Odds and Ends: Coming soon–new Leeham News; Boeing v SPEEA; 86-seat Q400; Boeing 326; Budapest Air Show

Coming soon: We will be rolling out changes this month to Leeham News and Comment.  We will expand our News and Analysis, providing the most insightful commentary of aviation issues of any on-line publication. Most on-line news resources either collate into one portal news from around the world, or report news without analysis, or offer superficial analysis. We’re famous (or infamous, depending on your viewpoint) for providing insight in a no-BS manner.

We often report the news before anyone else, and we spot market trends long before others.

For example:

  • We concluded in December 2013 that Airbus had to launch the A330neo program, at a time when other on-line publications were still muddling along and even Airbus hadn’t reached its conclusion.
  • We were the first to report that Airbus revamped its A350-1000, ahead of the company’s own announcement and before any other media tumbled to the development.
  • We’ve been the leading publication to focus on LOPA (Layout Of Passenger Accommodations) and IAC (Integrated Airplane Configuration) when comparing Airbus and Boeing airplanes at a time when other publications didn’t even know the terms.
  • Our aircraft economic analysis has the advantage of aerospace engineering background to take into account detailed understanding of aerodynamic improvements, down to the last percentage point.

These changes include transformation into a combination paid and free content site. We’ll have paid content several times a week in addition to our free content.

Changes are coming to Leeham News and Comment this month. Watch this space for details.

Changes are coming to Leeham News and Comment this month. Watch this space for details.

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A350 certified; we provide a comprehensive program review

Airbus’ most recent all-new aircraft, the A350 has achieved civil airline airworthiness certification from EASA today September 30, FAA certification will follow. It marks an end to an eight year program to develop an all-new airliner in the 250-350 passenger segment. It also creates a point where a review of this last (for quite a while) big aircraft program is called for.

Airbus photo of A350 test aircraft in formation, celebrating the certification.

Airbus photo of A350 test aircraft in formation, celebrating the certification.

Below we go through all the aspects of the A350, not only program and technical aspects but also organizational, economical and market communication aspects. In all those dimensions it was the big step forward. Continue reading

Air Berlin 787 cancellation potentially gives Boeing big advantage in Delta order competition

The announcement last week that AirBerlin canceled orders for 15 Boeing 787s gives Boeing an unexpected, big advantage in the contest for a big wide-body order from Delta Air Lines–depending on when Delta wants the airplanes.

The competition apparently has been narrowed to the Airbus A350-900 and the Boeing 787-9, according to Flight Global. Based on this article, the Airbus A330-900 neo has been eliminated, which if true is a blow to the fledgling program in which Airbus had counted on Delta to be a launch customer.

Outside of the OEMs and Delta, it’s not known when Delta wants 50 widebodies. But the A350 and 787 are essentially sold out through the end of the decade, though both OEMs can typically find delivery slots for important campaigns such as this one by over-booking or persuading other customers to move their delivery positions.

Airbus has plenty of slots for the A330neo from 4Q2017, when entry-into-service is planned. But with the apparent elimination of the A330neo from the competition, delivery schedule becomes important–and the AirBerlin cancellation works to Boeing’s advantage.

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Assessing the wide-body and narrow-body freighters

This column has been updated since distribution to our e-mail recipients Sept. 22.

There is an emerging demand to replace aging small- and medium-size wide-body freighters, but with limited choices to replace them.

Airbus A310Fs and A300Fs are rapidly aging. Used principally by FedEx, UPS and DHL, these aircraft are in a size that is too small for the new-build Boeing 777F and Airbus A330-200F, and for which these airplanes are too costly to provide a good return on investment.

FedEx is replacing many of its aircraft with the new-build Boeing 767-300ERF, but it deferred and reduced its order for the 777F. UPS has no 767s on order from Boeing, having previously fulfilled its backlog.

The package carriers may down-gauge. FedEx contracted to acquire a large number of Boeing 757s for P2F conversion, but many of these have been replacing Boeing 727Fs. DHL is currently evaluating proposals for converting 757s from P2Fs from third-party conversion companies. The 767-300ER is the one airplane most comparable with the A310s and A300s.

