Odds and Ends: Composites in future airplanes; Boeing and Hillary Clinton; 757 MAX; AA swaps A321neo orders; Delta RFP

Composites in future airplanes: Composites World has a post about the use of composites in the future, with a good graphic detailing the increasing use of this material in airliners.

Boeing and Hillary Clinton: The Washington Post has a long story about the relationship between Boeing and Hillary Clinton, while she was US Secretary of State. While the story raises some interesting issues with respect to the prospective presidential candidate in 2016, the points focusing on her advocating for Boeing aircraft purchases doesn’t bother us a bit: that’s what politicians do on behalf of Airbus. As far as we’re concerned, our government should be supporting our industries, too.

757 MAX: The Motley Fool raises the prospect of a Boeing “757 MAX,” which is a restart of the 757 line but with a composite wing and new engines–something along the lines of the 777X in concept.  We’ve been hearing rumblings about this, too.

American swaps A321neo orders: American Airlines swapped 30 A321neo firm orders into options, leaving 100 firm orders for this sub-type left. The deliveries were for 2021/22. American told us it retained this flexibility in the original contract and the new management elected to do so in order “to maintain flexibility.”

Delta’s RFP: Airchive has a good analysis of the Delta Air Lines Request for Proposals to replace its wide-body fleet. We were especially interested in the cost analysis of the 787 vs the A330, which is close to our own numbers (there was no collaboration between Airchive and Leeham).

Additional thoughts on MH370 as mystery deepens

Latest: The debris spotted in the ocean near the oil slick is not from MH370, officials say.

The mystery deepens on the disappearance of Malaysian Airlines flight MH370–there still is no sign of debris or the airplane, some 36 hours after it disappeared.

We have some additional thoughts, none of which should be considered as suggesting this is what happened, but only as possibilities to probe.

  • The absence of any debris along the intended flight path seems to suggest the airplane deviated from the flight path. If the plane was destroyed at altitude, as if from a bomb or catastrophic structural failure, debris, such as seat cushions, blankets, insulation, and even bodies, would be been found quickly. See TWA Flight 800 for an example of this (though it came apart while still climbing to cruise altitude). If the plane was intact on impact, debris would have been found. See Air France 447 or Alaska Airlines 261 as examples.
  • If the plane deviated from the flight path, then this suggests it obviously was under command of either the pilots or hijackers. But then what? Even after turning off the transponder, one would expect that at some point, primary radar contact would have been made, even if not immediately recognized as such. Investigation will certainly follow this path to determine any primary radar contact was established.
  • If the plane was under command, what happened to it? In theory, it could have been flown to an airport but then what? If the airport is in use, a Boeing 777 is rather obvious. If flown to a disused airport, to what end? To hold the plane and passengers for ransom? If so, it’s hard to collect ransom when you don’t tell anyone.
  • On the other hand, if the plane was being hijacked and flown somewhere, were the hijackers incompetent fliers, crashing the airplane into some remote mountains?
  • After 9/11 it is unlikely that any hijackers could have cowed the passengers into doing nothing while taking control of the airplane. Certainly this being a red-eye flight means most passengers probably immediately tried to sleep but somebody would have observed an attempt to take over the airplane and raised the alarm. The fact that four passengers now appear under scrutiny is also intriguing: four or five passengers were involved in the 9/11 hijackings.
  • But if hijacked, why hasn’t anyone claimed responsibility? The point of terrorists is to terrorize, not shroud an event in puzzlement and mystery.

How can a plane simply vanish? An ex-American Airlines Boeing 727-200 did so, and it seems to have been a criminal act. Air and Space Magazine recently had an update on this story.

Odds and Ends: AirAsiaX plans A330 order; AA’s livery; vote for TWA heritage livery

AirAsiaX plans A330 order: AirAsiaX, the long-haul low cost carrier, plans a large order for the Airbus A330 this week, according to Bloomberg.

A380′s future: Bloomberg News talks about the future of the Airbus A380 with CEO Fabrice Bregier. Among his comments: no stretch anticipated until 2030.

