Leeham News and Analysis
There's more to real news than a news release.
The Airbus and Boeing market outlooks, Part 1
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By Vincent Valery
Introduction
Sept. 12, 2022, © Leeham News: Airbus and Boeing published their updated 2022-2041 commercial aircraft outlooks ahead of the July Farnborough Air Show. Unsurprisingly, both OEMs saw robust demand for the next two decades despite recent economic headwinds that lowered long-term fleet growth forecasts.
Credit: Leeham Company LLC, 2022
Airbus and Boeing see a market for delivering 38,600 and 38,110 single-aisle and twin-aisle passenger aircraft over the period. A 1.3% difference over 20 years is well below the margin of error of such long-term forecasts.
However, despite such minor overall differences in long-term delivery forecasts, both OEMs use different assumptions to come up with those numbers.
Also, the recent challenges with increasing production rates on single-aisle aircraft raise the question of whether there is enough capacity to meet the optimistic demand outlook.
The first part of this two-article series highlights the main assumption differences between the Airbus and Boeing market outlooks. The second will translate those assumptions into production rates and assess whether OEMs can meet that demand, notably over the next 10 years.
We will focus on the single-aisle (100 passengers and above) and twin-aisle passenger markets.
Summary
- One OEM is more optimistic about fleet growth;
- Another on replacement rates;
- A (maybe not) surprising up-gauging assumption for one OEM;
- Higher growth rates than meet the eye.
Retrospective: 2011 pros and cons of composite airplanes as Boeing, Airbus look to next 20 years
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By Scott Hamilton
What will the Future Small Airplane look like? Composites, metal, or a combination? Concept Credit: Leeham News.
Aug. 29, 2022, ©Leeham News: Airbus and Qatar Airways are in a nasty court battle over composite degradation on the A350. Lightning strike protection is a major concern in the Qatar lawsuit. Paint begins to strip off composite materials on the A350 and Boeing 787. Building composite airplanes is expensive.
Composites have been on airplanes since the days of the Boeing 727 when the wing-to-body fairings were made of composites. Airbus put composite vertical fins on the A310 and A300-600R. Private airplanes used composites.
But it was the Boeing 787 that became a ground-breaking airliner with its composite wings and composite fuselage. Boeing’s launch of the 787 in December 2003 was what would later be described as a moonshot. It was the first “all” composite airplane. (About 52% by weight was composite.)
It was the first “all-electric” aircraft, meaning all systems were powered by electric energy. Boeing intended that this would be a “snap-together” airplane. Fuselage sections were to be “stuffed” when delivered to the final assembly line in Everett (WA) and “snapped” together, like a prefabricated house. Outsourcing to industrial partners was taken to unprecedented levels at Boeing. (Airbus already largely practiced this for its aircraft.)
Orders at Risk: Summer 2022 Snapshot
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By Vincent Valery
Introduction
Aug. 22, 2022, © Leeham News: The ink has now dried on the orders signed at the 2022 Farnborough Air Show. Boeing announced more orders than Airbus, mainly because of a sold-out A320 production line well into the future. Airbus also announced orders shortly before and after the Air Show.
Credit: Airbus
Airbus and Boeing also disclosed their second quarter of 2022 earnings and July orders and deliveries, the first post-Farnborough update. OEMs are more likely to reassess the quality of their order books before disclosing future earnings.
Airbus and Boeing have outstanding orders with airlines where there is a material probability some orders won’t translate into deliveries. Most were the result of airlines encountering financial difficulties, but some were related to contractual disputes. Boeing flags such orders as subject to an ASC 606 accounting rule adjustment.
Unlike Boeing, Airbus isn’t subject to an accounting rule like the ASC 606 adjustments. Therefore, the European OEM does not break down the orders at risk of cancellation by the program. Airbus only discloses the nominal value of its total adjusted order book in its annual report.
LNA analyzed July 2020, November 2020, August 2021, and February 2022 Airbus’ and Boeing’s order books to identify orders at risk and come up with an apples-to-apples comparison. We update this analysis with the latest order books from both OEMs. The above links explain our methodology and its differences with Boeing’s ASC 606 adjustments.
Summary
- Lingering order book cleanup for older programs;
- The Boeing-China factor;
- A healthier single-aisle Boeing order book;
- Updates on the A330neo and large twin-aisle aircraft order books;
- One aircraft variant stands out.
Pontifications: Airbus nears 800 sales for A220, but major challenges continue
Aug. 15, 2022, © Leeham News: Airbus now has nearly 800 orders for the A220, but the program is years from profitability and production faces supplier challenges like those facing the Airbus A320neo and Boeing 737 MAX.
Airbus A220-300. Credit: Leeham News.
Passenger experience easily exceeds the older design A320 and 737. The A220’s 2×3 seating, 18.5 inch window/aisle seats, 19-inch wide middle seat and wide aisle draw kudos. The windows are larger than the older airplanes. Economics are better than promised by Bombardier, which designed the airplane as the C Series.
