Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- The BWB has a long way to go before flying passengers, freight May 12, 2025
- 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
A321s in Airbus Mobile FAL
Sept, 13, 2015, (c) Leeham Co., Mobile (AL): The first two A321ceos are on the Final Assembly Line (FAL)
at the new Airbus plant here in Mobile (AL).
JetBlue is scheduled to take the first delivery in the second quarter next year, followed by an A321ceo for American Airlines by the end of next year.
The slow pace reflects the need to certify every step of the assembly process, which begins nest week with an audit by Europe’s EASA, through the learning curve necessary for a new facility and training the hundreds of employees initially hired.
By the end of next year, Airbus plans to be assembling A320ceos at the rate of four per month, the initial target for this first manufacturing facility on US soil. The plant has the capacity to produce eight a month.
Bjorn’s Corner: Production costs.
By Bjorn Fehrm
11 September 2015, © Leeham Co: In connection with our articles, there a numerous reader discussions around the development and production costs of new aircraft families. It’s not easy to understand how these costs arise, how they are booked in the OEM’s accounting and how they can be compared. Time for a primer.
I will not duplicate a course in company accounting, but it can be worth the read to understand how costs are created, accounted for and what we as externals can observe via aircraft industry economic reports .
I will focus on Airbus and Boeing. These are good examples of the different ways of collecting and showing costs in the global aircraft industry.
Embraer faces new challenge from MRJ90
Part 2
Paulo Cesar, president and CEO of Embraer’s commercial aviation unit. Photo via Google images.
Sept. 10, 2015, © Leeham Co. Embraer is the dominant producer of commercial aircraft in the 70-125 seat sector, having overtaken Bombardier in the last decade following the development and 2004 introduction of the E-Jet. Bombardier’s CRJ family struggles, hampered by a sales force that neglected it and the Q400 turbo-prop as attention focused on the new CSeries.
Embraer in recent years faced new competition. However, the early entries—AVIC’s ARJ21 and the Sukhoi Superjet SJ100, both in the 70-90 seat sector, proved little to worry about. The ARJ21, now eight years late, proved to be a technological and industrial dud, a project that was more about learning how to design and build an airplane than producing a commercially viable one.
The SSJ100, while winning favorable reviews, was and continues to be plagued by a poor production system and in recent years the political overhang of Russia’s annexation of Crimea and its war in Ukraine.
Shortly, though, the E-190 faces a new challenger: the Mitsubishi MRJ90. It’s two years late, now forecasting an entry-into-service of 2017—just one year ahead of the redesigned E-190, the E-190 E2. The MRJ90, a 90-seat clean-sheet design, is Japan’s first commercial airliner since the NAMC YS-11 turbo-prop of the 1960s. The MRJ90’s first flight is scheduled for the second half of next month. Full flight testing moves to Washington State in the first quarter next year.
Embraer CEO sees opportunity for 100-seaters in USA
Part 1
Sept. 9, 2015, © Leeham Co.: The chief executive officer of Embraer’s commercial aircraft unit believes a trend might be emerging for US major airlines to directly operate 100- and plus-100 seat aircraft (and below the 125-seat sector), opening new opportunities currently precluding the largest E-Jets, and by implication, competing jets.
Paulo Cesar, president and chief executive officer of Embraer’s commercial airplane unit. Photo via Google images.
US major airlines have generally migrated away from the 100-125 seat aircraft, up-gauging to the 150-162 seat Airbus A320s and Boeing 737-800s and their re-engined successor. The “baby” Airbus and Boeing aircraft, the A319ceo/neo and 737-700/7, haven’t sold well in recent years.
But the Embraer E-195 E2, at 122 seats in a comfortable single-class configuration and somewhat smaller in two class, hasn’t yet penetrated the US market. Neither has the Bombardier CS100, a 100-110 seat aircraft in two- or single-class configuration.
Delta Air Lines is bucking history with acquisition of 88 inexpensive Boeing 717s from the used airplane market. Southwest Airlines and United Airlines are acquiring used 737-700s and United agreed to lease in 25 used A319s.
Cheap fuel and cheap capital costs help these decisions. But Paulo Cesar, president and CEO of Embraer’s commercial unit, sees an opportunity for his airplane.
Boeing’s 767 revitalized as a MOM stop gap, Part 3
By Bjorn Fehrm
Subscription required.
Introduction
Aug. 31 2015, ©. Leeham Co: After examining the characteristics of the Boeing 767 to serve the market segment that Boeing is studying for its Middle of the Market (MOM) requirement, the 225 passenger/5000nm sector, we will now finish the series by looking at how the 767 can be made economically more competitive.
We will study the influence of improved aerodynamics like Aviation Partners Boeing’s Split Scimitar Winglet for the 767. We will also look at what engine PIPs can provide and also look at what a re-engine could bring.
Finally we examine at what happens when we add crew costs, underway/landing fees and maintenance costs to form Cash Operating Costs (COC) followed by capital costs to form Direct Operating Costs (DOC).
Summary:
- Boeing’s 767 has the right cross section for passenger transportation in the 225 passenger/5000nm segment.
- Its wings and empennage are too large, however. We make them work harder by transporting the 767-300ER fuselage and passengers.
- We also introduce aerodynamic and engine improvements. Still, the fuel consumption per seat mile is considerably higher than modern alternatives.
