Public pressure mounts on Airbus to launch A330neo

Public pressure is building on Airbus to launch a re-engining of its A330 medium-sector, twin-aisle, aging airplane as CIT Aerospace and Air Lease Corp. officials joined Delta Air Lines and AirAsia in their previous overt calls for development of an A330neo. Lufthansa Airlines is understood to be seeking a neo behind the scenes.

GE Aviation and Rolls-Royce are encouraging Airbus to proceed with a neo as a platform for their GEnx and Trent 1000 TEN engines. The GEnx is used on the Boeing 747-8 and the 787; the Trent 1000 TEN is used on the 787.

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Odds and Ends: S&P; C-17; AA-US merger (again); 777X wing work; WA aerospace future

S&P says don’t pay attention to our ratings: On the same day Delta Air Lines was named to the S&P 500, The Los Angeles Times had this article commenting on Standard & Poor’s legal defense of its investment grade credit ratings of companies involved in the 2008 financial collapse in the US that led to the global recession in 2008, affects of which are still felt today.

S&P’s defense included the argument that nobody should pay attention to its ratings, according to the article.

The ratings issue is important because airlines, lessors (and, of course, others outside aviation) covet investment grade ratings for the capital-intensive aerospace industry. Airlines and lessors need “cheap” money to buy airplanes. Air Lease Corp recently obtained its first investment grade rating, for example, something for which it issued a press release. Delta gained headlines for its return to investment grade status. Airlines have long used S&P, Moody’s and Fitch for rating equipment trust certificates used to finance airplanes.

The columnist for the LA Times is incredulous that S&P’s legal defense in the federal lawsuit is, essentially, nobody should pay attention to its ratings. It is indeed remarkable.

Final C-17 for US Military: Boeing’s C-17 program has been struggling to stay alive for the past several years and the challenge will get worse when Boeing hands over the final order to the USAF. The airplane’s survival depends now entirely on non-US sales, and these come few and far between. It’s also the last program of McDonnell Douglas; Boeing killed the MD-11, MD-80, MD-90 and MD-95 lines not that long after the two firms merged, though it did keep the MD-95 alive for a short time, renamed the Boeing 717.

The Long Beach Press-Telegram has a couple of additional stories here and here.

Why States opposes AA-US merger: Micheline Maynard writes in Forbes why she thinks states have joined the US Department of Justice lawsuit to block the merger between American Airlines and US Airways. The actions have nothing to do with consumer protection, the alleged motive of the DOJ, she opines. Rather, the states’ interests are far more parochial.

ElectroImpact competes for 777X work: ElectroImpact makes wings for the Airbus A380 and A350 XWB and it’s headquartered in Boeing’s back yard at Everett (WA). Now it’s hoping to build wings for the 777X. This Seattle Times report tells the story.

Washington State’s future in aerospace: The Pacific Northwest Aerospace Alliance hosts its second annual series of luncheons with members of the Washington State Legislature to talk about what needs to be done for the future of aerospace in this state. The first lunch is in Bellevue (WA) September 24 and the second is September 26 in Spokane, the other major aerospace cluster in the state.

Confirmed Bellevue Panelists

• Sen. Nick Harper (D), District 38 – Everett

• Sen. Paull Shin (D), District 21 – Lynnwood

• Rep. Mike Sells (D), District 38 – Everett

• Rep. Bruce Chandler (R), District 1 – Yakima

• Rep. Larry Springer (D), District 45 – Kirkland

Confirmed Spokane Panelists

• Sen. Michael Baumgartner (R), District 6 – Spokane

• Rep. Timm Ormsby (D), District 3 – Spokane

• Rep. Kevin Parker (R), District 6 – Spokane

• Rep. Mark Schoesler (R), District 9 – Ritzville

Information and registration for Bellevue is here.

information and registration for Spokane is here.

Clever headline: The Street.com column has a clever headline this morning in a post written by Ted Reed concerning the on-going sales battles between Airbus and Boeing.

United returns 787 to service today; WSJ points to other issues

United Airlines is the latest carrier to return the Boeing 787 to service today, on a route from Houston to Chicago. UAL CEO Jeff Smisek is joined by Boeing CEO Jim McNerney on the flight.

Meantime, the Wall Street Journal rained on the parade a bit with an article detailing other issues facing the 787. (Via Google News, but subscription may be required.)

Japan Air Lines, ANA and LAN expect to have the airplane back in service in June, according to reports.