American Airlines livery: Doug Parker, the new CEO of American Airlines, says employees will get to vote whether to keep the new American livery or restore the double AA/eagle livery to the tail. American will also add a TWA “heritage” livery airplane. US Airways has several heritage paint jobs in its fleet.

So…which TWA era would you like to see? Vote in the poll following the photos.

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Odds and Ends: EMB, BBD split AA order; WTO on Airbus subsidies; IAM, Boeing bargaining; KC-46A

EMB, BBD split American order: Embraer took the lion’s share of the long-awaited order from American Airlines for regional jets. EMB won 60 firm orders and 90 options for the E-175 and Bombardier won 30+40 CRJ-900s. Flight Global points out that none seem to be going to American Eagle.

The order is welcome by both OEMs, which had gaps in their respective production lines.

WTO on Airbus subsidies: Bloomberg News reports that the World Trade Organization won’t rule until the end of next year on a US complaint that Airbus failed to comply with WTO findings that it received illegal subsidies. (No link available).

Bloomberg writes, The EU says it had secured repayment of some $2.3 billion in launch-aid loans and terminated the launch-aid loan agreements in question, while also addressing subsidies given in the form of capital contributions, infrastructure support and regional aid.(Emphasis added.)

     The U.S. counters that the largest launch-aid subsidies—for the A380, Airbus’s super jumbo jet—remain in place and that the actions the EU claims to have taken with respect to earlier subsidies “appear to do nothing to withdraw them, or to remove their adverse effects.”

As we’ve written, Boeing is now requesting essentially the same thing in its Request for Proposals for the 777X site selection.

IAM, Boeing bargaining: It’s a relief to see Boeing and the International Association of Machinists District 751 bargaining for a new contract amendment for the 777X site selection, but no deal is imminent. The Seattle Times reports things could move quickly, however.

First KC-46A airframe, wings joined: Aviation Week has this story about the progress of Boeing’s KC-46A tanker program.

New American Airlines now a reality; big challenges ahead

December 6 passed without fanfare, but the New American Airlines is a reality.

The first day of stock trading, under the symbol AAL, begins today. The Ft. Worth Star-Telegram–the hometown paper of the Ft. Worth-based AA–has this story, posted Saturday. The New York Times provides this analytical piece.

We know the US Airways management team reasonably well and we think they will be much better than the former American management. American hasn’t been the same since Bob Crandall retired in 1998. Crandall’s successor, Don Carty, had a lousy tenure. He originated the acquisition of Reno Air, a small airline headquartered in Reno (NV), for reasons that passed all understanding. In doing so, he created ill will with the AA pilots union (which, in fairness, wasn’t hard to do with this bunch of malcontents), creating all sorts of labor issues. Carty also acquired Trans World Airlines, another merger of mysterious motives that appeared more to do with market share than business sense. TWA’s only US hub by this time was St. Louis (MO), a mere 250 miles from AA’s massive Chicago O’Hare hub. TWA’s fare structure was low, competing as it was with fellow-hubber Southwest Airlines and able to attract traffic on price rather than quality.

We’ll never know whether the TWA merger would have been a success. The 9/11 terrorist attacks happened shortly after the acquisition, and by 2003, American was on the ropes. Carty negotiated steep concessions from the employee unions, but the deal unraveled when it was revealed that management simultaneously lined up for tens of millions of dollars in executive bonuses. Carty was forced out in the quid pro quo to complete the concession deal.

Carty’s successor, Gerard Arpey, gained respect from the employees. Over the next few years, more concessions were sought by Arpey as he strove to keep American from following all its peers into bankruptcy. But those bankruptcies allowed all the competitors to shave pension plans, cut wages and benefits and other costs while American remained burdened with higher costs across the board. In November 2011–10 years after 9/11–American finally succumbed and filed for Chapter 11. Arpey, who disagreed with the decision, resigned and was succeeded by Tom Horton.

