Leeham News and Analysis
There's more to real news than a news release.
HOTR: Boeing moving HQ to Washington, DC, was obvious to those looking
By the Leeham News Team
May 5, 2022, © Leeham News: Boeing is moving the corporate headquarters from Chicago to Arlington (VA) (a Washington (DC) suburb), the Wall Street Journal reported. The signs were there for all to see if you were looking.
Boeing closed its headquarters in Chicago as the COVID pandemic expanded. The Illinois/Chicago tax breaks expired. Key corporate communications people relocated already from Seattle to Washington, including Bernard Choi—whose duties expanded from oversight of Boeing Commercial Airplanes communications to the corporate level. There is an under-utilized Boeing building in Arlington.
Already under financial pressure because of the 737 MAX grounding in March 2019, the pandemic made things much, much worse. With no orders flowing into Boeing Commercial and few deliveries after the pandemic grew across the globe, Boeing’s cash flow took a huge hit. Then 787 deliveries were suspended in October 2020 and have yet to resume.
Spirit AeroSystems seeks bigger role in aftermarket
By Scott Hamilton
May 5, 2022, © Leeham News: Spirit AeroSystems has had a tough couple of years. It’s not only had COVID to contend with, but its customer that provides more revenue than any other—Boeing—had a major impact on Spirit’s revenues and profits.
Boeing’s 737 MAX crisis, suspension of deliveries for the 787 and extended delays in the 777X programs all hurt Spirit. The Tier 1 supplier makes the fuselages for the 737s. It makes the nose sections for the 787 and 777. Spirit’s 737 production rate is now 31/mo. Deliveries for the 787 are expected to resume in the second half. Boeing said it will gradually increase production from the current rate of about 0.5 per month to 5/mo (though the timeline remains murky). Production of the 777X is suspended through 2023 while that for the 777-200LRF probably will hover around 2/mo for the indefinite future.
In its 1Q22 earnings release on May 4, Spirit appears on its way toward solid recovery. The company beat street expectations on strong Airbus deliveries, for which it’s also a supplier. Spirit’s own operational improvements and below-the-line improvements contributed to the better than expected results. And free cash flow was stronger than expected. The earnings detail is here.
Airbus 1Q2022 results; A better year ahead but conditions tricky
May 4, 2022, © Leeham News: Airbus presented its results for the first quarter of 2022 today. The results were better on all accounts compared with the first quarter last year, and the year’s outlook is unchanged.
However, Airbus CEO, Guillaume Faury warned that the geopolitical and economic conditions are volatile. The guidance for 2022 is unchanged, and longer-term Airbus now plans for 75 A320 series deliveries by 2025 (was 60).
The 1Q2022 delivered a 15% increase in revenue to €12bn as 140 airliners were delivered during the quarter (125 1Q2021). EBIT Adjusted (reflecting the operational profit) increased by 55% to €1.263m (€694m).
Impact of Russian Airspace Closure on Finnair
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By Bjorn Fehrm
Introduction
April 28, 2022, © Leeham News: Last week, we started an article series that looks at the impact of the closure of the Russian airspace for Western airlines.
We start with analyzing how Finnair’s cost base changes as it routes Helsinki to Tokyo has to fly over the north pole and then down to Tokyo instead of over Russia. How will this affect the airline’s costs and the payload carrying capacity of the aircraft?
Summary
- The costs for Finnair on the route increase significantly.
- Part of this increase is increased fuel prices, affecting all airlines. Others are tied to avoiding Russian airspace.
All Air Lease Corp’s single-aisle airplanes are delayed
By Laura Mueller
Airfinance Journal, April 14, 2022
Reprinted with permission
April 27, 2022, © Airfinance Journal: Air Lease Corp’s executive chairman, Steven Udvar-Hazy, told Airfinance Journal that “every one” of the lessor’s single-aisle Airbus aircraft is delayed.
Steven Udvar-Hazy. Source: Air Lease Corp.
“Our Boeing 737 Max deliveries also are delayed this year,” he said. “The supply chain, starting with the engine manufacturers, the people who make landing gear, the people who make avionics… are not equipped today to meet the production goals of the two manufacturers.”
Add in increased absenteeism and working from home, and it is clear further delays are ahead. “You can’t build airplanes on a Zoom call.”
The situation means Airbus and Boeing are “faced with very difficult strategies”.
ALC’s chief executive officer, John Plueger, echoed those thoughts. He told a JP Morgan conference on 16 March that 18% of the Airbus workforce was off due to Covid-related matters. Plueger confirmed to Airfinance Journal that Airbus told him that figure, but the information was “probably a month or two old” as of April.
“It would not surprise me to get further delays beyond that,” he added.
