AvTalk Episode 201: Sending the last 747 home

AVT 201 Transcript
EPISODE 201
[EPISODE]
[00:00:12] IP: Hello and welcome to Episode 201 of AvTalk. I am Ian Petchenik, joined from
where?
[00:00:20] JR: Great Falls State Park in outside of Portland, Oregon. Excruciatingly close to
Everett, Washington, but not quite.
[00:00:30] IP: But not quite. How dare they schedule such an auspicious occasion when you
are inside of a waterfall?
[00:00:36] JR: They really need to work around my flight patterns a little better in the future, but
we'll let it slide this time. The next time Boeing retires another iconic aircraft, I expect a little
more heads up. Or not retires, but finishes producing. I don't want to say retires, I will get yelled
at a lot.
[00:00:55] IP: No. The aircraft itself will fly for decades to come. This particular delivery will
likely be in service well into the 2050s at least. So I'm not worried on that front. But it is sad to
see the last of them can leave the factory. As you can hear from Jason's background, he's
inside of a waterfall in a state park in Oregon. I'm in the podcast studio place thingy.
[00:01:21] JR: Your basement.
[00:01:23] IP: My basement. A bulk of today's episode is going to be a conversation that I'm
having with Jon Ostrower from The Air Current about Boeing finishing production of 747, what
comes next at Everett and what comes next for Boeing. So we're going to talk a lot about that.
Then, also look into the quick settlement of the dispute between Airbus and Qatar Airways.
[00:01:48] JR: Seemingly coming out of nowhere.
© 2023 AvTalk 1
AVT 201 Transcript
[00:01:50] IP: Yeah. We went from a Reuters article earlier in the week saying they were
moving towards a settlement and I said, "Okay, that's interesting" to all of a sudden, "We've
settled our differences. We're withdrawing all of our lawsuits and counter suits, and we're
reinstating our orders."
[00:02:04] JR: But nobody is admitting fault. Never forget that part.
[00:02:08] IP: As is the case for many things here. That's true. No one's admitting fault. But that
will be the bulk of the show. We just wanted to check in with Jason, see how he's doing on his
vacation. Jason, as is customary. Who did you fly and how did it go?
[00:02:22] JR: I flew Alaska Airlines, JFK to Portland. Believe it or not, it was my very first time
on a 737 Max.
[00:02:31] IP: Well done, sir. Did it feel 737-ish.
[00:02:35] JR: I feel like I flew six hours across the continent on the 737.
[00:02:40] IP: Well, points for consistency.
[00:02:42] JR: Yeah, it was like every other 73 I've been on, except the engine is freakishly
large and it is quieter. There is that. But tomorrow, I'll be flying on an Alaska 73800, I believe and
ten an A321neo a few days after that. So I get to compare and contrast all of their newest,
latest, greatest and not so newest, latest and greatest, or that is the newest, latest, greatest that
they're getting rid of by the end of the year. So it's an interesting trip.
[00:03:12] IP: It'll be a fun mix.
[00:03:13] JR: Yeah.
[00:03:13] IP: Well, we're going to let Jason get back to his vacation, get back to the waterfall
and we will be back next week with a regular show, not coming to you from a state park, at least
as far as the plan is now.
© 2023 AvTalk 2
AVT 201 Transcript
[00:03:25] JR: We can't guarantee that. Yeah, this waterfall is pretty impressive.
[00:03:28] IP: You never know. When we come back after a quick break, it will be a
conversation with Jon Ostrower from The Air Current, so stay with us. We'll be right back.
[INTERVIEW]
[00:03:42] IP: As promised, we are back this week with Jon Ostrower, editor in chief of The Air
Current, a must-read aviation industry publication if there ever was one. Jon, thank you so
much, as always, for joining us.
[00:03:55] JO: Always, always, always great to be with you. This is my favorite stop on the
aviation podcasting circuit.
[00:04:00] IP: Well, thank you, sir. It's been a quiet week. Not much happening. That's why we
figured we have you on. Not really much to talk about, just wanted to chat.
[00:04:07] JO: Yeah, it's a light week.
