Could A220 fly Air Canada’s Montreal to Toulouse route? Part 2

By Bjorn Fehrm

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Introduction

February 13, 2020, © Leeham News: We continue our analysis if the Airbus A220 is a credible long-range aircraft. We started looking at the limitations of the aircraft last week and how these could be lifted.

Now we continue with an analysis of the economics of the A220 compared to established long-range aircraft like the Airbus A330 and A321LR/XLR. Is a higher frequency A220 route competitive with an A330 or A31LR/XLR operated route? We also examine how Breeze air will operate its A220s on long-range routes.

Summary:

  • By virtue of its size, the A330-300 has good economics when it can be filled to a high load factor.
  • The A321LR comes close in operating costs to the A330-300 on these types of routes.
  • The surprise is the competitiveness of the A220-300 on a route type it wasn’t designed for.

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Airbus’ profitability challenges

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By Vincent Valery

Introduction  

Feb. 10, 2020, © Leeham News: Airbus Commercial Aircraft ended 2019 with a surprisingly strong 1,131 new aircraft orders (768 net orders) and a backlog of 7,482 aircraft.

There were 863 aircraft deliveries, 8% higher than in 2018

But 2019 also sees settlement of a year-year probe into bribes and corruption of Airbus commercial airplane sales dating back years. A record fine of €3.6bn will be recorded against 2019 earnings. These results will be announced on Feb. 13.

Settling the probe lets Airbus off the hook from criminal prosecution, providing its skirts remain clean for the next three years.

But prosecution against individuals may proceed. The potential targets have not been identified.

Summary
  • The poster child of European integration;
  • Profitability lagging commercial success;
  • Decades-old programs still causing headaches;
  • Making up for early A220 program losses;
  • Short and long-term challenges.

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Pontifications: A few rays of sunshine emerge in MAX crisis

Feb. 10, 2020, © Leeham News: The was plenty of angst among suppliers last week at the annual Pacific Northwest Aerospace Alliance conference.

By Scott Hamilton

Worries about the production shutdown, its duration and lack of communication from Boeing prevailed.

But there were in fact rays of sunshine beginning to break through the dark clouds of the last year.

Some suppliers—not many—reported that they’ve been told to begin shipping parts and components as early as March 1.

This gives hope that production will resume in April.

To be sure, the good news is mixed with a lot of bad news for suppliers. Some laid off workers and more layoffs are yet to come.

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Could Airbus’ A220 fly Air Canada’s Montreal to Toulouse route?

By Bjorn Fehrm

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Introduction

February 6, 2020, © Leeham News: Air Canada announced in August 2019 it will start a five weekly route between Montreal and Toulouse from the 4th of June. It connects two growing, French-speaking cities with strong aeronautical clusters. The route will also connect Airbus headquarters and production in Toulouse with its new A220 aircraft development and production center in Mirabel outside Montreal.

Air Canada announced it will fly the route with its 292 seat Airbus A330-300 but the question has been raised “Could route be served with the smaller A220, then with an increased frequency”? We use our airliner performance model to find out.

Summary:
  • Montreal to Toulouse is on the range limit for an A220, especially when flying the return route against winter winds.
  • We look at different means to increase the range of the A220 to make the route possible without fueling stops when going West.

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Consultant to Boeing: cut dividends, invest in new airplane

By Scott Hamilton

Feb. 5, 2020, © Leeham News: Boeing is headed for a 30% market share unless it invests in a new airplane, and soon.

This is what aviation consultant Richard Aboulafia of The Teal Group predicted today at the annual conference of the Pacific Northwest Aerospace Alliance in Lynnwood (WA).

Aboulafia, who has been following Boeing for 30 years, implored the new CEO, David Calhoun, to redirect billions of dollars in shareholder dividends toward research and development instead.

Calhoun recently suspended 2 ½ year focus on the New Midmarket Aircraft to conduct a clean-sheet review of the next new airplane.

This has been widely interpreted as a move to kill the NMA. In reality, LNA understands, this is more about reassessing the market and what the airplane should ultimately be.

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“Who’s going to fail?”

By Scott Hamilton

Feb. 5, 2020, © Leeham News: “Who’s going to fail?”

This is a key question on the sidelines of the annual Pacific Northwest Aerospace Alliance conference in Lynnwood (WA).

The question, of course, related to the small- and medium-sized suppliers caught up in the grounding of the Boeing 737 MAX.

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Assessing airlines’ widebody replacement needs

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By Vincent Valery

Introduction  

Feb. 3, 2020, © Leeham News: As part of the 777X maiden flight, Boeing briefed the media on its demand forecast for the large widebody market. The OEM sees a demand to replace between 60 and 100 aircraft annually in that market segment until 2030.

Last week we estimated the number of narrowbody aircraft where airlines still need to place a replacement order. We now perform a similar analysis for the widebody market.

