Why the A321XLR makes sense for Alaska Airlines

By Scott Hamilton

Feb. 23, 2020, © Leeham News: Alaska Airlines last week said it will place an order, perhaps this year, for 200 aircraft for delivery over the next decade.

The carrier exclusively operated Boeing 737s until its acquisition of Virgin America. Officials repeatedly put off a decision whether to return to an all-Boeing fleet.

Alaska Airlines Boeing 737-900ER. Source: Alaska Airlines.

Virgin leases for Airbus A319s/320s extend to 2025. The ex-Virgin fleet numbers 61. Leases for Airbus A321s extend to late this decade.

Alaska has 30 A320neos on order from the Virgin merger. However, cancellation rights have small penalties.

The carrier ordered 37 737 MAX 9s. Three were built last year but are stored in the grounding. Seven more are due this year.

Alaska plans to aggressively grow in the next 10 years.

Here’s why converting the 30 Virgin orders to A321neos makes sense.

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Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 10.

February 21, 2020, ©. Leeham News: After spending several Fridays looking at different possibilities and technologies that can lower air transport’s environmental footprint we now turn the discussion to what path forward makes sense and how shall we set our priorities.

Figure 1. The CO2 concentration in the atmosphere and what causes it. Source: Wikipedia. Click to see better.

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ATR: We’re confident in the future of turboprops

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By Judson Rollins

Introduction

Executives from turboprop manufacturer ATR expressed optimism about their product range and the future of turboprops in general at last week’s Singapore Airshow.

According to industry databases, ATR has 52% of the market for 30+ seat turboprops in service and 63% of 70+ seaters. It competes primarily against De Havilland Canada’s DHC-8 family. The ATR-72 accounts for nearly two-thirds of ATR production. Both models are produced on a single assembly line.

However, ATR dominates the backlogs by a wider margin.

Summary

  • ATR touts advantages of the ATR-42 and -72 family;
  • Special performance capabilities of the ATR-42 are key for developing markets;
  • Adapting aircraft capabilities to stay ahead of revitalized DHC-8 competitor;
  • Not looking to compete with regional jets in the 70+ seat space.

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How much did the CSeries cost Bombardier?

By Bjorn Fehrm

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Introduction

February 20, 2020, © Leeham News: As we wrote in last week’s article about the A220 flying the Montreal to Toulouse route, the stakes are high in the civil airliner business. If you don’t have a very strong balance sheet you shouldn’t enter the business.

Bombardier learned this the hard way. Its follow up project to its successful CRJ regional jets, the CSeries, brought Bombardier to the brink of bankruptcy and it had to sell the project to Airbus at a fraction of its value. The project cost more to develop and produce than planned despite not running off the rails during development like Boeing’s 787 or Mitsubishi’s MRJ.

We analyze why it cost so much and at what fraction Airbus got the program.

Summary:

  • The CSeries nearly doubled its development costs despite being void of major hiccups. What was the cause?
  • Airbus picked up the program when Boeing forced Bombardier to sell. How much of a bargain did Airbus get?

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Boeing may have checkmated Airbus in trade dispute

By Scott Hamilton

Feb. 20, 2020, © Leeham News: Boeing may have just checkmated Airbus in the long-running trade dispute between the US and European Union.

In an unexpected move, Boeing and Washington State crafted legislation to void tax breaks dating to 2003. The tax breaks were given to support development and assembly of the 787 in Washington. They were extended in 2013 to support assembly of the 777X in Washington.

The tax breaks were found to be illegal by the World Trade Organization. The US appealed the amount of damaged. An outcome is pending was due in May or June.

This case is parallel to another against Airbus. The WTO found Airbus received illegal subsidies and failed to cure them in connection with the A350 and A380 programs. All Airbus airplanes imported into the US, along with other goods unrelated to aerospace imported from the EU, are now subject to tariffs. The Airbus planes have been taxed at a 10% rate since October. This goes up to 15% in March.

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Boeing helps some suppliers, but squeezes others

By Scott Hamilton

Feb 19, 2020, © Leeham News: Boeing says it is helping some suppliers with liquidity while the 737 MAX is grounded.

Other suppliers complain that Boeing is dunning them for alleged bad workmanship, squeezing cash. Still others say Boeing proposes not paying them for MAX parts until every regulator in the world recertifies the airplane. There are some 80 regulators who have to approve restoring the MAX to service.

