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Not something that a lot of us want to hear :!:
HOME > COMMERCIAL AVIATION > BOEING’S 747 STRUGGLES INDICATE LARGE-AIRCRAFT MARKET DECLINE
aviation-week-space-technology
To find the first official hint of the possible end of an aerospace icon, read page 17 of the July 27 Form 10-Q filing to the U.S. Securities and Exchange Commission (SEC), signed by Robert E. Verbeck, senior vice president and corporate controller of the Boeing Co. And make sure to read the last sentence of the paragraph, too: “It is reasonably possible that we could decide to end production of the 747,” the filing states.
The potential beginning of the end of an aircraft that has changed aviation like almost no other is being signaled as discreetly as possible. Ending production will surely be a difficult decision, given the role the aircraft has played for Boeing in the 46 years since it entered commercial service. And former program chief and 95-year-old Boeing legend Joe Sutter would surely vote against it if he had a seat on the executive committee. But a little more than 50 years after the 747 program was launched, all signs suggest the 747’s era is finally drawing to a close.
On July 15, 1966, Boeing announced the production launch of the program with orders for 25 jets for Pan American World Airways. At the time, Aviation Week & Space Technologyreported that the company had also secured orders for four 747s from Lufthansa and three each from Japan Air Lines and Air France.
With development of the Anglo-French Concorde and Boeing’s own 2707 supersonic transport underway also, it was expected the 490-seat aircraft would have a relatively brief life as a passenger jet. “As supersonic transports begin to make their appearance in the mid-1970s, [analysts] predict that the passenger appeal of the faster aircraft will cause the conversion of the majority of the 747s to a combined passenger-cargo configuration and, eventually, to all-cargo,” states an article in the Aug. 1, 1966, edition of the magazine. At that time, Boeing still believed it could develop a supersonic transport that could make money from fares that would be only 10-15% higher than for the 747.
The view that supersonic transports would take over from the likes of the 747 eventually was shared by many in the industry. Of course, looking back now, we see it could not have been further from reality. But revisiting this is a reminder that however sophisticated market research and analysis may be, it can go very wrong.
For the 747, that misjudgment turned out to be incredibly good news. Even if Boeing stops making the jets around 2020, more than 1,500 aircraft will have been built. The program will have generated big profits for many years in spite of the massive development costs at the beginning and the charges if it in fact does come to end soon. The 747 was the dominant long-haul aircraft of the 1970s, 1980s and into the 1990s on transatlantic and transpacific routes, which were then by far the biggest long-haul markets.
But in some respects, the 747 is also becoming the victim of its own success. It created the traffic base that justified efforts by Airbus and Boeing to develop smaller widebodies. Initially, they could compete with a 747 on a unit-cost basis, but the latest generation of these aircraft—the 787, 777X, A350 and A330neo—is at least comparable or even better in terms of seat-mile costs. Airlines no longer have an argument to opt for big aircraft to drive down costs; in fact, they have instead chosen to reduce the risk of having to fly with empty seats. Even congested airports that would in theory force airlines to use bigger aircraft have not been a factor important enough to sustain a larger number of orders for the 747 or A380.
It is an irony that Airbus felt compelled to launch the A380 as late as 2000 to counter the 747. Only a few years later, and before the A380 entered commercial service in 2007, deliveries of the 747 started to decline. Airbus has since argued that is because the “jumbo” jet is now being superseded by the “super-jumbo” or “the flagship of the 21st century” that will pick up essentially all of the demand in the segment. But the A380 now appears to have more or less the same problem as the aircraft it was intended to replace.
When the A380 program was launched, Airbus forecast demand for 1,200 500-seat aircraft during the next 20 years, plus another 300 all-cargo derivatives. But with 10 years to go before the endpoint of the first 20-year forecast (2007-27), Airbus’s projections are way off. It has so far recorded just 319 firm orders, and 193 aircraft have been delivered. If one airline—Emirates—were not so supportive of the program (with 142 orders and 81 deliveries), the figures would probably be much worse. Airbus announced in July that it is slashing A380 production to just one per month in 2018 from 2.5 aircraft per month now, a move that essentially puts that program on life-support.
The A380 and 747-8 are not yet in the same situation, however: The A380 backlog is stronger, even taking into account that a significant part of the non-Emirates orders could disappear. But Airbus at least has more time and some prospect that the market will eventually pick up. It can hope that Emirates will eventually want to replace the 140 aircraft and add to its existing fleet. And it has plans in reserve for a revamped A380neo that it could pull out to make the offering more attractive to other airlines.
But for the 747, the going is quickly getting really tough. Because of lower-than-expected demand for large commercial passenger and freighter aircraft and slower-than-expected growth of global freight traffic, Boeing says it will cancel “previous plans to return to a production rate of 1.0 aircraft per month beginning in 2019.”
Although it has expressed confidence that the 747-8 freighter market in particular will recover toward the end of the decade, as earlier-production 747-400s begin to retire, the lack of new orders means that even at the slower assembly rate, the program is running out of time. Earlier this year, before the announcement of Boeing’s recently concluded aircraft deal with the Volga-Dnepr Group, the company indicated the 747 line was around 70% sold through 2016 but only 50% sold out through 2017.
Mmmmm. Seems I cannot link the whole story so I'll post as much as is reasonable.
