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.
When we did our analysis of the A330neo after the Farnborough launch we limited our checks to trip fuel efficiency as we did not have enough clarity of the cabin improvements that Airbus announced. After a meeting in Toulouse last week with Airbus cabin experts we know have the missing information.
Airbus gives the A330 cabin an interesting update for the A330neo. It comprises A330 ideas (improved crew rests), A350 ideas (improved lighting and IFE) and finally ideas tried out on the A320 (SpaceFlex and SmartLav lavatories). Combined they give the A330neo cabin a better passenger experience and improved utilization of cabin space. Continue reading →
A third incident of “recline wars” has been reported, this time on a Delta Air Lines flight in which a dispute broke out between a passenger who reclined his seat and the passenger behind him who didn’t like it.
While the focus and debate has, so far, centered around who has rights–the passenger to recline or the passenger claiming reclining violates his space–the real issue, and blame, ought to rest with the airlines squeezing down legroom to a seat pitch of 28 inches (in the case of Spirit Airlines and Allegiant Air) to an increasingly common 30 inches on legacy carriers.
GAO report on ‘Boeing’s bank:’ The US Government Accounting Office, a non-partisan investigating agency, completed a study of the funding and guarantees provided by the US ExIm Bank, which is under criticism from Congressional Republicans, and concluded non-US airlines do benefit from what amounts to subsidies.
These put US competitors at a disadvantage, GAO concludes. The full 29 page PDF may be found here.
The study period covered the global financial crisis, during which a good deal of private capital funding dried up. Airbus and Boeing each relied more heavily on export credit agencies for customer financing–ExIm in Boeing’s case and collectively European Credit Agencies, or ECAs, for Airbus.
The GAO found that ExIm funded or guaranteed financing for 789 Boeing wide body aircraft while the ECAs supported 821 Airbus wide-bodies.
Parenthetically, this statistic alone should demonstrate to Congress the need for ExIm to continue to be available for Boeing airplanes.
National media and trade magazines are paying attention to the increasing battle between Alaska Air Group (Alaska Airlines and Horizon Airlines) and Delta Air Lines (including its regional airline partners) in the Battle in Seattle as the latter dramatically increases its presence here, but the focus appears to be on the wrong parties.
While the headlines and stories point to the “Delta challenge” to Alaska, a review of the traffic statistics and market share data provided to us by Sea-Tac Airport yesterday show that Alaska and its regional sibling, Horizon Air, and Delta with its regional partners are growing at the expense of United Airlines and Southwest Airlines.
Airbus’ Enders: Airbus Group CEO Tom Enders muses about what he will do when his current term ends in two years. He might seek another three year term as CEO or he could move on. In the Byzantine structure at Airbus, the CEO’s job rotates between a German and Frenchman with the opposite nationality heading Airbus (the airplanes) during the term. Enders has made great progress in bringing Airbus Group into the real corporate world and away from the government meddling that has proved the bane of the company’s existence. He still has things to accomplish, including a more traditional executive office structure regardless of nationalities and term limits.
Quote of the Day: We have our favorite in this story. We presume our Readers won’t have any trouble figuring this out. And the prospect of announcing the Airbus A330neo at the ILA Berlin Air Show is clearly off the table.
Boeing 757NG: Delta Air Lines’ CEO Richard Anderson thinks Boeing should make a 757NG. Failure to do so could open the door for Bombardier and Embraer to move up into this space, he says. Interesting idea from Seeking Alpha, with an annoying requirement for free registration to complete reading the article.
CSeries: From the sidelines at Pratt & Whitney: FTV 4 said to be airborne; BBD won’t send a CSeries to the Farnborough Air Show.
Airbus and Boeing face pricing squeezes that are the result of their continuing price wars and two products that need price cuts to maintain sales.
The fierce single-aisle battle between Airbus and Boeing, and to a much lesser extent, between Airbus and Bombardier, puts pricing pressure on the A320ceo and to some degree the A320neo.
Airbus and Boeing each blame the other for a price war that has put pressure on margins for the in-production airplanes, but market share battles are only part of the issue. There is the need to keep the production lines humming for these airplanes in advance of the transition to the re-engined A320neo and 737 MAX, particularly as the Big Two up production rates over the next few years.
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).
Twelve more Airbus A350-800 orders vanished as Aircraft Purchase Fleet canceled, according to the latest tally from Airbus. APF is the special purpose company set up for Alitalia Airlines, which is a financial basket case and probably couldn’t finance a Piper Cub, let alone an A350. In this case, the -800s were not upgraded to -900s or -1000s, according to the monthly Airbus Orders and Deliveries tally. There are now just 34 A358s in backlog.
The shrinking backlog further suggests the need for a refresh of the A330 with a re-engine, in our view. Without the A350-800, Airbus won’t have a competitor in the 250 seat sector that has any current technology. An A330neo with new engines would at least fill some of this void.
Meantime, Delta Air Lines issued a Request for Proposals for 50 wide-body aircraft to replace its aging Boeing 747-400s and some 767-300ERs. Delta’s CEO has said he could be interested in the A330neo. Delta eschews new technology, preferring “proven” technology, which could work against the Boeing 777X powered by an entirely new engine. By the time Delta would be ready to take delivery of its order, the A350XWB and its new technology will have been in service for many years. Delta has a deferred order for the Boeing 787-8 it inherited from Northwest Airlines, and this technology will be mature by the time Delta would be able to take delivery, so the 787 family could be in the mix. So could an A330neo, which would most likely be powered by one of the 787’s engine options, the GEnx or the Rolls-Royce Trent 1000 TEN. Market intelligence tells us Delta is pushing the GEnx, given its strong relationship with GE.