Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
- Does an A220-500 need a new wing and engines? Part 2. May 8, 2025
- Embraer downplays tariff impact on 2025 results May 6, 2025
- JetZero readies effort for private equity fund raising May 5, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
Airbus Group 2015 results: A330 increase to seven per month
By Bjorn Fehrm
24 February 2016, ©. Leeham Co: Airbus will increase the production rate of the A330
from six per month to seven beginning next year, it was announced today. The move comes after reducing the rate from 10 to nine and then to six per month as demand fell for the A330ceo ahead of the development of the A330neo.
Strong sales of the ceo resulted in the about-face to increase the rate.
The news came from the Airbus Group financial results for full year 2015 today in London.
In all other aspects it was a year of solid execution with revenue up 6% to €64.5bn. Profits stayed flat at €4bn despite record deliveries; the A350 and A400M ramp-ups are costly exercises.
Other highlights were;
IRKUT MC-21 analysis, Part 2
By Bjorn Fehrm
Subscription required.
Introduction
Feb. 24, 2016, ©. Leeham Co: Two weeks ago we started our analysis of the new Russian single aisle aircraft, United Aircraft’s Irkut MC-21. We looked at key design features and compared these to the Airbus A320.
We also analyzed the passenger capacity where we found that the model which will start flight testing, the MC-21-300, has a capacity between the A320 and the A321. The closest aircraft in capacity and performance in the MC-21 lineup versus the competition would be the MC-21-200 and A320neo.
We have therefore decided to do our efficiency analysis between these variants.
Summary:
- The MC-21 has a wider fuselage than the A320. This is a positive as it allows passengers to pass each other in the aisle of the cabin.
- The drawback of the wider fuselage is a bit higher aircraft drag.
- Coupled with a lower wing aspect ratio, the lighter MC-21 cannot open a fuel consumption advantage over the A320neo, despite being a more modern design.
Singapore Air Show pictorial
Feb. 2123, 2016: The Singapore Air Show ended last week with a dearth of news. William Bain, associate professor and co-editor of International Relations, provided LNC with these photos.
Welcome news for Bombardier, Mitsubishi
Subscription required
Introduction
Feb. 22, 2016, © Leeham Co.: The large order (Letter of Intent) last week by Air Canada for 45 firm and 30 option CS300s was welcome news for Bombardier.
And the LOI from the US lessor, Aerolease, for 10+10 MRJ90s was welcome news for Mitsubishi.
We take a look at both announcements and what this means for the two programs.
Summary
- The Air Canada order breaks the long drought in C Series orders, but it’s not enough for smooth sailing (to mix metaphors) for the aerospace company.
- Continuing the mixed metaphor, Bombardier still has a long hill to climb.
- MRJ order, by little known lessor, helps diversify customer base.
Pontifications: Tax breaks in Washington State
By Scott Hamilton
Feb. 22, 2016, © Leeham Co.: A group of Democratic legislators in Washington State will introduce five bills aimed at repealing some tax breaks and also taking yet another run at holding Boeing’s feet to the fire by tying jobs and tax breaks. The latest effort died in committee this year. This is the second year in a row by Boeing’s two key Washington unions, SPEEA (engineers) and the IAM 751 (touch labor) to get a bill out of committee to tie jobs to tax breaks. Boeing opposes the effort.
Most of the bills relate to non-aerospace industries. Two, however do:
Boeing CEO sees strong fundamentals
Feb. 17, 2016: The fundamentals of the aerospace industry remain strong in commercial and defense, says Dennis Muilenburg, CEO of The Boeing Co. Airlines are becoming more profitable, allowing them to accelerate fleet replacement, he said.
Dennis Muilenburg, Boeing chief executive officer. Source: Boeing.
In his first public appearance since the disappointing 2016 earnings call guidance on Jan. 27 and news of an investigation by the US Securities and Exchange Commission over the practice of program accounting, Muilenburg faced questions at a Barclays investors conference today.
Boeing stock is off about 22% since the beginning of the year and was off about 15% since Jan. 27. Stock has been recovering in recent days. Aerospace analysts say that Boeing has been buying back the stock, propping up the price.
Air Canada orders up to 75 C Series; announced with BBD 2015 financial results
Feb. 17, 2016: The long drought is over.
Air Canada has ordered up to 75 Bombardier C Series.The press conference is at 11am EST today. These will replace 25 Embraer E-190s. BBD now has orders and commitments for 678 C Series.
The announcement comes with the company’s fourth quarter and year-end financial results and a 90-seat version of its Q400 turboprop.
The Air Canada deal is a Letter of Intent for 45 CS300s and options for 30 more, including conversion rights to CS100s. Deliveries are from 2019.
- BBD to cut 7,000 jobs: Bloomberg News. The cut includes 2,000 contractors.
The earnings call webcast summary is below the jump.
Airbus, Boeing cash, stock, dividend strategies similar
Feb. 16, 2016, © Leeham Co.: Boeing has been under pressure since its Jan. 27 earnings call, when its 2016 guidance fell short of analyst expectations. Then the news that the company is under preliminary investigation by the US Securities and Exchange Commission over how its program accounting assumptions were reached.
Free cash flow (FCF), shareholder buybacks and strategy all have come under scrutiny is recent years. But just how different is this compared with its bitter rival, Airbus?
It turns out that other than Boeing’s use of program accounting and Airbus’ use of unit accounting (except for the first several A350 deliveries, for which contract (program) accounting is used), the approaches toward cash flow and shareholder buybacks are very similar.
Credit Suisse’s European analysts who follow Airbus issued a long research note on Feb. 5, just days before the Bloomberg News report on the SEC investigation. The Feb. 5 note doesn’t address program or contract accounting. But as does Credit Suisse’s US analyst who follows Boeing, the Airbus note discusses FCF and stock buybacks at great length.