Few orders at Farnborough Day 3

By Alex Derber

(c) Airfinance Journal, July 20, 2022

The Farnborough Air Show is all but over with a few orders announced on Day 3. Airbus executives have now left the show, with no more orders expected from them.

Commercial aircraft

Azerbaijan Airlines and Boeing announced a memorandum of understanding for four additional 787-8s. The flag carrier currently operates two of the type and plans to grow its 787 fleet to 10 aircraft by 2030.

Afrijet placed an order for an additional ATR72-600. The unit is scheduled to deliver before the end of the year. This order will bring the -600 fleet size to six ATR72-600 by 2023

Easyjet confirmed a firm order for 56 A320neo family aircraft following shareholder approval. The order is part of the UK carrier’s fleet renewal and up-gauging, cost, and sustainability enhancements to the business. The agreement includes an upsizing of 18 A320neo to the larger A321neo model.

Commercial engines

Easyjet chose CFM LEAP engines to power 56 Airbus A320neo-family units it plans to receive between 2026 and 2028. The carrier operates a fleet of 58 LEAP-powered A320neo-family aircraft and has an outstanding order book of 169 Neo aircraft with the LEAP powerplant.

Cemair ordered six new General Electric CF34-3B spare engines for its fleet of Bombardier-MHI CRJ100/200 LR aircraft. The Johannesburg-based company currently owns and operates a fleet of 12 CRJ aircraft.

50 Comments on “Few orders at Farnborough Day 3

  1. Some interesting discussion on the tanker front and Boeing working on the same auto fuel operation that Airbus is.

    Also some hints of some changed specifications if the KY-Y is confirmed to Boeing. Be interesting to see what those are.

    The Czechs have agreed to buy a stunning number (for them) of F-35s.

      • Boeing will fight the USAF in court, if they look at the auto refuel capability, because it was not in the original KC-X/Y requirements!

        • keesje:

          Tongue in cheek I hope?

          Any fixed price contract and you add something you pay for it. The A330MRT is adding some of what the KC-46A has and the operators are paying for the upgrade of an added option to the base price of new ones.

          The USAF screwed up some things as well.

          One was they deemed this an easy program and did not put a management team on it. That was sadly typical of the USAF, they do oblivious really well.

          Then there was the boom spec on force. That was USAF and nothing to do with Boeing.

          And the RVS has two aspects, one of which is a wider side scan, that was also a USAF specifications (like take a ride in an A330MRT and see what specs they have? nah)

          The USAF agreed with Boeing the wide view problem was their doing and they are paying for it just like the boom fix.

          There is no question Boeing screwed a number of things up.

          Some areas are working extremely well. The glass cockpit from the 787 has had zero problems. Fuel flow works fine. The Hull antennae working (that was a strange one and why the USAF approved it?)

          The shocking parts come when you have the fuel tanks and offload system working and they leave FOD in the aircraft. That is just bizarre

  2. Ravn is a strange one, they don’t have the money for this and on top of that the Owner is gathering 757s to do a Icelandic type operation (it will fail before it gets off the ground)

    https://simpleflying.com/ravn-alaska-zeroavia-hydrogen-electric-engines-dash-8/

    No idea what drives people like that. St Mary’s is not a central hub of any kind, its just one of many villages out that way, well short of Nome.

    Bethel you can reach as its shorter than St. Mary’s but then you have to fuel up again (and trust me, if Scott thinks Mosses Lake is a cow town, Bethel is not even a Caribou Town – its really the pits – not their fault, no economy other than Government out there. )

    https://www.google.com/maps/@60.7907215,-161.933809,11z

    When I was working in Saint Mary’s (my house building career) they were flying 100 lb propane cylinders in.

    Both get barges once a year for liquid fuel supply. Both of course are on their own power grid (diesel generators).

    Hydrogen either place is a joke.

  3. Well, as predicted a few days ago by Reuters, one can surmise that this year’s Farnborough Air Show was a bit of a non-starter.

    Although BA will be happy with the potential *PR effect* of getting some extra MAX orders (and a handful of extra 787 orders), it can be assumed that the *financial* effect of those orders will be (very) sub-optimal, due to (very) low pricing. Low margins are not useful when you have $63B in debt to repay.

    Airbus got 12 extra A220s, and a firming up of an earlier Easyjet commitment for A320 family aircraft — absolutely nothing to write home about.

    In contrast, Embraer had a great show — good for them 🙂

    We can expect much more action in the coming weeks, with orders from Air India, Malaysia, Japan Airlines and LOT.