AvWeek MRO Event: Kansas Mod lands first 777-300ER P2F order
April 26, 2022, © Leeham News: Kansas Modification Center/NIAR WERX won an order for three conversions from Boeing 777-300ER passenger aircraft to freighters from Backbone Freighter Leasing, an affiliation of Dr. Peters Group, a European lessor. Backbone also optioned seven conversions.
This is the first order for KMC/NIAR WERX. The deal was announced today at the Aviation Week MRO Americas conference in Dallas. Deliveries are in 2024 and 2025. Options have delivery slots from 2025 through 2027. The airplanes are ex-Emirates Airline aircraft. The first plane entered flight testing for loads analysis Sunday.
KMC forecasts certification by the Federal Aviation Administration in the second quarter of 2024. This conversion features a forward cargo door as opposed to the aft door in conversions offered by IAI Bedek and Mammoth Freighters. IAI has orders for 22 conversions from EVA, Emirates and lessor AerCap (which inherited this deal from GECAS upon acquisition of this lessor). AerCap has options for 15 more conversions, also from GECAS. Entry into service with AerCap is scheduled for this year.
Mammoth has an order for two conversions from Canada’s CargoJet and options for three more. Mammoth says EIS is targeted for the second half of 2023, a timeline some believe is optimistic.
Airbus aggressively seeks to reduce corporate, industry emissions footprint
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By Scott Hamilton
April 25, 2022, © Leeham News: Airbus is charging ahead with its ZEROe ecoAviation research and development, focused on hydrogen (H2) power while supporting efforts for Sustainable Aviation Fuel in the meantime. Airbus targets 2035 for a commercial airliner, which will almost certainly be a turboprop—not a jet.
Boeing previously said it believes Sustainable Aviation Fuel (SAF) is the near-term answer for greening up commercial aviation. By 2030, all its aircraft will be capable of 100% SAF use. Airbus is heading down this path, too.
Airbus believes H2 is the best solution to achieving zero emissions. Battery-powered airplanes and eVTOLs and battery-hybrids are other alternatives. Each has big technical and/or supply challenges to overcome.
In a webinar last week, Amanda Simpson, VP of Research and Technology for Airbus, said designing an entirely new airplane for H2 opens the possibility of an entirely new, high-tech wing design for which other research has been underway. A “Wing of Tomorrow” has been under development for years. Airbus already is pursuing an UpNext eXtra Performance Wing. For shorthand, LNA will identify this as the UNePW.
Bjorn’s Corner: Sustainable Air Transport. Part 15. Hydrogen propulsion system choices.
By Bjorn Fehrm
April 15, 2022, ©. Leeham News: Last week, we examined different airliner types’ power requirements and the importance of their size classes in the market.
Now we look at what propulsion system alternatives are available when using hydrogen as the energy source and their principal advantages and disadvantages.
Figure 1. CO2 emission by airliner segments. Source: EU Hydrogen-powered aviation report.
An A330neo freighter, should it happen? Part 2
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By Bjorn Fehrm
Introduction
April 14, 2022, © Leeham News: Last week, we speculated that Airbus might decide to upgrade the present A330-200F freighter to a neo variant based on the longer -900 fuselage.
To understand how competitive it would be, we compare its economics to the 787, 767-300F, and A330-200F freighters.
Summary
- Airbus’s A330-900F would be a modest upgrade project, as all bits needed are in production today.
- The result would outcompete all present midrange freighters and give a 787 freighter a match in the market.
Airbus nears finding homes for Air Asia X, Aeroflot widebodies
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Now open to all readers
By Scott Hamilton
April 11, 2022, © Leeham News: Airbus removed nearly all A330-900s from its backlog to AirAsia X, finally acknowledging what the industry knew for years: this deal was toast, even before the pandemic burnt it.
There are also A350-900s for Aeroflot that now no longer can be delivered.
Aeroflot Airbus A350-900. Source: Airbus.
Despite the widebody marketing being in the dumps, likely for another couple of years, don’t fret about these lost orders. According to market intelligence, Airbus has perhaps three campaigns for the A330neo that may jell within the new few weeks or months.
And the Aeroflot A350s may have a home sooner than anyone would think. Furthermore, some may wind up going to a customer with orders for the Boeing 787 that are in limbo because of the 18-month suspension of deliveries.
Furthermore, Airbus is quietly working to consolidate its dominance in the single-aisle market as the COVID pandemic continues to wind down and Boeing has challenges ramping up its 737 production—and certification of the 737-10 MAX by year-end seems slipping. The ramifications of this slip could be profound.
Summary
- Airbus lining up customers to take Air Asia X canceled A330-900s.
- Aeroflot A350s may find home soon, with a customer awaiting 787 deliveries.
- Boeing’s 737 production rate plans were affected by the China Eastern crash.
- China Eastern crash cause appears trending toward pilot suicide.