Tag Archives: GMF

A380 sales compared to 747 sales at program start

Some weeks ago, in a discussion with a colleague we tried to put into context whether the A380 sales were such a dismal or not.

My colleague first plotted A380 orders since the program launch (2001) in comparison to those of the 747 (1966). I show below the result:

A380 and 747 orders referenced to the year of launch of each program.

A380 and 747 orders referenced to the year of launch of each program.

Both programs show an initial sales rush at the time of program launch. In both cases the rhythm of sales slowed down after the second year. In the first 11 years of program, each had managed:

  • A380: 262 orders.
  • 747: 357 orders.

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

However, I wanted to make 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 want to wait to see the aircraft in operation before placing orders. See below this second comparison:

A380 and 747 orders referenced to the year the 1st aircraft delivery of each program.

A380 and 747 orders referenced to the year the 1st aircraft delivery of each program.

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

  •  A380: 262 orders.
  • 747: 281 orders.

You can see that still, 5 years after the 1st delivery of each aircraft (2007 for the A380 and 1969 for the 747) Boeing had sold more aircraft, but with this reference the margin is lower, 19 aircraft.

Boeing 747. The Boeing 747 was the first wide-body in commercial aircraft history and still is the twin-aisle with the highest amount of aircraft sold (1,528 a/c as of today, probably to be soon overtaken by the 777) and delivered (1,464 a/c as of today). However, it has taken over 40 years to reach those numbers. The 1,000th unit sold was reached after 25 years of sales in 1990. The 1,000th unit delivered was also reached after 25 years of aircraft deliveries, in 1993.

Thus, in my opinion, when we want to measure the success of the A380 we cannot be distracted by the figures of other commercial aviation segments (single-aisle and small / intermediate twin-aisle) but we have to check what the 20-year forecasts for the Very Large Aircraft say:

  • ~1,300 aircraft according to Airbus GMF,
  • ~600 aircraft according to Boeing CMO,

and then see what could be expected market share for the A380 against those forecasts and whether it is getting the orders to reach it or not.

You can find orders and deliveries figures in both manufacturers websites or summarized here: A380 and 747.

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Twin-aisle aircraft deliveries 20-year forecast

I read in the following article “Airbus seeks to increase Washington State supply business; aims for 13 A350s/mo” (from Leeham News) how from a presentation of a A350 supplier (ElectroImpact) at an aerospace suppliers event in Washington State, it was concluded that the Airbus aimed at building 13 A350s per month, as the mentioned supplier had built its factory with capacity to extend production rates up to those 13 aircraft.

This would be news because in its presentations Airbus talks about a production ramp-up up to 10 a/c per month (as does Boeing for the 787, which 10 aircraft/month should be reached by the end of 2013).

Having analyzed several times Airbus’ Global Market Forecast (GMF) and Boeing’s Current Market Outlook (CMO), I believe that those production rates of above 10 aircraft per month should be expected by industry followers just by seeing the numbers included in those forecasts.

In 2012, the GMF forecasted about 6,500 twin-aisle to be delivered in the next 20 years. The CMO indicated 7,210 aircraft. In 2013, Boeing CMO slightly reduced the figure to 7,130 a/c.

Comparison of Airbus GMF and Boeing CMO 2012-2031.

Thus, both companies expect between 6,500 to 7,200 twin-aisle passenger aircraft to be delivered in the following 20 years (excluding freighters, 747 and A380 – these 2 considered as Very Large Aircraft in the studies).

1st approach. If we were to take the mid-point of both forecasts, about 6,850 a/c, and simply divided by 20 years, we would reach to an average figure of 343 twin-aisle aircraft to be delivered per year between the 2 manufacturers, or 28 a/c per month. If Airbus wanted to maintain the long-term 50% market share, it would have to aim at delivering 14 a/c per month between all its twin-aisle products, which soon will be A330 and A350.

2nd approach. However, current twin-aisle production levels are in no way close to those 343 a/c per year. In 2012 there were 258 deliveries thanks to the introduction of 787s, but in the previous decade the average was about ~165 a/c per year. Thus, manufacturers must have a deliveries’ ramp up to accommodate those 6,850 in the next 20 years. Not knowing what that ramp-up is, I just linearized from where we are today and what is to be delivered.

I plotted in the graphic below all the deliveries of twin-aisle (excluding Very Large Aircraft) from the 1970s to 2012, and then what a forecast could be departing from 2012 deliveries’ figure to accommodate ~6,850 a/c in the next 20 years.

Taking a look at the graphic, one can already understand that if we take the GMF and CMO forecasts as good ones, the manufacturing rhythm will have to accelerate in the following years, especially in the second decade. In the late 2020s, over 400 twin-aisle would have to be delivered per year (over 33 per month), thus manufacturers will have to churn above 16 a/c per month each, that is the double of what they produced during the last decade.

Twin-aisle deliveries: historic series (1970s-2012) and forecast (excludes VLA -A380  & 747).

Twin-aisle deliveries: historic series (1970s-2012) and forecast (excludes VLA -A380 & 747).

Market shares. One could wonder whether this growth will favour more one company or the other. I compared market shares (excluding VLA):

  • in 2012: Boeing delivered 155 twin-aisle (26 767s, 83 777s, 46 787s) vs. Airbus 103 a/c (101 A330s, 2 A340s)… 60% / 40%.
  • in 2003-2012: Boeing delivered 839 twin aisle (148 767s, 642 777s, 49 787s) vs. Airbus 880 a/c (44 A300s, 687 A330s, 149 A340s)… 48% / 51%.
  • in 1993-2012: Boeing delivered 1,687 twin aisle (572 767s, 1,066 777s, 49 787s) vs. Airbus 1,521 a/c (175 A300s, 31 A310s, 938 A330s, 377 A340s)… 50% / 45%.

[The shares in the past decades include marginal deliveries from Ilyushin models and McDonnell Douglas models, which share I kept out of Boeing even after the merger in august 1997, these are ~30 a/c to be added to the 1,687]

Seeing that market shares have been fluctuating but always around 40-60% for each company, they could expect to have to at least deliver 40% of those 6,850 a/c in 20 years, or of those above 400 a/c in the late 2020s.

Backlog. Finally, just to see how the twin-aisle mix for each company is going to be, let’s look at the aircraft on order (backlog) that each company has as of today (end June 2013):

  • Airbus (43%):
    • A330: 260 a/c to be delivered.
    • A350: 678 a/c to be delivered.
  • Boeing (57%):
    • 767: 56 a/c to be delivered.
    • 777: 339 a/c to be delivered.
    • 787: 864 a/c to be delivered.

Thus, of the 6,850 twin-aisle to be delivered in the next 20 years, about 2,200 are already contracted as of today (plus the above 130 a/c delivered within the first half of 2013), thus 33% of those 6,850 a/c is more or less secured and among those the split is 57 / 43 for Boeing.

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Aircraft market forecasts accuracy

In a previous post I wrote about how the predicted average aircraft size by Boeing in 1990 did not match the actual evolution of that average size since then. In a more general context, how accurate are these aircraft market forecasts? Especially taking into account that they forecast along a 20-year period.

I dug in the archives and found an article in Flight International‘s issue of 10-16 March 1993 which compared Airbus’ GMF and Boeing’s CMO (you can find 2012 comparison here). Some excerpts from that article:

  • “Boeing is projecting deliveries of 12,005 aircraft, worth $815 billion at current values, from 1993 to 2010.”
  • (Boeing) “The trend towards larger aircraft will accelerate so that, although single-aisle types will account for about two-thirds of all deliveries, they will comprise 74% of those up to 2000 and only 60% beyond.”
  • “Airbus Industrie has released an upbeat forecast, predicting market demand for 11,653 new jet airliners to be delivered during 1992-2011, up from the 11,500 deliveries predicted in 1991.”
  • (Airbus) “The manufacturer foresees an accelerating demand for widebodied aircraft, driving average airliner size from today’s 176 seats to 255 seats in 20 years.”
  • (Airbus) “The global jet-airliner fleet will grow to 10,000 by 1998 and to almost 15,000 by 2011.

Now, let’s see what was the fleet at the end of 2011. Seeing Airbus’ Global Market Forecast from 2012, the departing numbers are those of 2011 fleet.

  • Passenger aircraft: 15,556 a/c.
  • Freighter aircraft: 1,615 a/c.

Thus, 17,171 a/c at the end 0f 2011. The GMF from 1992 underestimated the 20-year market by slightly above 2,100 or nearly 15% error. Not a bad shot taking into account the time span used.

Let’s take a more recent example, this time from Boeing. In the CMO from 1997, we find the following chart showing Boeing’s forecasted fleet size and distribution for 2001, 2006, 2011 and 2016 year-ends.

1997 Boeing CMO year-end fleet forecasts for 2001, 2006, 2011 & 2016.

In 2012 CMO, Boeing offered figures of 2011 year-end fleet.

