Boeing, Airbus and Airline Overcapacity in Asia & Europe

And 200 miracle orders — well, just a letter of intent — for the Boeing 737 MAX at the Paris Air Show.

By MC01, a frequent commenter on WOLF STREET:

Airlines and aircraft manufacturers usually announce large deals during the big air shows to add an air of glitz and glamour to their dealings. With the growing importance of Asian markets, air shows such as Aero India and the Dubai Airshow have gained in importance over the past decade. But the most important worldwide are still the Paris Air Show and the Farnborough Airshow, held in France and England respectively on alternating years. This year it was Paris turn, and some big deals were signed, but not quite as expected.

Airbus introduced the A321XLR, a very long-range variant of the A321neo narrowbody, which managed to obtain 243 orders and options. While on paper this sounds impressive, several prominent critics emerged among whom is Lufthansa CEO Carsten Spohr, who likened the A321XLR to the old A318, a “niche” aircraft, and predicted Airbus will be “lucky” to sell 400 of the type over the next two decades.

The only order for Airbus widebodies came from Virgin Atlantic, which agreed to buy eight A330neo outright, lease six from specialized lessor ALC, and took an option for a further six.

With a few extra orders for the ubiquitous A320neo being placed by China Airlines and Flynas, Airbus walked away from Paris with roughly the equivalent of $35 billion at book value in orders and options.

Boeing as usual saw brisk business in the air freighter segment, selling 11 brand-new 777F freighters to Air China and Qatar Airways; and 10 of the brand-new 737-800BCF, a freighter factory conversion of the hugely popular 737-800 airliner, to GECAS, the leasing arm of General Electric. Boeing sold a further 25 widebodies, in form the 787 Dreamliner, to Korean Airlines and to leasing specialist ALC.

However, the big news was a maxi letter of intent signed by International Airlines Group (IAG) for 200 737 MAX in an unspecified version. IAG is the holding company for British Airways, Iberia, Vueling, LEVEL, Aer Lingus and their ancillary companies and the sixth-largest airline group in the world.

A letter of intent is not a firm order: It’s a preliminary commitment of one party to do business with another. Boeing and IAG still have to iron out a lot of details, and the deal may even fall through if no agreement is reached.

This is an extraordinary deal, but not so much because IAG is buying a “doomed aircraft”: Ryanair among others has already declared it’s negotiating with Boeing for more 737 MAX, obviously to be delivered at a large discount. This is an extraordinary deal because so far IAG as a whole has been firmly committed to an all-Airbus narrowbody fleet and has many more members of the A320neo family on order: Vueling alone currently operates 106 members of the A320ceo family, 17 of the A320neo family, and is slated to receive a further 39 of the latter from existing IAG orders.

All things considered, Boeing was able to match the $35 billion of Airbus sales, at book value.

Conspicuously absent from the Paris Air Show were the now customary maxi-orders from Middle Eastern and especially Asian airlines: Korean Air, Flynas and China Airlines simply converted options they had already placed in firm orders or just added to their existing orders.

The last large order by an Asian airline was placed in May by Starlux Airlines, a startup from Taiwan, for 17 Airbus A350. This is a very peculiar order as these aircraft will be wholly fitted with “luxury” interiors as Starlux aims to compete in the cutthroat market for business and first-class flights on the Asian market. Good luck to them.

Asian airlines are busy digesting the enormous orders they placed over the past five years with Airbus and Boeing.

For example, Vietnamese startup Bamboo Airways placed orders for 50 Airbus A321neo and 30 Boeing 787-9, with a combined book value of $15.8 billion. This is astounding because Bamboo Airways presently operates a grand total of 10 aircraft: the first four A321neo from their order plus a further six aircraft on wet (or ACMI) lease. To call this an ambitious expansion plan would be the understatement of the week.

And here I’d like remind readers that even during boom times these airlines can go bankrupt, taking their huge order books down with them: when India-based Jet Airways ceased operations earlier this year, it had 215 Boeing 737 MAX and 10 787-9 on order, worth $29 billion at book value.

How much the growth of air travel in Asia over the past decade was driven by economic growth and how much by lower fares resulting from exploding passenger capacity and competition growing at breakneck speed remains an interesting question, as is what will happen once all this new capacity will make itself felt.

And to see the effects overcapacity has on an air-travel market, let’s turn to Europe, a mature market where overcapacity is now the norm.

In June the otherwise profitable Lufthansa Group warned their low-cost division Eurowings (formerly Germanwings) will remain in the red at least until 2021. This came hot on the heels of another announcement by Lufthansa, warning shareholders that their European operations will be affected by “market-wide overcapacity” and “aggressively growing low-cost competitors.”