[00:04:09] IP: Yeah, it's a light week. What started out as kind of a singular week has morphed
into a bit more. We've been really focused on the final delivery of the 747, the end of the
production line. We hadn't really discussed what was going to come next. Then, Boeing
announced this week that they were going to open up a four 737 Max production line at Everett.
So I wanted to just kind of tie everything together and kind of start with your thoughts on the
close of the 747 program and seeing the final one go out the door.
[00:04:45] JO: Yeah. It's interesting. It was an emotional week. If ever there was an icon – look,
747 became synonymous with airplane." What are you flying?" "I fly 747." "No, you didn’t. It
should be A320." It's like, "Maybe it was 737, I don't know." But like, 747 is like the default
airplane, because it is so fantastically iconic. We have spent the last several weeks, collectively
as an industry kind of paying tribute to its legacy and it is extensive. I think we could honestly
spend an entire hour just talking about that, whether it be societal, commercial, top to bottom
© 2023 AvTalk 3
AVT 201 Transcript
diplomatic. I mean, but really, from this particular milestone this week, we just take this week in
isolation.
The end of the 747 leaves a sizable hole, literally two full bays worth of open space within the
Boeing factory in Everett. On Monday, Monday morning, there was – caught an announcement
is a little squishy, because it was more of a memo that found its way to those of us in the
aerospace journalism world, announcing that Boeing would put a 737 Max line in Everett. It's
not taking the same spot as occupied by the 47. But it will be over on the east side of the
factory, which is the largest building by volume in the world still, and occupy a spot that was
actually being used for modifying 787s, and reworking them and getting them back in flying
shape. Then, those airplanes would move over to the 747 line. But this new line in Everett, it
effectively answers the biggest question going into this whole two days of events at Boeing
around the last delivery, which is what happens to Everett.
So, yes, we're going to get a 737 Max line in Everett, which is about roughly 45, 50 minutes'
drive from Renton where they do today the entire final assembly operation for the 737. This will
be the first time that ever it has hosted a single aisle airplane for production. Also the first time
since the 272nd 737 that 737s will be built anywhere but Renton. Actually, fun aviation trivia. First
271 were built at Boeing Field, which is closer to downtown Seattle. So it opens up an entirely
new set of questions, but really exciting developments for, number one, the workforce. It's very
significant for those in Everett, who are wondering what comes next, what are they going to
work on? Well, it's going to be 737s in Everett. It allows Boeing to take this massive factory and
start putting it to use building single aisle airplanes as 777X is delayed, as 787 goes to
Charleston and 747 goes away. Really does answer some of those questions.
[00:07:31] IP: So Boeing in the late 60s is designing the 747. Jo Sutters put design to paper.
His team is working on it. They say, "Well, we don't really have a place to build it." So they go up
to Everett, and they build this ginormous building, like you mentioned, the largest building by
volume. For the next 50 years, they build some of the largest aircraft in the world. Then, we've
kind of watched over the past few years. Boeing kind of slowly drawdown, and I know that was a
big question as they moved 787 production to South Carolina. In totality, what was going to
happen to that space? So you mentioned the rework, and I think we should unpack that a little
bit, kind of the quality issues that Boeing's been addressing with a number of the 787s that were
© 2023 AvTalk 4
AVT 201 Transcript
built over the past few years. That work was being done in basically in the existing 787 line that
they initially stood up to build the aircraft.
[00:08:32] JO: Exactly. Yeah. Okay. When production formally ended in spring of 2021, and
everything from a new build perspective moved to South Carolina, they had this massive
assembly bay, which is about one and a half times the size of one of the lines in Renton.
Actually, without going on too much of a tangent. It's actually even bigger, because a Boeing
does two side by side lines under one roof. It's an enormous, enormous building, enormous
amount of space that's available here. What they did after things went to Charleston, they had
dozens and dozens of 787s that they needed to be working on. So they set up a more static sort
of mod operation under that same roof. While, airplanes were going to be newly built in South
Carolina and Boeing's only, it's still about one per month there on getting 87 production back
going.
[00:09:23] IP: So they're going to move the 787 rework over to where the 747 production line
was. Then that 787 line will become the Max line.
[00:09:31] JO: Exactly.
[00:09:32] IP: The rate at the moment, is it still in the 30s?