And one Tier 1 supplier, Leonardo, sued Boeing Dec. 23 for withholding $20m in payments for 767 slats. Boeing alleges faulty workmanship. Leonardo says Boeing won’t provide documentation of this claim.

(US District Court for Western Washington, 2:19-cv-02082-JLR.)

Boeing’s tactic of withholding payments for claims against future invoicing was echoed by some of the suppliers attending the annual conference of Pacific Northwest Aerospace Alliance Feb. 4-6. Some complained Boeing is using them for its “bank.” It’s a complaint of long-standing even if for different reasons.

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Boeing finds debris left in new 737 MAXes, now in storage

By Scott Hamilton

Exclusive

Feb. 18, 2020, © Leeham News: Boeing recently discovered some of its stored 737 MAXes have foreign objects in the fuel tanks.

The entire fleet of 400+ newly produced but undelivered MAXes is being inspected.

Foreign objects, called foreign object debris (FOD) in aviation parlance, consist of tools or rags. FOD has been found in the fuel tanks of some MAXes. MAXes are stored at four locations in Washington State and in San Antonio (TX).

It’s unlikely that the FOD inspections will delay recertification or testing of the MAX.

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JetBlue, a carrier at crossroads

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By Vincent Valery

Introduction  

Feb. 17, 2020, © Leeham News: JetBlue Airways has come a long way since it started operations in 2000. The airline celebrated its 20th-anniversary last week.

While the US legacy carriers were struggling financially and busy with consolidation, the airline successively expanded. It now generates more revenue than numerous flag carriers around the world.

JetBlue built significant focus city operations outside its main New York–JFK base in Boston, Fort Lauderdale, and Orlando. The carrier profitably grew faster than most competitors in the years after the financial crisis. It also announced the start of trans-Atlantic operations from next year.

The airline has had some resounding successes over the years, notably the introduction of Mint service on US transcontinental flights. However, there have also been strategic failures.

After resisting the usage of ancillary fees, the carrier is aggressively increasing those revenues. Management announced in 2018 a shift towards expanding capacity in the focus cities where the airline has a significant market share.

LNA analyzes JetBlue’s performance over the years and the rationale behind the latest strategic decisions.

Summary
  • Succeeding where many others failed;
  • Some resounding successes;
  • And strategic failures;
  • Increasingly looking like a legacy carrier;
  • Setting itself up for a merger?

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Pontifications: In chaos there is opportunity for Boeing during MAX grounding

Feb. 17, 2020, © Leeham News: Boeing executives said that while the 737 MAX production is suspended, efficiencies are being implemented on the assembly lines.

By Scott Hamilton

At a Cowen & Co. conference last week, EVP and CFO Greg Smith outlined some of the efficiencies that are being put in place.

But another area that could be improved, not addressed by Smith, while the lines are shut down is supply chain tracking. This has huge ramifications for cost savings and streamlining. It’s part of the business plan for the next new airplane, whatever this is.

This process is called ERP, or Enterprise Resource Planning. Boeing is transitioning to a more advanced method, called SAP, or Systems Applications Projects.

Boeing Australia and Boeing Global Services have made the transition. But Boeing Commercial Airplanes’ transition is stalled due to middle management inertia, said several people who attended the Pacific Northwest Aerospace Alliance annual conference Feb. 4-6.

Boeing should use the production halt and slow ramp up to implement SAP, they said.

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Boeing 737 MAX 2020-23 backlog will require to 2026 to deliver: analysis

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Introduction

By Scott Hamilton

Feb. 14, 2020, © Leeham News: It will take Boeing years to deliver new production airplanes scheduled for delivery in 2020-2023 because the restart of the 737 MAX production will fall far short of delivery commitments.

There are an estimated 2,682 deliveries scheduled in this timeframe. Boeing’s production restart and ramp up provides delivery positions for an estimated 1,827 aircraft. This leaves an estimated 855 aircraft that will have to be rescheduled into the future, from 2023.

These will compete with Boeing sales for new order delivery slots. For example, the MOU for 200 MAXes from IAG, the parent of British Airways and other carriers, has delivery slots in these periods.

An analysis by LNA indicates it will take at least until 2026 to deliver these 855 airplane if no other orders are slotted in through 2025.

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