While the latter part is basically an admission the recent aggressive expansion plan by Ryanair into the ultra-mature German market is going strong and affecting even formerly untouchable Lufthansa operations, “overcapacity” is everywhere.

Czech airline Smartwings, for example, directly operates a fleet of 43 aircraft and has a further 32 Boeing 737 MAX on order. Using this fleet, Smartwings connects an expanding list of destinations, most of them in Southern Europe but with a growing number in Northern Africa. Smartwings also operates subsidiaries in Hungary, Poland and Slovakia, but all of these are small outfits working with local tour operators to shuttle tourists around vacation hotspots. The company also owns 98% of perpetual money-loser Czech Airline, which is going through yet another crash diet in an attempt to “restore profitability.”

And earlier this year, Smartwings announced the establishment of a German subsidiary, which must have come as more bad news to Lufthansa.

Inquisitive minds may want to have a look at Smartwings financials to see how well these recent expansion plans are going. Unfortunately, the last audited financial statement available is for Fiscal Year 2017 and it gave a loss of a little over $2 million for the period.

It may (or again may not) come as a surprise that Smartwings is quietly backed by Asian investors: In 2017, Chinese conglomerate CEFC Energy Group bought a 49% stake in Smartwings, the maximum amount allowed by EU rules on airline ownership. Why and how a Chinese energy company came to be interested in the cutthroat European aviation market is yet another interesting question. By MC01, a frequent commenter on WOLF STREET

Rolls-Royce’s debacle for the Boeing 787 Dreamliner. And China is learning it the hard way. Read… The Engines of Large Airliners and the Costly Challenges Manufacturers Face

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate “beer money.” I appreciate it immensely. Click on the beer mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

 

  63 comments for “Boeing, Airbus and Airline Overcapacity in Asia & Europe

  1. 2banana
    Jul 7, 2019 at 6:30 am

    The intra European air market is amazing a quite unsustainable.

    Flights across Europe (like London to Budapest) for a normal fare of 40 euro.

    People are so used to ultra cheap flights that the average joe routinely takes a weekend in a city hours away by flight.

    Most of these carriers are like the dotcomv2 and shale drillers in America.

    Cheap and easy money keeps them going.

    For now.

    https://simpleflying.com/wow-air-bankrupt/

    • CoCosAB
      Jul 7, 2019 at 6:53 am

      Since the start of global QE/ZIRP/NIRP ALL major activities are addicted to almost FREE PAPER-MONEY.

      Most of these airlines companies rely on DEBT to keep the business going.

      But modern slaves to enjoy flying around polluting the Planet and then complaining about “humanity made climate change”!

      The only way I see for the Owners of the Monetary System and their Friends to get away with a major fraud that is needed to “re-balance” the System is to create a very large global diversion…

      • sunny129
        Jul 7, 2019 at 5:00 pm

        The whole global Economy including the global Banking system is built and supported by DEBT/credit since March ’09! Underneath there are no fundamentals to support a productive economy built on an organic basis.

        The continuous financialization of the Economy by Fed/CBers mask these flaws! No wonder we have 13 Trillions earning NIRP and at least 15-20% of Corporations as Zombie businesses!

        Again, no one cares, as long as the party keeps on going at the Wall St!

    • alex in San Jose AKA Digital Detroit
      Jul 7, 2019 at 5:10 pm

      I used to correspond with a guitar-playing busker (street musician) in England, and he went off to play a gig in Istanbul, which sounded terribly far-away and exotic, until I checked the numbers and realized it’s closer to his town in England than Houston is to mine here in the Bay Area.

      Hop! Hop! Hop! Hop and pop around greater Europe on planes and trains, it must be nice!

      • MC01
        Jul 8, 2019 at 2:28 am

        Don’t get me started on Turkish airlines. :-)

        They are the poster children for all those pieces Don Q writes about the Turkish economy living high on ultra-cheap foreign-currency denominated debt.
        So far they have been able to muddle through by pitching themselves aggressively on the European market and because the Turkish lira makes for cheap vacations in Bodrum, Izmir and the like but they are living on borrowed time.
        But competition is cutthroat and as cheap interest rates are the sheer weight of debt loads is becoming crushing.

        Let’s see how long before that certain gentleman in Ankara demands us Europeans bail out his economy. As the old saying goes, always pick your friends very very carefully…

      • Olivier
        Jul 8, 2019 at 7:40 am

        Not trains, no. Trains in Europe are very expensive now, at least relative to flying. Gotta recoup these massive “investments” in high speed, you see. That and the disappearance of the very concept of public service.

  2. Iamafan
    Jul 7, 2019 at 7:22 am

    I don’t think I would like to fly on a Boeing 737 Max. Would you?
    Considering the negative press this airplane has gotten, it will take a lot of manipulation to ease the fears of the public.

    • Paulo
      Jul 7, 2019 at 11:04 am

      I was going to comment just before I read yours, that, one more (whatever) 737 crash, goodbye Boeing. Maybe any Boeing in the next year or so.

      Personally, for many reasons, I will never fly again. Done. Mostly, I can’t take the crowds and security checks. It’s a nightmare, then you cattle car in line and…….. Everything.

      • Dave Kunkel
        Jul 7, 2019 at 8:05 pm

        I’m never flying again either! The pre-bording strip searches are the last straw. If I can’t drive there, I’m not going.

    • MB732
      Jul 7, 2019 at 11:29 am

      The 737MAX has flown its last commercial passenger. They won’t do the right thing and scrap them, but Boeing will will make some mods and change the name to something far less memorable (there’s a lesson there, too, Boeing…catchy names have no upside and big potential downside).

      People will forget and have their memories fogged and confused by the new name and ‘software glitches’ fixed and poor pilot training in far away lands blamed and maybe someone at Boeing or FAA will get thrown under the bus for the greater good.

      But how does insurance work? Airlines and insurers aren’t going to take on the liability of flying a defective plane. Is Boeing, and ie USA taxpayer going to back them? And if another (renamed) MAX crash would cripple Boeing and make them (officially) a ward of the state, then does not that make the plane a target for nefarious actors?

      And I’ve just put on my tin foil hat, but is it really that difficult to imagine that if another one crashes for mechanical reasons, the USA will have to blame it on someone who’s govt needs overthrowing?

      Yes, I am saying this POS plane could start a war.

    • MC01
      Jul 7, 2019 at 11:45 am

      You are perhaps too young to remember but we had something very very similar with the Douglas DC10 back in 1979.
      An American Airlines DC10 crashed at the O’Hare Airport following an engine separation killing everyone onboard. The accident was caught on film by an Associated Press photographer who lived nearby and it was big news.
      The media went into overdrive about the “aircraft losing its engines”: it was exactly the same circus as we are seeing today, minus the Internet.
      The tragic thing is that trying to explain the engine separation (caused not by a design flaw but by American Airlines not following proper maintenance procedures) itself was not the cause of the crash but an already well known flaw in the leading-edge slats design aggravated by the DC10 bizarre electric system loss got you some very dark looks.
      The DC10 was involved in a lot of high profile accidents: look up Air New Zealand Flight 901 if you really want a real-life horror story.

      But I flew the DC10 and its derivative, the MD11, time and time again and I am still here. Perhaps it’s due to the fact my mother flew a lot of bush planes with me in her womb in Africa and Indonesia (when maintenance was considered a luxury) so I am naturally inclined to these things but the only thing I can complain about is that TWA “steamed vegetables” had the same consistence and taste as melted platic. ;-)

      • MB732
        Jul 7, 2019 at 12:25 pm

        MC01 hate to give you a hard time because really enjoy your articles and comments!

        But can you expand on the ways that the DC10 and MAX situations are ‘very very similar’?

        As a teenager, I rode on the hood of a car going 70mph and the driver had had a few. Surviving doesn’t necessarily mean you made good transportation choices ;-]

        • MC01
          Jul 7, 2019 at 2:34 pm

          Simple: the media is more interested in a good shock story than in the truth, just like back in 1979.
          DC10’s were instantly grounded in the US, and foreign-registered aircraft prohibited from entering the US airspace, because initial investigations by the NTSB (National Transportation Safety Board) discovered metal fatigue on the AA (American Airlines) engine pilon. The media instantly went into a feeding frenzy that made them overlook the fact DC10 crews were trained for such an emergency. There was more to it, just like there’s more to the 737 MAX than a software issue.

          In the DC10 case it was an already known issue with the leading-edge slats which relied on main hydraulics to be locked in place instead on a separate mechanism: the detached #1 (left side when looking at the aircraft from behind) engine tore through the hydraulic lines locking the left side slats, causing them to retract, in turn causing the left wing to stall. The stall could perhaps have been recovered had it been immediately detected but… the warning devices (a big red light and a “sticker shaker”, a system to shake the captain’s control column and warn him of troubles) were powered by a generator driven by, you guessed it, the #1 engine which had just detached from the aircraft.
          Yes, that’s actually what happened. Nobody had thought such a situation could emerge, but it did.

          This is my personal opinion but I think the 737 MAX crashes have been caused by more than some sloppily written and tested lines of software. I don’t even want to take a guess, but it’s a far more complicated issue that the media want us to believe.
          Things are never black or white, just different shades of grey.

      • sunny129
        Jul 7, 2019 at 5:14 pm

        “It seems more and more likely the 737 MAX grounding will go well beyond six months and it can approach nine months to a year depending on developments in the next months.

        The costs to Boeing for the MAX debacle are now approaching the costs of a new aircraft development.

        The end result of the management culture which produced this engineering shortcut is horrendous:

        https://leehamnews.com/2019/07/05/bjorns-corner-cutting-corners-in-aerospace-costs-a-fortune/

        Bjorn Fehrm, the author of the article is a fighter pilot and an aviation consultant.

      • Paulo
        Jul 7, 2019 at 6:17 pm

        I thought, if memory serves me, the biggest problem with the DC 10 design were hydraulic lines location and poor cargo door design. They would lose a fan, then incident severed hydraulic lines and plane was uncontrollable. Sure, they fixed the problems as they occured, kind of like the space shuttle did.

        • MC01
          Jul 8, 2019 at 1:24 am

          There were two accidents caused by cargo door lock designs early on the DC10 career. In one case (American Airlines) the crew managed an emergency landing and all aboard survived without injuries, in the other (Turkish Airlines) the aircraft was lost killing all onboard.

          The second accident was the classic cascade of events with a dark twist: maintenance logs showed the Turkish aircraft to have the cargo door lock modification devised by Douglas as a stop-gap solution until the whole door could be redesigned, but it hadn’t. Nobody was ever charged for this and to this day it’s debated why this happened: laziness and oversight are the most likely answers.
          Never attribute to malice what can be adequately explained by stupidity.

      • Olivier
        Jul 8, 2019 at 7:52 am

        @MC01 You haven’t answered the question. Yes “it’s more complicated” (it always is) but the question is: will the public shrug it off or not? The 70s are over and are not coming back. Rightly or wrongly the public is much more sensitive to perceived risk today than in the 70s (let’s leave aside the media circus: _that_ never changes). Only compare for instance the nonchalant attitude to terrorism in the 70s, of which there was quite a lot then, to the current obsession with it (a recent NYT articles reminds us that death from terrorism accounts for less than 0.1% of US deaths but 35% of online searches on causes of death).

        • Casey Burns
          Jul 8, 2019 at 12:13 pm

          People don’t change, communication might but people do not so ‘70’s or 2000’s makes no difference. Aviation is the safest means of transportation, safer than walking across a street. Main stream media hypes accidents which are rare considering the number of flights each day. With that said, airline management has a skewed view of a pilot’s worth which in their eyes isn’t much. There isn’t a pilot shortage, it’s a pay shortage which causes fewer people to pursue the vocation. Why spend over a hundred and fifty thousand dollars to earn less than a nurse out of school? Lack of skill, experience and training “contributed” to the Ethiopian crash. As a B737 Captain with over forty years of line experience I have seen training decreased due to cost cutting. The FAA has succumbed to pressure from the industry to cut cut cut. Two FAA personnel have recently been removed from their positions for failing to do their jobs overseeing the Max program. But I have also seen safety features developed making the industry safer. GPS Nav, Enhanced Ground Pox Warning, sophisticated weather radar, traffic collision warning amongst the top ones. Life isn’t without risk though.

        • MC01
          Jul 9, 2019 at 5:15 am

          The public? As long as they get a cheap airline ticket they don’t care what they fly. That’s the naked truth.

          People complain all the time about Ryanair treating them “like luggage” but they keep on going back because it’s very hard to beat the Irish carrier’s pricing policy.
          If the MAX 200 will really allow Ryanair to keep price inflation in check (by packing people like sardines, but that’s a matter for another day), people will fly it and that’s the end of it.

      • 91B20 1stCav (AUS)
        Jul 8, 2019 at 12:39 pm

        MC01-thank you again (and thank you, Wolf!) for your always-sagacious and well-written observations. It seems the world moves farther and farther away from the necessity of Murphy-resistant redundant technologies in product and thought, quick money and simple thinking/analysis being much less bothersome (until it is) to the general public.

        If I may ask, what moto were you considering adding to the collection?

        May we all find a better day.

      • Harrold
        Jul 8, 2019 at 3:10 pm

        Air New Zealand Flight 901 flew into the side of a mountain at an altitude of 1,500ft.

        Not sure you can blame the airplane design for that mistake.

      • Kasadour
        Jul 9, 2019 at 5:22 pm

        I just now watched that ANZ Flight 901 crash on The Flight Channel. How awful. Talk about an avoidable disaster. Why did the airline route that flight right into the path of Mt Erebus? The flight crew had no idea where they were flying.

        I fly Vueling and Ryan Air a lot all over western/central Europe. Italians and Spanish clap and cheer when the plane lands.

        The worst flight I ever took was from Amsterdam to Milan last year and I swore I would never fly Vueling again. I didn’t think we would survive that flight.

