Air Berlin files for bankruptcy

By Bjorn Fehrm

August 16, 2016, ©. Leeham Co: Air Berlin, Germany’s second largest airline, with 85 destinations, 8,000 employees and 72 aircraft, filed for bankruptcy yesterday.

We wrote about Air Berlin’s problems in October last year and we’ve covered its part owner, partner and moneylender, Etihad Airways, in articles this year.

It was the latter that no longer believed in Air Berlin’s turnaround plan and stopped the money flow.

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Small airlines face replacement challenges

Aug. 15, 2017, © Leeham Co.: Small airlines face continuous challenges about acquiring modern aircraft at prices they can afford.

There was once a number of manufacturers producing small airliners. British Aerospace (BAe) produced the 19-seat Jetstream and Beech the 19-seat 1900. Saab built the 340 and later the 2000. BAe tried to update the old Hawker Siddeley 748 with the ATP, Advanced Turbo Prop. Fokker upgraded the F-27 to the F-50. Embraer got its start with the small Bandierante and really hit the mark with the Brasilia.

Bombardier produced the Dash-8 40-seat turboprop in competition with ATR’s ATR-42 and both compete with a 70-90 seat turboprop. BBD dropped its Dash 8 and barely holds on with the Q400. ATR is the dominant player now. (China produces a turboprop, but it’s mostly a captive-market airplane.)

BAE, Saab and Beech exited the commuter airplane business. Fokker went out of business. Embraer moved to jets.

This leaves smaller, independent regional and commuter airlines in a real bind. There are simply no replacements for the 19- to 30-seat airliner, save one: the Viking Twin Otter. More about this below.

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Boeing’s tactical option for MOM sector

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Introduction

Aug. 14, 2017, © Leeham Co.: It’s not a done deal yet—the business for the so-called Boeing 797 remains a challenge. But the consensus is that Boeing will launch the program next year, for an entry-into-service around 2025.

Boeing 797 concept. Source: Boeing.

Yet there are airlines that say they don’t want to wait that long for a new airplane.

What are their choices?

  • Acquire the Airbus A330-200. It’s available now. Fuel is cheap and is expected to remain so well into the next decade.
  • Acquire the A330-800. It’s fairly cheap. It’s about 10% less expensive to operate on a per-trip basis than the A330-200. The new engines will serve as a hedge against rising fuel prices for an indefinite future.
  • Acquire the Boeing 787-8.
  • Airbus ponders an A321neo+.
  • There’s another option that is not readily apparent.

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Pontifications: Avolon sees strong sales for Boeing 737-10

By Scott Hamilton

Aug. 14, 2017, © Leeham Co.: Avolon, one of the world’s largest aircraft lessors following the acquisition of the CIT Aerospace portfolio, believes Boeing will see 2,000 of the 737-10—doubling the internal figure Boeing used to launch the program.

In a new white paper, which Avolon periodically issues, the lessor “projects that the MAX 10 will account for approximately 20% of all 737 MAX family deliveries, which would equate to around 2,000 aircraft. This compares to the A321neo, which is forecast to account for 40% of the A320neo family, with over 4,000 deliveries,” writes Steve Mason, Avolon’s SVP of Strategy.

Mason joined Avolon from CIT acquisition, where he held a similar position and likewise issued periodic white papers.

“The value proposition of the MAX 9 has been impacted by the launch of the MAX 10. It is unclear what role remains for the aircraft, but it is likely to have a limited future,” Mason writes.

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Bjorn’s Corner: Electric aircraft, Part 7

By Bjorn Fehrm

August 11, 2017, ©. Leeham Co: In this Corner, we will design the hybrid propulsion system for our 50-seat regional turboprop. We could see in previous Corners that we can’t use batteries as a backup for our gas turbine core and main generator.

The battery gets too heavy as the specific power weight of a battery is simply too low. We will now design a hybrid power chain with a different redundancy concept.

Figure 1. ATR 42-600 serves as a template for our 50-seat regional turboprop. Source: ATR.

