9 ms·

A Cycle of Misery: The business of building commercial aircraft

68 points by HR01 3y ago

OldGuyInTheClub 3y ago
The first table shows staggering loss after staggering loss yet both Airbus and Boeing are still around. They are large, diversified companies with loads of defense business and all that implies. The table also shows cost estimating is nuts in both the private and public sectors. Any honestly costed program will not make it past a Board of Directors or Congress. But something has to go forward and so overoptimism makes some careers in the near-term and kills others in the long-term.
- vosper 3y ago
  They are also considered critical companies for national security / capability reasons and neither will ever be allowed to fail by their respective governments, unless a local replacement exists.
  - geraldhh 3y ago
    as much as this place is a temple of the private sector; most old and big companies exist because of public money
    - chomskyole 3y ago
      Couldn't agree more. Let's democratize them!
      - sslayer 3y ago
        They already have been. Tell me what other industry has as much oversight. The FFA exist with the sole intent of regulating anything to do with air travel. Imagine if the USDA decided that McDonalds had to stop selling Big Mac's because they found 1 that contained listeria, and had to inspect Millions of pounds of meat prior to letting them resume sale. Car recalls exist, but you don't see us stop driving when brakes fail or hackers can hijack your CAN system.
        throawayonthe 3y ago
        [dead]
        dbspin 3y ago
        That's not what democratizing means. It doesn't refer to regulation or oversight, but rather to worker ownership and organisation of the group or business in question. Collectively owned / horizontally managed businesses do exist at scale, from farm cooperatives to the Brazilian industrial giant SEMCO.
        baldeagle 3y ago
        You mean like when they basically shut down Blue Bell for listeria? That is exactly what the FDA and CDC did. https://www.cdc.gov/listeria/outbreaks/ice-cream-03-15/index.html https://www.cdc.gov/listeria/outbreaks/ice-cream-03-15/index...
      - iancmceachern 3y ago
        What does this mean?
        chomskyole 3y ago
        It means that ownership is democratized. I.e. either owned by the workers or by the stakeholders/users.
dkjaudyeqooe 3y ago
This is an argument for smaller airplanes. There will never be an A380 again but also the larger twin isles may be be an endangered species. The A321 XLR seems to be a harbinger of the future, smaller airplanes serving more city pairs point to point. Ultimately lower cost airlines will win out because flying is largely an undifferentiated product and connecting flights are just an opportunity to be left stranded somewhere. They add complexity and cost. But in this scenario there is still the need for longer flights in larger planes and we're seeing that in A350s doing pairs like Perth-London or Singapore-New York. Even those are more economically marginal with the larger planes and making something somewhat smaller with a very long range makes more sense.
- dralley 3y ago
  > Ultimately lower cost airlines will win out because flying is largely an undifferentiated product and connecting flights are just an opportunity to be left stranded somewhere. They add complexity and cost. MentourPilot made the exact opposite argument recently. The low-cost airlines are being disproportionately negatively affected by current market conditions. Some of those are due to a fluke, and some due to the low-cost carriers buying the wrong size aircraft, and some of it is due to the big carriers intruding into their market. https://www.youtube.com/watch?v=6_nKC7HxyOk&t=9m00s https://www.youtube.com/watch?v=6_nKC7HxyOk&t=9m00s
- jmward01 3y ago
  I think aviation as a whole is ripe for massive disruption. I think the end result will be much smaller planes that do point to point but the exact 'how will it happen' is still an unknown. This will force regulatory changes too since a lot more smaller = totally different airspace management and cockpit requirements (please allow autonomous!). My personal bet for the disruptor to do it is is on electric. Look at the graph of battery capacity/kg/year and it is clear that electric will out-pace JET-A in the not distant future. The benefits are massive when that happens since (as the article points out) developing engines is a huge part of the challenge. Electric engines are going to be vastly easier to design and certify and provide massive new options since they can be mounted in new ways making aircraft more efficient and cheaper to build and operate. They will also likely change the altitudes and speeds that aircraft fly at since the same issues that impact turbofan engines don't impact electric (there are other issues obviously though).
