This is a continuing series of articles derived from LNC’s “retirement” interview with John Leahy, COO-Customers of Airbus. Leahy retires this month.
Jan. 3, 2018, © Leeham Co.: This is the year many expect Boeing to decide whether to launch the New Midmarket Aircraft, also known as NMA or unofficially, the
797, to serve the Middle of the Market.
The MOM sector is broadly defined as above the Boeing 737/Airbus A321 and below the Boeing 787/Airbus A330-200/800.
Others, including LNC define the market more broadly.
By Bjorn Fehrm
January 03, 2018, ©. Leeham Co: Both United Aircraft Corporation (UAC) and COMAC got their single-aisle airliner projects into flight test during 2017. The MC-21 and C919 had their first flights within less than a month of each other, with the Chinese C919 first at 5th of May, followed by the Irkut MC-21 on the 28th of May.
Superficially the aircraft and projects are similar. Both are 150-220 seat single aisle projects in the mold of Airbus’ A320neo and Boeing’s 737 MAX programs. Looking a bit closer, they are different. One is extending the state of the art in several areas; the other is playing safe.
The Top 10 are a statistical listing of the most-viewed posts, not some judgment call on the part of LNC.
Here is the rundown.
By Bjorn Fehrm
December 29, 2017, ©. Leeham Co.: The past year was a transition year for Embraer. Their E-Jet was in its last year before deliveries of the new E2 version begins. The company labels 2018 as an additional transition year, as the ramp-up costs of the first E2 deliveries, the E190-E2, will keep profits down.
Strategically, 2017 has been a tumultuous year for Embraer. Boeing’s complaint to the US Department of Commerce for Bombardier’s CSeries sales to Delta at “dumping prices” drove the competitor aircraft into the hands of Airbus. This unexpected move saw Embraer and Boeing hold merger talks, plans which could be affected by the Brazilian government’s golden share in Embraer.
Dec. 28, 2017, © Leeham Co.: It’s not often that levity appears in briefing papers in US government trade cases, but Delta Air Lines managed to draw LNC’s chuckle in its post-hearing brief in the Boeing-Bombardier trade case.
Delta’s introduction was novel to say the least.
Dec. 28, 2017, © Leeham Co.: Two thousand seventeen had to be a bittersweet year for Bombardier.
Despite landing two good, blue-chip orders in 2016—Air Canada and Delta Air Lines—it hadn’t achieved the “commercial momentum” hoped for. At long last, Letters of Intent for 31+30 and 12+12 orders and options were announced this year for the CS100 and CS300 from an Unidentified European carrier and Egyptair respectively. Officials hope to firm these up by the end of this year.
No additional C Series orders were forthcoming for the rest of 2016 and none for 2017 when Boeing stepped up and puked all over the program.
In April, Boeing filed a trade complaint with the US government. Boeing would prevail with the US Department of Commerce, which preliminarily determined to levy a 300% tariff on each C Series imported into the US.
The US International Trade Commission took up the case Dec. 18; a decision is due next month. If ITC finds there was no harm to Boeing, the DOC decision goes away.
Dec. 27, 2017, © Leeham Co.: Boeing had an outstanding year.
For the first time since 2013, it booked more sales of the 787 than it produced, the so-called book:bill ratio.
Total net orders through November were 633, almost twice that of Airbus through the same period.
This excludes orders announced at the Dubai Air Show which have yet to be booked.
The only lump of coal, coming just before Christmas: Airbus won a major deal from Delta Air Lines for 100 A321neos plus 100 options.
Other events propelled Boeing to an outstanding 2017.
Dec. 26, 2017, © Leeham Co.: Potential synergies exist between Boeing and Embraer which may be important to development of the next new, clean-sheet airplane for both companies.
Last week, both firms acknowledged a Wall Street Journal report that talks have been held about a combination of some kind. No details were reported about what this would look like. The Brazilian president was quick to say the government, which holds veto power over any merger or acquisition of Embraer, won’t approve any deal that means EMB ceases to be a Brazilian company.
Joint ventures or minority ownership structure appears possible.
What are the potential benefits for Boeing and Embraer?
Dec. 26, 2017, © Leeham Co.: It’s been a miserable year for Airbus.
Corruption investigations. Delayed deliveries due to engine issues for the A320neo. Delayed deliveries due to interior supplier issues for the A350. A year’s delay for the A330neo due to engine development issues.
Production reductions and doubts over the future of the A380. Continued cash drains and write-offs for the A400M. Internal turmoil as CEO Tom Enders dramatically changes responsibilities and reporting lines.
Getting walloped by Boeing at the Paris and Dubai air shows, losing the wide-body order race in a landslide and losing the narrow-body order race.
Next year will have continued challenges.
Dec. 22, 2017, © Leeham Co.: Boeing blames a subsidized, price-dumped Bombardier C Series for the poor sales of the smallest member of the 737 family, the -700 and the 7 MAX, but history doesn’t support the claim.
The US Department of Commerce clearly ignored sales evidence that the 737-700 has been “done” for many years and the 737-7 MAX was an unattractive design
that hasn’t been fixed with a redesign; airlines simply don’t want the airplane. Commerce levied tariffs amounting to 292% on C Series imported into the United States in the future.
The US International Trade Commission is currently awaiting post-hearing briefs from Dec. 18 testimony from Boeing, Bombardier, Delta Air Lines and other parties to determine whether Boeing suffered “harm” by the C Series deal with Delta and a near-miss with United Airlines.
If the ITC concludes Boeing suffered harm, the DOC tariffs stand. If not, the DOC action is moot. The loser at ITC is expected to appeal.