Pontifications: 2020 Retrospective–the worst ever seen

By Scott Hamilton

Dec. 21, 2020, © Leeham News: This is my last Pontification of 2020. I’ll be off between the Christmas and New Year’s holidays.

It’s only fitting to look back at what is the worst year in commercial aviation—ever.

I’ve just completed my 41st year in this industry. I’ve seen two Gulf Wars, SARS, 9/11, the Great Recession and several economic cycles.

Lockheed and McDonnell Douglas exited the commercial airliner business.

I’ve seen three groundings: the McDonnell Douglas DC-10, Boeing 787 and 737 MAX. I’ve been on site of two significant crashes: the American Airlines DC-10 in Chicago and Delta Air Lines’ 727 in Dallas. I flew over a third, a Delta L-1011 in Dallas the day after it happened.

I worked for the first new airline certified by the Civil Aeronautics Board in 40 years, the first Midway. I also went through one bankruptcy and one merger, each part of the deregulation shake-out.

As a reporter, I covered some of the business giants, including Bob Crandall, Herb Kelleher, John Leahy and others.

It’s been a great four decades.

But nothing compares to the global industry disaster of 2020.

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The 717 and A220, Part 2: Operational economics comparison

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By Bjorn Fehrm

Introduction  

December 10, 2020, © Leeham News: Last week, we introduced the Boeing 717 and its closest replacement size-wise, the Airbus A220-100. Delta, a major 717 customer, is accelerating the replacement of the 717 with the A220-100 under the pressure of the COVID19 pandemic.

We use our performance model to understand why. What are the gains when going from the 717 to an A220-100?

Delta Airlines Boeing 717-2BD landing at LaGuardia. Source: Wikipedia.

Summary
  • The 717 version of the DC-9 architecture produced a rugged and well-liked short-haul airliner. It’s five abreast cabin is preferred over the six-abreast Boeing 737 and Airbus A320.
  • It’s size-wise in the same 115 seat bracket as the 15 years younger Airbus A220-100. It’s 40 years old airframe architecture holds up well compared to the modern A220.
  • The engines of the two are also 15 years apart. But the Rolls-Royce BR715 of the 717 was originally designed to fly on fast business jets, necessitating a low by-pass ratio design. This is a handicap when used on lower speed airliners. It shows against the high bypass ratio Pratt & Whitney PW1500G of the A220.

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Lessors to Take Growing Share of Fleeting the Future

By Kathryn B. Creedy

Air Lease Executive Chair Steven Udvar Hazy expects lessors to play a larger role in aircraft fleeting in the future, according to comments made during yesterday’s Aviation Week Fireside Chat with the lessor.

“I don’t see lessors going below 40%,” he told Air Transport World Editor Karen Walker. “I see it creeping up to perhaps 50% or 55% and that includes operating leases and various other exotic mechanisms.”

Udvar Hazy pointed to the poor financial shape of the world’s airlines which have used all their current levers to increase liquidity to ride out the Covid 19 crisis.

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Airbus integrates the last pieces of the CSeries from Bombardier

September 3, 2020, © Leeham News: Airbus and its subsidiary Satair announced today it has integrated one of the last pieces of Bombardier’s engagement with the A220, the spare parts distribution.

Airbus acquired Bombardier’s part of the A220 aircraft program in January, but Bombardier continued to purchase, stock, sell and distribute the A220 spare parts. From the 1st of July, this is handled by Satair, part of the Airbus group, to give airlines with Airbus aircraft a single point of contact for spares part services.

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European Regionals Face Hostile Operating Environment

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By Kathryn B. Creedy

Third in a Series. Previous articles:

Introduction

Aug. 31, 2020, (c) Leeham News: European regionals face far greater challenges than Covid and, sadly, much of what is happening to the industry is beyond its control. The result is similar to failures seen in the U.S.  Flybe’s recent loss resulted from pre-Covid problems which also led to the pre-Covid failures of such airlines as Flybmi and Cobalt.

The failures illustrate, however, the three reasons why European regionals are so fragile – low-cost competition, geography, and challenging government policy.

 

 

 

 

 

Flybe is just the latest of many regionals to cease operations owing to harsh conditions in Europe.

Summary
  • Government Policies Hardest on Regionals
  • LCC Competition Challenging
  • Consumer Protections Crushing
  • Turboprops Have Large Role

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US Regional Consolidation Began Before Covid

Second in a Series on the Future of Regionals

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Introduction

By Kathryn B. Creedy

Aug. 6, 2020, (c) Leeham News: Many might assume the recent loss of three regionals – Compass, Trans States and ExpressJet – is Covid related.

What is actually happening is the long-anticipated consolidation of the regional airline industry coupled with fleet restructuring and the most recent fallout of the pilot shortage crisis that began in 2013.

Reducing the number of regional partners also streamlines the inherent inefficiencies of the regional/major model.

Summary
  • Regional airline industry is volatile.
  • Mainline-regional model broken for many years.
  • Rising costs eliminate some advantages.

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Looking ahead for 2020 and 2030 decades: Embraer

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Fourth in a series.

By Bjorn Fehrm

Introduction

July 8, 2020, © Leeham News: All airliner OEMs have a disastrous 2020, but for Embraer, the year has been even worse. After spending a year and over $200m to carve out the Commercial Aviation division to merge it into Boeing, the Joint Venture Agreement (JV) was stopped by Boeing at the last moment.

The Executive Jets and Defense side were not affected, but now Embraer was organized as two companies instead of one. The company must now re-merge the organizations to save costs in a COVID-19 environment where limiting cash outflow, and lowering costs are necessary for survival. At the same time, it’s arch-rival on the world market, Airbus A220 has gone from strength to strength through basket selling with the popular A320.

How does Embraer come back from the Boeing pass up and regroup in a regional market that is no longer a fight of equals? Embraer competes with Airbus that in 2019 was 11 times larger in airliner deliveries and 29 times in airliner revenue.

Only in the below 100 seat market is it saved from the giant, who doesn’t have a model in the segment. And it seems the below 100 seat competitor, Mitsubishi, might fold its entry.

Summary
  • The botched JV with Boeing came at the worst possible moment for Embraer, just when the COVID-19 pandemic stopped airliner deliveries.
  • The planned JV had held back sales and deliveries, waiting for the JV to complete.
  • In addition, it cost Embraer $200m, pushing it into the red for 2019.
  • Embraer must now find another fix to the Airbus problem while wrestling with a worldwide COVID crisis.
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The future of regional jets is limited by choices, Scope Clause

By Judson Rollins
Introduction 

July 6, 2020, © Leeham News: The fallout from COVID-19 is beginning to intersect with the beginning of a wave of regional jet retirements globally. However, the market for smaller commercial jets today stretches the meaning of “regional” as most aircraft still in production have 100+ seats and can fly more than 2,500nm.

In the critical US market, both Embraer’s E175-E2 and Mitsubishi’s remaining M90 are too heavy to comply with the Scope Clause limits imposed by pilot labor agreements. These clauses restrict regional carrier flying to 76 seats and 86,000 lbs MTOW, while also capping the number of regional jets that can be flown by each carrier.

Delta Air Lines is limited to a total regional fleet of 450 aircraft, while American Airlines is capped at 75% of its single-aisle fleet and United Airlines is limited to 255 aircraft plus 90% of single-aisles in service. Earlier this year, American accelerated the retirement of some EMB-140s to maintain compliance with its limit.

Summary

  • Regional jet utilization will be lower in the near term due to higher unit costs and US Scope Clause fleet limits.
  • There will still be some replacement demand for regional jets over the next decade.
  • Scope Clause relief is unlikely to happen in the coming round of US pilot contract negotiations.
  • Lack of Scope relief will extend the life of Embraer’s E175-E1 through the 2020s.

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Regional Jet Retirements

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By Vincent Valery

Introduction  

June 22, 2020, © Leeham News: Last week, LNA analyzed the narrowbody aircraft retirements. We now turn our attention to the regional jet market.

LNA analyzes retirement prospects for Embraer’s E-Jet and ERJ, the ex-Bombardier CRJ100/200 and CRJ700, Fokker 70/100, BAe 146/Avro RJ, Sukhoi Superjet 100, and Comac ARJ21.

Summary
  • Four families dominate the market;
  • Heavy geographical concentration;
  • Challenges for old and small regional jets;
  • Retirement trends in the two largest regions;
  • Regional breakdown for the oldest types in service.

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Looking ahead for 2020 and 2030 decades: Airbus

First in a series of reports.

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By Scott Hamilton and Vincent Valery

June 17, 2020, © Leeham News: Airbus was riding high in February.

The A321XLR was a clear winner. An important order was won from United Airlines, up to then an exclusive Boeing narrowbody customer. American Airlines selected the XLR. An order was expected from Delta Air Lines.

Each order was another that made it impossible for Boeing to launch the New Midmarket Airplane (NMA).

In one of his first actions, Boeing CEO David Calhoun, taking office Jan. 13, put the NMA on indefinite hold, pending a complete review of Boeing’s product strategy.

The Boeing 737 MAX remained grounded by regulators, with no return to service in sight.

The Airbus A321XLR. This 9-hour capable airplane helps fragment routes–and soften demand for widebody aircraft. Source: Airbus.

Things couldn’t be going better for Airbus.

And then in mid-March, the COVID crisis became a global pandemic. Air transportation fell up to 95%. Airlines required government bailouts. Airbus CEO Guillaume Faury said the very existence of Airbus was threatened.

Summary
  • COVID’s impact.
  • A320 family ‘s commanding lead over Boeing.
  • A220 commands low-end of single-aisle sector.
  • A330neo is the weak link.
  • Looking ahead in product strategy.

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