Category Archives: Aerospace & Defence

Review of Boeing Current Market Outlook 2018

Two weeks ago, on the second day of Farnborough air show, Boeing Commercial published its yearly update of the Current Market Outlook (CMO) for the next 20 years of commercial aircraft market (2018-2037).

I have just compared the figures for passenger aircraft of the last two years’ CMOs:

CMO 2018 vs 2017 comparison

CMO 2018 vs. 2017 comparison.

Some comments to it:

  • You can see that the total number of new aircraft delivered has slightly increased from 40,110 to 41,750, a 4.1%, which is consistent with the 4.7% traffic increase (1) that Boeing predicts (2).
  • The volume (Bn$) increases by a higher percentage, 4.8% (280 Bn$) up to 6.07 Trn$. This is due to the increase in the single-aisle aircraft expected sales in volume (9%, +300 Bn$) and aircraft (6.2%, +1,830), as the other segments see both a forecast decrease in terms of volume and aircraft.
  • For years, Boeing has been dowplaying in its CMO the demand for the segment of the large aircraft (seen as mainly 747, A380 and some other high capacity aircraft, depending on the manufacturer). Last year, Boeing stopped to consider them a category by themselves and merged that category with the “intermediate twin-aisle” (i.e. 777, A350…). This year, Boeing has further reduced the detail provided in the wide-body category by merging large aircraft with the small wide-body (i.e. 787, A330…) segments and now provides a single forecast for wide-body.

This year presentation did not include slides showing the accuracy of Boeing’s CMO of 20 years ago in predicting today’s fleet. They used to include such a slide in previous years’ presentations. I will come back to that in a following post.

Find below a slide from the excutive summary [PDF, 263 kB] that provides a good snapshot of the forecast that the guys from Boeing have put up together:

BoeingCMOinfographic2018.png

As always, I recommend going through the CMO, as you can learn a lot about the business: from global numbers, to growth, traffic figures, fleet distributions, forecasts, etc… You may find the presentation [PDF, 5.1 MB], a file [XLS, 0.6 MB] with all the data or the full CMO report [PDF, 11 MB].

(1) Traffic increased measured in RPKS (revenue passenger kilometers) in trillions.

(2) These two ratios, 4.1% fleet demand and 4.7% traffic growth, point to an implicit increase in the average size of the aircraft in fleet and / or a higher utilization of the aircraft (higher availability).

(3) Find the reviews I wrote comparing 2017 CMO with 2016 CMO2016 CMO with 2015 CMO2015 CMO with 2014 CMO2014 CMO with 2013 CMO and 2013 CMO with 2012 CMO.

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Flight excursion to the Flying Legends airshow at Duxford.

Two weeks ago, Albert, a work colleague, and I took one of the aeroclub’s DR-400 airplanes to make a flight excursion from Toulouse to Northampton Sywell, Old Warden and Duxford (England) as part of a “Fly out” organised by the Aviation Society of the Airbus Staff Council, in which 6 aircraft would make the trip.

The main purpose of the flight was twofold:

  • Visit the Shuttleworth collection and their evening flight display on Saturday 14th July.
  • Visit the Flying Legends airshow at Duxford, hosted at the Imperial War Museum, on Sunday 15th July.
Mont Saint 34_Michel

Mont Saint Michel.

During the trip we were to make 6 flights: Toulouse Lasbordes (LFCL) – Cherbourg (LFRC), Cherbourg – Sywell (EGBK), Sywell – Old Warden (EGTH), Old Warden – Fowlmere (EGMA), Fowlmere – Laval (LFOV), Laval – Toulouse Lasbordes. In all about 14 hours of flight time, which we split among the two of us, together with sharing the navigation and radio communications workload.

Flights_picture

We prepared the flights using Mach 7 online tool, with which we generated the flight logs and routes for GPS, which could only be charged onto Albert’s smartphone, I replicated them in my Air Navigator app on my phone as well, however we did most of the navigation by way of following the paper charts.

Chart

Having to fly most of France from South to North, we decided to overfly some castles of the Loire Valley (Chenonceau, Cheverny and Chambord), the racing circuit of Le Mans and Omaha beach in Normandy (which we couldn’t see well due to the presence of clouds at the time we passed). See below some of the pictures we took of those places (with the smartphone, no pro cameras on board).

