The delay of Calhoun’s new plane threatens Boeing’s future in the airplane business

CEO Dave Calhoun’s announcement at last week’s investor day that Boeing won’t introduce a new plane until the mid-2030s marked a game-changing moment in the civil aviation industry. This could be the beginning of the end for Boeing
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The announcement was a significant departure from his comments at an investor conference last June that it would be “several years” before a new plane is launched. The new time frame means that it will be more than 25 years between the introduction of all-new Boeing planes, assuming the new plane goes on sale in 2030.

So there will be very little “tribal knowledge” passed between the design teams involved in the last clean slate program and the next one. According to Calhoun, “And then there will be a point in time where we pull the rabbit out of the hat and introduce a new airplane sometime in the middle of the next decade.” Who will be at Boeing to make that rabbit? Retaining talent in general will be a major challenge, as young engineers have just been told that this decade will feature nothing new.

The new timeframe also raises questions about his rationale that it’s not worth doing until the new plane can incorporate significantly more efficiency-enhancing technologies. There may be disruptive technologies in the future. But the most promising ones are effectively “platform neutral”; greater autonomy and sustainable aviation fuel (SAF) are beneficial for any new aircraft. The fans may or may not prove destructive, but they were tested on aircraft in the 1980s, and while they may finally be ready for use in the 2030s, this slow path suggests that their arrival will not make everything else obsolete.

Everything else, such as hybrid/electric or hydrogen propulsion, will not be ready for use on large jet aircraft in the 1930s or even 1940s. In short, Calhoun’s rationale is not a new jet, it seems like an excuse not to spend money creating new products. This decision may be related to a plan to simply break up the company, a possibility I’ve outlined here.

Either way, the rationale for the delay is based on a misunderstanding of aviation history. In June, Calhoun stated, “If you go back in the history of new airplanes, they’re never launched until the propulsion package is somewhere around a 10 percent, 15 percent, 20 percent improvement over the last one.”

Well, no, not really. Perhaps some proper history would be useful here. What usually happens is that Boeing does an amazing job of defining and designing a new product to meet market needs, and the resulting new aircraft arrives either at the same time as a competitor or even several years after the aircraft arrives of the competitor. And usually Boeing does such a fantastic job that it beats the competition.

This process began with the 707, which defeated the Douglas DC-8. The 727 then defeated the Hawker Siddeley Trident. The 737 beat the DC-9, BAC 1-11, Sud Aviation Caravelle and others. 757/767 beats A300/A310. The 777 beats the A330/340 and the MD-11. 777-300ER/200LR beats A340-500/600. It wasn’t about new engines; new engines benefit everyone. It was about beating the competition.

The only new Boeing jet that vaguely fits Calhoun’s statement is the 787, which uses new engines and other technology to beat the A330-200 (and fragment international air routes and make the A380 look silly). But even then, the 787’s propulsion technology was inevitably used 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 to do with product definition and launch.

That brings us to today. For the reasons I’ve outlined here, airlines want the biggest, most capable single aisle they can buy, and Airbus’s A321neo is in the right place. The order book stands at an astounding 4,525 aircraft, and the backlog of 3,689 aircraft is greater than the entire 737 MAX family backlog (3,500 aircraft).

Yet the A321neo is long overdue for just that kind of punch from a new Boeing aircraft. The A321 airframe is 35 years old and could easily be beaten by something more capable. Many of these “hard” orders are likely to be abandoned and all new orders will go to Boeing. Yet all Boeing has in this class is the 737 MAX 10, the last stop in the 737 line. It has garnered less than a fifth of the A321neo orders. There isn’t even a clear path to MAX 10 certification, and Calhoun has threatened to cancel that option if the US government doesn’t grant it a certification delay that allows it to maintain similarity to the rest of the MAX family.

Airbus’s future has been greatly simplified by the latest announcement from Calhoun, who seems curiously oblivious to possible moves by rivals. All Airbus needs to do is continue to develop the A321neo and dominate the very strong midsize market. Next, they will create the stretched A220-500, which will seriously damage the 737 MAX 8, Boeing’s best-selling aircraft. At this rate, by the early 2030s, Airbus is likely to hold 70% to 75% of the entire jet market.

Airbus may also reinvent the A320 series with a new wing and engines; this will bring them to 80% of the market. With a reduced revenue base and possibly without the necessary talent, Boeing Commercial will not be able to build a new aircraft and will simply disappear.

The only alternative to this scenario is if Boeing gets a new CEO. Or if Boeing Commercial spun off as its own company or as part of a different company and could actually create a future for itself.

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