[00:09:36] JO: It is, yeah.
[00:09:36] IP: Per month for the 737 Max?
[00:09:38] JO: 737 Max is at 31 ½-ish airplanes per month.
[00:09:43] IP: And a half-ish.
[00:09:45] JO: Yeah, exactly. Building half an airplane is, sometimes it's a good thing,
sometimes not.
[00:09:49] IP: There you go.
© 2023 AvTalk 5
AVT 201 Transcript
[00:09:49] JO: But yeah, 31 ½. But what's really interesting is that they've been struggling at 31
½. They haven't been able to get enough engines. There's been issues with suppliers. So, it's
been kind of a halting path to go on. They actually really want it to be at 38, 42 about a year
ago. So the supply chain is just not allowed them to do that along with this kind of whipsaw of
pandemic employment, within the supply chain, within its own factory is where you go up, up
really quick. Then, you can swing down and you swing back up again, as demand for aircraft
returns. So the lack of stability in the aerospace supply chain is really, really tenuous at the
moment. One person put it to me this way. Effectively, Boeing had been looking at higher rates
underneath the same roof in Renton to really kind of push maybe past 63 per month, effectively
21 per month on each of the three lines that they have there.
But in doing so, the supply chain just needs to be running like clockwork and it's not. It's not only
not running like clockwork, it is all kinds of messed up that where there – well, you've got
additional buffer you need to put in the line for fixing work, for modifying things and accounting
for the discrepancies. Whether it's late parts or whatever, or lack of engines or whatever it is. In
a lot of respects, the fourth line is absolutely great news for the workforce. In Everett, as they
sort of look at the sunset and delays of various programs, it is ultimately a recognition of how
fragile, how screwed up the supply chain is right now to have to effectively create an entirely
new assembly line outside of your home base to account for a lot of the buffer that's required in
the system to fix what's going on elsewhere.
[00:11:43] IP: The fourth line isn't – we're going to automatically start building more aircraft for
building aircraft faster. It's basically saying, we can't build aircraft as quickly as we want to at our
existing factory, so we're just going to build more aircraft by building aircraft slowly. Am I getting
this right?
[00:12:01] JO: Effectively, yeah. I think it will start that way. I mean, Boeing has been above 52
airplanes per month before. Actually, in 2018, summer 2018, they were actually on their way to
57. The whole thing was shaken at that point, just like about to come apart. I mean, they
couldn't get engines fast enough, there were fuselage, availability issues. There were parts.
You'd go over to rent, and you just see airplanes that are with sections covered up in plastic
wrap and storage tape while waiting for final parts. What Boeing did then, they pulled back to –
© 2023 AvTalk 6
AVT 201 Transcript
said, "Okay. We're going to hold at 52. We'll just leave it there. We're not going to go to 57."
Well, what happened was, first, the Max was grounded and Boeing actually kept building
through that first big chunk of the grounding. That was March of 2019, and actually pulled the
rate back to 42 per month, and none of them were delivering. So they actually built a huge
inventory of hundreds and hundreds of airplanes that are still many, huge chunk of those
airplanes still need to go out the door, even today. But, then the pandemic hits, and it just like,
demand goes away, while the line effectively is stopped, because they got to a point during the
grounding, where they're like, "Okay. We need to just not be building more airplanes here. It's
just building too much inventory."
Now, Boeing is on its way back up as – Airbus went from 60 to 40 on a single aisle side, A320s
during the pandemic. Then, Boeing went from 42 to zero. Going from zero, effectively standing
still back to a level they want to be at, which is between 50 and 60 by mid-decade, '25, '26 is
really a huge challenge, because of the muscle memory that's required to run at that tempo. I
mean, the Renton factory was a phenomenally well-oiled machine, even it struggled at 52. It's
still running at an unbelievable tempo. Historically, it's been on that evolutionary path toward
higher rate under the same roof. This is in a building that – as Boeing sort of consolidated
operations there in the early 2000s, after the Nisqually earthquake. They actually went up
significantly. It went from, I think, 21 per month, all the way to 42 per month and beyond, all
underneath the same roof. That's an amazing thing to do when you think about the capabilities
of a factory.