        I flew Ryan Air from Beauvais, France to Ciampino-Rome and it wasn’t bad.

        Each flight was under €75 IIRC.

        I flew Aegean from Athens to Moscow for €200 and then Aeroflot to Gorky then to Zravnots, Yerevan. All of these flights were quite affordable and packed heavy. When I got back to Ciampino I didn’t know where I was.

        There’s a joke in the airline business and it goes something like this: how do you make a million dollars fast? Invest two million in an airline.

  3. Joe Lalonde
    Jul 7, 2019 at 7:28 am

    Making money at all costs…
    Soon airlines will no longer report crashes as it effects their stock and bonuses.

    • MC01
      Jul 8, 2019 at 6:00 am

      Then fly Norwegian Air Shuttle! They have been bleeding red ink all over the place for years and their stock price has been so brutally crushed it has lost 75% of its value in just one year.
      Or fly Alitalia, Air India, Korean Airlines, Asiana, Kenya Airways… they are all accustomed at losing enormous sums of money so a million more or less won’t change a thing.

  4. David Hall
    Jul 7, 2019 at 7:45 am

    In 1999 I flew from NYC to London via British Airways. The plane was not nearly full. I got a free upgrade to first class. They served Johnny Walker scotch. It was my first flight to Heathrow. I remember it well. Jet fuel was cheap back then. A few years later the price of jet fuel soared and airlines started overbooking flights. I noticed planes were full and I did not get any more free upgrades. I do not think the capacity had changed much. You might have to check airline profitability with all the new planes they are ordering, some airlines must be making money.

  5. Petunia
    Jul 7, 2019 at 11:16 am

    I understand the grounded Boeing planes had software developed by $9HR programmers from India. If this is the case, then everything that happened could have been predicted, had that fact been disclosed.

    • Bet
      Jul 7, 2019 at 11:35 am

      It is now. What did Boeing know and When did they know it? Can we spell RiCO?

    • char
      Jul 8, 2019 at 9:04 am

      It is not the programmer fault. He just wrote what was specified

      • Casey Burns
        Jul 8, 2019 at 4:07 pm

        No, the programming was outsourced to India with a company that had no aerospace experience. When you outsource you loose control of your product

        • NotMe
          Jul 8, 2019 at 6:03 pm

          “When you outsource you lose control of your product”

          Almost correct. What really happens, which American MBA culture does not grasp is:

          “When you outsource you lose your product”

          China and IBM/India can attest to that.

  6. otherbrother
    Jul 7, 2019 at 11:46 am

    Boeing is highly overvalued IMHO — it has massive debt — look at the book values, it’s the ugliest stock in the world right now.

  7. MCH
    Jul 7, 2019 at 11:58 am

    It is very interesting that the US airlines have managed to become profitable amidst all of this madness around the world. You don’t hear much about US airlines going bankrupt any more. The effects of smarter decisions I expect.

    It is interesting also to see that geographically isolated competition indeed does have an effect of some type. Imagine if air travel was further liberalized to allow foreign airline to compete directly in US local market. I wonder how much of the business today is long hauls being propped up by short haul flights with the US airlines, especially when they have to compete with all of these long haul LCC.

    Also, if a bunch of these airlines go bankrupt, the effect will not only be on the order books but on the used airplane market as there might be an ever increasing pile of them.

    • Max Power
      Jul 7, 2019 at 12:22 pm

      US airlines might be more profitable but the tradeoff you get is relatively high airfares, especially in the smaller markets in the US compared to other places around the world, plus a greater reliance on mega-hubs usually controlled by a single airline which makes flying more inconvenient.

      • MCH
        Jul 7, 2019 at 10:07 pm

        Yes, that’s the basic idea. The airlines are a business, not a charity. The US airlines from twenty years ago competed like crazy for market share, down to the point where unprofitable routes were kept in place.

        Also, for your information, the smaller markets in the US isn’t that small, because if it were, it would be pretty ruthlessly trimmed. These days, the airlines are focused on being profitable in the US, and that’s the point. You want cheap fares, go fly Spirit or Allegiant or Frontier, but don’t complain about the service. You get what you pay for.

        In terms of hub and spoke, yes, that’s the way around the world. There are very few airlines that do not adhere to that model, Southwest comes to mind. But even in hubs where one major airline dominates, there are usually routes from other airlines in play. Just not as many, consider for example. At SFO, you still see Delta and American, even though it is a predominantly United hub.

        • Max Power
          Jul 8, 2019 at 2:42 am

          The foreign market is very different than the US. There the Sprits, Allegiants and Frontiers have become the dominant players whereas in the US they are small niche players. They also do very little connection flying (until recently you couldn’t even do connections on Ryanair). The result is considerably lower fares with a lot more non-stops and to smaller destinations. Some would say that at least for the consumer it’s a less expensive, more convenient model.

