Sept. 17, 2018, © Leeham News: With the supply chain under major stress and Airbus and Boeing trying to recover from scores of “gliders” sidelined at airports without engines, each company nevertheless continues to study production rate increases for the A320 and 737 families.
Supply chain sources tell LNC Airbus is studying an even higher rate, into the “70s,” at early as 2020—a date that most consider out of the question.
Boeing is known to be considering a rate of 70/mo for its most profitable program.
Today, LNC looks at the A320 scenario. A future post will examine the 737.
Sept. 17, 2018, © Leeham News: The surprise resignation last week by Eric Schulz as Chief Commercial Officer for Airbus re-opened the door for the man who should have been named in the first place, Christian Scherer.
Scherer spent the last two years as CEO of ATR, which is 50% owned by Airbus, but his lineage is pure Airbus.
His father, Gunter, was one of the original Airbus pioneers. He was a flight engineer on the early A300B2 test flights when Airbus was formed. Gunter died in May.
Christian joined Airbus in 1984. Since then, he was Head of Contracts, Leasing Markets and Deputy Head of Sales as well as Head of Strategy and Future Programmes. At Airbus Defence and Space, he headed Marketing & Sales. He was named CEO of ATR in October 2016.
Sept. 13, 2018, (c) Airfinance Journal: Air Lease’s executive chairman Steven Udvar-Hazy says that Boeing could make a decision on whether or not launch the 797 model mid-year 2019.
If so, the timing could coincide with the Paris Air Show.
“In the NMA market, whether Boeing will launch the 797 is a ‘multi-billion dollars question’, he says, adding that right now the US manufacturer is assessing the engine availability.
“There are two potential engines applications. They are all derivative engines,” he says at the UK Aviation Club Lunch on 13 September.
“We all know the problems that Airbus and Boeing have been going through with the new engines on the Max and the Neo as well as the 787s,” he adds.
And for him Boeing is very ‘cautious’ on a decision. “They are trying to understand what is the real market demand for this aircraft and all indications points out to a decision sometimes in the middle of next year,” he says.
By Bjorn Fehrm
September 13, 2018, © Leeham News.: Last week we began an article series looking at the cost equation for an airliner. We discussed the different costs and how these would be affected by airline type and operating area.
Now we calculated the different costs for a Legacy airline operating either in the US, West Europe or Asia.
Update, Sept. 14: Marsh plans to continue AFIC despite the lawsuit.
“Since its launch, AFIC has given clients greater choice by contributing significantly to the development and diversification of aircraft finance globally. We stand fully behind it and will defend this case vigorously,” the company wrote in an email to LNC. Boeing declined comment, deferring to Marsh.
Sept. 12, 2018, © Leeham News: The trade secret theft lawsuits filed yesterday by Xavian Insurance and Xavian Holdings against The Boeing Co., Boeing Capital Corp., Marsh & McLennan and Marsh USA strike at the very heart of business plan intended to replace the virtually closed US ExIm Bank financing that Boeing used to rely upon.
It also potentially does so at a similar business plan Marsh created to support Airbus sales.
It’s impossible to assess the validity of the claims, but the lawsuits certainly paint a bleak picture of events—as plaintiffs do when they file one.
The Xavian-Boeing lawsuit may be found here: Xavian_Boeing_Complaint.
Sept. 11, 2018, © Leeham News: The Boeing Co., Boeing Capital Corp, Marsh & McLennan and its subsidiary, Marsh, a major insurance firm, have been sued for trade secret theft in lawsuits filed in Chicago and New York.
The dispute centers around the roles of Boeing, BCC and the insurers in creating Aviation Finance Insurance Consortium (AFIC). AFIC was created following years of the US Congress’ refusal to reauthorize the US ExIm Bank.
Xavian Holdings and Xavian Insurance Co. allege in the lawsuits that The Boeing Co., through its Boeing Capital Corp unit, and Marsh signed trade secret and confidentiality agreements that precluded the companies from acting on the concept for an ExIm replacement financing guarantee vehicle.
“Boeing and BCC waited until their need for those trade secrets became critical – and then
misappropriated them,” the Boeing lawsuit charges.
Xavian was founded by several Wall Street professionals in aircraft finance and some bankers from ExIm, led by attorney Thatcher A. Stone. Stone now lectures on aviation law at the University of Virginia School of Law. Xavian was backed by venture financiers and had received a significant financing commitment from Lightyear Capital, led by Don Marron, former chairman of Paine Webber and UBS.
AFIC was launched in June 2017. In its first seven months, it provided financial guarantees for 16 Boeing aircraft to four airlines and a lessor. The aircraft had a value of $1.5bn in financing guarantees.
One person told LNC that Boeing’s profits from the sale could be around $800m. The lawsuits don’t specify a damage claim, which is normal in federal courts.
Despite the trade secret and confidentiality agreements, Xavian charges in the lawsuit that BCC’s Kostya Zolotusky, Tim Myers, now president of BCC but a VP at the time, and Robert Morin, then still employed by ExIm but a part of Xavier’s effort, were privy to then Xavian plans. Also privy was BCC officer Scott Scherer, now retired, the lawsuit says.
Morin now works for Marsh, the insurance manager for AFIC.
Appraisers differ on market size but Boeing’s new aircraft type could launch as early as 2026.
Sept. 11, 2018, (c) Airfinance Journal: No announcement was made at the Farnborough Air Show about the proposed New Midsize Airplane (NMA). With Airbus’ A321neo model selling well, the ball is in Boeing’s court.
The A321neo is Airbus’s weapon to challenge that market and the European manufacturer is trying to move fast into the middle of the market segment with more A321neo improvements in an effort to challenge further Boeing on its business case. The aircraft’s current maximum range is 4,000 nautical miles (nm), but Airbus is understood to be working on an improved version that would be capable of 4,500nm or more. This would enable airlines to operate the aircraft on transatlantic services to destinations further south on the US east coast and further east.
Sept. 10, 2018, © Leeham News: With the Brazilian elections less than a month away, the outcome of the presidential race will determine whether the proposed joint venture between Embraer and Boeing will be approved.
Embraer is Brazil’s most visible and prestigious international company. The government has a “golden share,” giving it veto power over certain transactions, including the Boeing deal. Boeing will own 80% of the new JV that will be for EMB’s commercial business only. Embraer will own 20%.
The incumbent government says it will approve the joint venture; the opposition party says it will veto the deal.
Including orders, options and LOIs:
Sept. 3, 2018, © Leeham News: There is more evidence the aerospace supply chain is in meltdown—and it’s going to get worse, a manufacturer tells LNC.
The OEM requested anonymity to speak frankly.
As aerospace analysts gather this week in Seattle for their annual investors day at Boeing, based on the research notes I see, there’s little indication they recognize the magnitude of the evolving problems with the supply chain.
Although the focus recently has been on Boeing and analysts will visit Boeing Wednesday, the issues affect all the OEMs.
This was followed by a Bloomberg report that Lufthansa Airlines continues to have shortages from Pratt & Whitney for the GTF engines powering the A320neo.
Since then, I’ve had my own additional conversations with the supply chain. The production ramp ups that already have been announced and those being contemplated are in peril and all manufacturers are being affected.
Boeing can’t seem to close the business case on its Middle of the Market airplane, the New Midmarket Aircraft, or NMA.
And Airbus continues to stir the pot with talk of an A321XLR and the ever-present A321neo Plus.
Other than this, everything is fine.