Why Boeing 777X wins big

A model of Boeing’s 777X aircraft sits in front of a picture display for the new aircraft on the company’s stand during the 13th Dubai Airshow at Dubai World Central on November 18. Emirates ordered 150 Boeing 777X wide-body planes worth $76 billion at the airshow. — Bloomberg

Emirates, Etihad Airways and Qatar Airways all made big headlines at the 2013 Dubai Airshow with their huge orders and commitments for Boeing’s new 777X family.

Given the pace of the growth of these three Arabian airlines, it was almost inevitable that the 777X charge would be led by the very customers that had pushed for it most.

Emirates employs the world’s largest fleet of Boeing 777-300ERs — indeed, it was the first airline in the world to operate all six variants of the 777 and it comes as no surprise that the 777X family is being spearheaded by them too — the $76 billion-plus deal is the biggest in commercial aviation history and it is unlikely to be repeated for long, long time.

But just why is 777X so important to the likes of Emirates and other 777 operators?

777X brings the best of the current 777 family interior comfort — the widest cabin of any long haul twin aisle, twin engine airplane — it brings the lowest fuel burn of any engine in service along with a unique haulage capacity of 50 tonnes or more, allowing destinations such as Dubai-Los Angeles to be serviced year round without payload or passenger penalties.

Airlines today are enjoying to 20 per cent or more greater fuel savings of the 787-8 compared to 767-300ERs, A330-200s and A330-300s. Dual A330 and 787 operators are seeing fuel savings, depending on mission profile of over 20 per cent in the 787-8s favour. While the 787 Dreamliner programme was mired with delays, Boeing is keen to avoid repetition of that on its cash-cow 777 family when it transitions to 777X.

Emirates has been impacted hard by the A380 wing-rib cracking fiasco if only because it is the biggest operator of the A380. Emirates has been slow to phase out its ageing A330-200s while it copes with increased passenger demand and has relied relentlessly on the 777-300ER fleet to support it during these challenging times. Add in the delays to the A350XWB, Emirates is acutely aware that new airplane programmes bring risk — but that the 777X mitigates a lot of that risk by way of virtue thanks to its matured, efficient and seamless supply and production chains — and that risk is further suppressed by the fact that 777X will be built in Everett too.

777X will of course hit the 747-8 Intercontinental — an airplane that Emirates was close to buying to operate alongside its Airbus A380 fleet, but Boeing would rather the 747 be killed off by another one of its own products in the 777X family rather than via another competitor offering.

Emirates, Etihad and Qatar Airways are equally buyers of the A350-1000 too. While Etihad and Qatar Airways have upped their orders for the A350-1000 by way of chopping and changing some of their orders, Emirates remains the only one of the three big Arab airlines not to have increased its order. Boeing knows that the A350-1000 is going to struggle on a number of fronts — fronts, which the 777-9X will take advantage of thanks to its slightly bigger physical presence and better economic performance — performance, which drove Emirates to launching 777X in the first place.

Boeing knows it has a heck of a lot riding on the 777X family. After the oft-repeated production/assembly debacle on the 787 since 2007, Boeing is fine tuning its flagship 787-8 variant to provide additional robustness and flight readiness after a spate of over-hyped incidents — incidents which occur hundreds of times a day on a litany of jets across the world. Emirates will be pressing Boeing on how to avoid episodes seen on the 787 rearing their head(s) on 777X development.

But all these dizzy-height and big number dollar value orders come at a price. And pricing is crucial to purchases. Beyond the discounts airlines get for being launch customers, asset value is just as important — value erosion can make an airplane uneconomical to operate.

There is a ceiling on large airplane pricing — the decimated dollar-value of the A380 order book shows that while customers will happily buy big jets, they do not always command the biggest premium. Emirates is acutely aware of the continued decline in A380 values — the 777X effectively ends their interest in the A380 in its current form and there is no guarantee that a stretched or even re-engined A380 would cut the mustard any more. Despite ordering 50 more A380s, primarily as replacement for its early build and overweight A380s, much of which is leased, Emirates, like other A380 operators know that the second hand market for this airplane is effectively dead. Once A380s start leaving Emirates’ fleet, for them to find homes or second lives at another carrier looks about as bright as an eclipse.

