Re: Boeing craziness (was Re: 767-400 "a different type"?)

Date:         19 Aug 98 00:57:43 
From:         kls@ohare.Chicago.COM (Karl Swartz)
Organization: Chicago Software Works, Menlo Park, California
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>US Airways was in financial peril when they "said 'screw you'" and one
>would expect Boeing to show a little more flexibility.

If they were in such financial peril at that time, what business did
they have placing an order for up to 400 aircraft from Airbus?  Despite
much of the BS which flies around, I doubt Airbus was/is giving those
planes away for free.

>I think stretches that sell are a marvelous idea. As you may
>have noticed, the 753 isn't exactly flying off the shelves. A handful of
>charter carriers does not a profitable aircraft make ... When some major
>carriers (American is rumored) place large 753 orders, I'll eat crow.

Boeing has been learning that a one-size-fits-all approach is a thing of
the past.  One way of adapting to the new environment is to cobble up
new variants from existing parts, and the 757-300 appears to be a good
example of that approach.  There doesn't appear to be much new about it
(with a 27 month development period from order to delivery there *can't*
be much that's really new).  A handful of charter carriers (not that I'd
consider Icelandic to be a charter carrier) placing smallish orders very
well might make a profitable aircraft if the development is cheap enough
and Boeing can charge a significantly higher price.

Still, I agree that the 757-300 will be a lot more of a success if one
or more major carriers order it.

>As for the 739, it competes too closely with the 757-200. Not a direct
>overlap, certainly, but close enough that it is troubling. Boeing would have
>targeted that market much better with a 757-100, which would retain the
>significant performace advantages the 757 has over the 737.

Those performance advantages of the 757 come at a substantial cost
disadvantage -- according to Boeing's web site, prices for the 757-200
run about $11.5 million more than for the 737-900.  In return, you get
a plane that's typically over 35,000 lbs heavier, with an entirely new
type rating and maintenance program if you're already a 737 operator
but not a 757/767 operator.  You get a lot more range, which may or may
not be of value to you, and a few more seats.

Consider the 737-900 launch customer, Alaska.  The 757 (even a -100
model) would offer them nothing but added cost over the 737-900.

Somewhat more interesting is Continental, which ordered the 737-900
despite already being a 757 customer.  I believe I read that CO will
be using them on Central American routes, where range isn't an issue
and presumably the better operating economics outweigh having another
variant (but not type, since CO is already a 737 operating including
the 737-700) in the fleet.

>Douglas' insistance on building an DC-9/MD-80 special for
>every customer that came along (a lesson learned after the one-size-fits-all
>DC-8) played a major roll in sinking that company.

Douglas screwed themselves well before the MD-80, in part by *not*
building a single variant of the DC-8 Super Sixty.  But that's rather
different than what Boeing is doing -- the DC-8-62/63 wing was a big
change from the wing on the earlier models, whereas the four sizes
of the 737NG are pretty much the same other than where you snip off
the sausage, er, fuselage.  The BBJ and C-42A are bigger changes, but
Boeing seems to be taking the right approach by keeping those out of
the way of regular production as much as possible.

>>Because they had commitments to do so.  Should they unilaterally cancel
>>their commitments the way USAir did?  In any case, 737 Classic production
>>will end soon -- I think 2000 is the date I heard.

>Not entirely true, Boeing has taken new orders for second-generation 737
>equipment from several leasing companies and major carriers, Alaska among
>them. If they keep the order books open, production will be going on long
>after 2000 (particularly if delays in manufacturing keep up).

That's a reasonable point, though I wonder how many of those new orders
were simply filling in gaps left by unexercised options -- gaps which
might otherwise have resulted in problems stemming from lumpy production
rates.

>Aircraft manufacturers have unilaterally changed orders before. All A320s
>after Ship 21 were -200s. Once again, this is not the same circumstance as
>Boeing is facing but it has happened

The difference between an A320-100 and -200 is relatively minor, whereas
the 737NG is *very* different from the 737 Classic in a number of major
areas, like the wing, engines, and cockpit.

>There is a difference between experimentation and indecision. In the case of
>Boeing, they have changed their "official" long term 777 strategy a number
>of times without attracting any new customers.

If they come up with something and their customers say "no, it's not
quite what we want," Boeing is not supposed to go back to the drawing
boards?  As for changing strategies, they first changed because the
engine manufacturers were improving the engines faster than anyone had
expected, and most airlines were saying the 777-100 was too small and
would be too expensive per ASM to operate.  Then the airlines kept
asking for more range, and finally Singapore said "sure, we'll take it
if you guarantee that it will have 180-minute ETOPS OOTB and we can
cancel the order right up until delivery time if that doesn't happen."
Picking a strategy and sticking to it come hell or high drifts is stupid
if you're operating in a highly dynamic market.

>They actually put the A340-8000 up for sale (and got a whopping 2 orders).

What exactly were the terms of those "orders?"  Airbus is well known for
playing fast and loose with terminology when it comes to counting orders.

>Boeing has offered none of its 777 experiments to the airlines yet.

What exactly were they doing with Singapore in that case, and was the
Malaysia Airlines MOU for 15 777-200Xs done unilateraly, without any
sort of offering coming from Boeing?!

>And lets face it, some of the ideas they are batting around are right off
>the charts. The third engine in the tail for take off assistance, for
>example. Makes the so-called "hunchback of Mukilteo" look downright sane.

I can't argue with that one.  It seems pretty loony to me, too.

>And lets not forget the folding wingtip debacle.

Driven in large part by AA, the same airline which over thirty years ago
was demanding a widebody *twin* which could fly out of LGA -- and quite
happily fulfilled that wish by buying the three-engined DC-10.  Airlines
are not terribly rational customers.

>many rumors say that the plane is doomed after the AirTran order is filled.
>And as much as Boeing wants the Long Beach floor space for the 737, I'm more
>inclined to the latter view ...

Well, Boeing has finally announced their plans for a 737 line at Long
Beach, in an area that previously was used for MD-11 production.  No
risk to the 717-200 program (yet).

>And how about lay offs? They just layed off several thousand emplyees. Just
>two years ago, they couldn't hire enough people. With a gigantic order
>backlog, those don't sound like the actions of a healthy company.

While some of those layoffs have been in the Puget Sound area, many have
been in other parts of the country and have nothing to do with commercial
aircraft.  They are instead a logical part of the continuing rationali-
zation of assets and operations after the acquisition of Rockwell's
aerospace operations and the McDonnell Douglas merger.  It would be
unhealthy to maintain overlapping functions just because they came from
different predecessor companies.

--
Karl Swartz	|Home	kls@chicago.com
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"The average dog is a nicer person than the average person." - Andrew A. Rooney