The -10 Dilemma

Interesting counter-point to my column, Jon. What will the readers think of the two differing views?

I don't get why Boeing should decide on how to address the 350-1000 before the 350 design is frozen.

Boeing ponders a 'diet' 777-200ER with GEnx engines and some mods including 787 elements, dubbed 777-200X.

Jon- Great blog. Some thoughts re your and Scott Hamilton's (last week) pieces on Boeing's 787-10 "dilemma."

I don't think Boeing have a dilemma. They have been very clear that they will build the -10 with 300-320 seats to compete with the 350-900. Boeing have delayed offering the -10 because they, like the rest of the industry, do not know the -900's final specs, and they have to unscramble their 787 production mess before they can set an EIS for the -10.

The key point is that Boeing are not building the -10 just to replace the 777-200ER per se. They are building it to compete with the 350-900. The larger -10 (380-425 seats)that you and Scott discuss will not serve this goal.

I think Boeing see the addition of the -10 to the 787 family as an unbelievable opportunity to crush the 350-800 and-900, so long as they can build it without major expensive changes that would jeopardize commonality; ie,keep it substantially within the "point" design that Richard A. discussses. If they can do this, then most airlines which need the smaller 787-8 (BA being the most recent), with which the 350 does not compete, will also buy the -9 and -10 as needed to maintain that commonality, and the 787 family will end up dominating the 350-800 and -900. The fact that Boeing have nearly 600 orders for the -8 now is strong support for this strategy.

In addition, I believe Boeing think they can marginalize 350-1000 so that it will not sell well or be a sales leader of the 350 line inducing -800 and -900 sales the way the -8 leads the 787 family, this even though Boeing will never have a direct competitor to the 1000. This is the case mainly because the 1000 is just too late. It's EIS is mid 2015 (7 1/2 years from now) at the earliest, so too late to be produced in large enough numbers to compete before Boeing offer their -300ER replacement EISed for 2022-2025. According to AB, the 350's maximum produciton rate of 13/mo will not be reached until 2016. Altho AB has not said what portion of those will be -1000s, it is not likley to be high because AB will have more orders for the -800 and -900 than for the -1000 if current trends continue. Assuming 3 per month starting in 2016, AB will be able to deliver 180 -1000s in the five years starting 2016. During this time Boeing could deliver 420 -300ERs producing them at 7 per month (I believe this their current production rate) on a seperate line from the 787; ie, in addition to 787 production on its own line of 14/mo. which Boeing is shooting for now.

Most important, Boeing will time the announcement of its -300ER replacement to reduce to the maximum the -1000's sales. It is highly likely that this replacement (Y3?) will be BWB, which Tim Clark has recently publicly asked for. Boeing will likely be ready because of their work on the X-48B and, I have read, BWB work for a freighter which two unnamed carriers are financing at least in part. Only the clueless would order the -1000 for delivery between 2015 and 2022 (and a service life of 20 years) once Boeing says it will EIS its new plane in 2022 with BWB and other featurs making it hugely more efficient than the -1000.

Instead, carriers which already operate 300ERs will likely buy or lease more of them as needed until delivery of the Boeing's replacement. Airlines which do not operate the -300ER, like Qantas, may be inclined to the -1000 instead of the -300ER since they would be introducing a new plane to their fleet either way. But there are not likely to be many given how many airlines operate the 300ER and those that consider the -1000 will have to think very carefully about whether or not Boeing's 300ER replacement will obsolete their -1000s in 5-10 years, long before the end of their service lives.

Also Boeing will continue to improve the 300ER to make its efficiency competitive with the -1000 as needed to win orders. It has already been reducing weight for the last 2-3 years and will continue to that and make other improvements, including the most important of all, adding new engines when they come along. And remember, the -1000 is not XWB in relation to the -300ER. It is XN(narrow)B. The -300ER's interior fuselage width (nearly equal to the 747's) and spaciouness are some of its strongest selling points. Tim Clark loves it. He has asked Boeing to build a composite craft just like the 777. Jon, you loved it on your recent first trip as I and my wife did on our first trip two years ago.

