Tag Archives: Airbus

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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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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Airbus vs. Boeing, comparison of market forecasts (2017)

Two weeks ago, during Le Bourget air show in Paris, both Airbus and Boeing released their market forecasts for the following 20 years: Airbus’ Global Market Forecast (GMF, PDF 3.6 MB) and Boeing’s Current Market Outlook [PDF, 3.8 MB].

In previous years, I have published comparisons (1) of both Airbus’ and Boeing’s forecasts. You can find below the update of such comparison with the latest released figures from both companies.

Forecast2017

Comparison of Airbus GMF and Boeing CMO 2017-2036.

Some comments about the comparison:

  • The main comment for this year CMO is that after years of Boeing dowplaying the demand for the segment of the large aircraft (seen as mainly 747, A380 and some other high capacity aircraft, depending on the manufacturer), it has finally stopped to consider them a category by themselves and has merged that category with the “intermediate twin-aisle” (i.e. 777, A350…).
  • Excluding the large aircraft, both companies’ forecast for the twin aisle segment is nearly identical: ~8,175-8,210 aircraft (we may assume that about 100 of those 8,210 from Boeing’s CMO correspond to large aircraft, thus comparing apple to apples would be ~8,175-8,100). The mix between small and intermediate twins varies, ~400 units up and down.
  • On the other hand, Boeing forecasts about 4,700 single-aisle more than Airbus (the gap has widened in 100 units this year). Boeing doesn’t provide the split between more or less than 175 pax capacity airplanes since its 2015 CMO, nor does Airbus since 2016.
  • Alltogether, Boeing sees demand for 10% more passenger aircraft (excluding regional a/c and freighters) with a 9% more value. The gap is slightly lower than in 2016.
  • In relation to last year’s studies, Airbus has increased demand by ~1,700 aircraft (and ~ 190 Bn$) whereas Boeing has increased it by 1,400 (and ~ 130 Bn$).
  • In relation to traffic, measured in terms of RPKs (“revenue passenger kilometer”), that is, the number of paying passenger by the distance they are transported, they see a similar future: Airbus forecasts for 2036 16.5 RPKs (in trillion, 4.4% annual growth from today) while Boeing forecasts 17.8 RPKs (4.7% annual growth).

Some lines to retain from this type of forecasts:

  • Passenger world traffic (RPK) will continue to grow about 4.5% per year. This is, doubling every ~15 years.
  • Today there are about 18,890 passenger aircraft around the world (according to Airbus; 19,130 in Boeing’s CMO), this number is about 800 a/c more than the year before (5% increase) and will more than double over the next 20 years to 40,120 a/c in 2036 (41,320 as seen by Boeing, excluding regional jets).
  • Most deliveries will go to Asia-Pacific, 42% or ~17,000 passenger aircraft (according to Airbus).
  • Domestic travel in China will be the largest traffic flow in 2036 with over 2,000 bn RPK (according to Boeing, an annual growth of 6.1%), or 11.6% of the World’s traffic.
  • Nearly 13,000 aircraft will be retired to be replaced by more eco-efficient types.
Middle_Class

The doubling of the world’s middle class over the next 20 years will fuel air traffic growth and new airplanes demand.

As I do every year, I strongly recommend both documents (GMF and CMO) which provide a wealth of information of market dynamics.


(1) Find here the posts with similar comparisons I made with the forecasts of previous years: 201020112012, 2013, 2014, 20152016.

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Boeing vs. Airbus: CEO compensation (2016)

For the last 3 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 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 2016 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’ 2016 compensation (financial statements here, PDF, 1.0 MB, page 59):

Enders_2016

Airbus CEO Tom Enders 2016 compensation.

Enders saw its base salary increased in 100 k€ after 3 years at 1.4 M€. Variable pay also increased substancially, but share-based remmuneration decreased in a bigger amount. The overall compensation (6.25 M€) decreased, as it has been the case for the last 3 years.

Boeing CEO, Dennis Muilenburg’s 2016 compensation (proxy statement here, PDF, 4.2 MB, page 30):

Muilenburg_2016

Boeing’s CEO Dennis Muilenburg 2016 compensation.

Dennis Muilenburg saw its base salary increased in 50 k$, after a decrease of 330 k$ last year in the transition between McNerney and him. Incentive percentages were kept constant, has been the case in the last 4 years. The total compensation (15.18 M$) increased in relation to 2015 but it is still bellow the 2014 levels (17.8 M$).

Comparison. It is interesting to note that while the base salary is nearly the same, 1.5 m€ vs 1.65 m$ (more so taking into account average exchange rates in 2016 (~ 0.90 EUR/USD)), the incentive schemes at Boeing end up with a total remuneration for the CEO about the double (x2.2) of that in Airbus.


(1) See the previous comparisons for the years 2013, 2014 and 2015.

(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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Leadership perspectives from a TOPGUN pilot

A few days ago, I attended a conference by an executive from Airbus recently founded subsidiary . The talk was on Leadership Perspectives, from his experience in government (as a White House military aide for two US presidents), as an aviator in the US Marines, within the aerospace industry, etc. The resume of David Kalinske is impressive, take a look at his profile here.

The conference in itself was rather classic and straightforward; going from a discussion on the definition of leadership to its main traits (no charisma, extrovert or outspoken type of person among them, by the way), principles of a good leader, a few key lessons learnt, some best experiences and recommendations, with a questions and answers session at the end of it. Plenty of common sense.

nfws_tgThere were, however, two sections from this speech that I found especially interesting and unique, which were the ones based on his takeaways from having served as a military tactical pilot (graduated in the TOPGUN school) and as an aide to presidents G. W. Bush and B. Obama. I will share below some of those takeaways with a few comments from my side.

