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
Odds and Ends: Middle East carriers high on 777X; Airbus’ Japan ambitions; Low fare airlines
Boeing 777X: Reuters has this article on negotiations between Boeing and Etihad Airlines for the new 777X. Reuters reports that up to 30 777Xs could be ordered, along with a follow-on order for the 787. Emirates Airlines is expected to order between 75-100 777X. Qatar Airways will almost certainly place a 777X at some point.
The Boeing Board of Directors is expected to give the go-ahead for the 777X this month, with a public launch at the Dubai Air Show next month. Emirates is widely anticipated to place its order there, though its president, Tim Clark, has been quoted in the press that it’s possible he won’t be ready by the air show. Because this air show is in Dubai and the home base for Emirates, it’s quite possible the Etihad and potential Qatar orders would come outside the air show.
Lufthansa Airlines has already ordered the 777X, subject to formal program launch.
Airbus in Japan: Having achieved a major breakthrough with a large order for the A350 from Japan Airlines, Airbus has set some ambitious goals to increase its market share in this country, reports Bloomberg News.
Low Fare Airlines: Images and myths surround low fare airlines. We’ve written many times in the past that the USA’s Southwest Airlines, which built its image since its founding in 1971 at the low fare airline, often isn’t any more. (In fact, we were years ahead of the mainstream media in discovering this.) You can usually get lower fares on the legacy airlines, though bag fees and change fees, if you have check bags or change your flight, destroy the savings. If you don’t have to do either, it’s usually cheaper to fly the legacy airline than Southwest.
In Europe, Ryanair is viewed as the cheapest airline to fly. The base fare is ridiculously low but fees are imposed for everything except using the loo, though CEO Michael O’Leary would like to charge for this, too. This article calculates that in fact Ryanair isn’t the cheapest way to travel. The article rates the top 20 low fare carriers and Ryanair comes in #4.
Airbus’ McArtor on VLA, 777X, 757 replacement and Airbus future products
Airbus Americas Chairman Allan McArtor.
Allan McArtor believes there will always be a market for the Very Large Aircraft (VLA), but he’s not surprised Boeing cut the production rate of the 747-8.
McArtor, who as chairman of Airbus Americas, is hardly an unbiased observer. He says the 747-8 Intercontinental is uneconomic and the market for the 747-8F is weak. But he also acknowledged that the dearth of sales for the Airbus A380 has been a challenge.
Airbus has forecast 1,200-1,300 VLA-Passenger deliveries over a 20 year period every year since 2000, while Boeing has steadily reduced its forecast to just 540 VLAPs in its current forecast. Airbus believes it will capture 50% of the market, based on its forecast. In fact, it currently is capturing between 86%-90% of the sales.
Each forecasts several hundred more VLA-Freighter deliveries during the next 20 years. Boeing currently holds a monopoly in the VLAF sector, but sales haven’t been on a pace to meet either company’s forecast, nor have sales of the A380 remotely maintained a pace that suggests Airbus will meet its own forecast, without dramatically adjusting both the total market and its market share expectations.
In an interview with Leeham News, McArtor maintained there will “always” be a demand for the VLA. He acknowledged that one can quibble with the forecast or the timing, but airport constraints and growing markets between key cities, such as London-Tokyo, London-New York, Paris-Tokyo or New York and similar segments, will demand a VLAP.
Airbus so far this year has has a net order for the A380 of minus three, but it signed a Memorandum of Understanding for 20 from specialty lessor Doric during the Paris Air Show. This is expected to be firmed up before the end of the year, potentially at the Dubai Air Show.
Boeing is also expected to make a splash at Dubai with the highly anticipated public launch of the 777X, with a large order from Emirates Airlines. The airplane, with a new composite wing, new engines, systems upgrades and cabin modifications, will come in a 350-seat 777-8 and a 407-seat 777-9. The 777-8 directly competes with the Airbus A350-1000. The 777-9 doesn’t have an Airbus competitor and at nominally 407 seats falls just within the VLA sector, which begins at 400 seats.
Odds and Ends: Repairs begin on Ethiopian 787; WTO appeals; CSeries update
Ethiopian 787: Remember that Boeing 787 fire at London Heathrow Airport some months back? It seems that Ethiopian Airlines, the owner, and Boeing, have finally reached agreement on how to fix the airplane–but nobody is saying how, according to Steve Wilhelm at the Puget Sound Business Journal.
