Leeham News and Analysis
There's more to real news than a news release.
Pontifications: Shifting focus to Embraer
By Scott Hamilton
Jan. 25, 2016, © Leeham Co. Embraer announced last week it had cut metal on its first E195 E2, more than a month before the roll-out of the first E190 E2, scheduled for Feb. 25, at is Sao Jose, Brazil, plant.
The aggressive manufacturer of small(er) passenger jets is moving forward full speed toward its next generation of aircraft even as Airbus, Mitsubishi, COMAC and Irkut encounter one delay after another.
Minuscule demand for Boeing 747-8F
- See Scott Hamilton’s new column for Forbes on-line, It’s time for hard questions for Boeing.
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Introduction
One of Boeing’s white tail 747-8Fs. This, and another that has been stored, was painted in the livery of the Seattle Seahawks. Boeing photo.
Jan. 25, 2016, © Leeham Co. Boeing’s decision to cut the production rate on the 747-8 is not a surprise. It’s only a surprise that it took officials so long to do so.
The company continues to cling to the hope of a recovery in the global air cargo market to sustain the program. This is unlikely, however.
The business case for the 747-8F is minuscule.
Summary
- The metrics of the global freight market have simply changed too much.
- Load factors for freight remain stuck below 45%.
- Yields continue to be low.
- Shifting trends from main deck freighters to using lower deck space on the big passenger airlines continues to grow.
- Low fuel prices, temporary though they may be, diminish the new for new 747-8Fs.
- Low capital cost 747-400 Passenger models stored in the desert or soon to be exiting the world’s fleet, along with stored 747-400Fs, provide ample opportunity for cheap freighters.
Bjorn’s Corner: The coin has two sides
By Bjorn Fehrm
22 January 2016, ©. Leeham Co: Today’s Corner should have been about something else. But we learned yesterday that yet another order did not go Bombardier’s way, the 125 seat aircraft order of 40 units for United Airlines.
Normally I don’t care about who gets a single aisle order; the players that are active are all producing very good products and which one that gets chosen in not a big deal.
Boeing took this business with its smallest 737NG member 737-700. The 737NG was scheduled to take on aircraft like the CSeries and the re-engined A320neo while Boeing perfected a clean sheet single aisle for the end of this decade.
This corner is about national characters and what happens when this character gets under pressure. It’s also about the fact that the coin has two sides.
The fuel effect; or old is beautiful
By Bjorn Fehrm
19 January 2016, ©. Leeham Co: When Willie Walsh, the CEO of IAG, said that the Airbus A340-600 “is a fantastic aircraft at fuel below $60 a barrel but perhaps not at $120,” he put operational words to something the Growth Frontiers 2016 conference in Dublin had been grappling with since it opened on Monday morning.
What is going to happen now? Crude is falling below $30 a barrel and Jet fuel is below $1 a gallon. This must have an effect on how people decide, whatever the lessors and aircraft OEMs say.
And it had to be a senior airline CEO that broke the mantra that everyone was repeating: “We don’t see fuel prices having any effect on fleet planning for airlines.”
IAG is looking at leasing used A380s
By Bjorn Fehrm
18 January 2016, ©. Leeham Co in Dublin: Willie Walsh, the CEO of IAG (which is the holding of Brittish Airways, IBERIA, Vueling and Air Lingus) spoke at the Growth Frontiers 2016 conference in Dublin about how the new IAG has become more agile in following market changes to opportunistically increase its operational efficiency.
Walsh gave the example of IAG’s aircraft fleets where he announced that it is looking to lease five to six used Airbus A380s in addition to the ones that British Airways (BA) already have on order. These could be aircraft for BA only use but also for a joint BA and IBERIA operation.
Bjorn’s Corner: What did we learn in 2015; engines
By Bjorn Fehrm
15 January 2016, ©. Leeham Co: Last week we looked back on what happened in 2015 on the airframe front. We finish the retrospective by looking at what turbofan engine technology came to market in 2015. New engine technology is vital, as it is on the engine side that the quest for higher fuel efficiency has the largest successes.