Lessons learned from tactical aviation:

  • “You are only as good as your last flight”. Which in the business world may be translated as “as good as your last closed sale”, “your last analysis”, “test performed”, “meeting effectively managed”, etc. You need to be constantly aiming for the best performance.
  • “It takes a good wingman to be a good flight lead”. This one highlights the importance of team work, of developing the skills of the team members, empowering the team so they can take good decisions, delegate.
  • “Debrief, debrief, debrief” (1). Continuous effective communication and the importance of feedback loops cannot be overstated. Here I want to comment on the resource of the public speaking organization Toastmasters, which is heavily built around giving and receiving continuous feedback. It really helps oneself to get into that attitude.
  • “Be your own worst critic”. Don’t wait till someone has to point to you your own flaws and errors, be self-critical to improve yourself. In relation to this point, Chuck Yeager mentioned in his autobiography“Arrogance got more pilots in trouble than faulty equipment”. Moreover, Charles A. Lindbergh recalled in his autobiography the following piece of advice from his instructor in the Army (Master Sergeant Winston) “I just want you to remember this: in aviation, it may be all right to fool the other fellow about how good you are – if you can. But don’t try to fool yourself”.
  • “Plan from the target, outward”. Take this one as linked to setting smart objectives, realistic plans.
  • “Always be flexible. Your plan will never withstands first contact”. This relates to risk mitigation, the having a plan B, working on “what if” scenarios, etc. There is a similar line from former boxer Mike Tyson: “Everyone has a plan ’till they get punched in the mouth”.
  • “Make complicated missions understood by all”. The one person that has not understood the mission may become the weakest link on the chain. David mentioned that one striking difference between working in private companies or the military is the widespread knowledge of the organization’s mission, main objectives and how an individual may contribute to them in the latter.
  • “There are no points for 2nd place”. Sometimes there is no place for mistakes. The drive for excellence. Contracts are awarded only to the best offer.
  • “Bearing & discipline. Never appear rattled in the toughest circumstances”. Once there is a plan, the execution of that plan is key. The team, the leader cannot be constantly questioning the plan. My flight instructor used to say: “dans l’air, le cap c’est la vie”, once you have worked out your navigation plan, you need to rigorously stick to it. Charles A. Lindbergh described in his biography how the uncertainty of his flight across the Atlantic Ocean in 1927 made him wonder that, depending on the prevailing winds combined with his precision while flying, the land he would spot first could range from Norway to the gulf of Biscay in Spain. He spotted the Irish coast, right on the middle of his intended track.
  • “Face your fears”. David gave as an example public speaking; for that one I would recommend again Toastmasters. In a  more general context he referred to acquiring new skills, being adaptive to change, to getting out of your comfort zone. Chuck Yeager said “I was always afraid of dying. Always. It was my fear that made me learn everything I could about my airplane and my emergency equipment”.
  • “Nothing is accomplished without a team effort”.

Lessons learned from the White House:

  • You cannot please everybody. In the case of the president, there will always be 150 million people loving you and 150 million people hating you. You cannot take decisions trying to please everybody.
  • Do what you think it’s right based on your principles.
  • Hire the best, learn from them. Surround yourself with the best. As a motivational speaker put it “we are the average of the five people we spend the most time with”.
  • Be optimistic. 
  • Be an expert at dealing with bad news. And don’t let yourself be driven by them.

Conclusion.

The main takeaways, that I personally got from this conference, based on his general presentation and particularly on his experience as a pilot and in the White House, are: effective team work (including trust, empowerment, delegation), continuous candid and constructive feedback and keeping an optimistic attitude (including the reaching out of new experiences, getting yourself out of your comfort zone).

(1) David mentioned that even for dogfight flights that would not last more than 45 minutes they would have a post-flight debrief of up to 8 hours. This impressed me. I write myself a post flight report after every VFR flight, but my report may be about 1 DIN A4 length.

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Boeing vs. Airbus: CEO compensation (2015)

Last year, I wrote a couple of post titled “Boeing vs. Airbus: CEO compensation (2014)” (and 2013) in which I compared the compensation of both CEOs. Yesterday, I saw that those posts received a larger than usual amount of visits which reminded me that now, at the end of the year 2016, we can find the same information for the 2015 fiscal year. Thus, this follow on post.

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 will just copy the information below for comparison and future reference.

Airbus Group CEO, Tom Enders’ 2015 compensation (financial statements here, PDF, 1.7 MB, page 58).

Airbus Group’s Tom Enders 2015 compensation.

Airbus Group’s Tom Enders 2015 compensation.

In the case of Boeing, 2015 was particular in the sense that Jim McNerney was the CEO for the first half of the year and since July 1st the position is held by Dennis A. Muilenburg. Find in the table below the figures for both (proxy statement here, PDF, 3.7 MB, page 30):

Boeing’s Jim McNerney and Dennis Muilenburg 2015 compensation.

Boeing’s Jim McNerney and Dennis Muilenburg 2015 compensation.

It is interesting to note that while the base salary is nearly the same (1.4 m€ vs 1.6 m$, which after taking into account current exchange rate is almost equivalent) the incentive schemes at Boeing end up with a total remuneration about the double of that in Airbus Group.

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