  4. “Farnborough 2022: Airbus completes first Wing of Tomorrow prototype”

    “Airbus has completed assembly of its first full-size prototype of its Wing of Tomorrow technology demonstrator ahead of testing.

    “The completion of the first of the three fully composite wing demonstrators has included the integration of more than 100 different component and manufacturing technologies. These have included a new assembly system, and helped validate key automation targets.

    “Assembly of the first prototype wing began in September at Airbus’ Filton site in the UK.

    “Three full-size prototype wings will be manufactured in total: one will be used to understand systems integration; a second will be structurally tested to compare against computer modelling, while a third will be assembled to test scaling-up production and compare against industrial modeling.

    “Sabine Klauke, Airbus’ chief technical officer said, “Wing of Tomorrow brings a completely different build philosophy to the way we currently assemble wings and is a crucial part of our R&T portfolio that will help us assess the industrial feasibility of wing production in the future.””

    https://www.aerospacetestinginternational.com/news/farnborough-2022-airbus-completes-first-wing-of-tomorrow-prototype.html

    • Airbus definitely looking more innovative and forward thinking than Boeing at this point.

      Is Boeing doing a bunch of R&D that we’re just not seeing, will they announce major innovation when/if they announce their new aircraft?

      • Boeing doesn’t have the available cash to do anything.
        Q2 figures will be announced on the 27th. Analysts expect cash to have dwindled to about $10B — which is enough, at the current burn rate, to keep the lights on for about a year. With a gross debt of $63B, it can’t viably borrow any more. With meager 737 delivery income and no 787 deliveries, earnings are consistently inadequate to give much (if any) profit.

        However, Bloomberg did publish this vague / non-committal article yesterday:
        “Boeing Commercial Chief Gives Peek Into Work on Next Plane”

        https://www.bnnbloomberg.ca/boeing-commercial-chief-gives-peek-into-work-on-next-plane-1.1794631

        • Heh. I read that very fluffy piece.. the well-fed gentleman’s photo at the top of the page says more than the text does, I think. Perhaps that was the intent?

          “We’ll introduce an “NA” (Boeing’s latest, carefully-dismal term; rhymes with “Not Available”) when we damned well want to!”

          Oh. Something Else is going on, I think. Other interpretations of BCA’s actions
          are most welcome..

  5. Airbus says the priority this show was suppliers, not the customers. Engaging with it’s supply chain on various levels, re-establishing F2F contacts in changed organizations, discussing the restrains, shortages and challenges.

    The traditional order battle wasn’t a priority, it would pour fuel on a fire, touch open nerves in high places and re-fight a battle already won. Why? Let Boeing shine for a few days.

    • that’s what you say when you don’t have orders lined up….

      OTOH, Airbus has basically sold out production lines for everything but A330s for the next 5-8 years so perhaps they decided they didn’t need to undercut their profit margins and offer huge discounts for a press release.

    • It is funny how when Boeing says that they don’t particularly schedule order announcements for airshows unless the customer so requests that is reported as a sign of weakness by Boeing, but when Boeing clearly runs away with orders at one of the Big Two shows “the traditional order battle wasn’t a priority”.

      On a more serious note I suspect the world’s airlines are figuring out the Airbus has essentially no production slots available for at least 5 years, which in one sense is a good problem for AB to have but could also restore balance to the duopoly.

      • Au contraire — I can imagine that Airbus and Embraer are delighted with BA’s orders at the airshow, because they know that the margins on those orders were exceedingly thin.

        As regards production slots: that recent Chinese order for Airbus secured production slots in 2023 and 2024, so there are certainly slots to be had. It’s likely that a lot of deferrals occurred during the pandemic, thus freeing up earlier slots for buyers now. Tim Clark is also getting earlier slots on his A350 delivery.

        • Traditionally, from the industry in general, Airbus has the lowest reported profit margin. Therefore, I don’t expect that the 5 years backlog is on big profit for Airbus. Their strategy is clearly marketshare over profit share.

          • I hoped by now the 2012-2019 financial engineering, free cash flow driven, share value dominated and push-out-debt & promise the world perception castles in the air had deflated.

            People that have been absorbing the happy Quarterly’s, proven by share value growth and dividends have now the right to feel taken for a ride.

            They must have felt the $40-60B debt was somewhere out there, but were ensured short term free cash flow & long term industry growth was all that really mattered.

            https://www.forbes.com/sites/michaelcannivet/2019/03/03/lesson-from-boeing-follow-the-free-cash-flow/?sh=66fef896102c

            Now they’re back feet on the ground.