Deliveries of new 787s resumed this month. All this will soon return momentum to Boeing, with formal launch of the 787-10 now anticipated by observes to likely come at the Paris Air Show. Launch will come with orders–widely believed to be from British Airways, Singapore Airlines and Air Lease Corp, and possibly others. If this happens, these will go a long way to restoring the brand damage caused by the ground of nearly 3 1/2 months.

Implications include a boost in the production rate of the 787 to as much as 14 a month. Although this may or may not be announced concurrent with the 787-10 launch, the boost is, in our view, a must. While Boeing expects some 787-9 customers to swap to the 10, reality demands that production increase beyond the 10/mo that will be achieved by the end of this year.

Boeing needs new capacity for the 10 and to open slots for customers who want the 8 and the 9. The line is essentially sold out to 2019-2020 as it is.

EIS for the 10 is planned for 2018, giving the supply chain plenty of time to ramp up.

Fourteen a month–seven in Everett and seven in Charleston–is an unprecedented rate for a wide-body airplane. Airbus is producing the A330 at 10-11 a month and plans to push out the A350 at 10/mo, though at one time there had been talk of a target of 13. The company is already considering a second production line to accommodate demand for the A350-1000. Like the 787, the A350 is essentially sold out to 2019/2020.

Odds and Ends: 777X ATO next month, says AvWeek; 787 and the FAA; A318

777X ATO: Aviation Week reports that Boeing’s Board will grant Authority to Offer the 777X at the next meeting, in April.

Emirates Airlines has previously said it will order 100 or more of the X to begin replacing its 777-300ERs. Lufthansa and Air Lease Corp are likely co-launch customers.

Update: The Wall Street Journal now has an article identifying British Airways and Japan Air Lines as possible launch customers.

787 and the FAA: The FAA is expected to green light this week going forward with Boeing’s proposed fixes for the battery issues in the 787, but this doesn’t mean the challenges are over for Boeing. Extensive lab and flight testing will be required, meaning it still will be some time before the grounding is lifted.

A318 Done: Bloomberg has a story about the Airbus A318 and its dried-up sales. It was never a good seller.

Odds and Ends: Cathay cancels 8 777Fs, takes up 3 747-8Fs; soft cargo market a concern

Cathay cancels 777F order: Cathay Pacific Airways canceled an order for eight Boeing 777Fs. CX will instead acquire three 747-8Fs, trading in four 747-400Fs to Boeing. The cargo market remains soft and Boeing is struggling to sell 747-8Fs. One person close to the program says Boeing is faced with building several white tails this year and a recent aerial photo of Paine Field at Everett did show at least two 747-8Fs with no airline markings on the flight line.

We’re concerned about the continuing soft cargo market–it’s usually a leading indicator about the direction of the passenger market. Boeing forecasts recovery in 2014 but we’re not so sure.

Speaking of 777s, Air Lease Corp picked up an order for 10 777-300ERs.

787 update: Aviation Week has an updated report on the Boeing plans to begin flight tests for the 787. There seems to be a consensus building that the earliest the aircraft might return to revenue service is late April or in May–the latter a day we forecast earlier.

Odds and Ends: Narrowing the cause on 787s; 30-120 days grounding?

Narrowing the Cause: Aviation Week has a good article with some behind-the-scenes snippets about the grounding of the Boeing 787. Toward the end are comments from Japan Air Lines about narrowing the cause of the battery problems.

The JAL comments support what we heard on Friday: that Boeing and investigators are indeed beginning to focus on what they think may be behind the battery incidents. Things are still too fluid and uncertain to provide details here–we don’t want to head people or media off in the wrong direction, even inadvertently–but we’re cautiously optimistic.

Aviation Week also has this story about failure mode testing and the 787 batteries.

Reuters has this story about the progress being made in the investigation.

What this means for grounding: So the continuing question remains, how long will the 787 be on the ground? Boeing wants to get the airplanes in the air this month. A source, citing conversations he’s had with the FAA, says the federal agency sees the 787 grounded a minimum of 30 days and a maximum of 120.

Lithium-ion Batteries OK to Fly: The Detroit News has an interesting story: while the 787 is grounded, lithium-ion batteries are continued to allow to fly in cargo holds.

Air Lease Orders 25 A350s: This is the long-overdue order (it was expected last November). Included are 20 A350-900s and five A350-1000s.

Regional aircraft trending up: Aviation Week reports that regional aircraft sizes are trending up.

CSeries v Airbus, Boeing: Something called the Wiglaf Journal (never heard of it) has an analysis of the Bombardier CSeries vs Airbus and Boeing.

