LionAir says CSeries order coming: Montreal Gazette

The Montreal Gazette reports that LionAir of Indonesia expects to place an order for the Bombardier CSeries next year.

Bloomberg has some additional detail.

LionAir already has hundreds of orders outstanding from Airbus and Boeing and is essentially attempting to replicate the business model of AirAsia, with subsidiaries in a number of countries.

Odds and Ends: 787 service return; LionAir’s A320 order; race to Paris; 777X v A350

787 to fly soon: Jim McNerney, CEO of Boeing, says the 787 will be back in service soon. Tests should be completed within days and he is confident in the fix.

LionAir’s A320 order: In case you wondered what LionAir is going to do with all those Airbus A320s now on order, this story tells you. As we suspected, LionAir will follow the AirAsia Group model of setting up airlines throughout Asia. Some will obviously compete with Tony Fernandes’ airline.

The race to Paris: AirInsight won the race by three minutes over Aviation Week. AirInsight posted at 1:24pm EDT and AvWeek at 1:27pm. That might be about the result between Bombardier and Airbus.

777X v A350: Aspire Aviation has an analysis of the forthcoming Boeing 777X and A350-1000 competition.

Odds and Ends: Post-SPEEA Vote; LionAir and RyanAir; ANA skeptical of Boeing timeline

Post-SPEEA Vote: The ratification of the contract offer by Boeing by the SPEEA technical workers is welcome news. It gives Boeing and its stakeholders certainty at a time when the 787 issues remain outstanding and the developmental programs of the 777X, the 787-9 and 10, the 737 MAX and the KC-46A are at important stages. Although SPEEA took a loss over the pension issue, the union was able to extend the previous contract provisions over economic issues for another four years. Call this a draw for the two sides.

LionAir and RyanAir: On Monday Airbus announced an order for 234 A320ceo/neo family members from LionAir, previously an all-Boeing customer. Today Boeing announced an order for 175 737-800s from RyanAir, an exclusive Boeing customer. There were no MAXes in the order, however. RyanAir CEO Michael O’Leary has not been a fan of the re-engined 737.

ANA skeptical of 787 timeline: Reuters has an interview with All Nippon Airways in which it expresses some skepticism about the Boeing timeline of returning the 787 to service within weeks. ANA calls this a “best case” scenario.

On the other hand, LOT, which took the 787 out of its schedule through September, now says the airplanes could be back in service by summer.

Vote in the Polls: All Nippon Airlines has begun its effort to rebuild the 787 brand flying in its colors. Boeing began its effort last week. Is the view of the 787 turning? If you haven’t already done so, please be sure to vote in these polls (scroll down after clicking the link).

Paine Field Pleads its Case: Targeted for closure in Sequester, with a decision to be announced this week, the director of Everett Paine Field pleaded his case to remain open in this letter:  FAA Tower Closure – Paine Field (1).

Well wishes: Daniel Tsang, founder of Aspire Aviation, has been hospitalized in Sydney, Australia, with an unknown ailment first thought to be measles but it’s not. Well wishes to him.


Odds and Ends: Second SPEEA vote results tomorrow night; Big LionAir-Airbus order finally ready

SPEEA vote tomorrow night: Update: Tomorrow is now today; the SPEEA vote results will be counted tonight (Monday).

The revote by SPEEA technical workers will be counted Monday night. Technical workers rejected the best and final offer from Boeing last month and authorized a strike. The professional engineers accepted the contract but authorized a vote, a technical maneuver that became moot with contract acceptance.

The issue leading to rejection was Boeing’s desire to shift from a defined pension plan to a defined contribution for new employees.

Boeing refused to improve its offer. Without the backing of the professionals, we think the technical workers will vote to approve the contract this time.

Vote results will be well into the evening.

Big Airbus-LionAir Order: At long last, the huge order we first referred to September 24 last year appears ready to be announced Monday, Paris time. Reuters, The Wall Street Journal and French papers are reporting the deal will be announced tomorrow. It’s for A320s (neos, maybe some ceos) and breaks Boeing’s monopoly with LionAir and the 737/737MAX. This is a huge win for Airbus.

The famed Airbus “5th Quarter”–huge LionAir buy reported

We talked about this a month of more ago: the prospect LionAir would order 100 Airbus A320 family aircraft. Today (or was it yesterday, in Asia?) comes this report that LionAir signed an order in December for as many as 220 A320neos (with PW GTF engines, we understand).

Through November Airbus recorded a net of 585 orders, compared with Boeing’s year-end total of 1,200. Reuters believes Airbus will end 2012 with around 900 orders.

