Dear Fellow Pandemic Life-Changers,
This letter caps 32 years working at Teal Group. Teal president Bill Storey has been a fantastic boss and a great friend. Thank you, Bill. Next month, I’m starting as a Managing Director at AeroDynamic Advisory, an aerospace management consultancy started by my old pal Kevin Michaels. With this last Teal Aircraft letter, it’s time to take stock…how did my predictions do? That’s 32 years of my professional life in two pages – here goes. First, what I got right:
1. Douglas’s Death. A few smart mentors told me what they thought was going on, but they were a bit less willing to call the emperor naked. I was too young to have anything to lose by hooting at the naked emperor. Still, I’ll take credit for calling DAC’s demise seven years before the last MD jet delivery. Not counting the B717. I called that one’s death well in advance too.
2. The A380’s Failure. A wretched jet, born of misplaced nationalism, wishful thinking, and sheer hubris. Calling it that from the start was one of best calls of my career, although I took plenty of heat for terming it the worst product launch decision since New Coke. Production ended last month. Goodbye, A3Turkey.
3. The 777 and 787’s Success. I was a cheerleader for both jets for solid reasons: when Boeing launched new planes, they got it right – that perfect combination of great engineering, customer requirements, and macro travel and societal trends. These two great jetliners brought the world closer together, and saved billions of gallons of fuel. Unfortunately, 787 execution is stumbling badly right now, and the 777X may be too. This brings us to the next topic.
4. Boeing’s Demise as an Engineering Company. Two sentences I wrote years ago that hold up: “Boeing Will Pay High Price For McNerney’s Mistake Of Treating Aviation Like It Was Any Other Industry” and “Boeing needs to rethink the relationship between engineering and management, and where engineers fit into the leadership team”. Read Peter Robison’s new, superb Flying Blind: The 737 MAX Tragedy and the Fall of Boeing for more.
5. The VLJ and Air Taxi Bubble. I saw this debacle coming, I’m proud to say, but so did some other like-minded skeptics. Happy memories of long discussions with a group of fellow VLJ resisters, fighting off hordes of Kool-Aid quaffing bubble-blowers. I think we all learned from this debacle. Never again will grifters and techno-utopians pull a fast one on unsuspecting rubes with too much money and not enough…oh, too late. It’s happening again. And this time, the air vehicles are vertical and electric. Think Disruptive! Better still, don’t think.
6. Civil Tiltrotors as a Non-Starter. Speaking of disruptive, it’s hard to believe this was once a thing, with forecasts and drawings of regional tiltrotor services ferrying happy commuters between downtown vertiports. I never believed any of it. All we have left is Leonardo’s comparatively tiny 609. Weird time dilation effect: the 609 has for years been one year from entering service, is now one year from entering service, and will always be one year from entering service. Maybe…next year.
7. Comanche Cancellation. I just didn’t see the business case, or how the Army could fund it. People ask me how long the 1960s and 1970s era helicopters will stay in service with the Army, and in production too. Well, the RAH-66 disaster shows how hard it is to create all-new rotorcraft. Its fate haunts the entire FVL program. But these are very different times, in terms of budgets and strategic drivers, and I’d give FVL better odds than I gave Comanche.
Now, my less successful predictions:
1. Business Aviation Market Transformations I Didn’t Expect. I did okay at predicting market shares, and I saw the big/small cabin bifurcation thing, but I just didn’t anticipate the huge growth leaps in second half of the 1990s and in 2003-2008. While helping General Dynamics with due diligence in 1998/1999, I thought Gulfstream was more risk than reward. It’s now twice as big, and the undisputed industry leader, and very profitable too. Oops. While I was okay at forecasting downturns, I didn’t see that 2010-2020 would be a lost decade, as Brian Foley correctly predicted.
2. Fourth Generation Fighter Fatalities I Wrongly Predicted. I thought the F-35 and F-22 would pretty much mean their gradual extinction, and that Europe (and Boeing) would need a backup plan to ensure that they didn’t exit the business by 2020. I was totally wrong, for many reasons. Of the fighter programs planned or active 20 years ago, 100% are alive and well. The F/A-18 is in a difficult position, but it’s not like the USN has a Plan B. It’s a weird outcome when the F-15 will likely outlive the F/A-18.
3. The Turbopropcalypse I Didn’t See Coming. When I started at Teal in 1990, there were eight companies building regional turboprops. Ten years later there were two. I thought regional jets would have a limited impact, with a few prop casualties, but nothing cataclysmic. Wrong again. I still think a prop comeback makes sense, but there’s not a lot of logic in Regional-land.
Finally, stuff that’s somewhere in the middle:
1. CSeries. A weird series of events. I thought it was a terrible idea that would gravely wound Bombardier and probably couldn’t get to market. I was very right about the first, but before I was proven right on the second, I reversed myself and said it was a good jet that might yet succeed. To avert collapse, Bombardier then paid Airbus to take the jet, which means I was right (before my reversal) about it not being able to get it to market. But with Airbus, it’s now a very good and successful product. I really don’t know whether I should declare victory, admit defeat, or both.
2. Civil Supersonics. Again, weird. I always thought there might be (“the odds favor…”) a market for a supersonic business jet, but with Aerion’s death, I really doubt one will happen. By contrast, I never liked the idea of a commercial supersonic jet (I still don’t), but Boom is still attracting investor cash, so I can’t declare victory…yet. That’s true for the vertical/electric stuff, too.
Two logistical notes: (1) I will be replaced as Teal’s World Military and Civil Aircraft briefing analyst by two excellent people, details to be announced shortly; for one year, I will be an Emeritus advisor to Teal on the Briefing. (2), I will keep doing this aircraft letter, but with a different letterhead, sent from a different email. The cynicism will remain intact. But I’m still privileged to work in an amazing industry, with fantastic people. A happy better new year to all.
Yours ‘til My Post-AeroDynamic Reckoning, Probably In Less Than 32 Years,
Richard Aboulafia