Put another way, I think the -300ER is just too fundamentally good and easy to improve for the -1000 to obsolete it before Boeing delivers its replacement. It will continue to sell well from now until 2022. It will be produced on its own highly efficient production line, and continue to deliver substantial profits which AB will not get because it offers no competitor. The -1000 will not obsolete the -300ER. Boeing's -300ER replacement will obsolete the 350-1000.

alcefdoes Boeing have to chose oo
For sure, Boeing is not going to enlarge the 787 to 380 or 325 seats, as some airlines want because (1) that would a very expensive aircraft which was esssentilly all newai e old mre There is no chance that Boeing will buildyk

Just noticed the garbled last paragraph of my -10 dilemma piece. Sorry. Please ignore.

I'm sorry Christoper, but the hypothetical 787-10 will never "crush" the A359. Actually, it's the opposite way around. Furthermore, any 787 derivative cannot be competative with the A35X period, without a new larger wing with about a 20 percent larger surface area.

Thanks OV-099 for your sympathy. You may be right that Boeing will have to make more substantial changes to the 789 than it would like to build the 7810. Tim Clark at Emirates seems to think so because he has said that the 789 is 14,000 1bs over weight and the 7810 will require more thrust than Boeing thinks it will. Boeing, at least for the record, is still saying that the 7810 will be a simple stretch of the 789, adding more seats and reducing range. They appear to be hedging their bets a bit though because they have pushed the 7810's EIS to 2013. We shall see in the next few months.

My point is that Boeing and AB are trying to sell the 787 and 350 as families, and the 359 will be at a disadvantage because the many airlines that buy hundreds of 788s, for which AB has no compeititor, will also buy the 789 and 7810 for commonality. What do you think? Dito re my predicition that the -1000 will be DOA.

Christoper, the A350-1000 has 40 firm orders (QR 20 and EK 20) 8 years before EIS. Also, there are already more orders & commitments for the A350 as for the entire A340 series, 14 years after A340 EIS and 6 years before EIS of the A350-900. Qantas may order a significant number of A359s and A35Xs as early as next month. So, what does that mean? The hypothetical 787-10 may just be at a real disadvantage because the worlds leading airlines that buys the A380, for which Boeing has no competitor, will most certainly also buy the A350-900 and A350-1000 for, among other things, reasons of commonality. From about 2015 the Trent XWB engine will fly on all new-build A380 frames, offering the same type of engine commonality to airlines of the like of (i.e.) Qantas which has been using the RR-211-524G-H/T for their 744's and 767's. Now, you say that the 788 has no competitor from AB. Care to look at how many A332 sales Airbus has secured since the Boeing board authorized offering the 7E7 to airlines in December 2003? Finally, isn't it quite plausible that Airbus will upgrade the A330 series (after the EIS of the A350) with the latest state of the art al-alloys, fibre metal laminates, engine technologies and the new cabin which was intended for the original A350 (non-xwb)? Heck, they might even incorportate the metallic fuselage section 11/12 of the A350 XWB into the A330 fuselage for a maximum level of commonality in addition to the availability of extra space for more LD-3 containers since Airbus on the A350 seems to have maximised the volume of the cockpit and avionics bay while optimising aerodynamics and the positioning of the nose landing gear.

OV-099 - Some responses to your interesting reply:

1. You still have not responded to my point that Boeing's -300ER replacement will obsolete the 350-1000 because it will be not be available until 2015 at the earliest and in any case AB's production capacity for it will be low.

2. If I were you I would not rely on the 340 to support any argument. It is one of the historic dogs of commercial aviation history. I am sure you do not mean to suggest that the 350's orders will track the 340's and tank to zero.

3. I disagree that the 380 will lead its customers to the 350 in substantial numbers because the number of airlines buying the 380 will at best be much smaller than those buying the 787/350 lines, and of course the planes are just too different.

