SCOTTSDALE -- Steven Udvar-Hazy, the most high-profile and influential man in aircraft leasing, gave journalists a lengthy interview immediately following the International Society of Transport Aircraft Trading (ISTAT) conference today.Because Udvar-Hazy shared his thoughts on so many topics, Runway Girl Mary Kirby and I have decided to break the lion's share of the interview on our blogs. Mary's blog covers Udvar-Hazy's comments about narrowbody aircraft, while I'm taking the widebodies.
For the sake of historical context, here's Udvar-Hazy's last interview with this page from February 2008's Singapore Air Show, prior to the launch of the CSeries, 787-3 cancellation and global economic crisis.
The complete interview is continued below the fold.
On whether or not the A350-1000 has enough power to perform its mission:
It doesn't have enough thrust. So we're going to buy a bigOn the potential for 787-9 and performance of the 787-10:
cement company so extend runways everywhere in the world. Concrete, it's
going to be the way to go.
Our feeling is that the -900 XWB will be the main star of the A350
family, and maybe they'll be two versions of the -1000, the initial
version, like on the A340-600 the initial version that had some
performance limitations and after a few years they'll figure out ways to
get more thrust, weight, max takeoff weight and more fuel capacity, So
there could be a 1000 'Super', but we're looking at 2020 or 2021.
I think the -9 will do well once they get the airplaneOn 747-8 sales prospects and future orders:
debugged, and Boeing's doing a lot of studies on the -10X, which will be
a stretch. Well it's going to be a -10X, it's basically a stretch of
the -9, it won't have the range of the -9, but a lot of applications,
for example, trans-atlantic and west coast to Asia, it has adequate
range and it will be a good replacement for the A340-300, it will be a
good replacement for the 777-200 and it's a low cost stretch. It's like
going from a 737-700 to an -800. Same engines, same landing gear, same
cockpit. So you could have an airline that has -9 and -10s. I don't see a
really high gross weight -10 - or what I call the -10LR - because
neither Rolls-Royce nor GE right now can give you the thrust and the
configuration that makes sense.
I think it would be a good airplane, I think we're looking at 2019, 2018 [for the -10LR].
My personal view is that the freighter is in a class by
itself, once they fix their flutter problems, and there other, what I
call 'baby pains'. Because the A380 has basically forfeited the very
large freighter market, the MD-11 is out of production so I think the
747-8F is going to be the benchmark for the next 15, 20 years, as the
most efficient large freighter if you can fill it. I don't see any
competition.
The passenger aircraft is a different story. In a way, the 777-300ER,
they compete a little bit with each other, there's quite a bit of
overlap and there's many airlines both in the Asia segment and Europe
that have shifted their 747 flying to 777-300ERs and they can work with
frequency, off-season, it's a little better match capacity-wise, the 777
vs the 747. I think Boeing will sell some units, it will complement
their sales of the freighters, but if I had to make a forecast crystal
ball, I would say the freighters will - in the long run - outsell the
passenger version.
They'll make some sales and they'll tie it to other deals and 787s, and
777s, Boeing has lots of tools in their toolbox so they'll get some
sales. Bit I don't see it as a massive number of units like the 747-400
was.
As a new lessor, with a smaller balance sheet, that we had at ILFC we're
not pursuing large four-engine aircraft. It's not an area we're
spending a lot of time on.
If we do any four engine aircraft in the future - and I'm not saying we
will or we won't - the one we would probably look at is the freighter.
It's kind of a long shot.
On Chinese orders for the 747-8I:
You know these big Chinese buys are not always commercially
driven, there's always government to government. It's a really small
deal. I think it's more symbolic. Air China had 747-200, 747-400, 747
combis, they had 747-400 freighters, in a way its a natural evolution.
On 787 break even point and profitability:
The break even point for 787 has
moved far, far to the right. you can imagine their R&D development
cost has skyrocketed compared to the original projection. This means the
number of aircraft they'll have to sell will be significant and my
guess is at least 1,500. But then again, that's a 30 to 40 year
production cycle.
On 787 delays:
It's been very frustrating for those of us that ordered the
airplane and we wait, and we wait, and there's a problem and another
problem, and a solution.
I think most airlines have accepted the fact that the program is late. What can they do?
[Airline] certainly can't plan exact dates anymore cause those days are
over, where they get an exact date and then a few months later Boeing
says 'well sorry it's going to be another three months or six months'. I
think most airlines are just in a holding pattern waiting for the
captain to say okay ladies and gentlemen we'll finally be landing at
O'Hare.
I don't want to make any prediction on when they're going to certify the
plane or deliver the -9, I just don't know. I don't think anybody knows
to be honest with you, people have expectations, but who knows what the
FAA is going to do.'
On 787 performance and achieving spec brochure performance:
Well they're overweight, they need to go on a diet. I can't
that my gut feeling is that the airplanes will always be heavier and
they'll just have more power and they'll just increase the max takeoff
weight and say we still meet the spec. It's just going to become a
heavier more powerful animal.
A lot of the reinforcement they've had to add, they have to use ti,
because al and ti don't mix too well. If they can overcome some of those
structural mods and use composite, then you're back to saving weight,
but you have to reinforce composites with titanium, that's your weight
enemy.
The feeling I have is on the -9, is that they've learned so much they'll
incorporate a lot of what they've learned on the -8s. Show me one
commercial jet that hasn't been heavier, whether it's the A380 or the
777 or the A330, they're always heavier. Engineers are not the best
estimators of weight.
On 787 compensation in relation to ILFC's 737 order:
But if you go to Boeing and you have 74 planes on order thatOn 777 upgrades and the A350 schedule:
haven't delivered and some are like two years late. Legally Boeing has a
huge liability to ILFC for late deliveries, so you can solve that three
ways: ILFC can cancel, which they're not going to do because they have
leases. You can give ILFC a lot of cash or you can give them some
commodity.
I don't work for them anymore, I'm retired. I get a retirement check from them every month.
Well, I don't think Boeing is giving away the 737s, but if you're a 787
airline and they owe you money, that's a way of coming to a business
solution rather than going to court.
I don't think the pressure is as great today on the 777 new derivatives as there may have been, say, a year ago
It's pretty common knowledge that the A350 is not 100% on schedule, I
mean, no program is 100% on schedule so that also means that leaves a
little breathing room to think about that.
On buying A350s or 787s:
[Long Pause] You guys know how we operate?"
The only widebodies we're doing are new A330-200s and -300s and
777-300ER. So, what's the logical next step in three or four years is to
take some role in the A350, particularly -900, and the 787-9. But
that's not a current priority. Because those aircraft don't produce any
revenue for us, and as a new company we've been focused on getting
aircraft we can actually put in our portfolio. An aircraft that actually
delivers in 2020 doesn't have a lot of value to me right now. If I had a
1000 airplanes that's one thing, but we started from nothing.
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