Now, here we are having trouble getting past 31 ½ because of supply chain, because of their
own operations, because of just getting the workforce where it needs to be. So it's a really – it's
an interesting challenge. One of the things to point out is that Airbus is having a similar
challenge. Not the same challenge, but similar challenge, getting to these higher rates. A huge
part of this is like, Boeing and Airbus say, "Well, we're not chasing market share." Well, okay,
that's all well and good for a PR line, but it's not necessarily clear from their actions that that's
an accurate statement. Because you've got – going to 50 airplanes per month at Boeing and 75
per month at 2025, 2026 at Airbus. Boeing is trying to keep pace. Airbus is trying to push
because they've got demand and Boeing has demand too. But certainly, there's a market share
dynamic that's persisting here.
© 2023 AvTalk 7
AVT 201 Transcript
[00:15:16] IP: To me, at some point, these accelerating rates of production for single aisle
aircraft. It seems to kind of fly in the face of we're working really hard to move beyond this
aircraft. Do you know what I'm saying? Where you've got Airbus and Boeing saying, "We're
going to increase rates. We're going to – Boeing is going to build 40, 50, 60, 70 per month.
Airbus is saying, we're going to do 75 and we could go higher depending. But then, they're also
both saying, "Well, we're going to move beyond these types of aircraft and we need to see
what's next.
[00:15:48] JO: Boeing really like the cash they're bringing in right now.
[00:15:52] IP: All right. Exactly. But at some point, I mean, you get to the point where you're
talking about mid-decade is those rates are going to be so high. At some point, you're going to
hit a wall of some kind that says, "We need to start building fewer of these aircraft, because we
have to start building the next thing." If Airbus wants to build a hydrogen aircraft, if Boeing wants
to build something. We'll talk about that in a minute. But it seems to me that there's kind of
incongruity between raising these rates as fast as possible, and perhaps a bit more fast than is
practicable. What comes next for all the talk about what comes next.
[00:16:29] JO: Yeah. It's funny, Courtney and I have this debate back and forth. There was a
huge glut of wide buddy aircraft in the market going into the pandemic. There are a lot of
reasons for that. There was the massive, A330 increase in production, in the face of 787,
delays. There was the massive increase in 777 production in the face of 787 delays back in the
early 2010s. Then, you had the 787 come online, and then it was a sprint to 900 deliveries over
the following, way less than a decade since it entered service. There's a tremendous,
tremendous number of wide buddy aircraft that came into the market.
Frankly, when the pandemic hit, even the day before COVID arrived, there were way too many
airplanes, and everyone knew there was too many airplanes. The debate that Courtney and I
have is that he doesn't think that there's a risk of over supplying on single aisle airplanes. I look
at kind of the rates, even with a current scarcity of airplanes, because of underproduction,
because of the max grounding, because of COVI, because of all of that and holding off
production plans. I think this industry will still find a way to stumble into an oversupply. One way
or another, they get to that point and what forces them to pull back. What forces them to pull
© 2023 AvTalk 8
AVT 201 Transcript
back was actually really interesting in 2019 was the max grounding. The max grounding forced
Boeing to stop delivering airplanes. There was an artificial scarcity that was created, and largely
was, the entire industrial ecosystems way of taking a breather, where you didn't run into an
oversupply situation at a time when they're already working with the white buddies in the mix.
[00:18:15] IP: So let's talk now about the future. We've talked a lot about what Airbus is
planning, with their small electric aircraft with their larger hydrogen powered aircraft and moving
towards that kind of 2035, 2045. But we hadn't really talked about what Boeing was doing other
than – we think SAF is a good way to go and we're kind of waiting to see what happens. But in
the past couple of weeks, we've seen a real inkling of where Boeing's headed with the award
from NASA on the Truss-Braced Wing concept. It's a simple concept, at least as far as the
renderings are concerned. But it seems to offer a pretty big improvement in fuel burn. So I was
hoping we could kind of unpack where this came from and what Boeing's involvement is.