4. You are right that the 332 will remain a viable player in the 200-50 pax market, at least during the years to come when the 788 is sold out. The 330 line is AB's only true wide body success since the 300/310, and deservedly so. AB's web site today shows orders for 452 332s and 66 200Fs, but those totals do not reflect November's many orders because AB updates its orders monthly. I cannot tell from AB's web site how many of these orders were placed after Boeing announced the 7E7 but no doubt the number is high. Keep in mind tho that many of the recent orders are not revenue producing because they are part of AB's settlments of damage claims for late 380 deliveries with, for example, Qantas and Singapore.

5. Your 332 argument only strengthens my core point about the 200-50 market; namely, that it is huge, perhaps the largest segment by far of the entire twin-asile medium market (200-400 pax), and the entire 350 family is at a disadvantge because it does not compete with the 788. One irony is that the 332 is succeeding now because Boeing has sold so many 788s that it cannot fill new orders for years. Witness Hawaian Air's order yesterday for 332s delivered (leased) in 2010 and bought in 2012, with 358s to follow in 2017. Thus, from now until whenever Boeing can fill new 788 orders their and AB's relationship in the 200-50 pax market has returned to what it was prior to the 7E7, namely, the 332 vs. 767-300ER, in which the 332 will do very well. In this respect the 332 may mimic the 788 and act as a leader to the 358 and/or 359 at least during the period when Boeing has no 788 slots. This is AB's obvious strategy.

6. I fully agree with you that AB will make incremental improvments to the 332 to improve its chances when it competes against the 788 so that AB can also get more 350 orders. You sound quite familiar with various possible enhancements. To me the irony here is thick as heavy oil: These impovements will turn the 332 into the very 350 which AB originally offered and which Stevn Udvar-Hazy torpedoed. I can still remember John Leahy's bitter reply to SUH, a virtual cri de coeur, in which he pointed out how well he was doing selling a souped up all-metal 332 against Boeing's vaunted plastic 787, that is until SUH spoke.

7. Finally (and perhaps at long last), your 332 improvement argument strengthens my view that the -1000 is DOA (dead on arrival) because the 777 is in the same position vs AB as the 332 is vs Boeing. Like the 332, it is a fine all-metal plane that can be incrementally improved at low expense to make it a viable competitor with a plastic plane until something better comes along. I think this reality, and also my point about the -1000's being late, are some of the reasons that Scott Hamilton (Leeham) suggested in his piece last week that AB might have to re-think the -1000.

What do you think?

OK, here we go:

1. I'm not sure how the 77W (777-300ER) replacement (if any) will look like, are you? If it's a 787-10 or a hypothetical 787-11, it would need a new wing, a new six-wheel main landing-gear bogie and, of course, would cost at least US$ 5 billion for R&D. Do note that the fuselage and wing structure of the current 77W is designed to support more than 351 metric
tonnes at MTOW while on the A35X, only 295 metric tonnes need to be supported at MTOW (and 8000 nm range). Also, since the "double bubble," or ovoid fuselage, of the A350 provides for a much more optimised cross-section with much less wasted space in the crown than the 244-inch
diameter circular fuselage of the 777, the A350 requires additional less structure and, of course, will induce significantly less drag. Not
mentioning that the GE90-115Bs by-pass-ratio is even less than that of the GE90-94Bs, and that the engine is really "maxed out" sizewise, Boeing seems to have a near impossible task upgrading the 777-300ER to a level where it can be competative with the A350-1000. It's true that Boeing can do 10 across with an uncomfortable 17" seat width on the 777, but the
extra space provided for in first and business class in the 777, is as wasteful as the extra space in the crown since very few airlines seem to be willing to accommodate a 2-3-2 in business class anymore. Finally, any Y3 base or shrink model will have a hard time competing with the stretched and structurally efficient A350-1000.

2. If the A340 series were produced in seperate procuction facilities and shared little commonality with other Airbus products, then based on total sales, one could perhaps argue that the aircraft is one of the "historic dogs" of commercial aviation history. Now, since Airbus chose the route of hardware and production commonality for the A340 program, you're wrong in your assertion that the A340 is a "dog". One should remember that in fact, the A340-300 was Airbus' first long range airliner and that each one of those A342s, A343s, A345s and A346s sold represented one less 777 produced by Boeing. However, it's interesting to compare the sales success of the A350 with all of the A340 sales, since it's clear that the A350 will make it possible for Airbus to reassert itself in the long range single deck widebody category.

