By Bjorn Fehrm
April 20, 2017, ©. Leeham Co: We will start the series on keeping airliners operational by discussing how the structure is kept fit.
There are three areas that are more key to flight safety of an airliner than others. The aircraft’s structure, the engines (already discussed) and the flight control system. We will start with the structure.
By Bjorn Fehrm
April 27, 2017, ©. Leeham Co: Airbus Group presented its first quarter results this morning. There were no surprises. Revenue and earnings were a bit lower than expected, but this is because a part of the company has been sold, the Defense & Space Electronics division.
There was no news on the problematic A400M. Negotiations with the customers have just begun, any results will take time to materialize.
By Bjorn Fehrm
April 27, 2017, © Leeham Co.: We have in several articles gone through the sizing of an NMA (New Midrange Aircraft). We looked at the fuselage, cabin, wings and engines. Now we will sum the exercises and look at the performance of the resulting aircraft.
Boeing is seriously considering launching an NMA. The key to the launch decision will be the airplane’s economics: for development and production as well as operation.
The idea is the NMA shall have “twin aisle comfort with single aisle economics.” We will now use or performance model to analyze if the final aircraft has these characteristics.
This is the second of two Parts looking at the wide-body market
April 25, 2017, © Leeham Co.: When lessors face re-leasing wide-body airplanes as lease terms expire, they face a far narrower market than for single-aisle airplanes.
While there may be a thousand operators which can be targets for Airbus A320s and Boeing 737s, there may be only a hundred operators interested in the most popular wide-body aircraft. When you get to the Very Large Aircraft sector, the potential market declines to the figurative, and perhaps literal, handful.
April 24, 2017, © Leeham Co.: Boeing faces growing challenges this year as airplane sales slow, production of the 777 Classic declines, its new Global Services unit prepares to formally launch and a decision whether to authorize a sales offering for the New Midrange Airplane looms.
We’ve spent a lot of time covering slowing sales and declining 777 production. Tomorrow, we’ll have a special report on the ambitious Global Services strategy.
We’ve also spent a lot of time on the Boeing NMA. LNC’s Bjorn Fehrm last week presented number three in a paywall series on the NMA, looking at it from a technical viewpoint. We’ll take a look at it from a strategic point of view today.
This is Part 1 of a series looking at wide-body aircraft demand.
April 24, 2017, © Leeham Co.: We’re in a five-year slump for wide-body aircraft orders, say veteran executives of a new leasing company.
This means airlines will hold onto Airbus A330s and Boeing 767s/777s longer than planned, deferring—but not canceling—orders for Airbus A350s and Boeing 787s.
Orders for Boeing 777Xs and even Airbus A380s will resume eventually—but not any time soon.
Ray Sisson, the chairman and CEO of the new lessor AVi8 Air Capital, and Ed Wegel, president of the company, told LNC in an interview last week that there is a solid market for the proposed Boeing 7M7 (the Middle of the Market airplane).
Sisson, who was CEO of the lessor AWAS until a large portion of its portfolio was sold, also sees a robust market eventually for the 777X.
A much more modest market is seen for the A380.
April 24, 2017, © Leeham Co.: AVi8 Air Capital is a new lessor with a different business model.
Instead of the standard operating lease model, Avi8’s mission is to buy groups of airplanes from other lessors and later sell them. AVi8 intends to be a clearing house for other lessors.
The company, which pronounces its name with the long “A” (as in aviator), was formed last year and expects to conclude its first transaction this year.
“The difference between AVi8 and other leasing companies is as follows,” says Sisson. “When I was running AWAS, I was told by a number of investment banks that you get economies of scale by getting between $12bn and $18bn in assets. You can be bigger than that, but when you get between $12bn and $18bn, you capture real economies of scale – you’re buying enough new aircraft from OEMs, financing aircraft in bulk in capital markets/bank syndicates/Export Credit agencies, and leasing enough aircraft to airlines globally.”
This, among other things, was important to the rating agencies, Sisson said.
By Bjorn Fehrm
April 20, 2017, © Leeham Co.: After defining the fuselage and wings, it’s now time for the engines. We go through the sizing criteria for engines for airliners and find the size of engine that is needed for the NMA.
The NMA will need engines which are larger than the single aisle engines for Airbus’ A320neo and Boeing’s 737 MAX. But they will be smaller than the next size up for modern engines, the GEnx-2B for Boeing’s 747-8.
This means the NMA will need new engines, at least 50% larger than the present engines designed for A320neo and 737 MAX.
April 17, 2017, © Leeham Co.: A shift is underway among Asian airlines that could have ramifications for the airframe and engine manufacturers and, by extension, their suppliers.
It doesn’t appear, however, that aerospace analysts in the US and Europe realize this shift. At least none has written about it that we’ve seen among the research notes we receive.
April 17, 2017, © Leeham Co.: Buckingham Research Group last week issued back-to-back notes about Boeing. One was a recap of an investors call with Steve Rimmer, CEO of Altavair Airfinance (nee Guggenheim Aviation partners). The other was BRG’s earnings preview, the first off the mark for Boeing’s earnings call on April 26.
I’ll include a summary of BRG’s earnings preview in a subsequent post when other analysts issue their previews.
BRG’s Rimmer note is lengthy and covers industry issues beyond Boeing. Here are a couple of the Boeing-focused points: