Wednesday, May 23, 2018

The DDG 1000 Becomes A Prototypical Hole In The Water

Laughter could sink a rowboat:

The money pit goes to sea as in the USS Zumwalt. It's all holster and no gun. It's as effective as a knife in a gunfight. The hull, at least slices through the water like a knife and fights like a ship no bigger than a fishing boat, or as some have some said of its radar profile. On the "Three Amigos", it was said, "I don't see no stinking railgun". Nor does it have a punch of a 5" shell going 67 miles because the round goes for $800,000 a shot. That's the same price of a one bedroom condo in the bay area of California. Therefore, no gun for the ship's holster. It can sneak up on other ships, well maybe it can after ten years of adversarial radar standards upgrading, but it can find an armed fishing boat.

The DDG 51 series was resurrected and now it faces an end of its build run as it approaches Block III DDG 120, making a Naval bookmarker for the Arleigh-Burke class destroyer program. The three-ship naval blockade of the Zumwalts will pour more money into that hole found in the ocean than the Titanic could even hold in its sunken mass. More trees are cut down each year in the Amazon jungle for making US currency while paying for Zumwalt's prototypical mishaps. The demise of the paper-making Amazon forest may destroy the breathable atmosphere and become one of the Zumwalt's biggest secret weapon.

The biggest Zumwalt mishap to date is letting too many Naval experts into the same room during the Zumwalt's planning phase. Whatever happened to good ole American garage know how? Now I'm worried that if some off-the-shelf drone could lead a cruise missile into its $8 Billion hull.

Zumwalt is surrounded by Fishing Boats it missed in the fog
Image result for zumwalt ddg 1000

United Airline Board Ponders Winging IT Suggests

United's board is engaged in a decision-making round of fleet renewal proposals with possibly a decision coming in a direction for future airplane purchases. Winging It considers the board is seeking a one-maker fleet for simplification even though United mentioned all makers are on the table for its fleet replacement.

Plane Spotters/United Detail Order Column A Winging It Proposal

The chart reflects an order column with possible fleet renewals from a “Winging It's” perspective totaling 690 units from single-aisle to Wide Body class of commercial aircraft. The suggested total is from a class to class replacement model using Boeing aircraft only for a one fleet type replacement. Of course, there will be many adjusting factors as United fine-tunes its fleet according to its own needs. This chart illustrates what Boeing is facing in an Airbus dual. The order potential would be placed over 10 years with firm orders and LOI's pacing the fleet building process as United moves with all new airplanes it desperately needs. The Plane Spotter data is just a starting point and it assumes United will not seek a split of either the Airbus or Boeing offering.

Tuesday, May 22, 2018

Airbus says, "Boeing suffered little real damage"

The WTO says, "Airbus fixed the system and hurt Boeing."

Carl Sandburg Said,

“If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell”

Airbus says, "yell like hell!" (Airbus also says, "Boeing suffered little real damage") 

Sunday, May 20, 2018

70 Isn't A Lonely Number, Its Invisible

On your 20th birthday, it should be called, "the Oyster birthday", you are the peril. At age 30 people see the 20-year-old in you with an extremely attractive view. At 40 this former 20 something turns leader and everyone admires this rendition of a  20 marvel as the head widget maker. Then come to the 50th B-day and the touch of grey hits this former twenty-year-old head, don't get sacked. Even the 30 somethings marvel at a 50-master- looks, making any other 20-year-old look childish. 

At 65, the scary thing becomes almost complete invisibility just over the hill. No one notices you or can identify that 20-year-old in the mirror who once dominated the cultural scene. In a few short years, 70 appears and poof you are invisible and no one notices. The twenty-year-old no longer exists and the 70-year-old is finally free of a value system built on specific age-related looks. Being 70 allows you to stand at the back of the room and hand out programs at an event attended by 30-40-year-olds who know so much and dress so nice. Another "70 something" approaches the back wall and nods with a wry smile as if saying "we are free and no one cares because our old looks have made us invisible"! An old Holywood poster shows a  young budding star and then on The Today Show, a guest appears. Who is that same starlet from fifty years ago? The teenager racing to high school notices the guest on TV and smugly remarks, "whose that old bag"? 

Invisibility has hit the former twenty-year-old rising star, aka "old-bag" on the Today Show. It's good to be invisible, you can do so much and no one notices! Three score and ten is the prize, You are invisible now conquer the world.

Saturday, May 19, 2018

Remember John Leahy, The Airbus Marketing Guru

Well, a course correction has occurred for Airbus fortunes. It is facing a North America trifecta with American, United, and Delta airlines. The first shoe dropped when American Airline ordered 47 widebody 787's last month leaving Airbus the bridesmaid once again. Airbus lost to Boeing in Hawaii when its main airline on the island switch from A330 to 10 787's on its order book. 

United will have a plethora of fleet slots when it retires its last 767's numbering about 50 and Airbus once again is in a position of being slighted by those pesky Yankees. The term, "once again", pops up in this blog too many times.