- At a Cash Operating Cost and Direct Operating Cost level, the higher fuel consumption has less influence in today’s fuel prices. The result is that the 767-300ER becomes an interesting alternative as long as the fuel price stays low.
A320 oversold in bridge from ceo to neo
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Introduction
Airbus A320neo. Source: Airbus
Sept. 7, 2015, © Leeham Co. Airbus is oversold in its A320 family positions as it transitions from the ceo to the neo, an analysis shows.
The first delivery of the A320neo is scheduled for December. Airbus plans to phase out the A320ceo family over two years (as does Boeing with the 737NG in favor of the 737MAX).
We analyzed the 737NG bridge to the 737MAX last week and concluded Boeing faces a production gap of between 100-200 aircraft, depending on how delivery dates of 737MAXes for Unidentified customers are scheduled. We indirectly received push back from Boeing on this, which we also address in today’s report.
Summary
- Airbus is oversold in 2016 and 2017.
- A gap appears in 2018, but this depends in part how “TBA” delivery dates are allocated for Unidentified customers.
- Boeing says Options and Overbooked orders fill its apparent 737 gap.
- We update our 737 production gap analysis to include Options and find a gap still exists.
- Boeing wants to accelerate MAX deliveries from 2018 into 2017.
Pontifications: Airbus flies past Boeing in order race
By Scott Hamilton
Sept. 7, 2015, © Leeham Co.: Airbus flew past Boeing in the annual orders race when the August numbers were reported last week by both companies.
With the order for 250 A320s finally firmed up by India’s Indigo Airlines (it was announced last year), and an order for 45 A330ceos announced by China, the outcome was clear.
Through August, Airbus now has a 66% market share of single-aisle orders. Boeing has a 60% share of wide-body orders, thanks to a boost from FedEx for 50 767-300ERFs. (Boeing reported 48 767 orders net of cancellations.)
But if you remove the FedEx orders and just look at passenger airplanes, Airbus edges out Boeing in the year-to-date wide-body market share.
Boeing faces 737 production gap: analysis
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Introduction
Sept. 2, 2015, (c) Leeham Co. Boeing faces a production gap for the 737, based on an analysis of the delivery streams of the 737NG and the 737 MAX.
There’s a production gap for the Boeing 737 more than 100 airplanes, according to a Leeham Co. analysis. Boeing photo.
While focus of Boeing production gaps has been on the 777 Classic and, to a lesser extent, the 747-8, few have analyzed the production gap for the 737 line. Boeing announced rate increased from 42/mo to 47/mo in 2017, the year the MAX enters service, and again to 52/mo the following year. The company is studying taking rates even higher, to 60/mo, by 2020. Boeing cites a large backlog and continued demand for the 737 for boosting production rates.
But Market Intelligence indicates emerging concerns about the gap.
Summary
- We see a gap of perhaps 100-200 737s in 2017 and 2018, even as the 737 MAX is “feathered” into production of the 737NG.
- Beyond 2018, the apparent gap depends largely on the delivery stream of Unidentified MAX customers accounting for nearly 600 orders identified by the Ascend data base. Boeing lists just over 1,000 Unidentified 737 orders through July (August figures aren’t out yet), sharply higher than the Ascend data base.
- The current low fuel price environment is a concern.
Pontifications: Casting eyes toward Dubai Air Show
By Scott Hamilton
Aug. 31, 2015, © Leeham Co. September begins tomorrow and we’re only nine weeks away to the 2015 Dubai Air Show.
We’re looking to this event to be the last big opportunity for major airplane orders for this year. While it’s true that Airbus, Boeing and the other 
OEMs make a big year-end push to top off the order book, the Dubai show has become increasingly on a par with the Farnborough and Paris air shows, but focused on wide-body orders and program launches.
Eyes on the Dubai Air Show will be watching for what could be would be this year’s prize catch: whether Emirates Airlines will be ready to place the oft-talked about order for 50-70 Airbus A350-900s or Boeing 787-10s. (Some have floated an even higher number.) The other big item of interest: whether Airbus will launch the A380neo.
Boeing’s 767 revitalized as a MOM stop gap, Part 2
By Bjorn Fehrm
Subscription required.
Introduction
Aug. 31 2015, ©. Leeham Co: Last week we started to look at Boeing’s 767 to see if it can serve the passenger and range space which is not well covered by modern aircraft: the 225 passenger/5,000nm sector. Boeing calls this the Middle of the Market or MOM. Boeing recently said that there is some increased interest for the 767. We analyze why and what can be done to increase any chances of it having a new life as a passenger aircraft.
We started with comparing the 767’s different variants to the most likely MOM aircraft from our series “Redefining the 757 replacement requirement for the 225/5000-sector”. We will now continue and look at the 767 in detail, its strong suits and its less efficient areas. We will also discuss what can be made to address the less efficient areas.
Summary:
- Boeing’s 767 has the right cross section for passenger transportation in the 225 passenger/5,000nm segment.
- It also carries cargo containers, not as efficiently this time. We show what the consequences are.
- Finally the wing is not the slender wing of the modern aircraft. We show what impact it will have on overall efficiency.
- Combined with engines from the 1990s, this gives less than stellar fuel economics. We investigate what can be done about this and how much of an impact it will have in today’s low fuel prices.