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

Date:         09 Apr 97 13:26:03 
From:         M Carling <>
Organization: Merrill Lynch
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H Andrew Chuang wrote:
> 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.

I'm not sure why Andrew thinks that "the A340-600X will compete directly
with the B747-400 rather than the B777-300X." The Airbus will be between
the two Boeings in size and perhaps about the same range as the
747-400X. I think the A340-600X, if launched, will compete will both the
747-400 and the 777-300X.

The operating cost of the A340 at any given cruise speed is difficult to
reliably determine prior to development of its wing, which Andrew
indicates below will be developed.

> 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.

The 747-400 has significantly greater capacity on regional Asian routes
than will the 777-300 unless the 777 is configured with ten across
seating in Y (Ick!), as TG has done with their 777-200s.

> Furthermore, with dedicated regional aircraft like the
> B777-300, operators can configure their aircraft accordingly.

Operators are similarly free to configure their 747-400s as they see

> Thus, a B777-300 with regional seating configuration means more
> seats (hence, more revenue) than a B747-400 with long-haul
> configuration.

That's comparing apples and oranges. A 747-400 with regional seating
e.g. TG's seating configuration, has more seats than a 777-300 with a
regional (nine across) seating configuration. At slot limited airports
such as NRT, the 747-400 will remain attractive relative to the 777-300.

> 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.

UA are already operating the 777-200IGW LHR-SFO.

> 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.

Right. I expect the 747-400s to continue serving markets where the
777-300 doesn't have the capacity needed.

> 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.

Are you talking about the 890,000lb. MGTOW version that Boeing has been
promising for some time?

> 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.

Right, the wing will be expensive. But at least it is a chance for
Airbus to correct their mistake in trying to shoehorn the same wing onto
the two engine A330 and the four engine A340.

> More importantly, even with the -600X, Airbus still doesn't
> have an answer for the baseline B777-300 and the proposed -300X.

I'm not sure why you disqualify the A340-600X as an answer to the
777-300X. If you just don't think the airlines will buy it, let's let
the airlines decide. If you think it can't serve the same market, then
please let us know why.

> 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.

That's possible, but it hasn't happened yet. Boeing may decide to build
a 777-400X with another 10 meters added in length. That would still be
shorter than the 280 foot maximum length that can turn around between
typical airport terminals. The reported 720,000lb. MGTOW of the 777-200X
indicates that 777-400X is possible, though it would not be a long-range
aircraft. It would be far less expensive to operate than a 747-400 or an
A340-600X and would be well suited to regional routes out of NRT or LHR.
The biggest problem is that Boeing's new 777 factory was built to
assemble aircraft up to 777-300 size. I'm not sure that Boeing could
easily build a longer aircraft in that factory.

> 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.

I don't know the 777-200X/A340-500X market isn't quite large. The
777-200X might be the plane that fractures the Pacific market the way
the 767 did with the Atlantic market. This remains to be seen.

M Carling