1_Chenonceau

Château de Chenonceau.

2_Cheverny

Château de Cheverny.

3_Chambord

Château de Chambord.

4_Le Mans

Racing circuit of Le Mans.

We then made a stop, refuelled the airplane, ate some energy bars and departed for England. The weather seemed uncertain and there were several air traffic restrictions due to the Royal International Air Tattoo going on at Fairford, preparations for Farnborough air show, and the visit of Donald Trump, staying at Buckinghamshire. However, our colleague found a corridor through which we could fly smoothly past 15 h local time. We over flew the English Channel (La Manche) and approached the islands by first flying over the Isle of Wight (where I stayed one month during the summer of 1999 working at Camp Beaumont in Bembridge, at the eastern corner of the island, pictured below), the Hayling island leaving Portsmouth to our left, then up North by way of Winchester, Reading, Oxford and then Northampton. But as you can imagine, as there are not sign posts in the sky we were flying following the instruments and different navigation references close to those places. We took the opportunity to over fly Silverstone racing circuit.

5_Isle of Wight

Isle of Wight.

6_Silverstone

Silverstone racing circuit.

We then landed at Sywell, where we stayed for a night at the Aviators hotel, by the aerodrome, an ideal place to make an overnight stop.

 

The following morning we made a short flight to Old Warden, a small grass aerodrome where the Shuttleworth collection is based.

I found about the Shuttleworth collection some years ago in Twitter and started following their account (@Shuttleworth_OW). They happen to have arguably the largest collection of flying aircraft from the 1910s and 1920s. They do have the oldest flying machine in airworthy condition, a Bleriot XI from 1909. Rather than introducing the collection with a few paragraphs, I share here this video from their site:

For me, visiting the collection was a dream come true, moreover on a day in which they would fly most of their airplanes. See below a few pictures.

10_Bleriot XI

1909 Bleriot XI. The original oldest airplane in airworthy condition.

11_Triplanes

1920s biplanes (DX60X Moth, Southern Martlet).

12_Bristol Boxkite

Bristol Boxkite 1910 replica flying.

9_Avro Triplane

Avro Triplane 1910 replica.

I wanted to share a short video I took of the Bristol Boxkite 1910 replica flying just after taking off (a replica built in 1965). It took its time to gain some altitude, always at quite low speeds. It never went much higher than 50 ft. It was wonderful to see it flying.

We stayed the night over at the camping by the aerodrome and in the morning we departed for Fowlmere, another grass aerodrome a few miles from Duxford. The taxiway at Fowlmere was fully packed of small airplanes (including the Antonov An-2 coming from Germany that you can see below) and tents of pilots that had been camping the previous night or would camp the following one, as we did.

 

We got a faboulous breakfast at the airfield and then drove to Duxford to attend the Flying Legends air show and visit the Imperial War Museum.

Flying-Legends-2018Our Fly out was organised by a fellow British colleague, Derek. He recalled how being brought to Flying Legends as a child by his father had been a marking moment. He only came again decades later. The air show is one of the biggest and best classic aviation events in the world. If you have the chance to visit it once, do not hesitate, go.

This year the show commemorated the 100th anniversary of the Royal Air Force and the 50th anniversary of the filming of Battle of Britain which had Duxford as one of the locations and some of those very airplanes as main characters of the movie. Other locations of the filming were the Tablada airfield in Seville (where Airbus Defence has facilities), the coast in Huelva passed as Dunkirk or San Sebastian as if it was Berlin.

There are plenty of aircraft to see up close, from the flight line, many exhibitors come with  books, models, clothing, memorabilia, etc., you’ve got the museum in itself (!) to visit, you have literally dozens of WWII birds flying, among them: Supermarine Spitfire (we saw a formation of 11 of them flying), Hawker Hurricane, North American P-51 Mustang and resident Boeing B-17 Flying Fortress Sally B (only B-17 in flight in Europe)… By the end of the day you will be more than overwhelmed, exhausted, but with that smile of wonder when watching those jewels fly up in the air while you hear the engines roaring, the music and the explanations from the commentator of the show.

