catch-up late last year. In fact, the company nearly managed to meet its goal of delivering 50 A350-900s by year-end with a furious fourth-quarter delivery pace, reaching 49. 

Meanwhile, following a decision last year by American Airlines to delay delivery of 22 A350-900s by an average of 26 months, long-term delivery schedules for the A350 remain in flux for reasons unrelated to the supply chain. In fact, early this year United Airlines said it had begun considering alternatives to the 35 A350-1000s on which it holds a firm order and, more recently, Delta Air Lines said it had started to “review” its widebody commitments, namely orders for 25 A350-900s and 25 A330-900neos.    

Notwithstanding the uncertainties surrounding the U.S. airlines’ A350 orders, that program remains a relative bright spot for Airbus, considering the travails of the A380 superjumbo. As sales totals for the big quad-jet continue to languish, Airbus has put to rest any thoughts of launching a so-called A380neo any time in the near or medium-term future. Instead, it has introduced a new interior configuration designed to create room for 78 more passengers on average in an effort to widen its appeal to current and future customers.

Of course, every airframe maker’s primary goal lies with cutting seat-mile costs, and whether a completely new design or a derivative of a ubiquitous industry workhorse, each new airplane model promises its own set of economic benefits. Here, AIN recaps the credentials of each widebody airplane program under full-scale development for market entry over the next decade. 

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AIN 2017 New Widebodies (160K)

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