          • I believe that the short term financial strategies are really flawed, and investors should start looking on long term strategies, specially looking on product roadmaps. But a company which strategy is bite everything it sees, no matter the margins, is damaging to the industry, forcing supply chain and competitors to a lose lose game. Long term growth, with long term and reasonable profits, should be the common ground for everyone.

          • @Max
            When you have $63B in debt to repay, and ca. $500M per quarter in interest payments alone, you can’t afford the luxury of paper thin margins.
            We know from SEC filings that Southwest got about 65% discount on its 737-7 order, and we can assume that Delta got even higher discounts on its 737-10s (BA was chasing Delta for 3 years for this order). The margin on whitetails — such as those going to Akasa — is probably negligible (if not negative).

          • That is pretty funny. Boeing does not do any deals with Ryanair who returns the thinnest of margins and then of course gives the house away to others?

            Right. Keeping in mind Delta has been chasing this deal as well, they have a deep interest in working on LEAP engines.

            Boeing will be getting numbers back on MAX and the 787 soon.

            And you discount the Boeing defense side which is making legacy stuff as well as some newer items (T-7A /MQ-25 ) and the tanker end is not just coming along but they will get another 170 some orders.

            The T-7 is also going to see more orders with a requirement of fighter squadron level support and use there of to lower F-35 costs. At one time the USAF ran T-33 at the squadron level for those flights no specifically requiring the front line fighters.

            A realistic view is Boeing is someplace in between.

            Clearly you have never been in or seen business operate. I have. Boeing has far more options than you think.

          • @ TW
            If you scroll down, you’ll see a Nasdaq/Zacks report citing 7% decline in defense income for BA, and an expected Q2 loss of 8 cents per share.

            “Clearly you have never been in or seen business operate. I have. Boeing has far fewer options than you think.”

            *******

            Further:
            “Boeing does not do any deals with Ryanair who returns the thinnest of margins”

            BA sold 75 MAX-8200s to Ryanair just after the ungrounding — and probably made close to zero on the deal, because it was badly needed as a PR stunt.
            Forgotten that?

    • Data shows Cargolux has 15 of the 747-400F which is what the 777-8F would replace.

      They might need a few more due to the loading.

      That is a clearly good pickup for Boeing though logical as well (the can and width structure all in place and the handling aspects of that width.

      • Sure Jane. Hot air vs reality.

        -> Cargolux is unlikely to opt for a bumper order of aircraft. Mr Forson told The Loadstar in May he was fearful of overcapacity.

        Sadly the 777-8F won’t arrive in time when Cagolux’s 747F begins to retire. 😋

  6. And then there’s this!
    The A350 may be going 10-abreast in economy — allegedly without decreasing seat width — thus adding 30 extra seats.

    “Airbus is making some structural changes to the A350, which will allow the jet to more comfortably accommodate 10 people per row in economy. While some ultra low cost carriers have already done this, it came at the expense of seat width.

    “Airbus claims it can add another seat in each row without impacting seat width, by simply moving out the walls a little bit. I have to imagine this will become the standard sooner rather than later, since airlines will have a hard time saying no to increasing capacity by 30 or so seats.”

    https://onemileatatime.com/news/airbus-a350-10-abreast-economy/

  7. Nasdaq/Zacks: The analyst consensus for BA’s Q2 earnings (to be published on July 27) is a loss of 8 cents per share:

    “…However, considering the fact that the jet giant’s military business’ revenues comprised almost 43% of total revenues as of 2021-end, while that of the commercial business comprised 31%, the decline in defense shipment might have outweighed the revenue benefits of the solid commercial shipment, thereby hurting the overall Q2 top-line performance.”

    “…However, the abnormal costs in relation to the 787 program along with supply chain constraints might have had some adverse impact on the company’s bottom line.”

    “The consensus estimate for the bottom line is pegged at a loss of 8 cents per share, indicating a decline from the year-ago quarter’s earnings of 40 cents.”

    https://www.nasdaq.com/articles/will-mixed-product-deliveries-aid-boeing-ba-in-q2-earnings

    • AB has so called “low” profit margin, but how about BA?? For how many years BCA was losing money? How many years it’ll take to earn back those losses (esp when the MAX is stuck at 30-40 monthly rate)??

      • No question that Boeing had the high end for some time, which then blew on stock buy back and dividends.

        I would rather have the steady profits year in year out that Airbus has.

        I was offered short term jobs at real high pay rate a couple of times. But those were short term and long term you still needed a job and a full time one with benefits (at least back in the day) paid far more.