[00:19:09] JO: So a couple weeks ago, NASA announced that it was going to be awarding a
$425 million contract to Boeing, to build the sustainable flight demonstrator. That $425 million
comes with a $725 million, at least $725 million contribution from industry to fund this
development. Notably, $425 million is over seven years. So you need congressional expenditure
and approval of the NASA operating plan. Each session of Congress every time. So it's not
without its hurdles. But what did Boeing win, Boeing won the ability to design a demonstrator
aircraft taking an MG90 that used to fly a Delta, and slicing and dicing – actually, slicing and
dicing two or three of them to create an aircraft that has a really very slender, very thin wing
above the fuselage, but supported by two trusses. I think, Cessna 172 style, that are
aerodynamically shaped to allow for high-speed flight, which is very hard with these really long,
slender wings. But also, the trusses themselves generate lift.
As you can imagine, the design is called the transonic, high speed, truss-braced wing, the
TTBW. It's actually been something that Boeing has been working on for, really since the late
2000s. It's like 2007, 2008, 2009. It's something that they've always sort of quietly fixated on in
research as a probable next major leap, in step change in fuel efficiency for a single aisle
airplane. Why does this work? Well, we've already seen a trend among the wide body airplanes.
Think 777X and its folding wingtips, to have a longer, thinner, wingspan. But the problem is, the
span could go on forever. That would be the most efficient design, but it's got to stop
© 2023 AvTalk 9
AVT 201 Transcript
somewhere. But eventually, you have to park an airplane at the gate, and you want to use the
same 777 size gates before, so they fold the wing.
Well, folding wing is also part of this truss-brace design, but it takes this idea of growing span,
which ultimately reduces induced drag, which is the drag that comes along with producing lift.
Effectively puts a wide body wingspan in a single aisle package. We're going to see these really
like long, slender, thin, almost glider like wings on this demonstrator. Boeing thinks that this can
on its own just aerodynamically can reduce fuel consumption by about 9% or 10%. Well, that's
not – you said 9% to 10%, that's not that much. Well, when you pair it with a new systems
architecture, possible hybrid electrification of propulsion, new engine designs, you're actually
looking at a step change of potentially 30% fuel efficiency improvement over today's 737 Max
and A320. That is enormous. That is essential for the sustainability of the industry in terms of
burning less of whatever you put in the tank, whether it's traditional Jet A or sustainable aviation
fuels.
Ultimately, will allow the industry to justify its own existence. That's why there's so much of a
focus here. We're going to get into an entirely different economic debate about the idea of
induced demand, which is to say, "Well, okay. Well, if you can fly 30% more fuel efficient, will
you just fly 30% more, negating the benefit?" Well, you know, it's the Prius effect, which is, "Oh,
it's so much more fuel efficient. We're going to sell a ton of them." Whatever savings and fuel
efficiency in aggregate actually gets eliminated. Again, that's an important part of this, but it's not
necessarily the key part of the discussion now. But it's a worthy one, as far as industry growth.
I'm rambling, so I'm going to throw it back to you.
[00:23:09] IP: My thinking here, yeah, you were talking about induced demand, but you're also
talking about an aircraft that nine or 10% off the top isn't bad at all. That's all well and good. But
where does this take Boeing from? We're going to design a concept or two, really, I guess. One
concept do some proving of it, and then design a second, slightly larger version. Then, how
does that square with what Calhoun said last year, where until we can prove that we can take
enough percentage points off the fuel burn to start working on a new aircraft? I mean, is this
along the same lines? Could this become Boeing's next aircraft? Or is this a separate –we are
also going to build this?
© 2023 AvTalk 10
AVT 201 Transcript
[00:24:04] JO: There's a growing school of thought within Boeing itself, that this is going to be
the pathfinder for what comes next. Does the transonic truss-brace wing become the
configuration? That's still up for debate, but there are enormous implications for using this as a
platform for figuring out how to do high rate composite technology, for example, and other hybrid
electrification, propulsion, new systems, architecture designs, all of that new aerodynamic
technologies that will allow it to flow into maybe a more traditional form factor. But one that does
offer a genuine step change in efficiency.
