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
Boeing’s 767 revitalized as a MOM stop gap?
By Bjorn Fehrm
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Introduction
Aug. 27 2015, ©. Leeham Co: In our Monday article, “Boeing sees healthy future for 767,” Boeing’s spokesperson said, “We are continuing to explore additional capabilities and improvements” for the 767. It was not clear what these improvements were other than a 0.5% engine performance improvement package (PIP) that was introduced earlier in the year. With lower and lower fuel prices, existing aircraft get more and more viable as a stop gap to cover market segments that today are not part of the plans for the OEM’s modern products.
We will therefore examine the 767 deeper to understand what can be improved further and how well such an improved model would serve as a stop gap replacement for the lack of a modern Middle of the Market (MOM) aircraft. We explored how a MOM aircraft should look like in our series, “Redefining the 757 replacement requirement for the 225/5000-sector”.
The 767 has several of the attributes that we found optimal for a MOM aircraft, one having a seven abreast cabin cross section. In the 767 variant that is being produced for the US Air Force tanker program, the 767-200ER, the overall fuselage dimensions are also close to the ones we found desirable for a MOM aircraft.
With fuel now well below $2.00 per US Gallon (about $1.35), we will compare the 767 to our MOM specifications and try to understand where there is a fit and what would needed to be changed to improve the 767’s efficiency so that it could serve as a MOM stop gap. Finally, we will check if such changes can be economically viable in different fuel price scenarios.
Summary:
- Different to the 757,the 767 is still produced for the foreseeable future, thanks to the US Air Force tanker program.
- Boeing 767 is the only produced aircraft that has the desired seven abreast cabin, which we found optimal for a MOM aircraft.
- How does the 767 fuselage and wing compare to the ones we found desirable for the MOM?
- Is the cargo capability of the 767 acceptable for a MOM role?
- We explore the primary characteristics in our first article today. We will go deeper with technical and economical analysis in subsequent articles.
World air cargo market struggles continue; ominous sign for new-build main-deck freighters
Figure 1. A330F once tallied more than 60, but many were converted to passenger models. Today there are just 38 orders. The delivery stream shows a tapering off. Click on image to enlarge.
Aug. 26, 2015: World air cargo markets continue to struggle, according to reports yesterday from Cargo Facts newsletter and The Wall Street Journal.
Neither report bodes well for new-build, main deck freights, although Cargo Facts concludes a demand remains.
The Wall Street Journal reported that Europe-to-Asia volume and rates are falling.
“Maritime and air freight rates for some of the world’s busiest trade routes are tumbling as slower growth in China combined with a sluggish eurozone economy dash forecasts for higher volumes during the normally busy late-summer season,” writes WSJ’s Robert Wall, who is based in London. “The air-cargo market is suffering on several fronts. Lower demand in Asia is coming at the same time air-cargo capacity is climbing. A large chunk of the air-cargo market is transported in the hold of passenger planes. With major airlines adding flights globally this year, that is weighing on cargo rates. Falling fuel costs also are delaying plans by airlines to retire older jets, exacerbating the problem.”
Cargo Facts takes a different view on the belly capacity.
Six year turnover in sale/leasebacks put supply-demand balance at risk
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Introduction
August 24, 2015, © Leeham Co. When airlines like Indigo of India, Air Asia, Norwegian Air Shuttle (NAS) and Lion Air have outstanding orders for Airbus A320s and
Boeing 737s that number in the hundreds, far more than operations and growth appears ready to support, the deals raises the natural question: What are they thinking?
As LNC’s Bjorn Fehrm explained Friday, one aspect of these big orders is to “flip” the aircraft every six or seven years, a time that roughly coincides with the maintenance holiday/warranty period. Sale/leasebacks are used to finance these huge purchases.
The practice is hardly new. The USA’s JetBlue Airlines, Ryanair and others practiced this flip for years.
Carriers like the new LCCs mentioned above not only plan to do so to avoid major maintenance costs, but also to fuel their growth. In the case of Lion Air and NAS, these companies also plan to lease out aircraft to other airlines.
But there remain risks involved for the companies and for the industry.
Summary
- The growing practice of flipping aircraft every six or seven years presents risks to lessors.
- Indigo Airlines has 96 aircraft in service, 430 on order.
