Jan. 4, 2021, © Leeham News: Beginning today through next week, Leeham News presents its annual Outlook series for the coming year.
We’ve been doing this for years. In recent years, the Outlook reflected continued growth in commercial aviation. The industry had the longest upward tick in the more than three decades I’ve been involved in the sector.
Not this year. As I wrote before the Christmas-New Year’s holiday period, 2020 was the worst year for commercial aviation I’ve ever seen in 41 years.
This year is the beginning of the end of the COVID crisis. Yes, the vaccines began distribution in December, but large spikes in COVID cases began simultaneously and are predicted to climb higher through the first quarter.
Over the coming days, as LNA provides its Outlook for 2021, readers will see what we believe will happen.
Boeing will recover. Eventually.
Recovery will take years. Boeing won’t return to its former glory years. Too much must be done to bring Boeing back to its healthy days.
There are the obvious things. The MAX return to service will take more than two years to clear the inventory of new, stored airplanes. Delivering newly produced, stored 787s, effectively grounded by Boeing for inspections of manufacturing flaws, will take most of this year.
The company needs to reconstitute its Board of Directors, though there is little chance this Good Ol’ Boys Club will do so.
Boeing needs not one but two new airplane families to restore fully competitiveness with Airbus. Financial constraints make it challenging to launch one program. Obsession with returning to shareholder value as the No. 1 priority after recovery makes launch two programs unlikely.
The 787 needs a major refresh later this decade. The design, technology are features believe it or not, are already almost 20 years old.
Airbus is in better financial condition than Boeing. It’s product line, despite some weakness in the widebody sector, is better than Boeing. Airbus “owns” the single-aisle sector, from the A220 through the A321.
While Boeing continues its indecisive futzing about its next all-new airplane (a process begun even before the 787 entered service in 2011), Airbus is committed to a new airplane in the 2030 decade. It’s also prepared to respond to Boeing should a new airplane be launched, as needed, later this decade.
Just as Embraer, like the rest of the globe, began to be hit by the effects of the COVID pandemic, Boeing jilted the company at the altar. Boeing walked away from the joint venture announced in late 2017.
Embraer spent $130m preparing for the JV. Faced with deferrals and lacking new orders because of COVID, Embraer faces a rebuilding this year that will be several years in the making. Plans for a new turboprop were put on hold along with the JV. Officials still want to launch the program. But it’s something with an iffy business case.
The best news from Embraer was the drip, drip, drip series of decisions by Mitsubishi Heavy Industries to essentially abandon the MRJ/SpaceJet regional jet program. Embraer now is the sole Western supplier of RJs for the foreseeable future.
MHI hasn’t officially killed the SpaceJet. But have reduced the workforce and budget by 95%, killing it is basically a done deal.
Outside of China and Russia, ATR and DHC are the remaining turboprop airliner manufacturers. What they do next depends in large part what Embraer does with its potential program.
In the meantime, ATR will be a vehicle for Airbus for hydrogen technology. ATR is 50% owned by Airbus. A photo rendering by Airbus illustrating hydrogen-powered aircraft showed a turboprop. This won’t be through Airbus, a jet manufacturer. ATR will be a proving ground.
China’s COMAC and Russia’s UAS continue to develop the C919 and MC-21 challengers to the Airbus A320 and Boeing 737. Years behind schedule, each now is supposed to enter service this year.
Don’t count on it.
COVID recovery drives everything. Today, LNA’s Judson Rollins updates his look at the continuing impact, and recovery, from COVID.
The Airbus and Boeing Outlook appears tomorrow. The remaining Outlooks appear this week and next.