Fleet at year end 2011 according to Boeing 2012 CMO.

We can make a quick comparison:

Comparison of aircraft fleet at year-end 2011: 1997 forecast vs. actual (sources: Boeing CMO 1997 and 2012).

Some reflections:

  • The total fleet figure was missed only by 1%.
  • The single-aisle figure was missed only by 2%, though less larger single-aisle were acquired than expected.
  • Where the forecast is off mark is in both regional jets (underestimated) and twin-aisle, where there are almost 1,800 less aircraft in the current fleet than forecasted… another reason for Boeing to play down on A380 segment.

***

NOTE: Figures of current fleet from Boeing and Airbus differ. Some causes: Airbus does not include figures for regional jets, and definitions between large aircraft and twin-aisle vary from one company to the other. Other than that, figures for freighters are similar, 1,615 (A) vs. 1,740 (B), as they are for passenger single-aisles, 12,161 (A) vs 12,030 (B).

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Airbus vs. Boeing, comparison of market forecasts (2012)

Yesterday, John Leahy, Airbus COO Customers, unveiled at a press conference in London the new figures of the 2012-31 Airbus’ Global Market Forecast (GMF, PDF 5.6MB).

The last two years, I already published comparisons of both Airbus’ and Boeing’s forecasts (Current Market Outlook, CMO, PDF 3.0MB). You can find below the update of such comparison with the latest released figures from both companies.

Comparison of Airbus GMF and Boeing CMO 2012-2031.

Some comments about the comparison:

  • Boeing sees demand for 14% more passenger aircraft (excluding regional a/c) with a 19% more value (including freighters).
  • Boeing continues to play down A380 niche potential (56% less a/c than Airbus’ GMF), though for second year in a row it has slightly increased its Very Large market forecast, this time by 20 a/c, or 3.5%.
  • On the other hand, Boeing forecasts about 200 twin-aisle and 4,200 single-aisle more than Airbus, clearly pointing to its point-to-point strategy versus the connecting mega-cities rationale presented by Airbus.
  • 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 2031 ~12.8 RPKs (in trillion) (a ~4% increase vs last year GMF) while Boeing forecasts 13.8 (also increased about 3%).

The main changes from last year’s forecasts are:

  • Both manufacturers have increased their passenger aircraft forecast in about 500 a/c, less dramatically than last year’s change.
    • In the case of Airbus it has increased the single aisle segment, probably reflecting the success of the A320neo launch.
    • In the case of Boeing, they decreased both single aisle (130 a/c) and small twin aisle (300 a/c), but increased the intermediate twin-aisle in 900 a/c… selling internally a new version of the 777?
  • Both manufacturers have increased the value of RPKs in 2031.
  • Both manufacturers have increased the volume (trn$) of the market in this 20 years, 12% Airbus (to 3.7trn$) and 10% Boeing (to 4.4trn$).

Some catchy lines for those who have never seen these type of forecasts:

  • Passenger world traffic (RPK) will continue to grow about 4.7% per year (5.0% according to Boeing). This is, doubling every ~15-20 years.
  • Today there are about 15,500 passenger aircraft around the world, this number will more than double in the next 20 years to above 32,500 a/c in 2031.
  • The A380 market equation: Urbanisation + Mega-cities + Wealth = VLAs (Very Large Aircraft, i.e. A380 and B747).
  • Emissions of aviation industry amount to 2% of man-made CO2 emissions.
  • Centre of gravity of world travel will have moved from the Atlantic Ocean (in 1971) to the Middle East (2031).
  • A key driver here is the propensity to fly of the people as the economies of their countries grow. This is captured well by the graphic below, a classic in the industry. This time, Airbus mentioned in the GMF that it has carried out a survey during summer asking 10,000 people around the world whether they expected to fly more in the future. This was true especially in China and India.

Trips per capita vs. GDP per capita (source: Airbus GMF).

Again, I strongly recommend both documents (GMF and CMO) which, differences apart, provide a wealth of information of market dynamics. The complete book from Airbus will be published online next week according to Chris Emerson (SVP for Future Programmes & Market Strategy).

In case you find it tough, to read those kind of booklets, you may take a look at the video of the press conference, a great class on global economy, world aviation, forecasting, trend spotting…

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Airbus vs. Boeing, comparison of market forecasts (2011)

Some days ago, John Leahy, Airbus COO Customers, unveiled at a press conference in London the new figures of 2011-30 Airbus’ Global Market Forecast (GMF, PDF 28.8MB).

