Leeham News and Analysis
There's more to real news than a news release.
A330 easier to re-lease than 777
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.
Pontifications: Five-year slump in wide-body demand seen, says lessor
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.
By Scott Hamilton
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.
AVi8 to be ‘clearing house’ for lessors, OEMs, airlines
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.
Could an NMA be made good enough? Part 5
By Bjorn Fehrm
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Introduction
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.
Figure 1. The NMA takes more and more the shape of a 767 replacement (A United 767-200). Source: United
This means the NMA will need new engines, at least 50% larger than the present engines designed for A320neo and 737 MAX.
Summary:
- An NMA engine will be sized by V2 safety speed or Maximum Continuous Thrust (MCT) criteria.
- The normal Top of Climb (ToC) sizing point will be less stressing for a twin engine airliner like NMA.
Asian airline shift portends big ramifications
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Introduction
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.
Summary
- The creation of the Value Alliance of Low Cost Carriers brings together eight LCCs under one alliance.
- AirAsia faces a competitive threat.
- Full service carriers also face a threat, particularly those in Japan, concludes one aerospace analyst team in the region.
- Airbus, Boeing have a backlog of more than 1,000 airplanes with the VALCC group and hundreds more with other airlines.
Read more
Pontifications: Lessor cites cool reception to MAX 10
By Scott Hamilton
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:
Airbus won’t hit 1:1 book:bill this year
April 14, 2017: Airbus won’t hit a 1:1 book:bill (sales:deliveries) this year and maybe not for the next few years, it was revealed at the annual general meeting Wednesday.
Credit Suisse issued a note late yesterday on a variety of topics that included this:
Trump reverses self on ExIm Bank
April 13, 2017, © Leeham Co.: President Donald Trump reversed himself and now supports the US Export-Import Bank, according to news reports. He will appoint
Donald Trump suddenly discovered the US ExIm Bank was a “profit center” for the US Treasury. Photo via Google images.
two people to long-standing vacancies to allow ExIm to approve deals more than $10m.
ExIm, Trump now says, is a profit center for the US Treasurer.
His sudden understanding on this revelation is like his eye-opening realization that dealing with the North Korean situation isn’t easy.
Supporters of ExIm pointed out for years that the Bank returns money to the US Treasury.
Could an NMA be made good enough, Part 4?
By Bjorn Fehrm
Subscription Required
Introduction
April 13, 2017, © Leeham Co.: Last week we finished the sizing of the fuselage for an NMA design. Now we continue with the wing. We go through the key parameters that will decide the performance of the wing and the aircraft.
The NMA is a critical design case. The performance envelope has to be just right. Too high and the economics of the aircraft won’t work, both for purchase price and operational costs.
Figure 1. The NMA takes more and more the shape of a 767 replacement (A United 767-200). Source: United
Summary:
- Wing design is the mixing of conflicting requirements to a successful compromise.
- The NMA wing will use the design principles of the Boeing 787/777X wings but will be different in area, size and plan-form.
- The wing is sizing the engines, something we will look at in the next article.
7M7 is key to Boeing’s future
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Introduction
An enthusiast’s concept of the Boeing 797. Image via Google.
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.
Summary
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Posted on April 24, 2017 by Scott Hamilton
Airbus, Airlines, Boeing, Leeham News and Comment, Middle of the Market, MOM, Premium
737-10, 737-9, 747-8, 787, 787-8, 787-9, 7M7, A321LR, A321NEO, A330-200, A330-800, A380, A400M, Airbus, Boeing