FedEx, UPS and DHL may simply retire some of these aging Airbuses rather than replace them.

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Odds and Ends: Bombardier signs Macquarie Airfinance for 40+10 CS300s; 787 fire suppression

Big CSeries order: Bombardier today announced a firm order for 40 CS300s with options for 10 more with lessor Macquarie Airfinance. This brings firm orders to 243 and orders and commitments to 563.

This is the order that was has been pending since the Farnborough Air Show, and which was delayed perhaps a month because of the grounding of the test fleet from May 29. Flight Global initially reported that Macquarie could be lined up to place an order, and we followed up with some additional information July 29.

Macquarie is a small lessor by today’s standards, with 128 aircraft in the portfolio. These have all been acquired through purchase/leasebacks or via a portfolio purchase from other lessors. The CSeries is the first speculative order placed by Macquarie. As such, this is a major endorsement of the CSeries program. It also makes Macquarie one of the largest customers: Republic Airways Holdings, a launch customer, ordered 40 and optioned 40; Lufthansa Group ordered 30 plus options; and Ilyushin Finance Corp., a Russian lessor, has ordered nearly 40.

Macquarie bypassed Airbus and Boeing A320s and 737s for new orders. It has 63 and 57 in its fleet already and the backlogs for new orders stretch to 2020.

787 fire suppression: The Wall Street Journal reports that regulators have ordered changes in the Boeing 787 fire suppression system.

Boeing initially issued a service bulletin in May but regulators have now made the fix mandatory. The order covers 88 earlier versions of the 787; there are more than 150 in service today.

Coincidentally, a LOT Polish Airlines 787 made an emergency landing today in Scotland because of a faulty fire warning.


Odds and Ends: Comparing Airbus, Boeing 20-year forecasts; A320neo first flight; 787 battery probe fizzles; Mythbusting

Airbus v Boeing forecasts: The Blog by Javier takes its annual look at and comparison of the Airbus and Boeing 20-year forecasts. Airbus issued its new forecast this week; Boeing’s annual update was issued last summer.

Separately, the A320neo with Pratt & Whitney engines made its first flight today. The CFM LEAP neo is supposed to follow by six months. Showing class, Boeing Tweeted a congratulations for a milestone for the industry.

787 battery probe: The US National Transportation Safety Board hasn’t been able to find the root cause of the lithium ion battery failure in the Japan Air Lines and ANA Boeing 787 incidents. Now, the Japanese investigation has also failed to find the root cause of the ANA battery meltdown.

It’s rare but not unknown for investigators to not find root causes of problems, sometimes for years. A Northwest Airlines Boeing 747-400 split rudder hard over during a flight from Anchorage to Tokyo is one example; it took four years to determine the cause. The root cause of Boeing 737 rudder hard-overs, two of which caused fatal accidents, went unsolved for years.

Boarding airplanes: The reality show Mythbusters, an often entertaining look at myths, conventional wisdom, fact and fiction, takes a deep dive into airplane boarding. The article, with an insert to the episode, is here.

The Southwest Airlines style of boarding, with no seat assignments and derisively called cattle-call boarding, is the fastest and the most annoying, according to Mythbusters. Back-to-front is the longest. The Window-Middle-Aisle works best (but for those of us who like the aisle seat, the overhead bins are usually stuffed by then).

Odds and Ends: wrap-up from ISTAT Europe Conference; Airbus Group joins Aerion to create biz-jet.

The European 2014 ISTAT conference took place in Istanbul Monday and Tuesday. We have reported elsewhere on the presentations by Airbus and Boeing, here follows three interesting tidbits from the rest of the conference. We also comment on the surprising news that Airbus Group will join the US company Aerion to develop the worlds first supersonic biz-jet.

Airline and passenger growth: The  ISTAT conference had an inspiring keynote by the CEO of Turkish Airlines, Dr. Temel Kotil. It was all about phenomenal passenger growth.