HOME > COMMERCIAL AVIATION > BOEING’S 747 STRUGGLES INDICATE LARGE-AIRCRAFT MARKET DECLINE
aviation-week-space-technology
To find the first official hint of the possible end of an aerospace icon, read page 17 of the July 27 Form 10-Q filing to the U.S. Securities and Exchange Commission (SEC), signed by Robert E. Verbeck, senior vice president and corporate controller of the Boeing Co. And make sure to read the last sentence of the paragraph, too: “It is reasonably possible that we could decide to end production of the 747,” the filing states.
The potential beginning of the end of an aircraft that has changed aviation like almost no other is being signaled as discreetly as possible. Ending production will surely be a difficult decision, given the role the aircraft has played for Boeing in the 46 years since it entered commercial service. And former program chief and 95-year-old Boeing legend Joe Sutter would surely vote against it if he had a seat on the executive committee. But a little more than 50 years after the 747 program was launched, all signs suggest the 747’s era is finally drawing to a close.
On July 15, 1966, Boeing announced the production launch of the program with orders for 25 jets for Pan American World Airways. At the time, Aviation Week & Space Technologyreported that the company had also secured orders for four 747s from Lufthansa and three each from Japan Air Lines and Air France.
With development of the Anglo-French Concorde and Boeing’s own 2707 supersonic transport underway also, it was expected the 490-seat aircraft would have a relatively brief life as a passenger jet. “As supersonic transports begin to make their appearance in the mid-1970s, [analysts] predict that the passenger appeal of the faster aircraft will cause the conversion of the majority of the 747s to a combined passenger-cargo configuration and, eventually, to all-cargo,” states an article in the Aug. 1, 1966, edition of the magazine. At that time, Boeing still believed it could develop a supersonic transport that could make money from fares that would be only 10-15% higher than for the 747.
The view that supersonic transports would take over from the likes of the 747 eventually was shared by many in the industry. Of course, looking back now, we see it could not have been further from reality. But revisiting this is a reminder that however sophisticated market research and analysis may be, it can go very wrong.
For the 747, that misjudgment turned out to be incredibly good news. Even if Boeing stops making the jets around 2020, more than 1,500 aircraft will have been built. The program will have generated big profits for many years in spite of the massive development costs at the beginning and the charges if it in fact does come to end soon. The 747 was the dominant long-haul aircraft of the 1970s, 1980s and into the 1990s on transatlantic and transpacific routes, which were then by far the biggest long-haul markets.
But in some respects, the 747 is also becoming the victim of its own success. It created the traffic base that justified efforts by Airbus and Boeing to develop smaller widebodies. Initially, they could compete with a 747 on a unit-cost basis, but the latest generation of these aircraft—the 787, 777X, A350 and A330neo—is at least comparable or even better in terms of seat-mile costs. Airlines no longer have an argument to opt for big aircraft to drive down costs; in fact, they have instead chosen to reduce the risk of having to fly with empty seats. Even congested airports that would in theory force airlines to use bigger aircraft have not been a factor important enough to sustain a larger number of orders for the 747 or A380.
It is an irony that Airbus felt compelled to launch the A380 as late as 2000 to counter the 747. Only a few years later, and before the A380 entered commercial service in 2007, deliveries of the 747 started to decline. Airbus has since argued that is because the “jumbo” jet is now being superseded by the “super-jumbo” or “the flagship of the 21st century” that will pick up essentially all of the demand in the segment. But the A380 now appears to have more or less the same problem as the aircraft it was intended to replace.
When the A380 program was launched, Airbus forecast demand for 1,200 500-seat aircraft during the next 20 years, plus another 300 all-cargo derivatives. But with 10 years to go before the endpoint of the first 20-year forecast (2007-27), Airbus’s projections are way off. It has so far recorded just 319 firm orders, and 193 aircraft have been delivered. If one airline—Emirates—were not so supportive of the program (with 142 orders and 81 deliveries), the figures would probably be much worse. Airbus announced in July that it is slashing A380 production to just one per month in 2018 from 2.5 aircraft per month now, a move that essentially puts that program on life-support.
The A380 and 747-8 are not yet in the same situation, however: The A380 backlog is stronger, even taking into account that a significant part of the non-Emirates orders could disappear. But Airbus at least has more time and some prospect that the market will eventually pick up. It can hope that Emirates will eventually want to replace the 140 aircraft and add to its existing fleet. And it has plans in reserve for a revamped A380neo that it could pull out to make the offering more attractive to other airlines.
But for the 747, the going is quickly getting really tough. Because of lower-than-expected demand for large commercial passenger and freighter aircraft and slower-than-expected growth of global freight traffic, Boeing says it will cancel “previous plans to return to a production rate of 1.0 aircraft per month beginning in 2019.”
Although it has expressed confidence that the 747-8 freighter market in particular will recover toward the end of the decade, as earlier-production 747-400s begin to retire, the lack of new orders means that even at the slower assembly rate, the program is running out of time. Earlier this year, before the announcement of Boeing’s recently concluded aircraft deal with the Volga-Dnepr Group, the company indicated the 747 line was around 70% sold through 2016 but only 50% sold out through 2017.
Mmmmm. Seems I cannot link the whole story so I'll post as much as is reasonable.
