Calhoun’s New Jet Delay Threatens Boeing’s Future In Airliner Business

Aerospace & Defense Editors’ Pick Calhoun’s New Jet Delay Threatens Boeing’s Future In Airliner Business Richard Aboulafia Contributor Opinions expressed by Forbes Contributors are their own. I cover aircraft markets, industry dynamics and strategies. Following New! Follow this author to stay notified about their latest stories.

Got it! Nov 8, 2022, 08:37am EST | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin Boeing CEO Dave Calhoun is recognized dby President Donald Trump in a ceremony to sign a trade . . .

[+] agreement between the U. S. and China in the East Room of the White House in Washington, D.

C. , on January 15, 2020. AFP via Getty Images CEO Dave Calhoun’s announcement at last week’s investor day that Boeing would not introduce a new jetliner until the mid 2030s marks a game-changing moment in the civil aviation industry.

It could be the beginning of the end for Boeing BA as a jetliner prime. The announcement was a significant departure from his comments at an investor conference last June that it would be a “couple of years” before a new jetliner was launched. The new time frame means that over 25 years will have lapsed between Boeing all-new jetliner launches, assuming that the new jet will be launched in 2030.

So, there will be very little “tribal knowledge” transmitted between design teams involved in the last clean-sheet program and the next one. According to Calhoun, “And then there’ll be a moment in time where we’ll pull the rabbit out of the hat and introduce a new airplane sometime in the middle of next decade. ” Who will be around at Boeing to make that rabbit happen? Talent retention will be a major challenge in general, as young engineers have just been told that this decade will involve nothing new.

The new time frame also raises questions about his rationale that it’s not worth doing until the new jet can incorporate significant efficiency-enhancing technologies. There may be disruptive technologies coming in the future. But the most promising ones are effectively “platform neutral”; greater autonomy and Sustainable Aviation Fuel (SAF) are useful for any new jet.

Propfans might or might not prove disruptive, but they were flight tested on jetliners in the 1980s, and while they might finally be ready for use in the 2030s, this slow road implies that their arrival won’t make everything else obsolete. Everything else, such as hybrid/electric or hydrogen propulsion, won’t be ready for large jetliner use in the 2030s, or even 2040s. Calhoun’s no new jet rationale, in short, looks like an excuse to not spend any money on creating new products.

This decision may be related to a plan to simply break up the company, a possibility I outlined here . MORE FOR YOU The ‘Backsies’ Billionaire: Texan Builds Second Fortune From Wreckage Of Real Estate Empire He’d Sold Daily Dozen | Forbes: Election Market Gains; Peloton Cofounders Reunited; Puff Daddy’s Next Move COP27: SMEs Play A Critical Role At The Nexus of Climate And Nutrition Either way, the rationale for the delay is based on a misunderstanding of aviation history. In June, Calhoun stated, “If you go back in history on new airplanes, they were never really started until the propulsion package brought somewhere around a 10%, 15%, 20% improvement over the last one.

” Well, no, not really. Perhaps some correct history would be of use here. What typically happens is that Boeing does an amazing job defining and designing a new product to meet market needs, and the resulting new jet arrives either at the same time as a competitor, or even several years after the competitor’s jet arrives.

And typically, Boeing does such a fantastic job that it trounces the competition. This process started with the 707 trouncing Douglas’s DC-8. Next, the 727 trounced Hawker Siddeley’s Trident.

The 737 trounced the DC-9, BAC 1-11, Sud Aviation Caravelle and others. The 757/767 trounced the A300/A310. The 777 trounced the A330/340 and MD-11.

The 777-300ER/200LR trounced the A340-500/600. It wasn’t about new engines; new engines benefit everyone. It was about beating the competition.

The only new Boeing jet launch that vaguely fits Calhoun’s statement is the 787, which used new engines and other technologies to trounce the A330-200 (and to fragment international air routes, and make the A380 look dumb). But even then, the 787’s propulsion technology was inevitably leveraged by Airbus. This led to the A330neo and A350XWB.

They may be competitive, but they don’t make the 787 a bad idea. Boeing’s problems with the 787, as with the 737MAX, had everything to do with program execution and nothing at all to do with product definition and launch. This brings us to today.

For reasons I’ve outlined here , airlines want the largest, most capable single aisle they can buy, and Airbus’s A321neo is in the right place. The order book stands at an astonishing 4,525 jets, and the 3,689 jet order backlog is larger than the entire 737 MAX family backlog (3,500 jets). Yet the A321neo is way overdue for exactly this kind of trouncing by a new Boeing jet.

The A321 airframe is 35 years old and could easily be beaten by something more capable. Many of those “firm” orders would likely defect, and new orders would all go to Boeing. Yet all Boeing has in this class is the 737 MAX 10, the last stop on the 737 line.

It has garnered less than one-fifth of the A321neo’s orders. There isn’t even a clear path to MAX 10 certification, and Calhoun has threatened to cancel this variant if the U. S.

government doesn’t grant it a certification deferral that allows it to maintain commonality with the rest of the MAX family. Airbus’ future has been greatly simplified by Calhoun’s latest announcement, which seems curiously oblivious to any possible competitor moves. All Airbus needs to do is continue ramping on the A321neo, and dominate the very strong middle market.

Then, they will create the stretched A220-500, which will gravely damage the 737 MAX 8, Boeing’s best-selling jet. With this path, by the early 2030s, Airbus will likely hold 70% to 75% of the entire jetliner market. Airbus can also reinvent the A320 series with a new wing and engines; this will bring them to 80% of the market.

With a diminished revenue base, and probably without the necessary talent, Boeing Commercial will not be able to create a new jet, and will simply fade away. The only alternative to this scenario is if Boeing gets a new CEO. Or if Boeing Commercial is spun off as its own company, or as part of a different company, and actually able to create a future for itself.

Richard Aboulafia Editorial Standards Print Reprints & Permissions.