Lower interest rates, a tailwind for new orders

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By Vincent Valery


Sep. 16, 2019, © Leeham News: Over the last few weeks, LNA outlined significant production gaps from 2022 onwards for the major widebody programs at Airbus and Boeing. The OEMs expect airlines to place large fleet renewal orders to fill those.

Aircraft deliveries need to be financed one way or another. Access to affordable financing is crucial for airlines and lessors to make good on their orders.

Interest rates in the world’s major currencies hit an all-time low a few weeks ago. The 30-year US Treasury yield dipped below 2%, while the 10Y German Bund was at -70 basis points.

Corporations duly took advantage of the lower rates to issue record amounts of debt in US dollars during the first week of September. United Airlines and Bank of China Aviation were among them.

We will analyze how lower interest rates could benefit the aviation industry.

  • Varying interest rate exposure for airlines and lessors.
  • Level of access to capital markets among airlines.
  • Hurdles to capitalize on low interest rates.
  • Unlikely beneficiaries if low rates persist in the near future.
  • Boosting new widebody order prospects.

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Pontifications: Spirit Air reveals new seats at Apex

By Scott Hamilton

Sept. 16, 2019, © Leeham News: Los Angeles—Spirit Airlines, a US ultra-low-cost carrier, is upgrading its passenger seating experience, the airline’s CEO announced last week at the Apex Expo 2019 event.

Ted Christie unveiled new designs for its Big Front Seat—Spirit’s version of First Class—and coach seats that are ergonomically designed and intended to add more room and redefine how seats are measured.

The Big Front Seat appears little different than the previous version—more padding seems to be the main feature.

But the changes to coach seating, where most people fly, are billed to have the potential to make a big difference compared with the ever-slimmer, increasingly uncomfortable seats offered by many suppliers and installed on most airlines.

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WTO clears US for $10bn in tariffs in Airbus subsidy case

Sept. 14, 2019, © Leeham News: The World Trade organization Friday concluded that the US may impose up to $10bn in tariffs against the European Union as a final result of the 15-year trade dispute over Airbus subsidies.

Politico first reported the WTO decision, which has not been made public.

Airbus issued a terse statement.

“The WTO decision is neither public nor authorized for release. We do not comment on rumors on a report that is not public,” a spokesman said in an email. “Aviation is a global industry, and no aircraft comes from one single country or zone. Nobody will win — it’s a lose-lose for the whole industry if we move to tariffs.”

Boeing declined comment.

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Look to 2013 787 grounding to see how Boeing will return MAX to service

By Scott Hamilton

Sept. 13, 2019, © Leeham News: As Boeing prepares for what it hopes is an imminent recertification of the 737 MAX from the Federal Aviation Administration, how it will handle the logistics of returning 381 grounded airplanes to service and delivering nearly 300 more undelivered 737s is key.

One need look to the only other time a Boeing jetliner, the 787, was grounded and how “One Boeing” coalesced to attack what was then its largest logistical task for its commercial airplanes unit.

The return to service of the 787 paled compared with the task facing Boeing today. In 2013, there were only 50 787s grounded worldwide after two lithium ion battery incidents: one fire and one near-fire, one on the ground and the other as the airplane took off.

In 2013, the production rate of the 787 was in the single digits per month. The 737 is being produced at a rate of 42/mo.

In 2013, there were a few score of 787s parked around Everett’s Paine Field awaiting delivery. Today, the nearly 600 737s are scattered around four locations in Washington State, a Boeing facility in Texas and various airline storage areas around the globe.

In May 2013, I wrote a freelance piece for CNN’s website how Boeing planned to return the 787 to service. This story may be found here.

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Airbus touts Airspace, Internet of Things at APEX convention

Sept. 13, 2019, © Leeham News, Los Angeles: Airbus is expanding its Airspace interior look to the A321LR and A321XLR, providing a common theme with its widebody A330neo and A350 family members.

The OEM is also launching the fully cabin-connected Internet of Things (IoT), a system connecting just about everything in a cabin, for passenger experience and airline use.

The moves were revealed at the 2019 APEX convention last week in Los Angeles.

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Bjorn’s Corner: Fly by steel or electrical wire, Part 8

September 13, 2019, ©. Leeham News: In our series about classical flight controls (“fly by steel wire”) and Fly-By-Wire (FBW or “fly by electrical wire”) we discussed the flight control laws of Boeing’s 777/787 and Airbus’ A220 last week.

Now we continue with Embraer’s fourth-generation FBW, the one for the E-Jet E2 series.

Figure 1. The Embraer E2 FBW system is a closed-loop feedback design. Source: Embraer.

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Embraer delivers first E195-E2, expects E175-E2 entry into service 2021.

By Bjorn Fehrm

Sept. 12, 2019, ©. Leeham News, Sao Jose dos Campos, Brazil: Embraer celebrated the first delivery of its to-date largest aircraft, the 132 seat E195-E2, to Brazil’s Azul Airlines at a press event at its Sao Jose dos Campos headquarters today.

At the conference, the Commercial Aircraft CEO, John Slattery. also stated the smallest member of the E2 family, the E175-E2, will fly before the end of the year and he expects it fly revenue flights for its first customer before end 2021.

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A321 accounts for 50%+ of future deliveries; few production gaps

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Sept. 12, 2019, © Leeham News: More than half the Airbus A320 family scheduled for delivery over the next four years will be the A321neo, according to an analysis performed by LNA.

Airbus is sold out through 2024 the current production rate of 60/mo or 720 per year.

The production rate increases to 63/mo next year, although LNA doesn’t have a precise time when this occurs.

A variable is also whether a full 12 months of production is calculated, or only 11 ½ months to allow for the summer vacation shutdown.

Either way, the production gaps appear manageable through 2024.


  • Previous Airbus forecasts A321 would account for half of production were viewed skeptically.
  • A321 long-term future depends on Boeing’s decision over the New Midmarket Airplane.

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The struggling smaller European low cost carriers, Part 2.

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By Vincent Valery

Sep. 9, 2019, © Leeham News: In last week’s article, we discussed the context that led to the creation of numerous European low cost and leisure carriers. We also outlined the main reasons for their recent struggles.

Today we will look at the current situation for smaller carriers in various European countries. We will start with Germany.

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Pontifications: Next few weeks critical to aerospace industry

By Scott Hamilton

Sept. 9, 2019, © Leeham News: Reports increased last week that Europe’s EASA safety regulator may go its own way in recertifying the Boeing 737 MAX.

The head of IATA, the international trade group, and CEOs of several airlines and one lessor expressed fear and concern EASA won’t act with the Federal Aviation Administration to lift grounding orders of the MAX.

At the Regional Airline Assn. annual conference last week, buzz among journalists focused on one unverified report, based on EASA’s doubts reported during the week yet to hit the media, could significantly extend the grounding—measured in months, not weeks.

I know efforts are being made to verify the information.

If true, the effects would be devastating.

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