21_Flying Fortress

Boeing B-17 Flying Fortress Sally B.

20_Flying Fortress

Boeing B-17 Flying Fortress Sally B.

 

See this short video of the Balbo formation flight at the end of the display with 25 single engine WWII birds flying…

After the show we headed back to Fowlmere where we had dinner with three other colleagues (French and German) before walking to the airfield to camp by our airplane, which felt as the aviation of the beginning of the XX century.

22_camping

Fowlmere_4

Monday 16th July, feeling exhausted and overwhelmed, was the day to come back to Toulouse. The weather seemed good in England and to cross the channel but not so in France, so we took it with calm. We flew through the East of London, crossed the channel and then overflew all the coast of Normandy down to Omaha beach, then we headed South West to the Mont Saint Michel and then to the airport of Laval. There we rested for a couple of hours, ate more energy bars, studied the meteorological conditions to go further South and finally departed back to Toulouse Lasbordes.

24_London

London skyline.

25_Qeen E II bridge & Littlebrook Power Station

Queen Elizabeth II bridge and Littlebrook Power Station.

26_Thames

Thames river estuary.

27_Cliffs d'Etretat

Cliffs of Étretat, Normandy (France).

28_Le Havre Pont de Normandie

Le Havre. Pont de Normandie.

29_Oil tankers

Oil tanker ships departing from Le Havre.

30_Sword beach

Sword beach (British). Normandy Landing.

31_Arromanches

Remainings of Arromanches mulberry bridge.

32_American cemetery Omaha

American cemetery at Omaha beach.

33_Omaha beach

Omaha beach.

Mont Saint 34_Michel

Mont Saint Michel.

Main takeaways and afterthoughts:

  • The airshows and visits were totally worth it. Dreams come true.
  • Over flying those castles, circuits, beaches, historical landscapes… you can imagine, breathtaking.
  • Radio communications: much easier than expected, in England as well (even if the there were lots of radio frequency changes to be made around London). French in France, English in England.
  • We made ourselves follow in each air space. It forces you to interact more with the control but it adds to the safety of flight (traffic information overflying Saint Michel or the castles is advice-able).
  • Flight plans: in France they are not required for the long flights we did South-North flying spaces E and G. But we filed them. It allows the control to better follow you. They know your plans, they give clearances for D spaces without hesitation.
  • All the terrains we visited in England required PPRs (a colleague took care of this).
  • To fly into England a GAR report must be submitted in advance.
  • We didn’t touch a single sterling pound in the four days, credit cards almost did the trick for everything. A colleague had to pay for a taxi and a meal. We could have avoided that by selecting alternatives which accepted credit card payment.
  • We had to divert due to the meteorological conditions when arriving to one of the destinations. Clouds and fog were closing our visibility. We found ourselves with no more than 3-4 km of visibility and flying very low, so we turned back. The two diversion aerodromes we had initially selected would not do the trick (in the middle of the cloud region). We had to look for a third one in flight. That was stressful. Luckily we were two pilots on board: one keeping the airplane on air, the other navigating, looking for a suitable aerodrome and downloading the aerodrome chart (we carried about 30 on board, but not the one we finally needed). Lessons learnt: never spare charts, you may need them; ensure you’ve got batteries and chargers on board (you may need them in the worst situation), if you are the only pilot on board, but have passengers with you, try to get one of them briefed in advance of what can he or she do if something happens.

After this excursion I have completed just above 120 flight hours, and I am quite happy with the flight training provided by the aeroclub and system in France. Before the excursion we had some uncertainties about some aspects of the flight. In the end all of it was much easier than expected.

 

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Boeing vs. Airbus: CEO compensation (2017)

For the last 4 years I have been writting a small series of posts comparing the compensation of Airbus and Boeing CEOs (1). This series started out of conversation with colleagues and I keep it updated to have a record of the evolution and for quick reference in other conversations (2). Thus, this post is just the update with the information for the 2017 fiscal year.

As both Boeing and Airbus are public companies, the information about their CEOs compensation is public and can be found in the annual report and proxy statement from each one. I just share the information and sources below for comparison and future reference.

