Leeham News and Analysis
There's more to real news than a news release.
Odds and Ends: Bernstein: no 777X before 2020; Alaska, Frontier and Competition; A380 repair costs; Boeing labor challenges
No 777X before 2020: Bernstein Research, in a note issued today, says it doesn’t see delivery of the Boeing 777X before 2020. Also: on a recently completed trip to Asia, Bernstein wrote this:
There’s clearly huge demand for the 787. There was a lot of excitement about it, but Boeing was heavily promoting the 747-8, for which the company is certainly seeking more orders, with few orders for the passenger version and the air freight market being very weak. To date, the majority of orders for that airplane have been freighter orders. This is a relatively small program, but we think it is the most difficult within Boeing’s portfolio right now. …[Y]ou’re probably not going to see the growth that Boeing had once hoped for there. That’s certainly how we have been making assumptions, as well.
Alaska, Frontier and Competition: The Centre for Asia Pacific Aviation has this analysis about Alaska and Frontier airlines, which aside from being a little geographically-challenged, is one of CAPA’s usual well-researched and thought-0ut looks at airlines. (In fairness, CAPA often strays from the Asia-Pacific, but we couldn’t resist the quip.) CAPA now actually calls itself Centre for Aviation.
A380 Repair Costs: Aviation Week has this article detailing the costs to Emirates Airlines for repairs to the Airbus A380 wing bracket cracks.
Boeing Labor Challenges: Boeing seems headed for war again with labor unions. Here’s an article from The Everett Herald with several links within it; one from MyNorthwest.com about SPEEA; and one from The Seattle Times about SPEEA.
Cargolux and Qatar: We posted some news about Cargolux and Qatar yesterday; The Seattle Times has this piece about the threat to the Boeing 747-8F from Cargolux’s problems.
Odds and Ends: Air France v Rolls-Royce for A350; Virgin America rejigs; Last A340s sold; Heading South with SPEEA
Air France v Rollsr-Royce: The saga continues-see this Bloomberg story. We understand there is more to it than just maintenance. Rolls wants AF to order the Trent 1000 for the 787 order, too.
Virgin America: This airline, headquartered in San Francisco, has been an airline in search of a business plan. Its operations don’t have a niche and didn’t fill a void (like jetBlue created and filled at NY-JFK). It’s lost hundreds of millions of dollars. And, finally, the losses have caught up. Bloomberg has this story about aircraft order deferrals and cancellations. The deferrals are Airbus A320neos (note to Alabama: VA was going to take the first neos from the new Airbus Mobile plant in 2016).
Virgin is seeking to restructure aircraft leases, according to two industry sources. Failing to do so could lead to a Chapter 11 filing, the sources say.
Last A340s Sold: The remaining two Airbus A340-500s, originally destined for ailing Kingfisher Airlines, have been sold.
SPEEA and Boeing: Things appear to be heading south with SPEEA. This could affect Boeing’s year-end push to deliver as many as 50 787s as well as the other 7-Series.
EU caves on ETS, for now–but says it didn’t really cave
The European Union caved in on implementing the carbon trading scheme known as ETS that would have taxed international airlines flying into Europe.
The EU claimed it didn’t really cave to international pressure (Financial Times, free registration required) but clearly it did. China was the first country to tell its airlines not to pay. This was followed by counties in the Middle East, India and the US Senate. But we’re going to give credit to China, not only as the leader but a country which adeptly uses its strength in ordering-or not-aircraft from Airbus or Boeing as political tools.
China put on hold ordering $14bn worth of Airbuses, notably 35 A330s. Airbus froze production rates pending this order–which means a loss of jobs.
As countries protesting the unilateral ETS scheme noted, such taxation should come from international agreements through the airline organization ICAO.
What is so annoying about the ETS scheme is that the taxes would go into the countries’ general fund and not be applied to environmental improvements.
Airbus, Boeing under price pressure
The Wall Street Journal has two articles about Airbus and Boeing being under price pressure. There is a third article by the WSJ about Airbus wanting its suppliers to consolidate.