yedava 3y ago
When we think of centrally planned economies, we think of things like communism. But monopolies and duopolies are also a form of central planning. Without competition, decisions are all made by a select elite (and not the market). That inevitably leads to disaster. For far too long we've let corporations grow uncontrolled like a cancer. It is time to break them up. There are many more disasters like Boeing waiting to happen.
- MrBuddyCasino 3y ago
  As long as regulation drives the market towards oligopoly, breaking up companies does nothing. What is needed is for conditions to change such that competition becomes viable again. In some cases this will be impossible due to financial constraints.
- pbmonster 3y ago
  > Without competition, decisions are all made by a select elite (and not the market). I'm not disputing that this is true, but in this context the statement is a little weird. The article mentions multiple times that Boing or Airbus misjudged where the market - their airline customers - would go, and took huge losses because of it. If it was up to a select elite, today, the A380 would allow for massively increased passenger numbers flying out of the big hub airports. Instead, the plane is dead, and Airbus begrudgingly builds what the market wants instead.
- Night_Thastus 3y ago
  I'm not sure how you extracted that from this article. Breaking those two up into more would just make more struggling companies that would inevitably die after losing so much of their talent and advantages of scale.
Cacti 3y ago
“ In the late 1960s, Lockheed and Mcdonnell-Douglas drove each other to ruin by each developing a new aircraft (the L-1011 and the DC-10, respectively) for what turned out to be a very small market: less than 700 aircraft were sold between them. Lockheed ended up abandoning the commercial aircraft market after losing $2.5 billion on the program (~$9 billion in 2023 dollars), and McDonnell-Douglas never recovered, ultimately selling itself to Boeing in 1997 as its market share declined and it was unable to fund the development of new aircraft.” I don’t think anyone who worked in the industry would attribute the 1997 merger to the DC-10 some 30-40 years earlier. First off, the DC-10 is, as the name implies, a Douglas aircraft. That fiasco did indeed cause a merger, to McDonnell… in 1967. Also, if McDonnell-Douglas “never recovered”, how did it afford to fund in the 80s and early 90s, the enormously expensive design and development of the C17, entirely with its own money? An effort so expensive no aerospace company ever tried to do it again? The cause of the 1997 merger was if anything the loss of the JSF contract in 1996 (which became the F35) , which was made necessary by the preceding loss of the ATF contract (which became the F22) and slow sales of the MD-11; most analyses of the 1997 merger focus on the MDC-Boeing rival in commercial airliners, but MDC would have lived through the MD-11 and the merger would have never happened in 1997 if it hadn’t lost two generational fighter contracts. At least, the merger wouldn’t have happened before 9/11.
- coredog64 3y ago
  Missing in this analysis is the MD-95 (now renamed as Boeing 717). McD did a bunch of expensive reengineering and the gamble didn’t pay off when the launch customer was involved in a crash that eventually sank them.
  - Cacti 3y ago
    The MD-95 didn’t even get type certification until 1999. Are you thinking of ValueJet? That was in 1997 and wasn’t a MD-95 but a DC-9, and the cause of the crash was, you know, it was ValueJet. MDC in 1995 and 1996, when the talks were occurring, was not in dire financial shape. The C17 had a contract finally and was printing obscene amounts of money. But there was nothing new in the pipe, so once they bombed on JSF, it was either merge then at the top or ride the trainwreck for the next 30 years. And Boeing made out, because they picked up the desperately needed cash from C17 and the military business. Which was the right move, since there have been 2 or 3 times since then where commercial nearly bankrupted the company. PS I agree the MD95 sucked and was a poor decision. My understanding is that a new design was considered too expensive at the time (the 80s), hence the decision to go with the derivative. It can work, but if it backfires you end up with the MD-95 or the MAX.
resolutebat 3y ago