Airbus CEO, Tom Enders’ 2017 compensation (financial statements here, PDF, 4.0 MB, page 58):

Enders_2017

Airbus CEO Tom Enders 2017 compensation.

Enders saw his base salary frozen in relation to 2016 at 1.5 M€. Variable pay decreased in 7.3%, post-employment benefit costs increased, etc. The main change in last year’s remuneration was the line “Termination benefits”, which in the notes it is explaiend as stipulated in 1.5 times the “Total Target Remuneration (defined as Base Salary and target Annual Variable Remuneration)”, as Enders announced that he will retire from the post when his current term expires in 2019. Thus, the overall compensation (9.1 M€increased.

Boeing CEO, Dennis Muilenburg’s 2017 compensation (2018 proxy statement here, PDF, 6.7 MB, page 30):

muilenburg_2017.png

Boeing’s CEO Dennis Muilenburg 2017 compensation.

Dennis Muilenburg saw his base salary increased in 50 k$. And with that all other incentive and other compensation concepts. The total compensation (18.45 M$) increased in relation to 2016 and has now raised above the 2014 levels (17.8 M$).

Comparison. It is interesting to note that while the base salary is nearly the same, 1.5 m€ vs 1.69 m$ (more so taking into account average exchange rates in 2017 (~ 1.13 USD/EUR)), the incentive schemes at Boeing end up with a total remuneration for the CEO about the double (x1.8) of that in Airbus.


(1) See the previous comparisons for the years 20132014, 2015 and 2016.

(2) From what I see in the stats of the visits to this blog, other people are having similar conversations as these posts with the compensation comparison have ranked among the top 10 most read ones the last years.

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Boeing commercial aircraft discounts (update for 2017)

A couple of weeks ago I published a post with “My forecast of Boeing Commercial Airplanes 2017 revenues“. In that post I built a forecast of Boeing Commercial revenues based on its 2017 airplanes deliveries, orders, list prices and my estimate of the discounts Boeing applies as a relation to what it reports in the revenues vs. what it publishes as list prices.

“I’ll try to guess the figure of revenues for the Boeing Commercial Airplanes division, not so much trying to be accurate in itself, but to point in advance to the increasing of the discounts as we will see below.” (excerpt from the referred post)

My forecast for Boeing Commercial revenues was 57.0 bn$. A few days later, on January 31st, Boeing announced its 2017 results. Boeing Commercial revenues were 56.7 bn$.

Boeing Commercial Airplanes revenues full 2017

As I already anticipated,

“[…] I see that their discounts have been greatly increased in the last 2017. […]

The implied discount of my revenues forecast would be in the ~ 50% range.”(excerpt from the referred post)

With those 56,729 bn$, the 2017 Boeing list prices, its 763 airplane deliveries and 912 net orders I come to an estimated average discount for Boeing commercial aircraft of 50.4%.

Discount evolution_2017

Boeing Average Discount Evolution, through 2017.

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Boeing 787 orders, cancellations, deliveries & backlog through 2017

Quick post with the updated figures and graphic of orders, cancellations, deliveries and backlog of the 787 programme at the end of 2017.

For the fourth consecutive year above 100 787 airplanes have been delivered in 2017, 136 deliveries, the third year in a row with above or 135 deliveries. At that pace, the backlog is being consumed quickly, especially since in the last years the wide-body market has been rather sluggish.

In the last 4 years, 351 orders for 787s were placed, offset by 87 cancellations (about 25%) for a total of 264 net orders, 94 of them in 2017, its best selling year since 2013. Book-to-bill ratio was 0.69 in 2017, less than a desired > 1, but better than in the previous years.

Since 2011, there have been 636 cumulative deliveries, that is 49% of the standing 1,294 net orders. Reversely, there is backlog of 658 aircraft to be delivered, 51% of the orders received so far.

787 orders and cancellations 2017

787 orders, cancellations, deliveries and backlog through 2017.

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Commercial wide-body airplanes’ deliveries per year, 1969-2017

In the last weeks, both Airbus and Boeing have released the figures of aircraft deliveries for the complete 2017. This is just a quick post to update a graphic with the commercial wide-body airplanes’ deliveries per year since 1969 (year of the introduction of the 747) till 2017 (1).