We were never impressed with Horton, particularly with his view that he deserved $20m in the bankruptcy restructuring. He’s non-executive chairman of American but will leave the company soon. He provided this farewell message to employees.

Doug Parker, the CEO of US Airways and America West Airlines, who engineered the merger, is the new CEO of American. Parker and his team never got the respect we think they deserved for keeping US Airways alive, profitable and competitive with perhaps the weakest route system of the US legacy airlines.

Parker was an early proponent of adopting ancillary fees, a practice passengers really don’t like. But the industry had changed dramatically and free meals, free checked baggage and other stuff of history became just that for all the airlines: history. Today, most carriers make their profits from fees and not the tickets they sell.

Parker will have challenges to bring American back into the forefront of top tier airlines. Its reputation and employee morale have been battered. US Airways continues to rank near the bottom of passenger surveys. Employee group integration at US Airways from the merger with America West continues to be difficult; now add American to the mix.

AA and US will continue to fly under separate banners and certificates for some time, following the examples of United-Continental and Delta-Northwest. Integration of reservations systems, frequent flier programs and so on will undoubtedly present huge challenges. We fully anticipate passenger disruptions, also following the pattern of the other mega-mergers.

One of the things we expect to see is an employee contest for a new livery to replace the one adopted by Tom Horton. The tail logo is just awful, though the fuselage and stylized eagle are fine. When America West and US Airways merger, Parker held an employee contest and the winner is what’s painted on the US Airways planes today. It was a good was to involve employees. Then legacy paint jobs of the predecessor airlines were added to the fleet. We have no doubt this will happen at the New American. There are plenty of aviation geek ideas for an American livery. Some may be found here. From this link, you can click through to various other sites for some pretty creative ideas. We like several of the renderings at this website. The last two are what Horton should have adopted.

Points to ponder in Boeing 777X site selection

Boeing last month issued Requests for Proposals from 15 states and locations for some or all of the work for its new 777X.

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Deadline for responding to the RFP is mid-December, essentially three short weeks away.

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Richard Aboulafia, a consultant with The Teal Group, marked Boeing’s shopping around the 777X assembly site appears more driven by anger at one of its unions than by economic sense.

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The RFPs were issued in the wake of the International Association of Machinists IAM District 751 rejecting the contract Boeing offered on November 13, a quid pro quo: accept deep concessions on pension, health care and wage progression in exchange for siting the 777X assembly at Everett (WA), where the 777 Classic is built.

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IAM 751 members, who provide the touch labor, rejected the contract with 67% of the vote.

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Boeing’s scouring the nation is viewed as a plan to get away from unions. However, here are some things to ponder:

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CFM LEAP accelerating in test program; Airbus and the A350-800

Aviation Week has a long, detailed story about the test program for the CFM LEAP engine, which is accelerating rapidly.

In its 737 MAX program update yesterday, Boeing said the LEAP-1B has begun testing and it will benefit from the testing already underway for the LEAP-1A, the version that is designed for the Airbus A320neo family. The LEAP-1C for the COMAC C919 is on its original schedule for certification in 2015, despite the fact the C919 has slipped to at least 2017, reports AvWeek.

The 737 MAX is exclusively powered by the LEAP, as is the C919. The former has more than 1,600 firm orders and the latter just hit its 400th order/commitment. CFM faces competition on the A320neo family from Pratt & Whitney’s P1000G Geared Turbo Fan, where PW holds a 49% market share against CFM, which previously held a larger, more dominate position in the A320ceo competition. A large number of orders don’t yet have an engine selection.

PW is the sole-source engine provider for the Bombardier CSeries, the Mitsubishi MRJ and the Embraer E-Jet E2. PW splits the engine choice on the Irkut MC-21 (soon to be renamed the YAK 242) with a Russian engine.

Just as Boeing’s LEAP-1B will benefit from the experience of the LEAP-1A now in testing for Airbus, Airbus will benefit from the testing and experience of PW’s testing of the GTF on the Bombardier CSeries.