Turkish Airlines uses its location between east and west for a development in the scale of the Gulf airlines, Turkish is thereby a good example of the doubling of passenger traffic over 15 years as presented by Airbus. From its privatization in 2004 it has gone from 12 million passengers per year to 60 million 2014, spanning 250 destinations with 260 aircraft.

Turkish Airlines feels it is ideally placed at the cross roads to Asia and Africa, both continents with very high growth. They therefore foresee continued growth to 120 million passengers by 2033. They are fortunate that the Turkish state has played its part in enabling such expansion, leasing land to a 3rd major airport in the Istanbul area. This will be necessary should the majority of these passenger streams pass Istanbul, then the area will beat London Heathrow’s present 70 million passengers, calling for additional infrastructure.

Wizz Air CFO Mike Powell: In a discussion over the future of airlines, the development in USA and Europe was compared. In the US the consolidation has led to 4 airlines handling 90% of the traffic, in Europe the numbers are 40 airlines covering the same extent of the market. Wizz Air CFO Mike Powell (fifth largest LCC in Europe after Vueling) predicts that airlines which does not deliver returns on their assets or state-owned airlines not being able to operate without subsidies would be victims of European consolidation. The local traffic will to a large degree be taken over by LCCs whereas long-haul will move to the large hubs and networks in Western Europe like Frankfurt, Amsterdam, Paris etc.

Powell also explained what drove Wizz Air to go from taking delivery of A320 to A321 from next year. Their LCC traffic is very price sensitive but not so frequency sensitive, if they go from an average frequency over their destinations of 5 flights per week to 4 they would normally only loose a couple of percent in traffic margin. Flying the same load factor with a 321 and at lower frequency gains them around 6-7% in cost i.e. going to the larger aircraft will gain them something like 4-5% in margin.

Airbus Group teams up with Aerion: Airbus Group has joined Aerion, the supersonic biz-jet company from Reno, to help them develop the world’s first business jet which can fly at speeds up to Mach 1.6. The aircraft, called AS2, will seat 8 persons in typical biz-jet comfort and has transatlantic range.

Aerion AS2 supersonic Biz-Jet

Aerion AS2 supersonic Biz-Jet

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ISTAT Europe Conference in Istanbul: Boeing and Airbus slugging it out with some new twists

Airbus and Boeing squared off once again Monday, this time at the ISTAT Europe conference in Istanbul, once again pretty much over the entire product lines.
Boeing’s VP Marketing Randy Tinseth began with two focal points, the 737 with its latest developments and Boeing’s “superior” Twin Aisle line-up. Tinseth claimed Boeing has caught up to the A320neo with the 737 MAX.

After an A320neo head start of a year, Tinseth says Boeing has kept the same sales rate per year for the 737 MAX. The backlog of 737 MAX now stands at 2,300 aircraft and he described why Boeing thinks it is well positioned in this market segment.

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Etihad, Emirates refute charges of favoritism from government owners

Two of the Middle East’s most aggressively growing airlines said charges that they benefit from government subsidies, artificially low fuel prices, cheap airport facilities and preferential financing refuted these charges at the World Routes conference in Chicago this week.

Neither, however, addressed charges they unfairly benefit from US ExIm Bank funding, a particularly sensitive topic for Delta Air Lines which has been waging an effective campaign to cast doubt over the Depression-era institution intended to support US exports. Boeing is the largest user of ExIm financing and Emirates in particular has been an active participant in the program. Delta claims ExIm provides below-market rate fees and interest charges.

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The airline industry is changing and acting like real businesses to return value for shareholders

“Our industry is changing and acting like real businesses to return value for shareholders.”

It’s a remarkable statement when you think about it. But this is how Jim Compton, vice chairman of United Airlines, led off at the World Routes conference this week in Chicago.

The US airline industry for years seemed to be operated more for market share than for profit. At least this is how many chief executive officers often characterized things until after 9/11, when US carriers wrenched through the aftermath of that horrible day. Even so, CEOs often complained there was too much capacity to allow for profitable operations. It wasn’t until after the global financial collapse of 2008 that US airlines began to consolidate, reduce flights and take capacity out of the system. Profits began to return.

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