Emirates knows that Airbus is at the end of the engineering scope to do anything with the A350-1000 that would bring it closer either to capacity or range to either the 777-8X or 777-9X. That is what is currently hampering Airbus’ ability to put strong pricing on the A350-1000, because no one wants to pay the premiums and secondly, it leaves the A350-1000 starting life with plummeting residual values — a key factor behind Emirates refusal to buy more of them.

The A350-1000 has neither the legs nor capacity to match the 777-9X and Emirates decision to buy 115 of them effectively seals the fate of the Airbus jet for them.

Airbus recently revised the A350-1000 range downwards by the tune of some 400nm — in real world operations for carriers like Emirates, that sort of degradation further underscores just why the A350-1000 will neither be a true 777-300ER replacement, nor be an effective long haul, high capacity airplane.

As a result, Airbus now faces a double-faceted quagmire. It can go back to the drawing board with the existing A350-1000 and make it a better airplane and delay EIS beyond 2017 with new engines, a bigger wing and new systems (which in our estimation is not going to happen) or it can run the risk of stretching it and cannibalise sales of the A350-1000 and take a massive payload/range penalty, which would still render it behind the 777-9X in terms of fuel burn and trip costs. 777-9X will have far superior economics against the A350-1000.

Both can haul significantly more passengers and payload with lower fuel burn. The 777-9X specifically can manage this with up to 12-14 per cent lower fuel burn per seat with 50 tonnes of freight in higher density configurations that Emirates had targeted for this particular airplane.

While the 777-8X may not be as svelte at the A350-1000 in the weight category, the excess weight actually plays to its advantage. With a higher MTOW (maximum take-off weight), the 777-8X will have better runway/field performance versus the A350-1000 with a bigger, optimised wing with an all-new, not derivative engine, while also being able to carry a combination of either more passengers, freight or both — all over ranges much farther and at significantly lower seat mile costs versus Airbus’ biggest twin aisle, twin aisle jet.

It matters not that the 777-8X won’t be a big volume seller. The orders to date would more than cover development costs.

A spin-off benefit is of course the 777-8X Freighter (777XF) that will emerge perhaps towards the tail end of the next decade — and with all three Arabian airlines currently operating 777Fs, the advent of 777XF will be a welcome addition to their 777-8X and 777-9X fleets.

The GE9X engine too, is a revolutionary propulsion system that harnesses the best of the GE90-115B, GEnx and LEAP engines. From its TAPS-3 combustor to its industry-leading 60:1 overall pressure ratio, the GE9X is already on track to meet the required 10 per cent fuel burn reduction versus that of today’s 777-300ER.

With the CFM International LEAP-1A/C engine test bed already validating the robustness and reliability of new components like CMCs, composite fan blades, cases and case-mounted gearboxes, the GE9X is arguably an amalgamation of engines honing in on the GE’s reliability success seen on the GE90-115B with a 99.99 per cent departure reliability rate with an IFSD rate of less than 0.001 per cent.

Just as Boeing embarks on its fourth-generation composite wing for the 777X, GE is also on its fourth-generation composite fan blade technology, leaving its other two rivals (Rolls-Royce and Pratt & Whitney) far behind.

Now that Boeing has finally secured the long term labour agreement with its machinists, it has to pull out all the stops to ensure that the 777-9X debuts on time in 2020. Boeing simply cannot afford to burn customers like Emirates with delays.

At the same time, Airbus’ 17 year wait to respond to the 777-300ER is too late — and it’s clear that the presence of the 777X alone will force customers to look hard at the A350-1000 value proposition and question whether its weak financial asset value is worth the lower sticker price for “second best” network performance.

Judging by the pent up demand for the 777X family in just 24 hours after its launch, it is fair to say that Boeing, with the input of key Arabian airlines has produced a new generation of jets which will form the backbone of their fleets for decades to come.

The writer is chief analyst at London-based StrategicAero Research, a private aviation consulting firm operating in 
Europe and the Middle East. 
Views expressed by him are his 
own and do not reflect the 
newspaper’s policy