OEMs are struggling to cope with the insatiable demand for latest-generation narrowbody aircraft. However, the situation is different in the widebody market. After significant orders and deliveries during most of the last decade, demand is sharply slowing now.

After announcing a 787 Dreamliner production rate cut last year from 14 to 12 per month, Boeing acknowledged it is expecting a further cut to 10 per month from early 2021. The company expects to return to rate 12 in 2023.

Photo by Scott Hamilton

Airbus hasn’t announced any reduction in its A330neo or A350 production rates yet but acknowledged demand softness.

Both OEMs point to the significant widebody replacement needs that will arise later in the decade. We will analyze whether their hope for better days is justified.

We will also partially address why Boeing decided to go back to the drawing board on new aircraft design.

Summary
  • At face value, numerous widebody aircraft to replace;
  • Materially different customer mix from narrowbody aircraft;
  • Varying demand, depending on aircraft size;
  • Boeing forecast for the large widebody market;
  • And a change of mind on the NMA;
  • Replacement needs timelines.

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Assessing airlines’ narrowbody replacement needs

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By Vincent Valery

Introduction  

Jan. 27, 2020, © Leeham News: The Boeing 737 MAX crisis appears headed for resolution within a few months.

Stephen Dickson, the administrator of the Federal Aviation Administration, told American, Southwest and United airlines the MAX could be recertified by summer. This is the first time the FAA suggested a timeline—though anything could change this.

However, the entire commercial airline ecosystem has even less visibility on another key topic: once the 737 MAX returns to service, will airlines and lessors place new orders for what was Boeing’s best-ever selling aircraft?

Whether the 737 MAX can accumulate a meaningful amount of new orders will have far-reaching consequences on Boeing’s finances and product strategy. As outlined in a previous LNA article, it might take until 2022 at the earliest to return to the intended production rate (57/mo) before the grounding.

Even if not many airlines cancel their 737 MAX orders, Boeing will need to accumulate sizable new orders to keep the assembly line busy through the 2020s. Any clean-sheet aircraft design would only be ready in the late 2020s at the earliest. Boeing CEO Dave Calhoun expressed confidence in regaining the market share Boeing had before the grounding.

Is Calhoun’s optimism justified?

The most reliable market to accumulate new orders is the replacement of aging aircraft. In this article, we come up with a conservative estimate of the number of aircraft airlines still need to order or lease to replace older airframes. We will analyze the breakdown among customer types, as well as timelines.

Summary
  • A significant number of aging narrowbody aircraft to replace;
  • Different order and replacement mix at Airbus and Boeing;
  • And airline fleet types;
  • Concentrated order and replacement opportunities;
  • Replacement needs timelines.

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Environment and aviation, a gap between aspirations and reality

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By Vincent Valery

Introduction  

Jan. 20, 2020, © Leeham News: Talks about climate change and the need to reduce human-induced carbon emissions are nowadays a daily occurrence in Western media. After years of faster-than-trend growth in global passenger numbers, aviation-induced carbon emissions commensurably increased in spite of record deliveries in latest-generation, fuel-efficient planes.

As a result of this growth, airlines have been one of the main targets of environmental groups. The high growth culminated in the start of the flight-shame movement that originated in Sweden (flygskam). As outlined in a previous LNA article, there are discussions about introducing a jet fuel tax for all flights within the European Union.

Credit: Zunum Aero

Credit: Zunum Aero

Airbus is committed to the “decarbonization” of its next airplane design.

Boeing’s next move for a new airplane has been sidetracked by the 737 MAX crisis.

Embraer is devoting considerable effort to developing a “green” airplane.

Summary
  • Airlines and politicians on the back foot;
  • Variety of opinion among regions;
  • And airlines make consensus-building hard;
  • An obsession with one way to reduce emissions;
  • Flybe’s bailout summarizes contradictions and challenges.

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Pontifications: Another Calhoun challenge: fixing Boeing’s product strategy

Jan. 20, 2020, © Leeham News: David Calhoun has been CEO of The Boeing Co. for a week. A couple of new problems arose.

By Scott Hamilton

Late last week, the US Air Force weighed in that it’s unhappy, again, with Boeing over the KC-46A program. The Air Force was previously open about its dissatisfaction with Boeing’s performance. But top officials were quick to contact the new CEO with its unhappiness.

A new software problem was found on the 737 MAX which may add some time to the recertification timeline. The problem involves booting up two computers on start up and isn’t considered a big issue.

Last week, LNA posted a series of articles about Calhoun’s immediate challenges.

Last November, LNA posted a graphic that listed a host of problems that occurred under Denis Muilenburg’s watch. Calhoun must deal with these, too.

Today, we take a look at another challenge Calhoun must face: Boeing’s commercial airplane product strategy.

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