John Leahy an American born business personality kept Boeing at bay for many years, while leading Airbus' most noted programs evolving in the marketplace. He was the Airbus tip of the market spear and has since retired, as all good people born in 1950 have probably done so by now. He loved to jab his spear in Boeing's side at an airshow as he sandbagged order announcements, and then announcing after Boeing would make a significant announcement. He also held customer orders in confidence until Boeing announced its final booked order for the year, then Airbus ends the year with a mass Leahy order, making it the top dog for the year. All these maneuvers agitated Boeing and made them look "secondarily" number two(hah). 

It worked as the Airbus single-aisle order book soared to new heights. He forced Boeing to bring on the Max. Boeing got the Leahy message and bracketed the Airbus widebody market with three 787's and two 777X types. It now looks as if it will roll out its stepchild, the 797.

At the top, it was mentioned a trifecta and Delta completes the North American sweeping out of Airbus from Boeing's door. The 797 will make Delta whole again with North America's patriots when becoming Boeing's North American launch customer for its type. United Airlines will order Boeing 787 over Airbus as it replaces its old portion of the fleet of 767's.

John Leahy's retirement ended the Airbus market run and sealed its corporate profit doom for the time being. The NW, MW or SE airplane "top dog" is already making headway in just a few months since Leahy takes his Syracuse MBA home again. Airbus lost its dog in the fight. It is now facing the NMA without an adequate plan. The A321NEO is not positioned to both take on the single-aisle and the dual aisle Boeing onslaught at the same time. It must come up with its plan "B" with another John Leahy NEO type it hasn't found. Boeing will go North of 100, 787's ordered this year, while Airbus will have a negligible widebody order book report at year's end unless Airbus pulls one more fast one with a December mega order announcement.

John Leahy saw the writing on the wall, he was 68 and Airbus was boxed in without the means for an immediate answer for Boeing's airplane designs. However, his golden parachute is floating just fine.

Friday, May 18, 2018

Why Delta Makes Sense For 797 Launch Customer

It has been an irritation to Boeing that Delta orders Airbus widebody A-350's and A-330's. Boeing also suffered a cancellation from Delta for long-held 787-8 order thus sending a second shot over Boeing's bow a second time. Boeing is not a Delta stepchild it merely did not line up with Delta's leveraging plans and struct the best value deal with Airbus using Boeing as a backdrop for low balling Airbus.

Here come the 797 and things are becoming a serious matter for Boeing. Delta has no Airbus player in place for this much-needed class of airplane and Boeing is going to offer an NMA solution soon. Delta has lost its leverage over Boeing when using Airbus for pricing value. Only a new offering and launch customer status could give Delta some bargaining chips on the table and that is why the Boeing NMA will have a North American NMA launch customer with Delta Airlines. Further examination of Delta's fleet and order book suggests the Boeing NMA will slide in neatly with the current  Delta fleet. An Authorization to Offer (ATO) is pending

CAPA Photo chart for Delta Airline fleet Type by Model/Maker 

The Delta Gap is found with its older 757 and 767 models which it has 219 Boeing frames on the flight line, and is a natural slot for the 797 model. Airbus has 100 A321 represented in Delta's backlog and has deferred 10 of its A-350 backlog a smidgeon until  2019 and 2020 delivery slots.

Delta has 41 Airbus widebody and it could defer some of its A-321 order books once Boeing's NMA issue is solved. A suspicion is Boeing and Delta are collaborating on an NMA  design as a Delta ordering sweetener. The two big launch customers are each coming from Asia and North America. Delta has over two hundred frames open for an NMA slot and a reduction of the A321 backlog by 25% is not inconceivable. An order for 200 NMA's and 100 options from Delta is a real possibility. A launch customer announcement would disrupt both American's and United's flight plans.

The entry into Service date having an ATO in 2018 would place the initial NMA's batch into customer's hands by 2026, at the earliest. A second suspicion is Boeing is further along with the NMA program process than what is assumed by all aviation insiders at this time. The design is almost off the CAD board and customers are tentatively lined up where it is known what Boeing proposes is a firm concept. The process has progressed to a promising stage, "if you do this we'll do this", status. The big hold up is the institutional phase of build capacity, supplier commitments, and most of all the engine program stage. Does Boeing have a workable engine from its group of suppliers? Other hold-ups are also institutional in manner referring to financing, and cash flows before announcing. Can Boeing avoid a 787 deferred costs debacle it had with the 787 program?

All-in-all, Boeing is very busy crossing the T's and dotting the "I's" for this ATO. Every day a check item is completed and launch customers are informed if any program checks alter the original design offering since the customer verbally or by memo agreed with the original concept proposal. The normal but stressful business stuff is happening at an ever-increasing pace culminating with an all-in shout out from Boeing, usually happening at a big airshow. 

Thursday, May 17, 2018

Flight Global Makes The NMA Case For Legacy Opertors

The link above makes the NMA case, Boeing has an eight-year window for its NMA build and order cycle using legacy carriers such as Delta and Chinese airlines. However, the possibility exists where emerging airline may jump in and fill the Boeing ATO (Authorize To Offer) call out announcement.

"Momentum appears to be gathering around Boeing's proposed New Mid-market Airplane (NMA) – already being referred to by some as the 797. Reports indicate a potential launch this year or in early 2019, although this is perhaps more likely to refer to an authority to offer (ATO), rather than the full industrial launch."