WTO Airbus/Boeing: In case anyone was wondering what’s happened to the cross-appeals of the World Trade Organization findings that Airbus and Boeing received illegal subsidies, it seems the USA isn’t the only place where budget constraints have bollixed things up. The appeals are delayed by budget shortfalls at the WTO.
CSeries Update: In case you’ve been wondering about the Bombardier CSeries test program–the plane has flown only three times since first flight Sept. 16–BBD just posted this YouTube with an update.
[youtube=http://www.youtube.com/watch?v=JwkhQDDEgdw&w=420&h=315]
We understand that the long run of rainy weather in advance of the first flight (delayed by a week because of the weather) meant that some of the testing that had been expected in advance of the flight resumed after the flight.
Flight Global has this short story.
757, 737-900ER/9 MAX, A321 replacement should be the next new airplane
The Boeing 757 doesn’t have a true replacement. The Airbus 321neo and Boeing 737-9 fall short. The 9 MAX doesn’t measure up to the A321neo. Boeing has to move toward a program to replace the 757 and the 737-9.
With the launch of the Boeing 777X a given, what’s next in aircraft development?
John Leahy, COO-Customers of Airbus, gave a tantalizing hint at the ISTAT conference last week in Barcelona, Spain, when he said the OEM was studying a stretch of the 350-seat A350-1000 to fill the gap between it and the 525 A380 and to compete with the 400-seat 777-9. But then he tried to reel it back, saying there was “no story here,” according to Aviation Week.
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- KING5 (NBC Seattle) has this report about the 757 replacement.
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Then Boeing’s own Joe Ozimek, who heads sales for the 737 MAX, asked the lessor’s panel which aircraft do they want and CIT Aerospace president Jeff Knittel said a replacement for the Boeing 757, Tweeted AFM magazine.
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This is what we think will be the next big project.
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We reported in March 2012 that Boeing continued studies-dubbed the New Airplane Study, or NAS-of a replacement for the 757 even after launching the 737 MAX program and billing the 737-9 as the 757’s replacement.
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Except that it isn’t. Far from it.
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The 737-9 doesn’t have the range, the field performance or the payload of the 757. Neither does the Airbus A321neo, although it is much better than the 737-9.
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Entry-into-service for what we will dub the 757R is envisioned for 2025-2027, leaning toward the former.
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During the media briefings in advance of the Paris Air Show, Boeing acknowledged it saw a market for the 757 replacement. Although 1,049 757s were built in its production run ending in 2003, a solid sales effort for its era, we believe the market is far larger when you consider the general up-gauging that’s been happening and the sales of the A321ceo/neo and the 737-900/900ER/9. Through September, there have been 1,861 A321 family sales and 766 of the largest 737 family siblings sold. Combined with the 757 sales, this totals 3,676 programs sales for all three airplanes, excluding future sales.
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|
Aircraft |
757-200 |
757-300 |
A321ceo |
A321neo |
737-900 |
737-900ER |
737-9 |
|
Sales |
994 |
55 |
1377 |
484 |
52 |
530 |
184 |
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Although Boeing claims the 737-9 is a replacement for the 757, for some 80% of the missions, and while Boeing claims the 737-9 is better than the A321neo, sales figures tell the story. Furthermore, airlines we talk to universally tell us the A321neo is more capable than the 737-9.
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The combined sales figures demonstrate that Boeing is trailing badly in the 180-220 seat single-aisle sector, with a mere 29% share of the market and even worse with the 737-9 at just 27.5% of re-engined competition. To recapture this market, Boeing has to proceed with a new airplane.
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We believe a 2025 EIS means activity will begin to truly ramp up for decision-making as early as 2017. Eight years now is becoming the norm for new airplane development lead time.
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Development of the true 737 replacement will then flow out of development of the 757R. The first 737 MAX EIS, for the -8, is slated for July 2017. The -9 follows in 2018 and the -7 in 2019, assuming the only two customers (Southwest Airlines and WestJet) don’t swap these for larger models or proceed with another solution entirely.
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We believe the MAX, coming two years behind the Airbus neo family, will have a shorter production life than the neo, especially with the poor-selling and poorer-performing -9. A 10-11 year production run is probably a reasonable expectation.
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Airbus and Boeing each have said they expect a replacement for today’s single-aisle airplanes around 2030. We believe this may be advanced a few years to as early as 2027.
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The question is, which company goes first? We think Boeing has the greater need and greater motivation. We believe Boeing will be first off the mark.
