Re: Boeing in the WSJ

From:         kls@ohare.Chicago.COM (Karl Swartz)
Organization: Chicago Software Works, Menlo Park, California
Date:         28 Sep 95 03:52:48 
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> 777 could be more profitable **if**:

> (1)  There will be no further 747 derivatives, and no 600-seater.

I'd be very surprised if the 747-500 (stretched -400) doesn't appear
before the end of the decade.  However, that's a niche aircraft, and
I don't see it having a material impact on the 777.  In the same way,
some North Atlantic markets still use 747s but most of that market
has moved to 767s and other twins flying greater frequencices or
serving smaller hubs.

I don't expect any other 747 derivatives, and I think the VLCT (etc.)
is a dead duck for the foreseeable future.

> (2)  There will be a big family of 777 derivatives that will soon make
> the 747 obsolete.

This is well on its way.  The 777-200 replaces the 747-100 with a
modest seat penalty, and the B market version will replace the 747-200
with the same seat proviso.  The 777-300 will eliminate the seat dif-
ferential and with engine developments will match the 747-200's range.
The proposed 777-100 will easily outdistance the 747-400 (which itself
beats the 747SP), and while it won't have the capacity, I think it's
likely that greater frequencies will negate this problem, just as the
lower capacity of the 767 hasn't been a major problem in replacing the
747-100 across the North Atlantic.

Higher frequencies across the Pacific might seem to be a problem for
some of the airports that are already overtaxed, e.g., NRT, but there
is some compensation in the better time distribution.  New airports
such as KIX and Chek Lap Kok will also add capacity.

> (3)  The 747 program has been going now for 26 years.  The 777 program
> will go for 50 years.

I think Boeing expects this.

> (4)  "We've gone about as fur as we can go" on engine technology, so new
> 777-replacement aircraft are many decades away, not just one decade or so.

The GE90 problems are temporary, predictable, teething problems, at
least from a technical standpoint.  (From a marketing standpoint, the
GE90 problems have cost GE dearly, and the loss of sales to PW and RR
now will make life exceedingly difficult for the GE90 program in the
long run.)  Once all the bugs are worked out, the GE90 should have
plenty of growth room, and there's no reason to believe other engine
manufacturers won't be able to match or beat the GE90 with their own
new designs.

The real question here is, given a significantly bigger engine, what
would you do with it?  Build a 600-seat twin or tri-jet?  Having four
engines isn't what put the VLCT on ice, insufficient demand for so
large a plane is what did it.  In the U.S. and across the Atlantic,
the trend has been towards smaller planes, flying higher frequencies
and/or thinner routes.  It's hard to see a market for a significantly
bigger engine than what is and will be flying on the 777.

Looking back on your comment, I suppose you could have meant greater
efficiency instead of greater thrust.  Together with improvements in
aerodynamics, one might ask how long it would be until the 777 could
be replaced by a similarly sized but far more efficient aircraft,
much as the 727 was eclipsed by the 757 and A320.  In the last two
decades, it seems that technological gains in the relevant areas have
not been coming in leaps and bounds as they were in the 1950s and
1960s.  Therefore, I think it unlikely that the 777 will rapidly
become technologically obsolescent unless some *major* development
appears, something akin to the turbojet replacing the piston engine.
It could happen, but it'll be a surprise for all of us.

> (5)  The MD-11 will eventually cease production, and the 777 will
> wipe 330/340 off the map.

The order books for both the MD-11 and the A330 have both taken a
pretty severe beating since the 777 was launched, so at least part
of this seems plausible.

The A340 will see some strong competition from the 777-100 if and
when the latter is launched, but I suspect ETOPS will remain an issue
for quite some time, and that will help the A340.  Crew commonality
with the A320 family will also be a boon to the A340.  The biggest
problem facing the A340, I think, is engines for growth, since the
CFM56 is already being pushed pretty hard and a new engine would not
be a very appealing alternative.

My prediction is that the MD-11 will either die completely or linger
on with minimal sales in niche markets.  The A340 will continue though
it won't set any sales (or profit) records.  The A330 will do well in
the form of the A329, a shortened version to replace the A300-600.  It
may also linger in its base form with meager sales, buoyed by common-
ality with the A340 and A329 which will allow it to continue when it
would otherwise die.

Despite my feelings about Boeing, I find the 777's impressive showing
so far to be quite surprising.  I expected it to do well, but I did
not think it would do as well as it has against the MD-11 and A330, at
least not so quickly.

In summary, I think it is at least plausible that the 777 could be as
profitable as the 747 or even better.  I wouldn't wager too much on
the proposition, however, at least not yet.

Karl Swartz	|Home
Moderator of sci.aeronautics.airliners -- Unix/network work pays the bills