Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Teamsters, Boeing have a new contract April 29, 2025
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
A380 orders boost backlog but future risk remains
The order by Emirates Airlines for 50 more Airbus A380s had been hinted at for some time, and it is certainly welcome for the backlog. This deal, coupled with the MOU announced at the Paris Air Show for 20 from lessor Doric, expected to be firmed up by year end, adds 70 orders to the long-stalled total count, which was 259 prior to either deal (net of three cancellations from Lufthansa Airlines). This now brings Airbus to 329 orders.
It’s still well short of the 650 orders Airbus expects to snare over the next 20 years from its September 20-year forecast. These expectations are on top of the existing order stream, and a figure that hasn’t changed much since its first Very Large Aircraft forecast in 2000.
(The current forecast is for about 1,300 VLA passenger models; Airbus expects to receive 50% of the market. This is before the 777-9X, barely qualifying as a VLA at a nominal 407 passengers, entered the picture. Up to now, Airbus has been capturing nearly 90% of the VLAP market against Boeing’s 747-8I.)
AIN Online beat us to our plan to assess the future risks for the A380, particularly as it heads into the secondary market, with this analysis. We agree with the broad conclusion that there will be little secondary market opportunity for the airplane beginning in 2020 when the first of Emirates Airlines’ behemoths start coming off lease.
One lessor, who is not an A380 owner, says it will cost about $20m to reconfigure an A380 in a typical three-class layout with the usual bells and whistles. Doric Lease, in an interview with Bloomberg, says Airbus needs to standardize configuration to make re-leasing the giant plane easier.
Boeing in Puget Sound after the IAM 777X vote: bleak, unless something changes
With the rejection last week by the International Association of Machinists Local 751of the Boeing contract offer that would have located the 777X airplane assembly and wing production in Puget Sound (Seattle), the inevitable question arises: What is Boeing’s future here?
Seattle media and state elected officials are worried that if Boeing locates the 777X outside Washington State, and given the toxic relationship between the machinists and Boeing as well as within its own union, that this could be the start of an exodus from the state.
We agree, although we believe it will be a slow, downward spiral, not a rapid exodus–unless something dramatic changes with the current situation.
The chart illustrates our forecast of Boeing’s gradual departure from Puget Sound based on the current set of circumstances.
DXB13 Day 1: Airbus scores big orders, Boeing launches 777X
From the Dubai Air Show, Day 1:
Airbus
Qatar would buy A350-1000 stretch
Boeing
777 Launched: Boeing New Airplane;
Montreal Gazette, reporting from Dubai
Aviation Week: 787 influence on 777X
Boeing leads Airbus after first day
Other news:
Ilyushin Finance targets Middle East
The Seattle Times has a behind-the-scenes article on the divide between IAM 751 and its International headquarters and within IAM 751.
IAE launches Pure V engine plan for V2500s on A320 family and MD-90s
International Aero Engines has launched
Jon Beatty, President of International Aero Engines
a program called Pure V program for the V2500 engine used on the Airbus A320ceo and the Boeing MD-90, leveraging OEM-provided maintenance and parts that will offered extended warranties and potential better residual values.
The announcement was made at the Dubai Air Show 17 Nov. local time.
IAE president Jon Beatty said the project was driven by customer input, particularly that of lessors, who own a large number of A320s powered by the V2500. Lessors in particular are concerned about residual values, which affect lease rates as they re-lease the aircraft after short-to-medium terms at lessees.
“Engines with 100% IAE-approved parts and repairs enhance the on-wing service, fuel economy and residual values,” Beatty told us in an interview.
Beatty said that qualifying in-service engines—and 60% will immediately, and the rest may be retro-fitted—will see improved on-wing time by an estimated 20% after going through the program. A Pure V engine will also see a return to original fuel burn specifications after normal degradation, and these will have about a one-half percentage improvement over non-IAE maintained and serviced V2500s not using IAE OEM parts.
More than 50% of V2500 owners and operators are already signed up to IAE’s power-by-the-hour program, called Fleet Hour Agreement (FHA). Beatty said 80% of the new customers choose FHA.
Non-OEM parts under the Federal Aviation Administration’s Parts Manufacturer Approval program won’t qualify for the Pure V program, extended warranty or other benefits.
For lessors, who own more than 50% of the V2500-powered A320ceos, expect to benefit from higher residual values by being able to pass through this value in their lease rates, Beatty said. Appraisers, who forecast RVs, need to become familiar with the program, and IAE plans a data base they can consult.
Odds and Ends: 787 teething; IAM-777X continues; Boeing in Puget Sound; Dubai Air Show
787 teething issues: Flight Global has this report from the Dubai Air Show in which it quotes Boeing as saying there will be another six months of teething issues on the 787. We hear it will be longer than this.