3. Even though the number of A380 customers obviously will be smaller than that of the smaller widebodies, most of the dynamic and astute airlines of the world are already "onboard" the A380 program, and they will likely buy A350s in massive numbers.

4. Don't make the mistake in believing that many of the recent A330 orders are not revenue producing. Only a relatively insignificant amount of the order intake at Airbus during the last 3 years have been part of any settlments of damage claims for late 380 deliveries. If you know something for sure, you should back up your claim with some real numbers and not with pure conjectures and speculation.

5. Don't look yourself blind on the "seating market" and what the OEM's have to say about it. Do you know, for example, how many pax BA puts into their 744s or SQ puts into their brand new 777-300ERs?

6. It's true that "improvements" will turn the A332 nearly into the very A350 which Airbus originally offered and which Mr. Hazy "torpedoed". The difference now, of course, will be Airbus's ability to offer 2 types of single deck widebodies with fuselages optimised for a relatively comfortable 8 and 9 seating arrangement in Y-class respectively.

7. No, the 77W/77L is not in the same position v Airbus as the A322 is v Boeing. As mentioned above, the 244-inch diameter circular fuselage of the 777 is no longer as "optimised" for the mission profiles because the fuselage is to large in both the crown and in the areas of an airliner that's "catering" to premium passengers. In comparison, The 222-inch diameter circular fuselage of the A330 wastes little space in the crown and in the areas of a plane set aside for premium passengers. Incorporating the "thinner" fuselage frames of the first versions of the A350, into a significantly upgraded A330 platform, will make the cabin almost as spacious as the upper deck of the A380. Also, while the 777 will obviously induce more fuselage drag than the A350, for obvious reason, the A330 will always induce less fuselage drag than the 787 due to the smaller cross-section. Finally, the A330 is performing as well as it does partly because it's optimised for "medium" range. A long range aircraft, such as the 777-300ER, is far more sensitive to added structural weight, and will for those reasons, and the others mentioned above, never be competative with the A350.

Regards

It’s going to be long, but I can't keep it in, so here goes…

Firstly, I am not from aerospace industry but interested in aircraft and technology and, as a (vintage) MBA, in the strategy battles of major corporations. In early 2000’s I was following the 787 point-to-point v 380 hub-to-hub clash of concepts and it is clear now that Boeing was right – without the Gulf, 380 would have been a colossal white elephant (no pun intended) and buying of the 380 (in meaningful numbers, at least) is driven almost entirely by:
(i) mad/easy oil money on an unsustainable path of castles-in-the-air explosive development in the Gulf (again, truly, no pun intended); as well
(ii) it being politically incorrect in the Arab world today to buy American products (when there is no choice, they tend to opt for at least splitting orders between Airbus and Boeing but not necessarily due to commercial reasons, which is why the “huge” order pending from Gulf companies for the 350 is not really reflective of the true commercial situation).

As for the current debate, I read with interest the articles related to the 787/777 v 350 situation and with all due respect to pros from the industry and other pundits here (definitely more experienced than me), I just don’t see a proper business-strategy or common-sense analysis. Especially strange is ignoring the good-old but crucial “sunk-cost” concept when dealing with the 777 – as these costs are critical, as far as I understand, in this industry. Let me throw my non-aerospace- pro analysis as below.

The situation as I see is as follows:

• Boeing has four relevant products in the game: the existing 777ER, the 787 family, 777X (a plane based on the existing 777 family but with 787/new technology and finally the 7#7 – a completely new airframe. The following costs are involved for Boeing:
o on the 777ER, virtually ALL of the huge development costs have been incurred already (it’s a classic sunk-cost concept or whatever but this is crucial for this analysis)
o on 787 family not all costs have been incurred yet, and definitely none on the 787-9 or -10, let's designate these 787-9 and -10 Costs to Complete: CtC787-10;
o on 777X virtually no costs have been incurred, let's designate the necessary Costs to Complete the 777X: CtC777X;
o the 7#7 will definitely have the highest development costs, let's designate the necessary Costs to Complete the 7#7: CtC7#7
• Airbus has only one relevant product for the moment, the 350-900/1k (I lump these two for simplicity) on which virtually no development costs have been incurred, let's designate the necessary Costs to Complete the 350 family as CtC350F and Costs to Complete the 350-900/1k as CtC350-1k
• I assume that
o Technical abilities of the two sides are similar and the final products (of same generation), if developed to broadly similar (except 7#7 that, if developed will be superior to 350F but at a huge cost and time-delay and of course, 777ER is tangibly inferior to 350-1k);
o Variable costs of the sides WILL be similar (I know, the euro etc. but eventually, these cycles tend to straighten in the long term that this industry naturally has);
o Both Boeing and Airbus are well established – (i.e., in this fight, Boeing can choose “do nothing” alternative without going-under) and there is no MUST for any of them to “fill” this or that market-segment – I feel quiet strongly about it, as I think that the analysis that I see is very wishy-washy “strategic” and conventional wisdom on this point rather than proper analysis – the “obsoletion” “cannibalisation” or “killing” of existing Boeing models is not relevant as an argument, only the costs and benefits;
• Airbus has committed to the 350-900/1k aircraft (and received orders), let's designate it as Airbus Strategy (“ABS”); while
• Boeing has three alternative strategies in this point in time:
o Do nothing (“Boeing Strategy Ø” or “BSØ”)
 meaning – fight it out with the existing 777ER with very minor developments until the originally intended end of the life-cycle of the 777 family in 2015 or so.
 Implications: no technical risks, incur virtually no new development costs but lose sales in the 777 segment to the superior 350-1000. Let's designate these losses (in future profits for Boeing) as “BSØL”;
o 787-9/10 development as a direct functional equivalent to the 350-900/1k: (“Boeing Strategy 787” or “BS787”)
 meaning: develop the 787 family to fight the 350-900/1k;
 Implications: incur the development costs CtC787-10, some technical risks and losses of sales for the 777 family which will result in some loss of revenue and profit (“BS787L”) but on the background of Gains in revenue and profit due to sales of the 787-9/10 (“BS787G”);
o 777X development of the 777ER a “fighting” equivalent to the 350-900/1k (“Boeing Strategy 777” or “BS777”)
 meaning: stretch significantly the development of the 777 family to include 787 and other new technologies to square to the 350-900/1000;
 Implications: incur the development costs CtC777X, bigger technical risks and inevitable losses of sales for the existing 777 family resulting in loss of revenue and profit (“BS777XL”) but on the background of Gains in revenue and profit due to sales of the 777X (“BS777XG”);
o 7#7 development of a completely new replacement airframe to the 777 family BEFORE the originally intended end of 777 life-cycle and sacrificing the 777 family completely in the process (“Boeing Strategy 7#7” or “BS7#7”)
 meaning: development of a completely new replacement airframe to probably out-jump the 350-900/1000, very long delay;
 Implications: incur huge development costs, CtC777X, reasonable technical risks (clean-sheet planning) and inevitable losses of sales for the existing 787 and 777 families resulting in loss of revenue and profit (“BS7#7L”) but on the background of Gains in revenue and profit due to sales of the 777X (“BS7#7G”);

One of the main points that are missed by the bloggers here is that Boeing does NOT HAVE to position a NEW aircraft to compete with the 350-1k! Boeing can compete by lowering the price on the 777ER (BSØ) – yes it is bad to have lower margins, BUT (i) 777ER is not completely inferior to the 350-1k and has a proven track record – its value for customers is indeed somewhat lower than 350-1k but at some price-point the customers will prefer the 777ER to the more expensive 350-1k and (iii) because the costs of development are “SUNK COSTS” for Boeing now, they can be ignored when there is a competing product and Boeing can slash the price to the right level. On the up-side, Boeing will not have to incur the huge development costs of a new variant or worse, a new airframe family. I have not seen one analysis that makes these common-sense 777ER price-reduction argument – they all fluff-around unsubstantiated “market-segment” and “strategic” issues.