To me, the most remarkable thing about the modern commercial aircraft industry is how similar the end results are. Only the keen planespotter can tell apart a A350 from a B787, from the outside or the inside, and the Chinese (COMAC) and Russians (Sukhoi) are not even trying to disrupt, just copy. Where are all the delta wings and other exotic designs used regularly in military aircraft?! IMHO there are two things with the potential to revolutionize passenger aviation brewing right now. One is the possible return of supersonic flight, with Boom racking up some 150 orders already, although they still have a long way to go until first passenger flight in 2029 (not holding my breath). The other is switching from aviation fuel to electric engines, which is inevitable, although the sheer weight of batteries is a much bigger problem for flight than for cars and it's likely going to take a decade plus until they're competitive for longer distances.
- Cacti 3y ago
  The other designs were ground away by cost, law, scaling, or practicality. These issues are less of a concern when someone is shooting at you.
- zokier 3y ago
  It is also common meme that all new cars look the same https://medium.com/swlh/the-zombie-mobile-b03932ac971d https://medium.com/swlh/the-zombie-mobile-b03932ac971d This is just a signal that the field is mature and the design is near local optimum. tbh I don't see that much exotic designs in military aircraft either. Something like Rafale, Eurofighter, Gripen, J-10 etc are all notably similar in design (pure delta with canards). Similarly, the new gen fighters also are quite similar to each other visually. X-32 was maybe the only outlier on top of my head, and it never left the prototype stage.
  - resolutebat 3y ago
    You can sense the first tremors of a shakeup in cars though: the interior of a Tesla Model 3 is very far from conventional, and there's a lot more room for play now on the exterior as well since you no longer need to devote the first third to the internal combination engine.
CitizenKane 3y ago
It's a fascinating read, and makes a lot of sense why it's so hard to develop a commercial aircraft that actually ends up being profitable. One thing that got me wondering, and maybe someone here might know this, is why hasn't Boeing attempted to miniaturize the 787 as opposed to continually re-purposing the 737? From the outsider's (and complete layman's) view it seems like this would be a more sensible way to build a successful modern aircraft in that vein as opposed to trying to repurpose a design which is now well over half a century old. I fly a fair amount an honestly the 787 is an impressive aircraft. I'm surprised that Boeing hasn't tried to take what they learned from their developments there and apply them in a way that could potentially help them recoup the costs of that program.
- stephen_g 3y ago
  I’m not 100% sure but I think there are some fundamental differences between wide-body and narrow-body aircraft (things aren’t just a different size but different shapes) that mean you couldn’t just shrink it down and change the seat pattern, but I expect they definitely could base a new aircraft on the same materials tech, avionics, etc. as the 787.
- markfenton 3y ago
  The article mentions that at the time they were looking at the 737 replacement in the early 2000s they didn't think they could scale up the production to the volume needed for the 737's market. I think this fits the general theme of the article - they probably could if they started work now, but they had to make the decision on replacing the 737 or creating the 737 Max whilst guessing on the future years down the line.
- icegreentea2 3y ago
  Scaling up and down aircraft is usually done by changing their length since that's both structurally very straight forward, and it can usually be done with relatively benign aerodynamic impacts. The 787 is significantly larger than the 737. It's not just built to have more passengers, but also to carry way more fuel so it can go more than twice as far. While you can always take off with less fuel to stave off the worst of the penalty when making shorter flights, a penalty remains. Scaling down a 787 to hit the 737's operating niche likely means: * Reducing the body diameter/width * Shrinking the wings (the 787 wing has 3x the area of the 737 wing) * Reducing the length The first two operations are really non-trivial. Certainly not impossible, but challenging enough that calling it a "787 redesign/miniaturization" vs "clean sheet model with 787 heritage" gets really blurry.
coredog64 3y ago
Something that is only touched on in passing is the 737NG delay. It wasn’t “chaos” that caused those delays: Flight testing exposed structural problems with the tail section (cracking) and it had to be rapidly redesigned and rebuilt. The internal rumor mill laid the feet at poor finite engineering work: The current practitioners looked at all the mass in the tail structure and said “We can do better, those old pencil and paper guys were so dumb”
everybodyknows 3y ago
> The 737 was only saved because it was finally being sold for less than its production costs, but it was not expected to pay back its development costs. Presumably, "more" was intended here rather than "less".