The two companies have accused each other of engaging in a price was in the single-aisle category. Airbus also is dropping prices on the A330 vis-a-vis the 787, as we reported following an Airbus presentation last May at its Innovation Days in which it illustrated a $900,000 lease rate for the A330-300 vs a $1.2m rate for the 787-9. The A330 had a slightly higher list price than the 787-9 and the time (Boeing since has raised its list price and is now higher).
EADS announces earnings: depressed by A380 wing costs, a US customer Ch 11 and political issues
Not a good day for EADS and Airbus:
Reuters: Spat with Germany affects cash position
BBC: Hawker Beechcraft bankruptcy costs Airbus
Washington Post: A380 wing fix costs EADS; A350 program “challenging”
United’s 787s delayed, but nobody is saying why
There appears to be a lot of focus on delays in delivering the next Boeing 787s to United Airlines–which has received one–but neither Boeing or United is saying what’s behind the delays. (Update, Dec. 1: one of the three was delivered yesterday.)
According to the Ascend data base, line numbers 45, 50 and 52 are supposed to be delivered this year and 55 and 77 are supposed to be delivered in January. All are with GEnx engines.
Here are some possible reasons for the delay:
- Rework is the obvious one. The first “clean” airplane to come off the Boeing assembly line in Everett was around line #66. The lower the line number, the more rework. UAL’s line numbers are higher, but rework is still necessary.
- GEnx engines. The failures on the 787 and 747-8 GEnx engines were unrelated and, as these things go, not especially severe, but fixing them is, we are told, complex for engines already assembled. Qatar refused delivery of its first 787 because of the GEnx issue. Contractually delivery has been accepted but the airline also wanted additional IFE (inflight entertainment equipment) installed and physically hasn’t accepted delivery. So…
- IFE upgrades: These UAL 787s were ordered by Continental Airlines prior to the merger and it’s been reported in the press that the delays in Boeing’s delivery left UA/CO will older, less sophisticated Buyer Furnished Equipment (the IFE). Maybe UAL wants more current IFE?
We were asked by media if this is another blow to the 787 program. We don’t think so. At this point, we haven’t heard of anything about the reason for the delay and pretty well shrugged it off anyway.
Meanwhile, Airbus is in talks with at least some of its A380 customers seeking compensation for the operational interruptions resulting from required inspections related to wing rub brace cracking. Compensation could amount to millions of Euros per customer.
KC-30 performing well for Australia; Boeing C17, Lockheed C130, Alenia C27J
The Airbus KC-30 is performing well, according to this article. Here is a PDF of the report referenced in the article: Airbus Tanker Proves Its Worth
The same writer prepared this piece on transport aircraft, including the Boeing C17, Lockheed C130 and Alenia C27J (purchased and subsequently rejected by the US DOD).
Odds and Ends: Airbus and Boeing BBJs; Oops by Sen. Cantwell; positive SPEEA talks
MAX BBJs: Boeing is offering 737-8/9 MAX BBJs but not, as yet, a 7 MAX BBJ. Boeing says it is still studying a 7 MAX BBJ. there have so far been no orders for the 7 MAX.
Airbus ACJ A318: Airbus says it’s offering an enhanced A318 Airbus Corporate Jet. Improvements are mainly to the interior, though the press release says, “These include Sharklets on the wingtips, which make the aircraft look nicer….” The Boeing and Airbus announcements were at the NBAA trade show.
Oops by Cantwell: Sen. Maria Cantwell (D-WA) is running for reelection. One of her TV ads is called The Hub, in which she promotes Washington State as the Hub for aerospace and her work in Congress on behalf of Boeing.
Only there was a big Oops in the first version: it opened with stock footage of US Airways Airbus A320s. Not only were these not Boeing airplanes, US Airways hasn’t ordered a Boeing since Steve Wolf was CEO–nor has America West, now combined with US Airways, ordered a Boeing aircraft since the 757.
The ad ran for some time on KING 5 (NBC-Seattle) until it was scrubbed and replaced with opening stock footage of a Boeing 767.
All YouTube videos containing the Airbuses have been “removed by the user.” Here is the revised ad.
[youtube http://www.youtube.com/watch?v=R8KV3mh9sp8&w=560&h=315]
Someone in Cantwell’s campaign really muffed this one.
Positive SPEEA talks: Last Friday, Boeing and SPEEA each released statements indicating negotiations have taken a positive turn. The Seattle Times sums it up here.