Aviation Week also has a story about the Airbus A350-800 with the blunt headline, The airplane Airbus doesn’t want to build. This refers to the A350-800. AvWeek muses that the outcome of the merger between US Airways, now the largest customer for the airplane, and American Airlines, may be the deciding factor for the airplane. We agree. With American’s large order for the Boeing 787-9, the A350-800 would be unnecessary.

That would then leave Hawaiian Airlines as a key decision-maker. We hear in the market that Hawaiian is just sitting back and waiting to see what kind of incentives Airbus will offer to entice a switch to the larger A350-900.

Odds and Ends: AA, US and DOJ have mediator; new C919 order; A380 break even

Movement on AA-US merger: Terry Maxon of The Dallas Morning News reports that American Airlines, US Airways and the Department of Justice have picked a mediator to sort out the DOJ’s lawsuit to block the AA-US merger. See also this Maxon report.

Maxon has a long piece, asking several pontificators (including yours truly) what they think the outcome will be.

Bloomberg reports that American CEO Tom Horton “sees a way” to a settlement but did not elaborate.

C919 Pie ChartCOMAC orders: COMAC says it received 20 more orders for the C919, but it once again is from a Chinese lessor, not an airline. A majority of orders for the C919 are from Chinese lessors, in stark contrast to standard practice among established lessors that they want to see a solid base (or a likely solid base) for a new aircraft type from airlines before signing up.

Although COMAC says this latest order brings the total up to 400, a data base shows only 275 so far (meaning the other 125 haven’t been converted to firm orders yet).

A380 Break Even: Airbus CEO Fabrice Bregier says hitting break even on the A380 program in 2015, which is the current plan, will be difficult if deliveries fall below the target of 30 per year. Airbus should deliver 25 this year, he said.

Southwest’s forthcoming expansion will offset AA-US consolidation

Southwest Airlines has begun a one year countdown to the day the Wright Amendment will disappear.

The Amendment, named after former US House Speaker Jim Wright, restricts Southwest’s ability to fly from in-town Dallas Love Field. Originally Southwest was restricted to Texas and the immediately adjacent states. The Amendment has been modified several times. Today the carrier may fly anywhere within the US beyond the exceptions with one stop. Love Field is now restricted to 20 gates; Southwest controls all but a few of them.

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The restrictions were put into place to protect the then-new Dallas-Ft. Worth Regional Airport, which was constructed mid-way between the two cities. All the airlines at the time served Love Field and when DFW was created, they all agreed to move to the new airport and close Love Field to airline traffic. Except Southwest, which didn’t exist at the time of the agreement but which began service from Love in the interim between the signing of the agreement and the opening of DFW. The attempts by Braniff International Airways and Trans Texas International (nee TRANS Texas) to put Southwest out of business are industry folklore.

The fear was that Southwest and Love would hurt DFW and the airlines competing from the distant airport, including American Airlines. When Southwest a few years ago launched a full-scale attack on the Wright Amendment, American led the charge to block the effort. The compromise was the gate restriction, the one-stop service and a five year phase out.

Who could have foreseen that this now could help come to the rescue of American and US Airways as they fight the US Department of Justice’s attempt to block the merger of these two carriers?

Here’s why.

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Odds and Ends: Bombardier and American; C919 EIS; Europe blinks

Bombardier and American Airlines: Bloomberg has an analysis of the campaign at American Airlines for a large regional jet order, and how vital it is to Bombardier to win the deal. Embraer won three previous important orders from the US major airlines, leaving American the last remaining prize in the near-term.

C919 Entry-into-Service: Reuters has an analysis about the Chinese effort to challenge Airbus and Boeing with the COMAC C919, and the continued challenges to do so. EIS is now figured for 2018.

Europe blinks on emissions: The European Union blinked on its long-running effort to force all airlines to pay a fine if they don’t meet emission standards. The effort met with international resistance, with China leading the way. Chinese orders for Airbus A320s and A330s had been held up. The Chinese earlier ordered the A320s, but still blocked A330 purchases by its airlines. We’ll see how quickly these orders come through.