Last November, Boeing said, "Well, okay. Look, there's not going to be a new airplane from us
this decade. It's not happening. We're taking it off the table." Look, that was a gut punch for a lot
of lot of folks, because it's like, "Okay. Well, now what?" This was – I think I actually even said
when we talk talked about this last time I was on with you guys, that the SFD was going to be
the thing that was the thing to watch, the sustainable flight demonstrator and that award. Here it
is, right? When you outline a series of strategic goals to foster single aisle aircraft production,
the future of single aisle aircraft production and technology in the US, there's only one person
who can win the contract. So Boeing had the truss braced aircraft, you're ready for this
discussion and they had read about the airplanes and all that, but it was already progressing
metric. They were effectively [inaudible 00:25:28] this. But within that, it gives Boeing the
opportunity to, I think from a both a strategic and a messaging perspective, I think those go
hand in hand here to say, "We are pushing the boundary here." There is also very much a
school of thought within Boeing that all the things that Airbus is doing are mostly for show. Yes,
flying the rise is usually important to validate the engine, but hanging it under the wing of a 380
doesn't get you any aerodynamic benefit, necessarily.
This is all the shade you'd expect to be thrown by folks of Boeing and Airbus. But I don't want to
also understate how important the demonstrator is for Boeing. The last time Boeing did a
commercial demonstrator was 1954. That was the 367-80 that became the KC135 and the 707.
Having this in their arsenal for these, testing these new technologies that are going to be
pathfinding to 2035. Boeing and Airbus right now we're in the homework years for what these
airplanes are going to be. It might be a really boring decade as far as product development that
we can fly on. But from a product research side and technology research side, the next 10 years
are going to decide whether or not the aerospace industry will be around, around in 2050, 60
and 70 when we see the long-term consequences of how we adapt to climate change.
© 2023 AvTalk 11
AVT 201 Transcript
[00:26:54] IP: That's one of the things that I've been thinking about lately is, did we get this too
wrong too late? I feel like there was a point in time, a few years ago, when all of this would have
been good to get started. I know that the commercial aircraft industry operates at what could
charitably be described as a glacial pace.
[00:27:17] JO: Charitably. At a good day, it’s glacial.
[00:27:20] IP: Yeah, but I feel like everything's picking up steam much more quickly than you
would expect if there wasn't a realization that what you just said. The existence of the industry is
being called into question.
[00:27:33] JO: It absolutely is, and in return with a glacial pace. The first 747 that came off the
assembly line, from I think launch to rollout was like 36 months or something like that. That's
what? Three years. The time from contract award to first flight of the sustainable flight
demonstrator, under this NASA contract is going to be five years. Not certified. So it just gives
you a sense of how the pace of things slowing down, that's a fantastic kind of side by side for it
to illustrate. But yes, it is existential. Look, I think the societal appetite, the visibility, Aviation is
only two and a half three and a half percent of global CO2 emissions, but they are
disproportionately visible. I think it is also one of those things where it's also an industry that has
continually and unceasingly sought to reduce its fuel burn, with the notable exception of the –
probably the late 1980s, when the price of oil collapsed. They're like, "Oh, we're good. We don't
need to do unducted fans and all that stuff" and they kind of kept going on their merry way. Oil
has been cheap and incentive is always there, but it's waned over time.
But now, we're looking at an environment where the necessity is essential. I think one of the
things that I'm still trying to wrap my head around is, after watching the lessons of the 787 and
the tremendous cost that Boeing bore to bring that much new technology to bear on the wide
body sector and how Airbus brings airplanes to the fore. Watching how Boeing and Airbus as
respective strategies unfold in this new environment is going to be, I think, phenomenally,
phenomenally important. Because is there still a way to deliver new technology, a new form
factor, a genuine 30% step change in efficiency and how we do this, without making the cost of
delivering that step change completely prohibitive either for airlines or for aircraft manufacturers.
© 2023 AvTalk 12
AVT 201 Transcript
That is going to be the biggest challenge over the next decade. I think the strategies that Boeing
and Airbus use to get there are going to be the things that are going to be most exciting to
watch, because that is going to be the path toward achieving that industry viability long term.
[00:29:59] IP: One of the things that I've been thinking about, as well as – is there – do we need
a return to kind of retail marketing from aircraft manufacturers? Because, I mean, you think back
to the 50s and early 60s, there were commercials saying, "Aircraft do this. They can fly you
places and they won't crash into the ground. Please, do fly on our aircraft." Is there room for
return to retail marketing, where aircraft manufacturer is saying, "Look, this is what we're doing.