If Boeing gets 400-500 solid ATO commitments it will go with an ATO this summer. However, the commitment sources may come from emerging Airlines in the Asia region such as the Singapore or Malaysia regions. China does have several opportunities from its other regional airlines which already have 787 product.

Delta is the top of the Flightglobal's heap for the North American short list. However, a small detail is that Air Canada announced it will cancel its 787 options thus signaling a possible NMA interest. It cited financial and market conditions for the 787 option cancellation. 

Airline order books should be watched closely if they trim current order commitments while signaling room for an NMA commitment. This is based upon an impending Boeing ATO announcement in 2018 that only an airline would have knowledge of since it is privileged knowledge for an impending Boeing ATO. The whole mess will sort out once the big reveal is made by Boeing's official offering of the NMA.

Boeing Reach Its 787 50-50 Benchmark

The 50-50 benchmark is a point where the same number of 787 delivered equals its reported backlog as shown below:

This is a significant milestone for Boeings' 787 programs. More orders are being booked at this time so the 50-50 relationship will drop back closer to a 48-52 relationship unless held for Farnborough  Airshow, then it remains close to 50-50 book to bill ratio or the perfect "one" most manufacturers seek. 

The Huge Dubai Mystery Deal For Single Aisle

Reuters broke a story in the last 48 hours. Boeing and Airbus are in talks bidding for up to 400 Single Aisle aircraft which Identifies the A-320 Neo and the 737 Max family of aircraft. It's not a winner takes all customer award but a mix coming from both mega aircraft builders. The battle is for who gets the most orders in this latest battle round. With it comes bragging rights.

This latest battle may trend the market towards who becomes the winner going forward. The Airbus offering has beat Boeing's own single-aisle offering of NG's and Max. However, in 2018, Boeing is making headway against Airbus in the bidding wars from customers in both the wide body and single-aisle category. Since this is pre-Farnborough airshow talk, I would expect the order announcements will occur during this airshow, the month of July 2018.

It would be a biased opinion to even predict an outcome. However, the price factor will play an important decider for this deal as both makers offer a very good product possibly for different reasons. The airplane efficiency is almost a push depending upon how you read the data or whom you believe is telling the correct story. The third point is what airplane best fits a Dubai business plan using maintenance numbers and commonality positions. This broad sweeping potential order will cover both makers where the stronger balance of orders will go with factors from efficiency and commonality from the airline building its fleet. No airline name was actually mentioned only just the deal-making is occurring with Dubai Aerospace Enterprise (DAE), a leasing company. Which supplies aircraft to Middle East customers. Currently, its fleet is about a 50-50 split between Boeing and Airbus.

DAE 2017 Fleet Report

A DAE deal is driven by what its customers want and future market projections in its region as DAE may want a build-up of backlog orders anticipating future orders. If Boeing does secure a big lead with this order, DAE sees a future demand for the Max over the NEO. If it remains a 50-50 split then status quo remains what its customers want. The unit price will drive this big deal demand. Predicting who wins is a wait and see processing. Perhaps there is an underlying factor not yet measured such as DAE has a leasing customer who wants its fleet from a certain maker.

Tuesday, May 15, 2018

Israel Eyes K-1 Airbase

Northern Iraq has an airbase just 100 air miles from Iran's border. The Kurds have this air base and have requisitioned the surrounding oil away from Baghdad Iraq. The air base is called K-1. Israeli based fighters cannot fly to Iran and back without tanker fueling which it does not have in abundance. The F-35 can punch a one-way ticket only for about 1,000 miles or it has a combat radius near 600 miles. Landing at K-1 with F-35's would make Israel the top dog in the Middle East and would cause Iran some severe heartburn. The US would, of course, assist via CIA with this venture.

Israel could use this Kirkuk asset when looking at Iran

Near Kirkuk K-1 base with a Soviet-era headstone
Image result for Iraq K-1 airbase

Israel has a plan or workaround for dealing with Iran and the Kurds have a big role in this plan but the US will need an assist from the Kurds going forward for years to come. Therefore, watching the US partnership with the Kurds is the tip of the Iceberg. Back to the F-35i.

Israel needs about 25 F-35i for this venture in punishing Iran for its support of Hamas in Syria. At this time a notepad becomes handy for writing down the players.  Lockheed needs to sell Israel, not 50 F-35i but twice that number once production prices reach $85 million a copy. Israel could mitigate airfield requirements with the F-35B, which it does not have on order from Lockheed at this time. Trump may advance Israel billions with defense treaty negotiations. That is how Israel has nine F-35i at this time. The US bought them for Israel via defense treaty.

K-1 Airbase, a former Iraqi-Baghdad airbase, is in Israel's crosshairs as a place to land its F-35i's, but not getting ahead of myself deals have to brokered.  

The US pays the Kurds for weapons it also pays Israel for the F-35i. Once the  US is divested from Iran nuclear treaty(done), Trump can make more deals with Lockheed, Israel, and the Kurds. "Poof", no more covert Iranian nuclear program the F-35i is that good.