While advances on the airframe side might bring an additional 5% per generation, the engines typically increase their efficiency per new generation with up to three times that value. Fuel efficiency per delivered thrust unit was improved with a whopping 15% over the engine it replaces for the Pratt & Whitney Geared Turbofan (PW GTF). It was certified for use on the Airbus A320neo in Q4 2015
The competing CFM LEAP-1A shall deliver the same improvement level to the A320neo once it is certified in the summer of this year. This engine has a smaller sister that started ground tests last year, the LEAP-1B, which is developed for the Boeing 737 MAX series.
The engine that is easily forgotten is the Rolls Royce Trent XWB. It entered service on the Airbus A350-900 during the year. It brings an improvement level of around 10% compared to the engines of the aircraft that the A350 replaces (Airbus A340/A330ceo and Boeing’s 777-200 range).
Dissection of the 2015 Airbus order book
Jan. 13, 2016, © Leeham Co. Airbus yesterday reported 1,139 gross and 1,036 net orders for 2015, dramatically out-performing Boeing’s sales figures.
Boeing’s 737NG outsold the A320ceo family but the A320neo captured 67% of the sales vs the 737 MAX. The A321neo picked up 98.3% of the market against the 737-9.
Boeing dominates the twin-engine wide-body sector, posting 212 gross orders compared with 170 for Airbus. Airbus recorded a 45% market share.
But Boeing’s clear win was due to the freighter sector, with the tipping order the 49 767-300ERFs from FedEx. Boeing sold 71 freighters last year, compared with just four by Airbus.
Lining up passenger-to-passenger model sales only, Airbus sold 166 twin-engine wide-body airplanes and Boeing sold 141, for a 46% market share.
Exclusive Interview: Airbus COO Tom Williams about changing times for Airbus.
By Bjorn Fehrm
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Introduction
13 January 2016, ©. Leeham Co: Airbus COO Tom Williams has a goal of reducing development expenses by 50% and streamlining the production to “best in class.”
Williams is in charge of the areas at Airbus with the greatest headwinds as Airbus goes from a development driven company to a production driven one.
It’s a daunting task to manage development, production and sourcing for a company with a product range where each delivered unit is made up of four million parts. It does not get easier by having to shrink the development activities from 30,000 employees and contractlors to 20,000.
We spoke to Williams about these challenges at the sidelines of Airbus 2016 annual press conference that recapped 2015 orders and deliveries.
Summary:
- Airbus is now changing from a development-driven organisation, constantly creating new products, to a production-oriented organisation.
- The development activities have to be transformed so as to support a company to that does constant improvement and derivatives, not new product lines.
- At the same time, the shareholders are saying it is payoff time. Years of investment shall now be honoured with industry conform return on invested capital. Read more
Airbus annual press conference 2016
By Bjorn Fehrm
Introduction
12 January 2016, ©. Leeham Co: Airbus held its annual press conference in Paris today against a backdrop of record 2015 deliveries. The year that went past was consequently a good one for Airbus. Orders were at a record high for the third year in succession and deliveries exceeded previous years for the 13th year in succession.
But the Airbus sky wasn’t totally cloud free; the large A380 only got sales by having ANA mop up the mess after Japan’s Skymark bankruptcy and production of the new A350 was hindered by a sole source lavatory supplier.
The result was that Airbus missed two 2015 delivery targets, the 15 per year for A350 (delivered 14) and the 2016 delivery of the first A320neo. The latter was because of “paperwork issues” related to certain things being “late to finish” ahead of certification. Read more
Dissection of Boeing’s 2015 order book
Jan. 12, 2016, © Leeham Co. Boeing announced its year-end 2015 orders tally, with 768 net orders and 878 gross orders. It is becoming increasingly clear the 737 MAX is essentially a one-aircraft family.
As expected, 737NG orders are declining, but Boeing won an important order from Delta Air Lines for the 737-900ER. There were no orders for the 737-700 and the 737-800 remains the backbone of the NG family.
There were no orders last year for the 7 MAX. There were four commercial orders for the 9 MAX plus one -9 BBJ. There were 400 orders for the commercial -8 MAX and four -8 BBJs. This means 99% of the MAX sales were for the -8 MAX and just 1% for the -9 MAX (Figure 1).
The -9 MAX nonetheless currently accounts for about 9% of the MAX backlog (Figure 2.)