We're trying to solve this problem as best we can. Here's how we're doing it"? Airbus has done a
little of that. Boeing, not really, but Boeing kind of had a real mastery of that marketing material
back in the late '50s and early '60s. So I mean, would that help at all?
[00:30:49] JO: You don't have to go back that far to find Boeing's mastery of that. In one of the
absolutely skillful things Boeing did was between 2003 and 2008, 2009. Was they actually
marketed the 787 and its various attributes directly to passengers, which in turn, theoretically,
incentivized the airlines to be like, "Well, my passengers want that. Let's do that. Let's buy that
airplane." Whether it's the bigger windows, the humidity, all of all these passenger-pleasing
features. But if you look at the way that they were focusing, they weren't focusing on the
airlines, they were focusing on the passengers themselves. Boeing did a great job of that, really
just skillful. I think that it's faded back a little bit, as the environmental component has played out
here.
I think what we're going to see going forward is, certainly, Airbus is yearning their entire
communication strategy around sustainability. Boeing is moving in that direction. But yes, I think
I think the fundamentally, Boeing and Airbus are B2B customers. They sell to other businesses.
They don't sell directly to consumers. I think we were already seeing airlines being able to sort
of compete on sustainability, whether it's legitimate or not. Certainly, they're trying to outdo each
other around who can deliver a more sustainable product, whether it's getting rid of plastics on
board, and all these little things that can really add up. But fundamentally, don't change the fact
that you're still carrying around tens of thousands of pounds of jet fuel that you need to get from
point A to point B. That remains the same.
© 2023 AvTalk 13
AVT 201 Transcript
I guess the question is, what is the consumer behavior going to be? I would also posit on top of
that. The consumer behavior is not going to be uniform based on geography. Like just being in
Europe, recently, they're just so acutely aware of carbon, carbon emissions, carbon footprint,
especially when it comes to flying. That I suspect we'll probably see it far more over there than
in the US. I mean, the US is sort of like, yeah, people are aware of it, but it doesn't seem like
anyone has. Certainly, the huge bounce back in air travel certainly indicates that people are not
changing their behavior, with that in mind.
[00:33:10] IP: Yeah. I think the fact that the geographic proximity to other forms of
transportation, especially in Europe, is a much bigger piece of the puzzle than it is here in the
US. I mean, the ability to travel almost as far as you want to go without having to get on a plane
is certainly a lot more helpful there. Would I mind having those options and not having to get on
a plane? I would not mind at all. So I think that it's all part of a much larger conversation. But I
think we are reaching the point where everyone's kind of on board now with, we have to figure
out what comes next, and we have to do it faster than we thought. But also, not necessarily as
fast as we probably should have.
[00:33:52] JO: Yeah, and a lot of the message [inaudible 00:33:54]. You need to keep buying
our current generation airplanes, so we can get to the next generation. It's like, "Okay." The
argument goes that, you're not going to have the money or the resources, whether they're
financial, or industrial, or intellectual to do these big projects if you starve aviation today. That
seems to be their – fly now and we can bridge to that point, That is a very controversial
argument, by the way. It's not necessarily a slam dunk, but it is the argument that they're making
because –
[00:34:36] IP: That's the one they're going with.
[00:34:37] JO: That's the one they're absolutely going with.
[00:34:39] IP: Fair enough. Before I let you go, I want to talk about something that happened
today before we recorded, which is highly unusual. So first of all, thank you to Boeing for
delivering the aircraft and having 747 departure before we recorded this week's podcast. I
appreciate that. Thank you, Boeing. Thank you, Atlas. But this news, switching topics completely
© 2023 AvTalk 14
AVT 201 Transcript
and going over to Europe and Qatar. Airbus and Qatar have patched up their long running and
extremely acrimonious dispute about the A350 paint chipping and foil damage. Qatar, having
grounded dozens of Airbus A350s, Airbus saying, "We're not sure why you grounded them. It's
just a painting issue" and back and forth, and back and forth. As late as last week, they were
back in court arguing for motions for discovery and turning over documents. Then today, all is
forgiven and Qatar has brought their existing order book back in and said, "Yeah, we still want
those planes."