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Can Airbus improve the A321neo further? Part 2

By Bjorn Fehrm

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Introduction

August 10, 2017, © Leeham Co.: Last week we started the look into how the Airbus A321neo could be incrementally improved. To understand what can improve an aircraft, ones need to understand its limitations.

The A321neo is mainly limited by its wing, which is highly loaded. But there are ways around this limitation other than developing a new wing, an exercise which would require time, money and a new certification program.

Having understood the limitations, we now look into what can be done about them.

Summary:

  • The changes to the wings can be limited to those that are easy to do, resulting in longer range.
  • Combined with fuel capacity improvements and stronger engines it produces a very interesting aircraft.

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CSeries starts operations from London City Airport

By Bjorn Fehrm

August 09, 2017, © Leeham Co.: Bombardier (BBD) CSeries has done its first revenue flight to London City Airport. It was a scheduled Swiss International Airlines (SWISS) flight from Zurich that landed on the airport yesterday.

With the CSeries operational from London City, the route network that can be flown from the downtown airport changes significantly. Europe out to Moscow or Las Palmas is accessible and an all business class CS100 could fly direct to New York.

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Delta asks Commerce to redefine scope of Boeing-Bombardier case

Bombardier CS100.

Aug. 8, 2017, © Leeham Co.: Delta Air Lines asked the US Department of Commerce to redefine the scope of the Boeing complaint of Bombardier price dumping in its CS100 order with the carrier, filings at DOC show.

Delta asked the DOC to redefine the aircraft definition from 100-150 seat to 125-150 seats, arguing that Boeing doesn’t make in airplane in the 100-125 seat size and therefore isn’t harmed by competition in the sale of the 110-seat CS100 that Delta ordered.

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Key lessors see strong wide-body market despite worries

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Introduction

Aug. 7, 2017, © Leeham Co.: Amid talk that Middle Eastern airlines, which are the largest group of users for wide-body aircraft, may defer Airbus and Boeing airplanes, there are conflicting signs that the bleak view of the sector isn’t as weak as perceived.

Just last week, two big lessors—Air Lease Corp and AerCap–of widebody airplanes said they are confident in the sector.

Few orders have been received for the Boeing 777-8 ultra-long range airplane. Sales for its larger sibling, the 777-9, have stalled. Along with the Airbus A380 and Boeing 747-8, demand is seen as limited.

AerCap ordered 30 Boeing 787s at the Paris Air Show. ALC has a significant order of Airbus A330neos.

And, the chairman of Emirates Airline said in an interview with the region’s  The National newspaper that despite the current challenges at the carrier, it expects to announce an order before the end of the year for either the 787 or the Airbus A350—and possibly the Airbus A380.

Quantities on the former weren’t discussed. Airbus is pitching 20 A380s, according to accounts.

Still, there are a large number of Boeing 777s and Airbus A330s coming off lease in the next few years that could slow orders if these aircraft are offered on the secondary market with low enough lease rates.

Summary
  • Air Lease Corp.’s wide-body aircraft are placed. A330neo orders late due to engine delays.
  • AerCap sees strong wide-body market, reaffirmed with 787-9 order.
  • More than 100 A330ceos and 777 Classics potentially entering secondary market soon.

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Pontifications: Context is everything

By Scott Hamilton

Aug. 7, 2017, © Leeham Co.: The quote appeared on Twitter, citing the chairman of Air Lease Corp, Steven Udvar-Hazy:

“I would simply but strongly encourage the OEMs to carefully review their production rate aspirations closely and realistically.”

Hazy, often (but erroneously) called the “Godfather of leasing,” is a voice to be reckoned with. He is enormously influential with Airbus, Boeing, lessors and the industry. He’s been a launch customer of several aircraft new aircraft models and, if he’s not the Godfather of leasing (this title really belongs to the late George Batchelor), Hazy raised aircraft leasing to a fine art.

So, when the quote appeared on Twitter, I sat up in my chair.

Was Hazy suggesting Airbus and Boeing will be producing too many airplanes, creating a supply-demand imbalance?

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