A340-500X/600X and B777-200X/300X [long]

Date:         09 Apr 97 03:09:25 
From:         Chuanga@cris.com (H Andrew Chuang)
Organization: Concentric Internet Services
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Right before last year's Farnborough Air Show, Boeing appeared to be ready
to launch the B747-500X/600X.  However, it did not happen.  Since then,
Boeing has shifted its efforts towards the B767 and B777 programs.  With
Delta's deal, it's only a formality to get the Board's approval to launch
the B767-400.  This year, it's likely that Boeing may launch the
B777-200X (~300 seats, ~8,500 nm) and -300X (~375 seats, ~6,500 nm) at
the Paris Air Show.  Airbus is also ready to counter Boeing's new
additions with the A340-500X (~310 seats, ~8,500 nm) and -600X (~380
seats, ~7,400nm).

GE has already signed an MoU with Boeing to offer the 100-102K-lb-thrust
GE90-100B/102B for the new B777 derivatives.  P&W is reluctant to offer
anything beyond the 98K-lb-thrust PW4098.  It is not clear whether the
PW4098 is adequate for the -200X and -300X or not.  R-R has yet to
announce a firm plan for the 100K engine (Trent 8100), but some of its
current B777 customers (Singapore, Malaysia and Emirates in particular)
have shown the most interest in the new B777 derivatives.  In fact,
Malaysia has already announced its intent to buy up to 15 B777-200Xs.

For the new Airbus planes, no powerplants have been selected.  GE
withdrew from its exclusive deal on the A340 with Airbus, because GE
was not able to convince Airbus to share some of its engine development
cost.  (Interestingly, it's the other way around with the next-generation
B737.  In the B737 case, GE/CFMI actually shares the development cost
with Boeing to remain as the sole engine vendor.)  At this time, the
front-runner for the A340-500X/600X appears to be R-R's Trent 700-based
derivative in which France's SNECMA may take an interest.  Also,
according to AW&ST, P&W may offer the PW4158 for the new Airbus
derivatives.

The A340-600X will compete directly with the B747-400 rather than the
B777-300X.  The -600X will be able to fly a tad farther than the
B747-400 but with a slightly smaller capacity.  I infer from the recent
AW&ST article that the DOC (direct operating cost) of the A340-600X with
current-generation engines will not be significantly lower than that of
the B747-400 unless the plane cruises at a lower Mach number.

IMHO, the A340-600X is not an attractive alternative for airlines.
Many airlines, especially those in East Asia, have been stuck with the
long-range B747 for regional flights (such as Tokyo-Seoul,
Taipei-Hong Kong, Singapore-Hong Kong, etc.) because the B747 is the
only high-capacity plane available.  However, with the baseline
B777-300, airlines no longer need the four-engine 747 for regional
services.  Furthermore, with dedicated regional aircraft like the
B777-300, operators can configure their aircraft accordingly.  Thus,
a B777-300 with regional seating configuration means more seats (hence,
more revenue) than a B747-400 with long-haul configuration. If the
B777-300X is launched, the new aircraft can be used to replace the B747
on routes like London-San Francisco, Tokyo-Sydney, etc.  At this time, I
simply can't see the A340-600X take any significant market share away
from Boeing because most of the B747-400s are still relatively new.  With
nearly 200 B747-400s still on order, the Boeing Jumbo line is still very
strong.  The slight range advantage that the A340-600X has over the
B747-400, Boeing seems to be ready to answer it with a proposed
B747-400IGW which will have even longer range capability than Airbus's
offer.

If Airbus does go with the Trent 700-based engine for the new
A340 derivatives, then it will make more sense for airlines such as
Cathay Pacific which also operates Trent 700-powered A330.  I won't
be surprised if Cathay is among the launch customers for the A340-500X.
(However, I can't see Cathay ordering the A340-600X.)  Whether the
A340-500X/-600X will be a success or not, Airbus inevitably has to
spend a lot more money on the new projects than Boeing has to on the
B777-200X/-300X, because a new wing is needed for the new A340.  More
importantly, even with the -600X, Airbus still doesn't have an answer
for the baseline B777-300 and the proposed -300X.  (Airbus had
previously studied the A330-400X and A340-400X, but airlines weren't
interested in these models.)  Personally, I think the 777-300 models
will be the more successful line of the B777 family, just like the
767-300 is the more successful line of the B767 family.  And it seems
Airbus may totally miss out the B777-300 market sector.

I can't really see how the A340-500X/600X can be a successful program.
Perhaps that's why GE was not interested in the exclusive engine deal.
The B777-200X/A340-500X market is probably not that big.  Thus, my guess
is that Airbus would have to rely more on the -600X sales than the -500X.
However, I doubt the A340-600X has enough technical and financial merits
to set itself apart from the, albeit 30-year old, B747.  Well, with the
A340-600, Lufthansa will be a step closer to having an all-Airbus
fleet.  ;-)