[00:35:43] JO: Dogs and cats living together. Mass hysteria.
[00:35:47] IP: [Inaudible 00:35:47].
[00:35:48] JO: This has been a long saga to end up back right at the beginning. I mean, yes, it
gets resolved, it was each side, got to make their case to their own customers, to lawyers, to
judges, that there's a settlement, and they're going to fix the airplanes, and they're going to get
them back in operation. Everyone's going to move on their merry way, and time and money
heals all wounds. I think that's –
[00:36:15] IP: Exactly.
[00:36:16] JO: But is there any material resolution to – so what's going on with the paint? Is that
cool? The answer, I think, the Airbus says always, "Yeah, it's fine. "Qatar seemingly has
accepted that answer, and whatever settlement is in the mix to help them accept that answer is
upon us. So yeah, it was – here we are.
[00:36:42] IP: It's just such a kind of a bizarre end to, as you mentioned, get back to where we
were. But we don't even get back to where we were because Qatar last three years on getting
the planes, it says, it so desperately wants.
[00:36:54] JO: Exactly. Then said it didn't want.
[00:36:56] IP: Then, went out and bought 50 Max 10s. So what happens to the Max 10 order? I
mean, in my mind, do they keep at least some of them? I mean, they've got 25 firm, 25 options.
© 2023 AvTalk 15
AVT 201 Transcript
Do the Max 10s – I mean, assuming the Max 10 gets certified any time soon. Do they take
those ahead of A320 Neos that they were supposed to begin taking delivery of last month, but
now won't be until 2026?
[00:37:24] JO: Yeah. Getting out of line is costly. Well, I think what we're going to see to some
extent is Qatar is probably going to take some Max 8s, airplanes that may have already been
built. There's actually a Max 8 that was floating around Boeing field with a Qatar rotor painted on
it, which would have certainly given a fair signal that something was coming down the line from
that front. I don't know if they're going to take the Max 10s. Certainly, I think the need is capacity.
Right? That airplane is delayed until, probably we won't see that in service until at least 2024.
Which is what United, the launch customer shared with me recently. And yeah, I mean, if you
need airplanes quickly, this might be the best way to do it. Especially, if you're getting 321 Neos.
Well, there are plenty of airlines that do a combination of 321 Neo and Max 8. Korean did that.
There were a few others. So they do have tend to pair nicely for certainly larger operations.
But yeah, right. I mean, Airbus close the door on them and said, "No, you're not getting these
airplanes as long as you're suing us." In turn, Qatar went across the street and said, "Hey. Okay.
Boeing, what can you do for me?" Then,10 minutes later, you've got Max 10 deal. Yeah, I think
that it's about capacity. I think it's about leverage. I think it's about all these different things, but I
think that they're going to find a way to get those airplanes in one way or another. I suspect, I
may be wrong, it's entirely possible that they are going to do A321neos and Max 8s as a
combination of airplanes over time. But I think I'd be surprised that they both operate both.
That's just my sort of head scratcher, armchair.
[00:39:00] IP: You mean both the Max 8 and Max 10?
[00:39:02] JO: I'd be surprised if they operate the Max 10 and the A321neo at the same time.
[00:39:06] IP: Okay. I see what you're saying. Well, we shall see,
[00:39:09] JO: We shall, indeed.
© 2023 AvTalk 16
AVT 201 Transcript
[00:39:09] IP: Jon Ostrower is the editor in chief of The Air Current, an industry publication that
you should all be reading, if you're not already. Though, I suspect many of you are and thank
you for that. Jon, always good to talk with you. Thank you so much for coming on the show this
week.
[00:39:24] JO: My pleasure.
[END OF EPISODE]
[00:39:31] IP: That is our show for the week. Thank you so very much for listening. This has
been Episode 201 of AvTalk. I am Ian Petchenik joined underneath the waterfall by Jason
Rabinowitz. We will talk to you all next week with a fresh episode and very likely no waterfalls
whatsoever. Thanks for listening.
[END]
© 2023 AvTalk 17