Odds and Ends: Supply chain demands; Southwest hints?; Retrospective on A320/737 replacements
Supply chain demands: Earlier this week, we talked about the prospect of production wars as Airbus and Boeing ramp up over the next five years, combined with the new entrants and the new offerings from Bombardier and Embraer.
We noted that this will mean opportunity and risk for the supply chain. Ryan Murphy from Salem Partners has a long analysis the starts with the finishing sector but which goes beyond this to discuss the broader implications. It makes for an interesting read.
Southwest: Hints of things to come? Yesterday we wrote about Southwest Airlines and the demise of the Wright Amendment that restricts travel from Dallas Love Field. We suggested several routes that Southwest would launch from Love once the Amendment passes into history.
Here’s a display Southwest erected on its countdown to the end of the Wright Amendment. We think it hints at things to come. Going clockwise: Chicago, New York and Charlotte seem to be where the airplanes are going. Then Los Angeles and Salt Lake City seem to be implied destinations. But the last one? Boise, or some other obscure city?
Or are we reading too much into the placement of these airplanes?
Source: Dallas Morning News
Our thoughts:
Retrospective: We were looking at previous posts for some specific information and in the process re-read one about replacing the Airbus A320 and Boeing 737. The post dates from 2009. In light of subsequent events, it makes for interesting re-reading. We discuss the internal views of Airbus and Boeing about replacement or re-engining their aircraft and the engines from Pratt & Whitney and GE Aviation/CFM. We also touch on Boeing leaning toward not replacing the 777.
Retrospective, Part 2: Airchive has a nice set of historical looks at the development of the Boeing factory at Everett: Part One and Part Two.
Odds and Ends: Embraer reports weak quarter; MRJ FTV #1 assembly; JAL, ANA politics
Embraer’s Third Quarter: Embraer delivered fewer commercial airplanes in the third quarter than had been expected. The maker of E-Jets and the E-Jet E2 re-engined versions due beginning in 2018 listed its deliveries and backlog in its press release. Analysts expects 22 E-Jets would be delivered in the quarter. But the backlog is up 44% year-over-year, largely on the strength of the launch of the E2 (150 orders, 100 of which are for the smallest E-175 E2 and 25 each for the E-190/195 E2), and orders from Republic Airways Holdings and SkyWest Airlines for the current generation of E-Jets. The E-175 remains to most frequently-ordered airplane.
Although Embraer is expanding the size of the E-195-E2 by up to 12 seats, orders have been few. The E-190 has proved a better-selling model than the E-195.
Source: Embraer
Officials expect to have a healthy fourth quarter delivery stream.
Mitsubishi MRJ: Assembly for the first Mitsubishi MRJ Flight Test Vehicle (to borrow Bombardier’s term for the CSeries) is underway. The first delivery was originally planned for this year; it’s now planned for 2017, four years late. This rivals Boeing’s 787 and exceeds the Airbus A350 and as yet the CSeries.
JAL, ANA Politics: Reuters has an analysis about the suspicion politics may have been involved in the decision by Japan Airlines to buy the Airbus A350 and the pending order by ANA of an Airbus or Boeing airplane.
Odds and Ends: ANA, Airbus and Boeing; Era of the jumbo jet; Repo wars
ANA to stay with Boeing? After losing Japan Airlines to Airbus, analysts are split over whether ANA will also defect. Some say JAL’s order will give ANA cover to defect. Others say JAL’s order will increase the pressure on ANA to stay with Boeing. The Seattle Times this story. Our take: compare this with what happened following American Airlines’ order with Airbus. The Delta Air Lines competition was next, and Boeing was determined not to lose that competition–and it didn’t. Market talk says Boeing’s price to Delta was 10%-15% below Airbus’ offer, though this has never been confirmed. We understand there were other considerations besides costs. Regardless, both sides are going to go all-out to win.
SuperJumbo Era: The Financial Times has a story about whether the era of the super-jumbo (the Airbus A380 and the Boeing 747-8) is over (free registration required). Bloomberg has a story about the Boeing 777X being a jumbo killer.
Repo Wars: Here’s an departure from our usual coverage–tactics used to repossess an airplane from a delinquent airline. A decade ago, we were involved in a similar situation, planning the repossession of a Boeing 767-300ER from a South American airline. The lessor obtained a court order while we did some behind-the-scenes plotting to “arrest” the airplane at Miami. It was at the gate, full of passengers when the sheriff served the pilot with the court papers. Secrecy was imperative, as the story linked above references. Once the airplane was seized, the airline rescheduled a second 767 to stay on domestic service so the lessor couldn’t seize that airplane, too.