    • DawnsEarlyLight
      Jul 7, 2019 at 12:46 pm

      I’m aware of the military’s ‘Bone yard’ in Arizona for ‘stored’ planes. Is there a storage area for old/idled commercial planes?

      • Max Power
        Jul 7, 2019 at 3:04 pm

        Absolutely. Those same areas have storage yards for commercial aircraft as well.

        The ones which no longer make sense to operate and maintain will eventually get scrapped while other equipment is either parked by airlines due to temporary excess capacity or waiting for a new owner or lessee to be found for them.

      • Mike G
        Jul 7, 2019 at 8:31 pm

        Victorville and Mojave in the California desert are major storage sites for airliners from around the world. Some are parked temporarily and go back into service, others are cannibalized for parts.

      • MC01
        Jul 8, 2019 at 2:07 am

        Yes. There are plenty in the Southwestern US due to the right combination of favorable climate and ready availability of highly qualified manpower to break the aircraft up. I am thinking Goodyear, Pinal and Kingman, all in Arizona.
        Outside the US there’s a pretty big one (APAS) in Alice Springs: this is a very new facility which was built to cater to the Southern Asian market. Apron Aerosalvage runs two facilities: one in Spain (Teruel) and another in France (Tarbes). This is the company that broke up the first two Airbus A380 withdrawn from service.

        I’ve heard, but never seen, the La Paz airport in Bolivia has a pretty large number of old propeller-driven airliners awaiting disposal: Douglas DC6, Convair CV240 etc. If somebody can confirm/deny this, I’d be grateful.

        • MB732
          Jul 8, 2019 at 11:48 am

          Google Maps shows a couple dozen likely scrapping candidates at La Paz. Not any big operation by the looks of it. Appears to be an interesting place with planes parked in various fields scattered about.

        • MC01
          Jul 9, 2019 at 1:24 am

          Thanks.
          There are plenty of smaller salvage operations around, often certified on a single type or a handful of types.
          Last time I was in Perpignan they had just two Fokker 50. One was awaiting “final disposal” (read: anything useful had already been removed and only the bare hulk remained) and the other was more than halfway through there. As there are only a dozen or so Fokker 50 still operational in Europe and even less in Africa they have applied to be certified on more types.

          I don’t even want to know what the market for DC6 parts is these days so I understand why the aircraft are just parked there until they have deteriorated enough to be just broken up for scrap metal.

  8. Michael Engel
    Jul 7, 2019 at 1:40 pm

    BA in Paris won large ghost orders.
    But Nike in Paris accumulated big real orders, the largest ever sale of T- shirts, with USA logo in red, white or blue colors, starting from 59.99 to 199.99.
    Today, US women won world cup, for the second time, thanks to
    the leadership of a coach who unified a very different group of players.
    USWNT made us one unified nation, for a while, after beating Holland. England & France, on the way to the final.

  9. tommy runner
    Jul 7, 2019 at 2:08 pm

    thanks for the article but..”crash diet”… ok, ill go first.
    ‘Boeings latest max diet burns away stubborn belly fat’
    or how about ‘I understand they are adding smoke machines to the max simulators’.. oh wait, simulators aren’t needed after all, computers are just fine.
    and finally (literally?).. boeing, boeing,….gone

  10. Nicko2
    Jul 7, 2019 at 3:06 pm

    Just today, Saudi airlines cancelled an order for 30 737 Max.

  11. SocalJim
    Jul 7, 2019 at 3:13 pm

    Any trained Mechanical Engineer that knows aerospace will point to the the MAX having terrible dynamics because of engine placement. This dynamics problem can not be fixed with software. However, some computer idiot decided the dynamics problem could be kept in check with a fancy piece of software. Even if they get that software to keep that dynamics problem in check, the plane will always handle like garbage and require more skilled pilots. Someone should fire some of the top executives at the Boeing company.

    Several months ago, I recognized the second crash was a big big story, but my comment was deleted nearly immediately. Instead of deleting my comment, you should have studied it’s merit then shorted the stock. I am an engineer that was a wall street trader until I recently retired in my 40s … I know how to smell a rat.

    • Jul 7, 2019 at 3:41 pm

      SocalJim,

      Your comment was deleted because the article you posted it on had zero to do with aircraft, airlines, etc. You just posted a link to the latest unrelated news item where a bunch of people got killed. This site is not a link dump. And it’s not where people can post comments or links about whatever off-topic news happens to fascinate them. This is designed to keep this comment section from turning into a zoo. Commenting guidelines #1 and #2:

      https://wolfstreet.com/2017/10/07/finally-my-guidelines-for-commenting/

    • Rob D
      Jul 7, 2019 at 5:21 pm

      Boeing decided not to include the MCAS in the flight manual.