68 points by HR01 3y ago

The first table shows staggering loss after staggering loss yet both Airbus and Boeing are still around. They are large, diversified companies with loads of defense business and all that implies. The table also shows cost estimating is nuts in both the private and public sectors. Any honestly costed program will not make it past a Board of Directors or Congress. But something has to go forward and so overoptimism makes some careers in the near-term and kills others in the long-term.

vosper 3y ago
They are also considered critical companies for national security / capability reasons and neither will ever be allowed to fail by their respective governments, unless a local replacement exists.
- geraldhh 3y ago
  as much as this place is a temple of the private sector; most old and big companies exist because of public money
  - chomskyole 3y ago
    Couldn't agree more. Let's democratize them!
    - sslayer 3y ago
      They already have been. Tell me what other industry has as much oversight. The FFA exist with the sole intent of regulating anything to do with air travel. Imagine if the USDA decided that McDonalds had to stop selling Big Mac's because they found 1 that contained listeria, and had to inspect Millions of pounds of meat prior to letting them resume sale. Car recalls exist, but you don't see us stop driving when brakes fail or hackers can hijack your CAN system.
      - throawayonthe 3y ago
        [dead]
      - dbspin 3y ago
        That's not what democratizing means. It doesn't refer to regulation or oversight, but rather to worker ownership and organisation of the group or business in question. Collectively owned / horizontally managed businesses do exist at scale, from farm cooperatives to the Brazilian industrial giant SEMCO.
      - baldeagle 3y ago
        You mean like when they basically shut down Blue Bell for listeria? That is exactly what the FDA and CDC did. https://www.cdc.gov/listeria/outbreaks/ice-cream-03-15/index.html https://www.cdc.gov/listeria/outbreaks/ice-cream-03-15/index...
    - iancmceachern 3y ago
      What does this mean?
      - chomskyole 3y ago
        It means that ownership is democratized. I.e. either owned by the workers or by the stakeholders/users.

dkjaudyeqooe 3y ago

This is an argument for smaller airplanes. There will never be an A380 again but also the larger twin isles may be be an endangered species. The A321 XLR seems to be a harbinger of the future, smaller airplanes serving more city pairs point to point. Ultimately lower cost airlines will win out because flying is largely an undifferentiated product and connecting flights are just an opportunity to be left stranded somewhere. They add complexity and cost. But in this scenario there is still the need for longer flights in larger planes and we're seeing that in A350s doing pairs like Perth-London or Singapore-New York. Even those are more economically marginal with the larger planes and making something somewhat smaller with a very long range makes more sense.

dralley 3y ago
> Ultimately lower cost airlines will win out because flying is largely an undifferentiated product and connecting flights are just an opportunity to be left stranded somewhere. They add complexity and cost. MentourPilot made the exact opposite argument recently. The low-cost airlines are being disproportionately negatively affected by current market conditions. Some of those are due to a fluke, and some due to the low-cost carriers buying the wrong size aircraft, and some of it is due to the big carriers intruding into their market. https://www.youtube.com/watch?v=6_nKC7HxyOk&t=9m00s https://www.youtube.com/watch?v=6_nKC7HxyOk&t=9m00s
jmward01 3y ago
I think aviation as a whole is ripe for massive disruption. I think the end result will be much smaller planes that do point to point but the exact 'how will it happen' is still an unknown. This will force regulatory changes too since a lot more smaller = totally different airspace management and cockpit requirements (please allow autonomous!). My personal bet for the disruptor to do it is is on electric. Look at the graph of battery capacity/kg/year and it is clear that electric will out-pace JET-A in the not distant future. The benefits are massive when that happens since (as the article points out) developing engines is a huge part of the challenge. Electric engines are going to be vastly easier to design and certify and provide massive new options since they can be mounted in new ways making aircraft more efficient and cheaper to build and operate. They will also likely change the altitudes and speeds that aircraft fly at since the same issues that impact turbofan engines don't impact electric (there are other issues obviously though).

yedava 3y ago

When we think of centrally planned economies, we think of things like communism. But monopolies and duopolies are also a form of central planning. Without competition, decisions are all made by a select elite (and not the market). That inevitably leads to disaster. For far too long we've let corporations grow uncontrolled like a cancer. It is time to break them up. There are many more disasters like Boeing waiting to happen.