LionAir has been exclusively a Boeing customer.

Update, Jan. 10: Avolon (a lessor) announced today it signed an order for 20 additional A320s in December.

New battle emerging in Asia

Our AirInsight affiliate has published a short report in its e-newsletter (subscription only) about a new battle emerging among LCCs in Asia.

An excerpt:

A new head-to-head battle appears to be shaping up in Asia.

Indonesia’s LionAir announced plans to create a new LCC, Malindo, which will be based in Malaysia and take on AirAsia.

AirAsia previously announced plans to acquire Indonesia’s Batavia Air—a deal that’s under regulator review and which may or may not consummate—in a bid to further penetrate the Indonesian market against LionAir.

AirAsia and LionAir are the two behemoths in the region, excluding flag carriers. AirAsia operates 100 Airbus A320s and has 272 more on order. It is poised to place an order for up to 100 more any day now. AirAsia was a launch customer for the A320neo and has been urging Airbus to proceed with a re-engining of the A330 to produce an A330neo—a move Airbus has so far resisted.

LionAir operates about 70 Boeing 737NGs and has an astounding 337 on order. It is the launch customer for the 737-9 MAX and was the first customer to sign a firm contract for the airplane. LionAir is poised to order 100 Airbus A320/A321 neos, presumably for the new venture.

Odds and Ends: Price vs Price in Indian contest; China theat; 787 financial impact on Boeing

Price vs Price: More on the price war between Airbus and Boeing in the A320 v 737 contest. Dominic Gates of The Seattle Times has this analysis of hot contest to win an order from India’s Jet Airways, hitherto an exclusive Boeing customer. He takes a larger look at the troubled Indian airline industry.

Finalizing Orders: Norwegian Air Shuttle finalized its order for 100 Airbus A320neos, breaking Boeing’s monopoly here. NAS was also a launch customer of the 737 MAX.

China threat: Maybe, maybe not. Jim Albaugh, CEO of Boeing Commercial Airplanes, cites China as the biggest emerging threat to Boeing and Airbus. Reuters, in Beijing for the IATA AGM, has this article saying, not so fast. The article takes a close look at the ARJ-21, China’s first effort at a modern jet. Although this is a regional jet and not competitive with Airbus or Boeing, it’s a “makee-learn” effort that leads the way to the Comac C919, which is directly competitive with the A320 and 737 class. Implications of the ARJ-21 are also discussed in the article.

LionAir and the 787: Confirming news reports this week, LionAir announced it has committed to the Boeing 787, agreeing to buy five. We’re told these are from the so-called “terrible teens,” those early 787s that required an enormous amount of rework and which were rejected by the original customers. Transaero and Rwanda Air are said to also be taking some of these early aircraft.

EADS Bank: More information on the reports EADS is considering getting a banking license.

Boeing economics and the 787: Jon Ostrower at The Wall Street Journal has an excellent piece today talking about the milestone of 787 #66 and the implications for cost reduction. Unfortunately, the full article is available only for paid subscribers. Contained within the article is this key data:

The losses don’t show up on Boeing’s bottom line, because accounting rules let the company spread the Dreamliner’s costs over years—effectively booking earnings now from future Dreamliners that it expects to produce more profitably. With previous models, Boeing initially spread its costs over 400 planes, but with the Dreamliner it is distributing the costs over 1,100 planes—a number it says reflects unprecedented demand. Boeing already has 854 Dreamliner orders from 57 customers.

Boeing reported that first-quarter profit at its Commercial Airplanes division more than doubled to $1.08 billion from a year earlier. But the company acknowledges that accounting for the costs of each individual plane would have resulted in a first-quarter loss of $138 million—a drop UBS analyst David Strauss says is almost entirely attributable to the Dreamliner.

The Dreamliner’s drain on cash is balanced by strong sales of the profitable single-aisle 737 and long-range 777 models. And analysts estimate Boeing is reducing the losses per Dreamliner by about $10 million each quarter. But maintaining the pace of cost reduction gets harder as the simplest problems are solved. Meanwhile, Boeing aims to increase production of Dreamliners to 10 per month at the end of 2013, up from 3.5 per month today—meaning the losses per plane will be magnified, but will also be tempered by the decreasing cost of each jet.

Some analysts believe Boeing’s target for cost reduction on the Dreamliner could be too optimistic. Mr. Strauss of UBS says the company appears to be assuming it can reduce its cost 50% faster than it did with the 777. If instead the pace of cost reduction matches the 777, says one of UBS’s models, the estimated $20 billion hole could double.