      A big selling point to the airlines buying the MAX was that existing 737 pilots didn’t need a new expensive type rating.

      These things are related IMO. The trial lawyers will have a field day during discovery.

  12. Max Power
    Jul 7, 2019 at 3:35 pm

    At the end of the day someone has to keep Boeing in business, otherwise you’ll end up with a single-source provider which would be disastrous for the airline industry.

    As for Boeing’s situation specifically… Sometimes it doesn’t pay to be first… Boeing’s first-mover advantage in the aviation industry has come back to bite it. All these issues can be traced to Boeing’s decision not to use a clean-slate design to cope with the fundamental changes in engine technology that took place between the 1960s and 1970s which resulted in ever-wider (albeit shorter) engines being introduced over the decades. By the time the 737’s main competitor, the A320 was released in the late 1980s the engines the 737 was originally designed for were obsolete and thanks to this later introduction, the A320 has had a significant design advantage ever since.

    • Vic
      Jul 7, 2019 at 9:00 pm

      Max, the 737 is the highest-selling commercial aircraft in history, with well over 10,000 being produced. Roughly only 1,000 were made with the original engine design, the rest equipped with the very capable CFM56 series engines. I had a 21 year career with a major US airline, the last four of which were as captain on the 737-800 (aka 737NG). It is a extremely capable airplane. In my opinion Boeing is the only entity that can save Boeing.

      • Max Power
        Jul 8, 2019 at 2:52 am

        Yes, the 737 is a very capable airframe but Boeing knew that turbofan bypass ratios are only going to get larger and larger and you can only jury rig an old design so far. They would have been well served to implement a clean slate design (like the Y1 concept they scrapped) at some point.

        • Vic
          Jul 8, 2019 at 8:30 pm

          Maybe so, but Mr. Market wasn’t going to wait for a fresh narrow body design. As I read the history Boeing got a really firm shove from Airbus and AA’s CEO Gerard Arpey. Seems to me that Boeing painted itself into this corner. Tough fight for them to get out. My opinion is that there’s a good chance the Max will tube the company into Chapter 11.

    • Briny
      Jul 7, 2019 at 10:07 pm

      I have to disagree here. Not with the “first mover” aspect, that’s correct, up to a point. Where the disagreement lies is that a cultural change at the top caused Boeing to lose its “first mover,” performance/quality/technology-leader first culture and then shift to a cost-cutting/shareholder-value first culture. Wearing both my (safety-critical) engineer and economist hats here, that’s a dangerous change, especially in aerospace let alone any other field where safety is the primary requirement well before all other considerations. That occurred somewhere in the mid-90’s if I recall correctly.

      All the other things that have been pointed out, from the technological band-aids, labor-force/production-site changes, even the manuals, simulators and pilot training considerations all trace back to this change. Culture matters as it influences every decision made ever after. It’s so significant that it was a core element of every decision I made in my designs. You can have the best technological designs and implementations in the universe, but they mean nought in the end is they are circumvented in the end by the users, intentional or no.

  13. 2banana
    Jul 7, 2019 at 4:09 pm

    Maybe there is a lesson in there.

    Instead of trying to klooge together something to make a 1960s design work (so you can use heritage training and flight certifications)…maybe start from scratch and design something from this century.

    • alex in San Jose AKA Digital Detroit
      Jul 7, 2019 at 5:17 pm

      I really think Burt Rutan was going to see a future where his designed would be scaled up, making super-safe and efficient planes. Instead his planes have remained only in the hobbyist market, with little commercial use (apparently they’re great for smuggling drugs in, being mostly composite and able to carry a good load).

    • MC01
      Jul 8, 2019 at 1:51 am

      Boeing had a family of three aircraft, codenamed Yellowstone, in development as of 2005.
      Yellowstone 1 (Y1) was supposed to be the wholly new 737 replacement, to be fully operative in 2020. But Boeing executives got spooked by the Airbus A320neo eating into their narrowbody orders until Y1 would be operative, so they put the Y1 on the backburner in 2011 and announced the 737 MAX.

      As far as short-sighted decisions go this was pretty big: at the cost of losing some orders short term Boeing would have completely dominated the narrowbody market by 2025 because Airbus had absolutely nothing in the works at the time and the A350 and A380 programs were stretching the French group’s resources to the very limit.
      More damning, Yellowstone envisaged a lot of commonality between aircraft, making possible to share design solutions between family members and hence save time and money.
      Even more damning the only survivor of the Yellowstone program (Boeing executives not merely killed that program but abused of its corpse when they announced the 777X) is one of the two best airliners presently available: the Boeing Dreamliner. One can only imagine what a 737 replacement using those technologies would have been.

