May 15, 2017, © Leeham Co.: It was a busy news week last week.
Let’s look at these events.
To no surprise, Emirates chose to emphasize the 29th consecutive year of profitability while down-playing the dramatic drop in profits.
This is nothing out of the ordinary. Companies often try to bury bad news in earnings reports. Once EK gets past the upbeat bullet points at the top of its press release, it does note that the Group’s profits fell by 70%. However, one must dig further to see that the airline’s profits fell by 83%.
EK’s lower profits have trended all year, so this final FY 31 March result isn’t a surprise. EK blamed Brexit, Europe’s challenges to immigration, terror attacks in Europe, new US travel policies and more for the declines.
The carrier retired 27 aircraft in the fiscal year.
Emirates is the flagship of the Middle East. It’s decline in fortunes is not good news for the region. Airfinance Journal’s Airline Analyst unit gives EK a financial score of 4.85 (Figure 1) on a scale of 8.
Rival Etihad Airways is in such bad shape, its president and CFO have been booted. Qatar Airways gets a 6.77 score from Airline Analyst. Etihad is not rated.
Last month, LNC reported order deferrals by Emirates and Etihad.
COMAC had the first flight May 5 of its C919 challenger to the Airbus A320 and Boeing 737. It looks like Irkut is getting close for the MC-21. Airplane #1 is now out on the tarmac. High speed taxi tests should come shortly, and this is typically within days of a first flight.
The MC-21 also competes with the A320 and 737.
We’ve seen the cabin mock-up of the MC-21 at previous international air shows. It’s slightly wider than the A320 and substantially wider than the 737. Passenger experience will be good. But it’s unlikely there will be widespread orders outside of Russia.
The media Twittersphere went wild over reports that the US Department of Homeland Security is on the verge of extending the ban on laptops from the Middle East flights to Europe. The ban, apparently, would not extend to all other electronic devices larger than cell phones.
Effective date is unknown, but journalists were in an uproar over the prospect of laptop cabin bans in advance of the Paris Air Show.
From my perspective, I travel with a tablet, not a laptop, so based on the sketchy information right now, unless I go to the Middle East, I’d be OK.
But there are so many problems with a check-the-laptop requirement. First, this does nothing to prevent a bomb from being embedded into a laptop going into checked luggage.
I know, the luggage scanners are deemed to be the security device on this, but no system is infallible.
I don’t know if having a bomb-embedded laptop in a confined LD container is more or less dangerous than having one in a cabin. Maybe some of the more technically-minded readers can weigh in on this.
But there is no getting around the dangers of scores or hundreds of laptops with lithium batteries jammed in luggage. There have been plenty of examples of lithium battery fires (not the least of which were those in the Boeing 787). These are very dangerous events. It’s been tough enough for flight attendants to extinguish laptop fires in a cabin with multiple fire extinguishers and full access. Imagine a laptop fire starting in a cargo hold.
It only takes eight minutes for a fire to get out of control, according to an Airbus study. A plane needs to be on the ground in 15 minutes. You’re toast if a fire occurs while you’re over Hudson Bay….
It seems to me the greater risk is requiring baggage checking of scores of hundreds of laptops than it is playing the odds of a bomb. (Not that either is a choice I’d like to make.)
On the other hand, look at all the ancillary revenue the airlines will get from more checked bags.
Boeing last week suspended 737 MAX test flights just days ahead of the first delivery of a MAX 8. This follows notification by CFM that some critical parts from one of two suppliers for the LEAP 1B engines on the MAX fail to measure up to quality and could lead to cracking of a crucial component.
We don’t view this as a Big Deal. Testing is supposed to find these things, and the problem—as far as been publicly disclosed—is confined to one of two suppliers. Flight tests resumed two days later.