Tag Archives: Airbus

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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Airbus vs. Boeing, comparison of market forecasts (2016)

Last week, on the first day of Farnborough air show, Airbus released the new figures of the 2016-35 Airbus’ Global Market Forecast (GMF, PDF 2.6 MB). This is good news, as it did so at the same time as Boeing released its Current Market Outlook (see a post here about it) and before it used to do so in September.

In previous years, I have published comparisons (1) of both Airbus’ and Boeing’s forecasts (Current Market Outlook, CMO, PDF 4.1 MB). You can find below the update of such comparison with the latest released figures from both companies.

Comparison of Airbus GMF and Boeing CMO 2016-2035.

Comparison of Airbus GMF and Boeing CMO 2016-2035.

Some comments about the comparison:

  • Boeing sees demand for 12% more passenger aircraft (excluding regional a/c) with a 10% more value (excluding freighters). The gap is higher than in 2015 (similar to 2013 and previous years).
  • In relation to last year studies, Airbus has increased demand by ~650 aircraft whereas Boeing has increased by 1,670.
  • Boeing continues to play down A380 niche potential (66% less a/c than Airbus’ GMF).
  • Both companies’ forecast for the twin aisle segment is nearly identical: ~7,600-7,700 aircraft (Airbus sees demand for about a 100 less aircraft than Boeing, mainly due to Boeing increased figures in relation to 2015). The mix between small and intermediate twins varies, ~300-400 units up and down. However, Boeing’s wide-bodies mix is not to be taken as engraved in stone, see the erratic trend in the last years here.
  • On the other hand, Boeing forecasts about 4,600 single-aisle more than Airbus (the gap has widened in 800 units this year). Boeing doesn’t provide the split between more or less than 175 pax capacity airplanes since its 2015 CMO, this year Airbus hasn’t included it either.
  • 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 2035 ~16.0 RPKs (in trillion, 4.5% annual growth from today) while Boeing forecasts 17.01 RPKs (4.8% annual growth).

The main changes from last year’s forecasts are:

  • Both manufacturers have increased their passenger aircraft forecast in between ~650-1,670 a/c.
  • Both manufacturers have increased the volume (trn$) of the market in these 20 years, by about 300-400 bn$.

Some lines to retain from this type of forecasts:

  • Passenger world traffic (RPK) will continue to grow about 4.5% per year (4.8% according to Boeing). This is, doubling every ~15 years.
  • Today there are about 18,019 passenger aircraft around the world (according to Airbus; 18,190 in Boeing’s CMO), this number is about 700 a/c more than the year before (4% increase) and will more than double over the next 20 years to 37,708 a/c in 2035 (39,750 as seen by Boeing, excluding regional jets).
  • Most deliveries will go to Asia-Pacific, 41% or 13,239 passenger aircraft (according to Airbus).
  • Domestic travel in China will be the largest traffic flow in 2035 with over 1,600 bn RPK (according to Airbus (x 3.7 times more than today’s traffic), or 1,897 bn RPK according to Boeing), or 11% of the World’s traffic.
  • About 12,830 aircraft will be retired to be replaced by more eco-efficient types.
Passenger traffic growth vs. global GPD growth.

Passenger traffic growth vs. global GPD growth.

As I do every year, I strongly recommend both documents (GMF and CMO) which provide a wealth of information of market dynamics. This year, Airbus included as well an excel file with its data, find it here [XLS, 0.3 MB]

(1) Find here the posts with similar comparisons I made with the forecasts of previous years: 2015, 2014, 2013, 2012, 2011, 2010.

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A380: 747 production rate throughout history

Back in 2013, I wrote a post comparing the orders of the Airbus A380 compared to those of the Boeing 747 Jumbo taking different references for the comparison. As I explained then, the idea for the post was triggered by a conversation with my friend Jose. A year later, in 2014 I wrote an update of that comparison (here).

This post is yet again triggered by another point raised by Jose (1) in another conversation a few months ago, when Airbus announced that it has reached the unit break even point for the A380 programme in 2015 with 27 deliveries. In that news it was already mentioned that the company sought to lower the number of aircraft for breaking even on any given year. The point became more relevant since Airbus confirmed, this week at Farnborough air show, that it would slow down its production pace to a monthly rate of 1 aircraft per month from 2018.

In our conversation, Jose looked at how the Boeing 747 production rate had evolved throughout history. Taking the figures from the 747 article in the Wikipedia (here), you can see the results in the graphic below. The bars show yearly deliveries. The lines the monthly production rate 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 (1).

747 rate

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: 2.7 airplanes per month (above 2.25 for A380 in 2015).
  • 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 1.3.
  • For the first 10 years of the 747 programme (as the A380 is just about to complete that first decade of deliveries), its production rate averaged 2.9 aircraft per month.
  • Even if not reflected in the graphic, for information, Boeing has announced that it would decrease production rate down to 0.5 airplanes per month (6 a year) from September 2016.

Time will tell if the rate for the A380 is sustainable and whether its market rebounds.

(1) I took 3 years to make the rolling average as the fact of confirming in 2016 a delivery rate decrease to be effective from 2018 may give an idea of lead times.

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Airbus, the biggest factory of France

Last Sunday, March 27th, the French TV channel M6 played, within its programme 66 minutes, the documentary “Airbus, la plus grande usine de France” (Airbus, the biggest factory of France). It can be watched in the website of the programme here (it lasts about 47′, in French).

A380The documentary opened with amazing scenes of the transportation of A380 components by road to Toulouse, it then covered different scenes of life at Airbus in Toulouse: the A380 final assembly line, the preparation and execution of flight tests (with again the A380 as flight test bed to test the Trent XWB 97k engine), inspections by the airlines of the finished product at the delivery centre, the factory and the Airbus lycée at Saint Eloi for apprentices, the cabin mock-up centre, last-minute negotiations and payment process at Airbus headquarters in Blagnac (“le quartier chic”)… It provides a good view of the life in Toulouse around aviation, including details down to traffic jams, lunch at the canteen, checks at the security gates, etc.

It was good to see the documentary with the family as it let us show where we wander around along the year.

In this post, apart from sharing the documentary I wanted to reflect on its title, “Airbus, the biggest factory of France“.

Airbus Group (1) employs over 130,000 workers world-wide. Over half of those work for Airbus, the division which builds commercial airliners such as the A380. This was the subject of the documentary. Airbus employs about 30,000 workers in France, over 15,000 in the Toulouse area (2).

To put this into perspective I will refer to and wanted to share the following sources:

MapThe reports and listings published by the French business weekly magazine “L’Usine nouvelle“. You can see here the latest listing of the top 100 factories in France. Be sure of it, Airbus Toulouse is the biggest one, followed by Michelin in Clermont-Ferrand and PSA-Peugeot Citroën in Montbéliard (Airbus Helicopters in Marignane comes 5th).

Even better, they published a handy map downloadable here [PDF, 5.5 MB] with those top 100 factories. If you want to study geography of France, you’d better start with this map.

 

An old post I wrote about the “Impact of Airbus in Toulouse employment” making some numbers using the concepts of direct, indirect and induced employment to gauge the impact of Airbus in a mid-size city like Toulouse.

(1) Formerly EADS, which encompasses Airbus commercial airplanes, Airbus Defence and Space (including military transport aircraft (e.g. A400M), fighters (Eurofighter) and former Astrium) and Airbus Helicopters (former Eurocopter).

(2) Between Airbus Operations and Airbus SAS (the headquarters or “le quartier chic” as labelled in the documentary).

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