Leeham News and Analysis
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Leeham News and Analysis
- Teamsters, Boeing have a new contract April 29, 2025
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
Caution overhangs 777X program-(Update)
Update: This story is corrected.
July 21, 2017, © Leeham Co.: Lufthansa Airlines’ indications that it may reduce the order for 20 Boeing 777-9s underscores caution with which the program should be viewed.
Emirates Airline already rescheduled its first deliveries from 2020 to 2021.
The largest customer for the 777X, with 150 orders, EK is now pressured with falling profits, excess capacity and it’s one of three Gulf airlines under attack by the Big Three US carriers for alleged violations of Open Skies pacts.
Boeing 787 payback gap widens
By Bjorn Fehrm
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Introduction
July 20, 2017, © Leeham Co.: The 787 Dreamliner is now on its sixth delivery year, well past half calendar time in the program’s 1,300 unit accounting block (for the explanation of accounting block and program accounting read here).
Within two quarters we also reach half time for deliveries at 650 aircraft. Production cost improvements must now create a margin, so that the $30b deferred costs to date can be amortized by remaining units. Is the margin created? Not so far.
We will know more in a week’s time. Boeing has its 2Q2017 call next week, where the production cost improvements can be monitored through the decline of the $30bn deferred costs. Right now, the decline is at a slow pace.
Summary:
- Program accounting means deferred production costs shall be nil at the end of the accounting block.
- Right now, there is $30bn to amortize and not too many aircraft left that can pay the sum.
- We explore the payback margins necessary to reach a black nil at 1300 units.
Is Norwegian in trouble? Part 2
By Bjorn Fehrm
July 19, 2017, © Leeham Co.: Last week we raised the question if Norwegian Air Shuttle was in trouble. The CFO, Frode Foss, left a few days earlier. Analysts were worried and the stock dived 8%.
Last Friday, the airline presented its 2Q2017 result. An optimistic report. New destinations, increasing revenue and a profit of NOK 861m ($107m). But the stock tanked further, now down 11%. What’s behind the increased worry?
Business case for NMA remains uncertain
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Introduction
July 17, 2017, © Leeham Co.: We’re half way through 2017. Boeing reported orders through July 11, a week ago. Airbus won’t update its July orders until the end of the month.
Through July 11, Boeing reported 116 net wide-body orders: 15 for the 767, 33 for the 777 and 75 for the 787. Net cancellations of -7 for the 747 are included in the net 116 figure.
The 15 767s were not commercial models, however, but 767-2C tankers for the USAF.
Over at Airbus, none of China’s 40 commitments announced July 5 for 40 A350s are in the June summary, and won’t be in the Orders tally until the commitments turn into firm orders. Through June, airbus had net 26 widebody orders: three A330-200s and 29 A350-900. There were cancellations of four A330-800s and two A380s.
If the 40 China A350s were included, this would bring Airbus to 66 widebody orders, still well short of Boeing’s YTD figure.
Summary
- Airbus product gap widens as A330-200/800 stalls.
- Boeing 787 strength comes from 787-9; 787-8 remains minor player.
- Middle of the Market business case still unproved.
Pontifications: Mississippi’s aerospace footprint
By Scott Hamilton
July 17, 2017, © Leeham Co.: Living in the Seattle area, the highest profile, dominant industry is the commercial aerospace sector.
Boeing, of course, headlines just about everything when it comes to aviation.
Boeing’s competition is principally Airbus—or at least it used to be until Boeing claimed teeny tiny Bombardier, a company one-sixth the size of Boeing’s revenues, is poised to put Boeing out of business with BBD’s CSeries.
Jet sales in 75-150 seat lag Airbus, Boeing
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Introduction
The Mitsubishi MRJ90 hasn’t recorded a sale in a year. Photo by Scott Hamilton.
July 13, 2017, © Leeham Co.: While analysts and reporters focus on the high-profile order competition between Airbus and Boeing, it’s time to look at Bombardier and Embraer, along with the 75-150 seat sector.
Boeing is doing better than expected this year, due largely to the launch of the 737 MAX 10. Airbus is struggling year-to-date, but received a big boost post-Paris Air Show with an agreement to sell 140 A320s and A350s to China. At this stage, it’s not a firm order, however.
How are Bombardier and Embraer doing in their core markets of 75-150 seats?
Just awful.
Sukhoi and Mitsubishi aren’t doing any better.
Summary
- Few new sales in 2017 in the 75-150 seat sector.
- Low fuel prices, Scope Clause and general order downturn converge.
- Embraer’s Paris Air Show results boosted this OEM’s year-to-date performance.
Is Norwegian in trouble?
By Bjorn Fehrm
July 11, 2017, © Leeham Co.: In our review of Norwegian Air Shuttle (Norwegian) the 8 of February, we pointed out the company’s ambitious fleet expansion plans with a rather weak balance sheet. We followed up with a second article the 15th of February where we analyzed the risky fleet plans further.
Last week, the longtime Norwegian CFO, Frode Foss, departed. It sent shock waves through analysts and the stock tanked 8% in a day.
The departure of a CFO is many times the pre-warning of troubled times. Foss was with Norwegian for 15 years. It was not a planned departure and Foss has no successor. The post is run by the Investor Relations manager in the interim.
Read more
A380Plus: First analysis, Part 2
By Bjorn Fehrm
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July 10, 2017, ©. Leeham Co: We went through the changes that are included in the Airbus A380Plus development study last week.
The study packages several improvements to the A380, improving the aerodynamics, increasing the passenger capacity and lowering maintenance costs.
The aim is to improve the cost per seat of the A380 to keep it competitive with the new Boeing 777-9. With the rundown of the improvements complete we now use our aircraft model to see if the cost per passenger can compete with the 777.
Summary:
- The A380Plus improvements makes the A380 competitive on Cash Operating seat mile Costs with the Boeing 777-9.
- The problem on how to fill the 70% larger A380 remains. It needs other solutions.
Bjorn’s Corner: Electric aircraft, Part 2
By Bjorn Fehrm
July 07, 2017, ©. Leeham Co: In last Corner we could see that battery driven electric aircraft will be for the extreme short-haul.
The stored energy per kg battery is 70 times lower than for fuel. In addition the weight is constant. Fuel gets burned off during the flight.
A more useful configuration is the hybrid, which adds a combustion driven generator as energy source.
Figure 1. The Siemens electrically engined Extra 330LE aircraft. Source: Siemens.
Qantas’ ultra-long haul dream, Part 3
By Bjorn Fehrm
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Introduction
July 06, 2017, © Leeham Co.: In previous articles we have learned how to fly the challenging route Sydney-London direct. From a well-informed person in Qantas we learned not to fight the winds. We shall use them. If we fly intelligently we put a cap on the longest distance we fly, even on windy days.
The other way around, London to Sydney, is less of a challenge. The aircraft is blown down under by the winds.
Figure 1. Qantas planned URL routes with Great Circle distances. Source: Great Circle mapper.
Now we use our aircraft model to understand how Airbus’ A350-900ULR and Boeing’s 777-8 would cope with the route.
Summary:
- The ideas of Qantas did not stop with not fighting the winds.
- We also learned how to simplify the analysis process for URL aircraft and routes.
- Forget about cabins, seats and passengers. It’s all about the hauled weight.