Qatar wants to be first 787-10 customer; praises EU for ‘face-saving’ freeze of ETS

Akbar Al-Baker, the CEO of Qatar Airways, said he wants to be the first customer for the Boeing 787-10. He has some competition for this status.

Boeing is talking with customers now for the new sub-type, which is expected to get the Board go-ahead this month. Air Lease Corp., British Airways and Singapore Airlines have widely been identified as likely launch customers in market talk.

Also at the delivery ceremony for Qatar’s first 787-8, Al-Baker praised the European Union for freezing plans to impose its carbon trading scheme called ETS. He termed the move “face-saving,” noting that several countries ordered their airlines to refuse payment, led by France China.

“This was a very wise decision,” Al-Baker said.

Airbus, Boeing battle for US MAX-NEO market share

With the announcement by Alaska Airlines for 20 737 MAX 8s, 17 737 MAX 9s (and 13 Next-Generation 737-900ERs), Airbus and Boeing continue their battle for the US market.

There are still a number of customers who have not ordered either aircraft. US Airways has been exclusively an Airbus customer. Airbus lost a hard-fought battle to Boeing in the competition for the A321-737-900ER order. ILFC orders seem to be on hold pending its Initial Public Stock offering.

737 MAX A320neo No Order Yet
American* Spirit Airlines US Airways
Aviation Capital Group** Frontier Airlines Delta Air Lines
Southwest Airlines jetBlue
United Airlines American*
Air Lease Corp Aviation Capital Group
GECAS CIT Aerospace
 Alaska Virgin America
*To be affirmed in bankruptcy court**Commitment, not yet converted to firm order  ILFC

Odds and Ends: 787 fuel savings at ANA; Airbus will benefit from Boeing

ANA 787s: Market Watch quotes an ANA official saying the Boeing 787-8 is saving 21% in fuel over eh previous airplanes. The article didn’t ID the previous planes, but they were the Boeing 767-300ER. Note, too, that the initial 787-8s are heavy and with Rolls-Royce engines that don’t initially meet specs.

Airbus to benefit from Boeing: The latter is closing its Wichita operations. The former will likely hire some of Boeing’s soon-to-be-out-of-work engineers. Here’s the article. Note that former Kansas Sen. Sam Brownback, who is now governor, was present garbed in Airbus colors. This is the same Brownback who couldn’t diss Airbus enough during the EADS-Boeing tanker competition. Now Airbus seems to be Brownback’s best friend.

China-EU showdown over ETS: China continues to refuse to comply with the European Union’s demand that carbon emissions information be provided. China, which already refused to firm up orders for 45 Airbus A330s, threatened to impound European airplanes if the EU retaliates against China’s refusal to comply.

Air Lease Corp to order MAX: Steve  Udvar-Hazy, CEO of the lessor, plans to order the 737 MAX within the next few weeks. Boeing wants to firm up orders from ALC, CIT Aerospace, ILFC, GECAS and Aviation Capital Group by or at the Farnborough Air Show.

ISTAT Part 3: Lessors Panel: GECAS, ILFC, AWAS, Air Lease Corp

The final panel at the ISTAT meeting is the much-anticipated lessors’ panel consisting of:

Jeff Knittle, president of CIT Aerospace, moderator;

Henri Courpron, Chairman of ILFC;

Ray Sisson, CEO of AWAS;

Norman Liu, CEO of GECAS; and

Steve Udvar-Hazy, CEO of Air Lease Corp.

Paraphrasing:

HC: All hell broke loose in Europe and upended aviation. Looking at consolidation in Europe. America now had a lot of stability and discipline, and we’ll see that happen in Europe. More fuel efficient aircraft will be required in Europe. I see a lot of opportunity and challenges to come in Europe.
NL: Asia has been by far our most active market, with 70% of our airplanes going there. You have to look at different parts of Asia–you can’t generalize. LCCs in Japan. Always something going on in China. SE Asia, good organic growth. Philippines and Indonesia very interesting. South Asia has had travails.
SUH: North America is going through an interesting time. Canada is a duopoly situation with new Asian and Middle Eastern carriers entering the market. The US is very mature having gone through a lot of trial and tribulation, more disciplined [than before]. After 9/11 there was a slow-down in US carriers taking new airplanes. We have a bow wave of a requirement for new fleeting.
RS: Latin America is under-appreciated. We see rapid growth there. By 2015 may be 17%, 20% of our fleet. There is a remarkable amount of demand and opportunities for lessors.