A380 and investors meeting: The Airbus A380 has been a sensitive topic for investors. Historically stock prices took a major hit when negative news about the A380 emerged. During an investors day in December 2014, one of the executives slipped that the program could be terminated. The stock took an immediate dive and other executives had to clean up the first one’s comments.
Airbus also holds an investors day during the Paris and Farnborough air shows. The latter’s was scheduled on Wednesday. The night before, the French newspaper La Tribune broke news that the production rate of the A380 will be reduced from 20/yr in 2017 to just 12/yr in 2018. Airbus scrambled to catch up to the story Tuesday night in advance of the Wednesday investors day.
The production breaks even at 20 but not at 12. Yet the stock opened down slightly and remained flat during the rest of the day before closing up slightly.
The jinx may be over, but perhaps Airbus either has to fix the A380 program or cancel its investors days.
CFM LEAP-1A: The engine proved in test flights on the Airbus A320neo to be quieter than expected. It’s going to be on specification at entry-into-service. It’s sister engine, the LEAP-1B on the Boeing 737-8 MAX, is likewise expected to be on spec at EIS next year.
737-10 launch: Despite a series of mixed messages from Boeing before and during the Air Show, the prevailing sentiment is that Boeing will proceed with the 737-10 derivative with a decision before the end of the year. LNC’s quick analysis of what we think the airplane will be concludes the 737-10, unlike the 737-9, will be more competitive with the A321neo. The question is how much it will cost Boeing in R&D to build the derivative.
More MAX upside than NEO: John Wojick, SVP Global Sales and Marketing for Boeing, told reporters this week that while the 737 MAX trails the Airbus A320neo in market share today, he believes the MAX has more upside than does the NEO.
He points out that Southwest Airlines and Ryanair have ordered just 300 MAXes compared with combined fleets of more than 1,100 NGs. The leading customers for the A320 are AirAsia and Indigo, which compared with Southwest and Ryanair are relatively new carriers. These airlines now have 830 orders but operate only 250 airplanes. Fair enough, but at one time Southwest and Ryanair only operated 250 airplanes between them. Wojick’s point is well taken, but the comparison is open to debate.
Qatar Airways: Vocal CEO Akbar Al-Baker told reporters at the Air Show he’s negotiating “seriously” with Boeing for some 30 737NGs and MAXes. Given his track record of negotiating in the press, his pronouncement has to be taken with a bit of skepticism. Cancelling the A320neo orders about which he’s been so vociferous simply doesn’t make sense. The delays for these are measured in months. Getting NGs and MAXes, even if from lessors, is measured in years.
Bombardier vs Embraer: Embraer declared war on Bombardier after the latter won an important order from Delta Air Lines, based on what EMB calls unfair competition because of “subsidies” the Quebec government. Au contraire, says BBD. The Quebec money, US$1bn, is essentially structured like a preferred stock issue (our highly simplistic description). But with BBD now EMB’s main competitor in the 100-125 seat sector in which it otherwise had a virtual monopoly, EMB is coming under new pricing pressure from the CS100. And this is what’s at the root of EMB’s complaints, says a BBD official.
More Bombardier vs Embraer: After the decision to do its own wing also for the E195-E2, Embraer’ is pointing out that the E-jet E2 series is the only aircraft family in the market which has an optimized wing for each member of the family.
Bombardier CSeries and Embraer E-jet 190, 195 E2 startup delays: The Pratt & Whitney GTF on these aircraft, like all aircraft engines, has rotor bow at some point during the cooling down after a sortie. But because Bombardier insisted that these engines (they both use the same engine, the 73 inch GTF) be mounted at the fan case and the turbine house (and not at the core like the A320 engines), the rotor bow is no problem. The engine’s natural weight bows the shaft in the opposite direction during cooling down. There is still a cooling spool period but this is so short that the engines startup time is within the standard 65 to 85 seconds. Actual startup time is 75 seconds.
If it’s Boring, we’re still going: For the journalists attending this show, we universally considered it very boring. But we still had to be here.