Therefore, the true analysis of Boeing’s alternatives should be viewed primarily in comparing the estimates CtCs, Losses and Gains variables! This is of course not easy, especially the Losses and Gains, but for example, the following relations are probably true:

CtC7#7>CtC777X>CtC787-10
CtC7#7≈CtC350F>CtC350-1k
CtC787-10≈CtC350-1k etc.

Bottom line:
• The seeming success of the 350-1k is a lot due to the Political Correctness of buying non-American in the oil-money flushed Gulf (yes I know about Qantas, but the bulk is in the Gulf), which development is unsustainable (if only I could “short” 380s…there will be a lot of them on the cheap in a few years when the oil cycle turns round) and
• None of the bloggers considers what I call BSØ for Boeing – i.e., fight the 350-1k by reducing the price of 777ER, wait for the inevitable set-backs of Airbus, develop the successor of the 777 family in due time and manner. By the way, is it at all practical to think about something radical like blended/flying wing for an airliner or we are doomed to winged-cigar configuration for the rest of our lives?

It’s going to be long, but I can't keep it in, so here goes…

Firstly, I am not from aerospace industry am but interested in aircraft and technology and, as a (vintage) MBA, in the strategy battles of major corporations. In early 2000’s I was following the 787 point-to-point v 380 hub-to-hub clash of concepts and it is clear now that Boeing was right – without the Gulf, 380 would have been a colossal white elephant (no pun intended) and buying of the 380 (in meaningful numbers, at least) is driven almost entirely by:
(i) mad/easy oil money on an unsustainable path of castles-in-the-air explosive development in the Gulf (again, truly, no pun intended); as well
(ii) it being politically incorrect in the Arab world today to buy American products (when there is no choice, they tend to opt for at least splitting orders between Airbus and Boeing but not necessarily due to commercial reasons, which is why the “huge” order pending from Gulf companies for the 350 is not really reflective of the true commercial situation).

As for the current debate, I read with interest the articles related to the 787/777 v 350 situation and with all due respect to pros from the industry and other pundits here (definitely more experienced than me), I just don’t see a proper business-strategy or common-sense analysis. Especially strange is ignoring the good-old but crucial “sunk-cost” concept when dealing with the 777 – as these costs are critical, as far as I understand, in this industry. Let me throw my non-aerospace- pro analysis as below.

The situation as I see is as follows:

• Boeing has four relevant products in the game: the existing 777ER, the 787 family, 777X (a plane based on the existing 777 family but with 787/new technology and finally the 7#7 – a completely new airframe. The following costs are involved for Boeing:
o on the 777ER, virtually ALL of the huge development costs have been incurred already (it’s a classic sunk-cost concept or whatever but this is crucial for this analysis)
o on 787 family not all costs have been incurred yet, and definitely none on the 787-9 or -10, let's designate these 787-9 and -10 Costs to Complete: CtC787-10;
o on 777X virtually no costs have been incurred, let's designate the necessary Costs to Complete the 777X: CtC777X;
o the 7#7 will definitely have the highest development costs, let's designate the necessary Costs to Complete the 7#7: CtC7#7
• Airbus has only one relevant product for the moment, the 350-900/1k (I lump these two for simplicity) on which virtually no development costs have been incurred, let's designate the necessary Costs to Complete the 350 family as CtC350F and Costs to Complete the 350-900/1k as CtC350-1k
• I assume that
o Technical abilities of the two sides are similar and the final products (of same generation), if developed to broadly similar (except 7#7 that, if developed will be superior to 350F but at a huge cost and time-delay and of course, 777ER is tangibly inferior to 350-1k);
o Variable costs of the sides WILL be similar (I know, the euro etc. but eventually, these cycles tend to straighten in the long term that this industry naturally has);
o Both Boeing and Airbus are well established – (i.e., in this fight, Boeing can choose “do nothing” alternative without going-under) and there is no MUST for any of them to “fill” this or that market-segment – I feel quiet strongly about it, as I think that the analysis that I see is very wishy-washy “strategic” and conventional wisdom on this point rather than proper analysis – the “obsoletion” “cannibalisation” or “killing” of existing Boeing models is not relevant as an argument, only the costs and benefits;
• Airbus has committed to the 350-900/1k aircraft (and received orders), let's designate it as Airbus Strategy (“ABS”); while
• Boeing has three alternative strategies in this point in time:
o Do nothing (“Boeing Strategy Ø” or “BSØ”)
 meaning – fight it out with the existing 777ER with very minor developments until the originally intended end of the life-cycle of the 777 family in 2015 or so.
 Implications: no technical risks, incur virtually no new development costs but lose sales in the 777 segment to the superior 350-1000. Let's designate these losses (in future profits for Boeing) as “BSØL”;
o 787-9/10 development as a direct functional equivalent to the 350-900/1k: (“Boeing Strategy 787” or “BS787”)
 meaning: develop the 787 family to fight the 350-900/1k;
 Implications: incur the development costs CtC787-10, some technical risks and losses of sales for the 777 family which will result in some loss of revenue and profit (“BS787L”) but on the background of Gains in revenue and profit due to sales of the 787-9/10 (“BS787G”);
o 777X development of the 777ER a “fighting” equivalent to the 350-900/1k (“Boeing Strategy 777” or “BS777”)
 meaning: stretch significantly the development of the 777 family to include 787 and other new technologies to square to the 350-900/1000;
 Implications: incur the development costs CtC777X, bigger technical risks and inevitable losses of sales for the existing 777 family resulting in loss of revenue and profit (“BS777XL”) but on the background of Gains in revenue and profit due to sales of the 777X (“BS777XG”);
o 7#7 development of a completely new replacement airframe to the 777 family BEFORE the originally intended end of 777 life-cycle and sacrificing the 777 family completely in the process (“Boeing Strategy 7#7” or “BS7#7”)
 meaning: development of a completely new replacement airframe to probably out-jump the 350-900/1000, very long delay;
 Implications: incur huge development costs, CtC777X, reasonable technical risks (clean-sheet planning) and inevitable losses of sales for the existing 787 and 777 families resulting in loss of revenue and profit (“BS7#7L”) but on the background of Gains in revenue and profit due to sales of the 777X (“BS7#7G”);

One of the main points that is missed by the bloggers and analysts here is that Boeing does NOT HAVE to position a NEW aircraft to compete with the 350-1k! Boeing can compete by lowering the price on the 777ER (BSØ) – yes it is bad to have lower margins, BUT (i) 777ER is not completely inferior to the 350-1k and has a proven track record – its value for customers is indeed somewhat lower than 350-1k but at some price-point the customers will prefer the 777ER to the more expensive 350-1k and (iii) because the costs of development are “SUNK COSTS” for Boeing now, they can be ignored when there is a competing product and Boeing can slash the price to the right level. On the up-side, Boeing will not have to incur the huge development costs of a new variant or worse, a new airframe family. I have not seen one analysis that makes these common-sense 777ER price-reduction argument – they all fluff-around unsubstantiated “market-segment” and “strategic” issues.

Therefore, the true analysis of Boeing’s alternatives should be viewed primarily in comparing the estimates CtCs, Losses and Gains variables! This is of course not easy, especially the Losses and Gains, but for example, the following relations are probably true:

CtC7#7>CtC777X>CtC787-10
CtC7#7≈CtC350F>CtC350-1k
CtC787-10≈CtC350-1k etc.

Bottom line:
• The seeming success of the 350-1k is a lot due to the Political Correctness of buying non-American in the oil-money flushed Gulf (yes I know about Qantas, but the bulk is in the Gulf), which development is unsustainable (if only I could “short” 380s…there will be a lot of them on the cheap in a few years when the oil cycle turns round) and
• None of the bloggers considers what I call BSØ for Boeing – i.e., fight the 350-1k by reducing the price of 777ER, wait for the inevitable set-backs of Airbus, develop the successor of the 777 family in due time and manner. By the way, is it at all practical to think about something less conventional like blended/flying-wing or squeezed/non-circular fuselage for an airliner or are we doomed to the winged-cigar configuration for the rest of our lives?