Commercial wide-body airplanes' deliveries per year, 1969-2017

Commercial wide-body airplanes’ deliveries per year, 1969-2017.

Some reflections:

For the first time ever, in 2015 over 400 twin-aisle aircraft were delivered in a year (412), the same feat was achieved in 2016 (402). In 2017 production descended to 394 twin-aisles, still the third best year in wide-body history.

The average number of deliveries for the previous 20-year period (1997-2016) was 239 airplanes per year. Up to now, in the 49 years of twin-aisle market, in only 6 years more than 300 airplanes were delivered in a single year, the six last years, and only in other 9 years more than 200 airplanes had been delivered.

The combined steep production ramp-up during last years has enabled to reach a production rate of more than the double of what was produced in 2010. In particular, the combined compound annual growth rate (CAGR) of the rate of deliveries for the last 10 years has been 7.1%. These rates are above the yearly growth of traffic (measured in RPKs).

With the figures up to the end of 2017, nearly 8,800 wide-body airplanes had been delivered. Thus, by mid-2018, we will certainly reach the 9,000th. However, we won’t know whether the 9,000th twin aisle will be a Boeing or an Airbus.

The share of wide-body deliveries in 2017: 59% Boeing and 41% Airbus.

There were 136 787s delivered in 2017. A remarkable feat: one aircraft short of its 2016 record of 137 deliveries, the largest amount of twin-aisle deliveries of a single model in a single year ever. Only the 787 and the A330 have ever been delivered in excess of 100 aircraft in any given year (4 times for each aircraft).


(1) See here a previous post with the figures up to 2015.

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A380 vs. 747: orders and production rates

After the recent announcement by Airbus and Emirates of the signature of an MoU for up to 36 A380 (press release), my friend and colleague Jose and I quickly wondered how would that leave a series of comparisons in which we set out years ago to compare how quickly or not sales of the 747 piled up back in its heyday.

See below the update of those couple of graphics.

First see in the graphic below A380 orders since the programme launch (2001) in comparison to those of the 747 (1966):

A380 vs 747 - Launch 2017

A380 and 747 orders referenced to the year of launch of each programme (up to 2017).

Both programmes show an initial sales rush at the time of programme launch. In both cases the rhythm of sales slowed down after the second year. In the first 18 years of program, each had managed:

  • 747: 615 orders.
  • A380: 337 orders (55% of 747’s). With a caveat being that we are now in January 2018 and through the end of the year the A380 could pile up some more orders.

Thus, we can see that the Boeing 747 was selling better already from the beginning of the programme.

I include again yet another comparison: aircraft orders taking as reference the year of first delivery, having heard so often the industry mantra that some potential customers would wait to see the aircraft in operation before placing orders. See below this second comparison:

A380 vs 747 - Delivery 2017

A380 and 747 orders referenced to the year the 1st aircraft delivery of each programme (up to 2017).

In this case, and due to the shorter time to develop the Boeing 747 since program launch (1966), the difference in sales is slightly narrowed:

  • 747: 554 orders.
  • A380: 337 orders.

You can see that, 11 years after the 1st delivery of each aircraft (2007 for the A380 and 1969 for the 747) the 747 had sold about 50% more aircraft and that is due to the pick up of sales it went through from its 8th year of operation.

Finally, I include below an update of yet another graphic in which we compared the Boeing 747 and Airbus A380 production rates throughout history. The bars show Boeing 747 yearly deliveries. The lines the monthly production rate for both aircraft and its 3-year rolling average. I took this average to smooth the curve even if it is very similar to the year-by-year data.

A380 vs 747 - rate 2017

Some comments on the 747 production rates (taken from its yearly deliveries):

  • The average monthly production rate since its first delivery back in 1969 has been: 2.6 airplanes per month (1.7 for A380).
  • During the first about 30-35 years (till ~2002-3) the rate fluctuated between 2 and 5 deliveries per month.
  • Since 2003 the rate has averaged 1.2.
  • For the first 11 years of the 747 programme (as the A380 just completed those first eleven years of deliveries), its production rate averaged 3.1 aircraft per month.

Time will tell if the market for the A380 picks up.

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