MrBuddyCasino 3y ago
As long as regulation drives the market towards oligopoly, breaking up companies does nothing. What is needed is for conditions to change such that competition becomes viable again. In some cases this will be impossible due to financial constraints.
pbmonster 3y ago
> Without competition, decisions are all made by a select elite (and not the market). I'm not disputing that this is true, but in this context the statement is a little weird. The article mentions multiple times that Boing or Airbus misjudged where the market - their airline customers - would go, and took huge losses because of it. If it was up to a select elite, today, the A380 would allow for massively increased passenger numbers flying out of the big hub airports. Instead, the plane is dead, and Airbus begrudgingly builds what the market wants instead.
Night_Thastus 3y ago
I'm not sure how you extracted that from this article. Breaking those two up into more would just make more struggling companies that would inevitably die after losing so much of their talent and advantages of scale.

Cacti 3y ago

“ In the late 1960s, Lockheed and Mcdonnell-Douglas drove each other to ruin by each developing a new aircraft (the L-1011 and the DC-10, respectively) for what turned out to be a very small market: less than 700 aircraft were sold between them. Lockheed ended up abandoning the commercial aircraft market after losing $2.5 billion on the program (~$9 billion in 2023 dollars), and McDonnell-Douglas never recovered, ultimately selling itself to Boeing in 1997 as its market share declined and it was unable to fund the development of new aircraft.” I don’t think anyone who worked in the industry would attribute the 1997 merger to the DC-10 some 30-40 years earlier. First off, the DC-10 is, as the name implies, a Douglas aircraft. That fiasco did indeed cause a merger, to McDonnell… in 1967. Also, if McDonnell-Douglas “never recovered”, how did it afford to fund in the 80s and early 90s, the enormously expensive design and development of the C17, entirely with its own money? An effort so expensive no aerospace company ever tried to do it again? The cause of the 1997 merger was if anything the loss of the JSF contract in 1996 (which became the F35) , which was made necessary by the preceding loss of the ATF contract (which became the F22) and slow sales of the MD-11; most analyses of the 1997 merger focus on the MDC-Boeing rival in commercial airliners, but MDC would have lived through the MD-11 and the merger would have never happened in 1997 if it hadn’t lost two generational fighter contracts. At least, the merger wouldn’t have happened before 9/11.

coredog64 3y ago
Missing in this analysis is the MD-95 (now renamed as Boeing 717). McD did a bunch of expensive reengineering and the gamble didn’t pay off when the launch customer was involved in a crash that eventually sank them.
- Cacti 3y ago
  The MD-95 didn’t even get type certification until 1999. Are you thinking of ValueJet? That was in 1997 and wasn’t a MD-95 but a DC-9, and the cause of the crash was, you know, it was ValueJet. MDC in 1995 and 1996, when the talks were occurring, was not in dire financial shape. The C17 had a contract finally and was printing obscene amounts of money. But there was nothing new in the pipe, so once they bombed on JSF, it was either merge then at the top or ride the trainwreck for the next 30 years. And Boeing made out, because they picked up the desperately needed cash from C17 and the military business. Which was the right move, since there have been 2 or 3 times since then where commercial nearly bankrupted the company. PS I agree the MD95 sucked and was a poor decision. My understanding is that a new design was considered too expensive at the time (the 80s), hence the decision to go with the derivative. It can work, but if it backfires you end up with the MD-95 or the MAX.

resolutebat 3y ago

To me, the most remarkable thing about the modern commercial aircraft industry is how similar the end results are. Only the keen planespotter can tell apart a A350 from a B787, from the outside or the inside, and the Chinese (COMAC) and Russians (Sukhoi) are not even trying to disrupt, just copy. Where are all the delta wings and other exotic designs used regularly in military aircraft?! IMHO there are two things with the potential to revolutionize passenger aviation brewing right now. One is the possible return of supersonic flight, with Boom racking up some 150 orders already, although they still have a long way to go until first passenger flight in 2029 (not holding my breath). The other is switching from aviation fuel to electric engines, which is inevitable, although the sheer weight of batteries is a much bigger problem for flight than for cars and it's likely going to take a decade plus until they're competitive for longer distances.