- Select LCCs in Asia, Europe, India have 1,000 A320s, 737s on order.
Bjorn’s Corner: Sale/Leasebacks
By Bjorn Fehrm
21 August 2015, ©. Leeham Co: IndiGo Airlines firmed up Airbus’ largest aircraft sale by unit numbers in the week. The order is for 250 A320neos. This means the airline goes from 180 A320neos on order to 430. The airline is just finishing off its first order with Airbus for 100 A320ceos, the final eight being delivered over the next months.
How can an airline that did not exist 10 years ago order 430 A320neos?
There are a couple of things that makes this possible, one of them being the Sale/Leaseback. Before we go to Sale/Leaseback and how this enables this magnitude of business, let’s take a quick look at IndiGo. It has certain similarities to other airlines that also close large aircraft deals.
PW chief credited MRJ with ripple effect leading to CSeries, A320neo, 737 MAX and E-Jet E2
David Hess, former president of Pratt & Whitney, credits Mitsubishi with the ripple effect that led to new developments at Bombardier, Airbus, Boeing and Embraer. Photo via Google images.
Aug. 20, 2015, © Leeham Co.: Conventional wisdom credits Bombardier’s CSeries with being the disruptor that prompted Airbus to launch the A320neo, which in turn caused Boeing to launch the 737 MAX and Embraer to launch its E-Jet E2.
But an academic paper by John Slattery, chief commercial officer for Embraer, reveals that David Hess, the former president of Pratt & Whitney, credits Mitsubishi rather than Bombardier as the catalyst for the dramatic changes that followed.
In a paper entitled Resources & Rivalry, A Case Study of The Single-Aisle Commercial Jet Manufacturing Industry, Slattery interview present and former executives of the Big Four airframe manufactures, the former CEO of ILFC and officials of P&W.
The paper provides a chronicle of thinking leading to decisions to move ahead with new airplane projects, including re-engining the A320 and 737 rather than proceeding with new, clean-sheet designs.
The interviews debunk some of the conventional wisdom surrounding the variety of programs. We’ll periodically report the findings of Slattery’s paper, starting with PW and Mitsubishi.
Airbus’ and Boeing’s Payload/Range for VLAs
- Bloomberg reported this week that Airbus is now offering the A350-900LR to Singapore Airlines to reopen ultra-long haul US direct routes. We predicted July 14 that Airbus would offer the LR. We offered some high-level analysis about how Airbus could achieve a long range version of the A350-900; the Bloomberg piece confirms our analysis.
By Bjorn Fehrm
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Introduction
Aug. 19 2015, ©. Leeham Co: We will now finish our series over Boeing’s changes to its configuration rule sets by looking at how this affects the Very Large Aircraft (VLA) segment.
Airbus and Boeing used to describe the VLAs in their line-ups using three class cabins, albeit with different standards. Now Boeing has changed its standard to a modern three class seating while Airbus has changed to a four class cabin, including premium economy.
We have enough information of the A380 equipped with a three class cabin to be able to make a comparison using three class rule sets. We will therefore apply a three class cabin to the A380 and 747-8 that will have modern seating standards and pair that with Boeing’s tougher payload weights and enroute reserves.
Summary:
- Boeing’s new Standard rules three class cabin and our normalized three class cabin for A380 and 747-8i are close in their configurations.
- We use our knowledge of these standards to create a level playing field on the cabin side.
- We also apply the new tougher passenger and bags rules + the tougher reserves policy that Boeing’s new Standard rule set prescribes.
- It used to be that A380 had a range advantage at max passenger payload. We check if this remains under the new rules.
Pontifications: Storm warnings ahead
By Scott Hamilton
Aug. 17, 2015 (c) Leeham Co: Sometimes I never know what’s going to exercise readers. Sometimes it’s obvious. Last week it wasn’t.
Our post last week about the formidable challenges still facing Bombardier for the CSeries brought some surprising reaction, particularly on Twitter. And I didn’t see it coming.
The story was behind the paywall, but Canada’s National Post saw the public portion and called to get more information. The Post published some comments from an interview and with permission recreated a chart that was behind the paywall.
We’ve been doing risk assessments of “skyline” quality for a couple of years now, including Bombardier, which is why the reaction to last week’s post came as a surprise.