      Boeing executives sacrificed the company’s future to get some orders right now, and failed even there because even before the first 737 MAX flew it was seen as an also run.
      As an old friend of mine says in these cases “What company will they ruin next once they realize they need to bail out to avoid being tarred and feathered by an angry mob?”.

      • Max Power
        Jul 8, 2019 at 3:01 am

        An all-composite narrowbody would have been an interesting concept to try.

        The airlines are reporting pretty insane fuel savings with at long ranges on the 789 compared to say a similar payload carried by a 772, and the 772 isn’t even that old of a design.

      • MCH
        Jul 8, 2019 at 12:50 pm

        Well, most of that can be put on the head of Jim McNerny, who after screwing up 3M was awarded the bigger role of screwing up Boeing. I remember the inception of the Max very well, Airbus had come up the NEO. Then, they took a large order with American, which pretty much prompted Boeing to come up with its own new engine option.

        Basically some of these horrible CEOs can be traced back to the days of GE under Neutron Jack. When Jack was looking for a successor, there were basically three or four guys in the running, the eventual winner for that job killed GE. But the losers managed to go out and kill other companies in the process.

        Yellowstone would’ve been pretty nice, but they’ve essentially taken all of the lessons learned from the 787 and chucked it out the window. Sad….

        But at least McNerny made out like a bandit.

  14. WSKJ
    Jul 7, 2019 at 5:20 pm

    MC01, what jumps out at me is that 200 is such a suspiciously round number. Hey, I always look forward to your picture-worth-a-thousand-words photos. Maybe one here showing Boeing execs with smiley faces would have been appropriate ?

    Thx

    • Max Power
      Jul 7, 2019 at 5:38 pm

      It’s because it’s not a firm order but more like an announcement of an intention to buy.

    • MC01
      Jul 8, 2019 at 6:32 am

      200 aircraft is the starting point for negotiations between IAG and Boeing. We’ll see where things go from here.

      IAG has already taken advantage of order cancellations to buy 18 777X: these were all aircraft originally ordered by well-known financial black hole Etihad before reality hit the Abu Dhabi carrier in the face. It’s widely rumored the further 24 options placed by IAG give them rights to the remaining 6 Etihad orders plus any other cancelled order.
      The 777X runs the serious risk of becoming another Airbus A380: out of the 325 ordered so far, 150 are earmarked for Emirates and a further 60 for Qatar Airways. In short the 777X would not have got off the ground without these maxi-orders by the usual suspects and airlines would have ended having to bite the bullet and buying the 747-8, the only aircraft in production filling that niche.

      The big problem with Airbus aircraft is the same problem they have always had: cargo carrying capacity. Leaving freighter conversions aside, Airbus have always been designed with lousy cargo carrying capacity. The A350-900 is the first to break with this nasty habit, but it still has about the same cargo capacity (170m³) as the slightly smaller 787-9.
      Companies with large (and lucrative) cargo contracts need all the cargo capacity they can get: that’s why Lufthansa bought the very niche (albeit very fast) 747-8 and was the launch customer for the 777X. The group makes a pretty penny with cargo contracts, especially on South-American routes, and loves having plenty of cargo room.

  15. sunny129
    Jul 7, 2019 at 5:26 pm

    BA have completely lost their credibility!

    https://leehamnews.com/2019/07/05/bjorns-corner-cutting-corners-in-aerospace-costs-a-fortune/

    Bjorn Fehrm, the author of the article is a fighter pilot and an aviation consultant.
    A set of comments by Fehrm in reply to a question- summarizes the core problems, succinctly facing Max! ( via Mishtalk com)

    -Research: MCAS was implemented with repetitive nose down trim commands if AoA stayed high. The research for the update found the necessary augmentation only needed one nose down cycle.

    Research for MCAS was not correctly done.

    -Implementation: MCAS was implemented with a single sensor trigger and without global limitation on nose down trim. The implementation of the update uses dual sensors and deactivation of MCAS if they don’t agree. It also has a global limitation of nose down to leave 1.5G nose up authority to the pilot via the elevator.

    The implementation of MCAS was not correctly done.

    -Testing: The testing of MCAS was done by Boeing on behalf of FAA. It did not judge the single sensor triggered repetitive MCAS as dangerous. It judged the Pilot would easily identify an incorrectly functioning MCAS despite not knowing of the function and how to distinguish it from the very similar and ever-present Speed Trim System function.

    The testing of MCAS was not correctly done.
    —————————————————-
    Bottom line:
    The damage to their CREDIBILITY is overwhelmingly understated!

  16. Mike
    Jul 7, 2019 at 9:52 pm

Comments are closed.