Cacti 3y ago
The other designs were ground away by cost, law, scaling, or practicality. These issues are less of a concern when someone is shooting at you.
zokier 3y ago
It is also common meme that all new cars look the same https://medium.com/swlh/the-zombie-mobile-b03932ac971d https://medium.com/swlh/the-zombie-mobile-b03932ac971d This is just a signal that the field is mature and the design is near local optimum. tbh I don't see that much exotic designs in military aircraft either. Something like Rafale, Eurofighter, Gripen, J-10 etc are all notably similar in design (pure delta with canards). Similarly, the new gen fighters also are quite similar to each other visually. X-32 was maybe the only outlier on top of my head, and it never left the prototype stage.
- resolutebat 3y ago
  You can sense the first tremors of a shakeup in cars though: the interior of a Tesla Model 3 is very far from conventional, and there's a lot more room for play now on the exterior as well since you no longer need to devote the first third to the internal combination engine.

CitizenKane 3y ago

It's a fascinating read, and makes a lot of sense why it's so hard to develop a commercial aircraft that actually ends up being profitable. One thing that got me wondering, and maybe someone here might know this, is why hasn't Boeing attempted to miniaturize the 787 as opposed to continually re-purposing the 737? From the outsider's (and complete layman's) view it seems like this would be a more sensible way to build a successful modern aircraft in that vein as opposed to trying to repurpose a design which is now well over half a century old. I fly a fair amount an honestly the 787 is an impressive aircraft. I'm surprised that Boeing hasn't tried to take what they learned from their developments there and apply them in a way that could potentially help them recoup the costs of that program.

stephen_g 3y ago
I’m not 100% sure but I think there are some fundamental differences between wide-body and narrow-body aircraft (things aren’t just a different size but different shapes) that mean you couldn’t just shrink it down and change the seat pattern, but I expect they definitely could base a new aircraft on the same materials tech, avionics, etc. as the 787.
markfenton 3y ago
The article mentions that at the time they were looking at the 737 replacement in the early 2000s they didn't think they could scale up the production to the volume needed for the 737's market. I think this fits the general theme of the article - they probably could if they started work now, but they had to make the decision on replacing the 737 or creating the 737 Max whilst guessing on the future years down the line.
icegreentea2 3y ago
Scaling up and down aircraft is usually done by changing their length since that's both structurally very straight forward, and it can usually be done with relatively benign aerodynamic impacts. The 787 is significantly larger than the 737. It's not just built to have more passengers, but also to carry way more fuel so it can go more than twice as far. While you can always take off with less fuel to stave off the worst of the penalty when making shorter flights, a penalty remains. Scaling down a 787 to hit the 737's operating niche likely means: * Reducing the body diameter/width * Shrinking the wings (the 787 wing has 3x the area of the 737 wing) * Reducing the length The first two operations are really non-trivial. Certainly not impossible, but challenging enough that calling it a "787 redesign/miniaturization" vs "clean sheet model with 787 heritage" gets really blurry.

coredog64 3y ago

Something that is only touched on in passing is the 737NG delay. It wasn’t “chaos” that caused those delays: Flight testing exposed structural problems with the tail section (cracking) and it had to be rapidly redesigned and rebuilt. The internal rumor mill laid the feet at poor finite engineering work: The current practitioners looked at all the mass in the tail structure and said “We can do better, those old pencil and paper guys were so dumb”

everybodyknows 3y ago

> The 737 was only saved because it was finally being sold for less than its production costs, but it was not expected to pay back its development costs. Presumably, "more" was intended here rather than "less".