Our risk assessment has taken a couple of forms. For Bombardier, it’s a Green-Yellow-Red assessment, the meaning of which really doesn’t mean any explanation for anyone who drives a car or, in the aerospace industry, has ever seen Boeing’s Green-Yellow-Red assessment of access to aircraft financing it does every year.
The other symbolic method we use is nautical: Storm Warning Flags, looking at the top 10 narrow- and wide-body customers of Airbus and Boeing and raising a Storm Warning Flag about how solid the order is. We do this annually and the most recent time for Airbus and Boeing customers is here, also behind our paywall.
Airbus’ and Boeing’s Payload/Range for Dual Aisle.
By Bjorn Fehrm
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Introduction
Aug. 17 2015, ©. Leeham Co: In our series over Boeing’s changes to its configuration rule sets, we will now continue with the dual aisle aircraft. Here the differences between Airbus and Boeing are larger. Boeing used to be specifying a three class cabin and Airbus two class. Now Boeing has changed to two class and Airbus is just changing to three class.
There is a bit of difference in the Airbus change to three class and the three class that Boeing had until now. Airbus changes from modern two class to a modern three class with Business, Premium Economy and Economy. Boeing’s change was from an outdated three class with old style First, Business and Economy to a modern two class with lie flat business section.
The new Boeing two class and historical Airbus two class are close in configuration. These end up within a seat or two of each other and also within our normalized two class cabins. As these cabin rules are similar, we use our normalized cabin data to compare the payload range of the aircraft when all apply the new, tougher passenger+bags weight rules and an equalized reserves policy.
Summary:
- Airbus’ two class rules and Boeing’s new two class Standard rules are close in their configurations.
- They are also close to our Normalized rule set. We use our normalized rule set to level the playing field on the cabin side.
- We can then apply the new tougher passenger and bags rules that Boeing’s Standard rule set prescribes for the twin aisle aircraft and see how they compare.
- We also use the same reserves policy for the comparison. Read more
Bjorn’s Corner: Holiday times
By Bjorn Fehrm
14 August 2015, ©. Leeham Co: It is holiday time in Europe and a lot of the European industry is shut down for summer break. This includes the Airbus Final Assembly Line (FAL) in Toulouse. Industrial holiday shut down or not depends a lot on the country’s industrial history.
Traditionally industry has closed shop for the month of July in the north of Europe and August in the south. For production-heavy industries with a lot of personnel in assembly work this is still the case. Examples are manufacturing industries like the auto industry, electromechanical goods industries and also the European aircraft industry.
For raw material industries, it depends if the manufacturing process can be interrupted for the three to four weeks a summer holiday would span. For many process chains, this is not possible. I earned my school summer break money on such an industry, replacing the worker that took his three or four weeks off.
Other parts of the world do not have summer breaks where the industry closes the doors and things go quiet. An example is the US, where, for example, Boeing produces aircraft 12 months of the year. Available vacation days are less than in Europe, typically two to three weeks against the typical four or five weeks in Europe. US vacations are usually taken spread over the year and the company normally doesn’t shut down production during the summer period. Read more
Airbus’ and Boeing’s Payload/Range for Single Aisle
By Bjorn Fehrm
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Introduction
Aug. 13 2015, ©. Leeham Co: Boeing this month changed the way it presents its aircraft in important areas like seating, weight and performance configurations, in short its “rule set.” After using a standardized but old rule set for 20 years, it updated all data around how far its aircraft can transport a standardized payload.
Airbus at the same time is also changing how it presents its aircraft. Right now the dual aisle wide bodies are going from a two class to a three class cabin in its rule set. While Boeing is leaving three class for two class, Airbus is going in the other direction.
Why these movements and are there any common themes in these conflicting changes?
We go behind the scenes to decipher the changes and decode what it all means when one want to compare Boeing and Airbus products. We start with the single aisle aircraft this week.
Summary:
- Airbus and Boeing had rather small differences in their rules and how they characterized single aisle aircraft up until this month.
- From now on Boeing is using higher average passenger+bags loads and have added additional equipment to the aircraft’s empty weight specification.
- We show what these changes mean for the aircraft’s performance. We also use our model to show Airbus single aisle aircraft’s range should they use the same rules as Boeing’s aircraft.