Last year, I already published a comparison of both Airbus’ and Boeing’s forecasts (Current Market Outlook, CMO, PDF 3.2MB). You can find below the update of such comparison with the latest released figures from both companies.

Comparison of Airbus GMF and Boeing CMO 2011-2030.

Some of last years’ comments still apply:

  • Boeing sees demand for 15% more aircraft with a 21% more value (excluding regional a/c).
  • Boeing continues to play down A380 niche potential (57% less a/c than Airbus’ GMF), though it has increased its Very Large market forecast by 40 a/c, or 7.5% (Did Emirates new order at ILA change their minds?)
  • On the other hand, Boeing forecasts about 600 twin-aisle and 4,000 single-aisle more than Airbus, clearly pointing to its point-to-point strategy.
  • 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 2030 12.3 RPKs while Boeing forecasts 13.3 (in trillion).

The main changes from last year’s forecasts are:

  • Both manufacturers have drastically increased their single-aisle forecast: +1,300 a/c in the case of Airbus and +2,200 in the case of Boeing.
  • In general all numbers have been increased: single-aisle (as mentioned above), twin-aisle (between 50-150 more), large aircraft (between 40-80 more), value of aircraft and RPKs… it seems that for commercial aircraft manufacturers not only the crisis is passed but they see a rosy future lying ahead.

Again, I strongly recommend both documents (GMF and CMO) which, differences apart, provide a wealth of information of market dynamics. I am especially happy to have encountered this year again full version of Airbus GMF, not only a short one [PDF, 4.7MB].

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New entrants in the commercial aircraft business

In a previous post, I mentioned the new entrants in the large commercial aircraft business (Bombardier CSeries, Embraer, Russian MS-21, Sukhoi SuperJet, Comac C919, Mitsubishi…). Now that the latest market forecasts both from Airbus (Global Market Forecast) and Boeing (Current Market Outlook) are available, I wanted to briefly note how they are treating the segment that most of these entrants would enter: single aisle jet aircraft.

For example, Boeing in this year’s CMO already splits the single aisle between 90-175 passengers (where new entrants would fall into) and over 175 passengers (still the safe harbor?). In previous studies Boeing didn’t offer such sub-segmentation. On the other hand, Airbus hasn’t published yet such differentiation.

It is even more interesting to compare last year’s GMF and CMO with this year’s ones.

  • Airbus saw a demand for 16,977 single aisle aircraft in 2009 while in 2010 sees a demand for 17,870.
  • Boeing saw a demand for 19,460 single aisle aircraft in 2009 while in 2010 sees a demand for 21,150.

In other words Airbus has increased the single aisle market forecast in 893 aircraft, while Boeing has increased it in 1,690 aircraft… Both have made the forecasted pie bigger before it will have to be shared.

On average, they see ~1,300 more single aisle aircraft than what they saw last year… In the case that these extra aircraft was room made for new entrants, that would leave the new entrants a market share of 6.7% of the single aisle market… not much.

However, those entrants are not yet delivering in that segment and most of their deliveries would come at the second half of the 20-year period. By 2029, it could well be possible that their combined market share is around 10%… still not a big share, but already ~7bn$ yearly business (in 2010 dollars); a ~4.4bn$ after discounts, an amount the size of Embraer revenues (the 3rd company in commercial aviation, reason enough for them to enter the segment).

Boeing even concedes that of the 21,150 single aisle aircraft, 86% of them will be between 90-175 passengers, precisely the market sub-segment that will be ferociously fought.

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Commercial aircraft market size after discounts (update)

In an older post I already made an analysis of the aircraft discounts related to the published list prices (by the way, Boeing just raised its list prices 5.2% a couple of days ago). In that case, I used the revenues and deliveries of Boeing in the previous 3 years (38% discount was the result!).

Using that information, now that the latest market forecasts both from Airbus (Global Market Forecast) and Boeing (Current Market Outlook) are available, we can say that the real market size in the next 20 years will be in the order of 2,100bn$ (average of both forecasts in 2010 dollars).

Flow of airplanes

Another very interesting feature that Airbus published in last year’s GMF (it is not yet in this year’s publication) and Boeing used for this year’s CMO is a graphic showing the dynamics of aircraft. In it you may understand how from today’s fleet, adding new deliveries, retiring old aircraft, converting some from passenger to freight transport they arrive to the forecasted fleet in 2029.

I include below both graphics.

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