IAM-777X: These stories will continue for some time. The latest: Reuters has this exclusive interview with IAM International President Tom Buffenbarger, posted Friday. But a Boeing official later denied Buffenbarger’s claim.
Buffenbarger said the IAM won’t make a counter offer; Boeing previously said it has “no plans to re-engage” the IAM. As we noted in our posting Thursday, both sides retreated to their corners in a testosterone posture. Buffenbarger screwed this up. It’s up to him to come up with a counter-proposal.
This from the Dubai Air Show via Twitter:
Boeing exec’s lament quick timing of IAM vote on 777X labour deal, believe members did not “digest” all info completely.
This is more evidence of the completely botched effort. If Boeing is lamenting, then it, too, ought to come back to the bargaining table.
Reuters has this article from Dubai, quoting Ray Conner, CEO of Boeing Commercial Airplanes, saying the ball is now in IAM’s court.
Boeing in Puget Sound: After the IAM vote debacle, the Tacoma News Tribune has a long article (picked up in the Everett Herald) about the future of Boeing’s Frederickson plant, which makes stuff for a variety of 7-Series airplanes. It would have been a participant in the 777X program.
Dubai Air Show: This opens tomorrow; follow on Twitter at #Dxb13 and @Dubaiairshow
Some key articles:
Odds and Ends: Volcano protection; Airbus trims guidance on A350; More on Boeing
Volcano protection: No, we’re not talking about any eruptions from IAM 751. Instead, Airbus and Europe’s easyJet created some man-made volcano ash to conduct tests for detecting the real thing.
Airbus trims guidance: EADS/Airbus trimmed its financial guidance on A350 development costs, according to The Financial Times (free registration required). According to The Times, the entry-into-service of the A350–slated for 3Q2014–“is at risk.” We have EIS in 1Q2015. EADS for now is sticking with the 2014 EIS.
Boeing 777X: As might be expected, there continues to be a lot of news on the 777X.
- Reuters: Boeing vote brings out rivals
- Los Angeles Times: Long Beach seeks 777X
- Wall Street Journal: Boeing moves to evaluation sites
- KING5 (NBC-Seattle): Has a number of stories at this link.
- Seattle Times: The morning after
- Fox Q13 (Seattle): Can Washington lawmakers save the day?
- Puget Sound Business Journal: 777X alternatives hotter climate but cheaper housing
- KUOW (NPR Seattle): What rejection means for unions
Odds and Ends: Right to Work; Middle East influence; latest on Boeing-IAM
Right to Work or Right to Worse: One of the more controversial issues in the relationship between Boeing and the IAM is Boeing’s continuous threat of removing work from union-heavy Washington and putting it in Right to Work states. South Carolina, of course, is at the top of this list.
KIRO Radio (CBS-Seattle) has a story about a Seattle transplant to Boeing’s Charleston plant who finds some interesting differences between the two locations.
As the IAM prepares to vote Wednesday whether to accept a contract extension that includes significant give-backs in exchange for landing the 777X Final Assembly Line and wing production, Boeing holds the prospect of locating the work in Right to Work states. These have been assumed to be or identified (though not by Boeing) as South Carolina, Texas and Utah. Boeing has facilities in each of these states.
As Readers know, we have suggested Washington needs to become a Right To Work state, which labor characterizes Right To Worse. It’s not that we favor RTW per se (though we do but not dogmatically), it’s more driven by the fact that Washington’s competition is RTW–and Boeing is very effectively using this as leverage over the Washington unionized labor force, and to extension, over the Washington Legislature when it compares our state’s cost of doing business with other states.
Meantime, Boeing has launched its website with its view of the contract proposal.
This is the letter Ray Conner, CEO of Boeing Commercial Airplanes, issued last week.
Middle East Influence: Aviation Week has a good piece about the evolution of the influence of the Middle Eastern airlines on aircraft design. Flight Global has this analysis of the Airbus A350-1000 vs the Boeing 777X in advance of the Dubai Air Show (free registration required).
Boeing IAM-Update: The Seattle Times has the latest from IAM 751 and from Boeing pending the vote tomorrow. Ray Conner, CEO of Bo9eing Commercial Airplanes, said Boeing is “under siege” from foreign competitors, including the Japanese, Chinese and Russians.
Maybe so, but Boeing has been helping these countries and their aerospace industries by outsourcing to them.
We also find it difficult to have sympathy for Boeing at a time when it is posting record profits and undertaking billions of dollars in stock buybacks instead of plowing the cash flow back into research and development instead of designing derivative airplanes.