        • Fake numbers! BA hid 787 losses in plain sight.

          LNA:

          Boeing uses US Program Accounting rules that allow production cost swings to be shuffled between the beginning and the end of an aircraft program.

          This presents *nice quarterly profits in the program’s early days when there are actual losses* but it comes around making mature aircraft programs less profitable than programs using international accounting rules where profits are calculated for each delivered aircraft (Unit based accounting).

          • Boeing reports it’s end year numbers in both program and unit accounting standards
            Been doing do since 2015 or so.
            There , that issue fixed long ago

          • At the current juncture, all that matters is cash burn.
            Window dressing to adjust EPS may / may not have a short-term effect on what the share price does, but cash on hand will determine what the company can / can’t do in the coming months. Cash had dwindled to $12.82B at the end of Q1 — which isn’t enough to start any new programs. Analysts predict a loss for Q2, which will further erode available cash — unless significant receipt of deposits can save the day.

          • -> Boeing reports it’s end year numbers in both program and unit accounting standards
            Been doing do since 2015 or so.

            Buried in footnote and fine print?? Hah. Where did those “high” margin # come from? Fake or real numbers???

    • And you get a new engine in that thrust class from where? Fighter engine!

      I take as as Airbus trying to gin up buzz. Jon is a very good reporter but anyone can make statements.

      Airbus keeps saying that the -500 is when they get the A220 program sorted and its not yet.

      More to this than just posting stuff, analysis is needed.

      • A220 series has the smaller fan PW1500 GTF with 73 in fan size, thrust 19k-23k
        The PW1100 with 81 in fan comes in the next thrust class 24k to 35k
        Seems an easy choice

        I see there are some news that CFM maybe an engine choice for this new model ?

    • BA has nothing to offer.

      Seattle Times:
      -> What will Boeing do if Airbus launches the A220-500? It’s already *seemed to rule out building a new plane to replace the MAX*.

      Asked on Monday, Boeing Commercial Airplanes CEO Stan Deal responded with one word: “Undecided.”

  8. Reuters: “U.S. carriers’ cost struggle overshadows travel demand surge”

    “”As an industry, pilot wages are going to increase,” said American Chief Executive Robert Isom. “And that’s something that the industry as a whole is going to have to digest.”

    “Airlines are also facing higher fuel costs, but a decline in global prices is expected to offer some relief. Yet, United warned that higher fuel prices would be the new normal for the industry. It expects its fuel bill this year to be $9 billion higher than in 2019.

    “Strong consumer demand, thus far, has allowed carriers to mitigate inflationary pressure with higher fares. Analysts, however, are not sure they will have the same pricing power in the fall when leisure travel bookings tend to slow down.

    “Christopher Raite, senior analyst at Third Bridge, said business travel spending will have to pick up the slack.

    “But the industry’s struggle to get operations back on a smoother track as well as a worsening economy have cast a shadow on business travel demand. Many companies have already started tightening their purse strings.

    “”The airline industry is fundamentally less profitable than it was pre-pandemic,” Raite said. “If we are to see corporations cut back, that would be a bad sign for airlines.””

    https://www.reuters.com/business/aerospace-defense/american-airlines-books-first-adjusted-profit-since-start-pandemic-2022-07-21/

    • I tend to think business travel will be significantly less.

      My wife shifted to on line music lessons when her teacher decided in person was out (rightfully so).

      Its worked out well generally. Some hiccups on the link up end but that is an at home and not the highest bandwidth connection.

      I have been impressed how good it is and the music come across well.

      I don’t think you can eliminate all face to face but I could easily see 50% of it and maybe more. Some advantages to the many phone conference I was in during my illustrious tenure as a tech/engineer. Those left a lot to be desired as we could not even see the people we were talking to and often sketches and drawings would have clarified things (you know how engineers are, talking with our hands and then right to paper)

      Throw in Pilot shortages and ……. I am getting too long in the tooth to be called back though I could manage a PM role I think.

      • Haha.

        Read that many are enjoying “professional” gatherings to get out: sightseeing, fancy meals etc

    • Wonder how come the “news” of continues to be *re*ported each time at face value. American exceptionalism? Attention deficit??

      BA continues to tout higher production once delivery resumes. Hah.

  9. > Boeing will be getting numbers back on MAX and the 787 soon. <

    Evidence for those assertions would be welcome.

    • ‘American Airlines Hints Boeing Will Resume 787 Deliveries in August’

      Its evidence , but yet to be confirmed by actual delivery

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