Exiting Commercial Aviation
By Scott Hamilton
Development costs, neglect of the Bombardier Q400 and CRJ programs and concurrent development of two new corporate jets nearly bankrupted Bombardier. To save itself, Bombardier exited commercial aviation and killed one of the two corporate jet developments. The Q400 program was sold to Longview Aviation, which rebranded the turboprop its original name, the Dash 8-400, and adopted the legacy company name, De Havilland Canada.
The CRJ program was sold to Mitsubishi Heavy Industries. MHI had little interest in the CRJ regional jet. Interest was in acquiring the CRJ global product support and MRO system as a groundwork for the M100 SpaceJet it was developing. (MHI later changed CEOs in its policy of rotating the leadership. The new leaders killed the SpaceJet program, the reason for buying the CRJ in the first place.) MHI last year seriously considered restarting production of the CRJ. This idea was abandoned only last month.
The C Series was sold to Airbus in 2017, the first of Bombardier’s commercial programs to go. The impetus was a complaint filed by Boeing with the US Department of Commerce in 2017. While Commerce was assessing the complaint, Bombardier agreed to sell 50.1% of the program to Airbus. BBD was committed to fund construction of an assembly plant at Airbus’ Mobile (AL) complex and cover up to $700m in losses. (Commerce eventually upheld Boeing’s complaint and levied a 292% tariff. But the required review by the Court of International Trade found Boeing suffered no harm in a deal with Delta Air Lines that triggered the complaint. The CIT’s finding killed the tariff.)
Bombardier was unable to fulfill its commitments to Airbus, which eventually bought out Bombardier’s remaining share of the program. (A Quebec, Canada, pension fund still retains about 25% ownership of the program.)
Bjorn’s Corner: Sustainable Air Transport. Part 32. Mixed architectures, Part 2.
August 12, 2022, ©. Leeham News: Last week, we looked at two eVTOLs that don’t fit the terminology we use; Multicopters, Vectored thrust, or Lift and Cruise, the Vertical VX4, and the Archer Maker. We look at Airbus’ CityAirbus NG this week, a Lift and Cruise design like no other (Figure 1).
Figure 1. The Airbus CityAirbus NG. Source: Airbus.
The industries’ CASM trap
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By Bjorn Fehrm
Introduction
August 11, 2022, © Leeham News: The airliner world measures efficiency in CASM, Cost per Available Seat Mile, and RASM, Revenue per Available Seat Mile. An airliner with more seats then has lower CASM or RASM.
Looking at seat counts, we can see that the hottest selling single-aisle, the Airbus A321neo, is closing the gap to widebodies like Boeing’s 787-8 and Airbus’ A330-800.
So it’s CASM, and RASM should be phenomenal. Or is it? Are we comparing correctly, or are these Apples and Oranges comparisons? We use the cabin generator of our airliner performance model to understand it better.
Summary
- The measurement of economics per seat makes sense for internal airline work.
- When comparing different airliner types in the same size class or between types (single-aisle, widebody), it’s the wrong method.
Dual or Single Aisle for Long Haul, Part 3
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By Bjorn Fehrm
Introduction
August 4, 2022, © Leeham News: We’ve been analyzing whether flying long-haul is better with a single-aisle or with a widebody under identical conditions.
To have equal conditions, we fly between Milano and New York at the practical range limit for our single aisle, Airbus A321XLR. We finished the analysis of Cash Operating Costs; now, we look at passenger and cargo yields and the generated margins on the trips.
Summary
- The margins with identical conditions point the same way as the Cash Costs.
- Any cargo traffic on the route will favor the widebody.
Dual or Single Aisle for Long Haul, Part 2
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By Bjorn Fehrm
Introduction
July 28, 2022, © Leeham News: Two weeks ago, we started looking at the most economical way to fly long-haul. The single-aisle alternative or stay with the trusted widebody?
We laid out a route on the practical range limit for an Airbus A321XLR, Milano to New York. With typical headwinds (as we fly west), it’s close to 4,000nm for the aircraft. The first analysis was for fuel burn. Now we add other costs to form Cash Operating Costs.
Summary
- The fuel burn points one way, the Cash Operating Costs another.
- The background is different costs scale differently with size.
Farnborough Air Show winds up with post-pandemic slow pace
By Scott Hamilton
July 22, 2022, © Leeham News: The Farnborough Air Show produced little in the way of headline news. But Boeing comes away with some momentum. Airbus announced a big order on July 1, well ahead of the show, from China, leaving show orders in high double digits.
Boeing announced orders and commitments for 278 737 MAXes, including 100 firm and 30 options from Delta Air Lines. This order was the first from Delta in 11 years, ending a long-running behind-the-scenes streak of sour relations between the companies.
The order, for the 737-10 MAX, finally fulfills Boeing’s goal of getting the -10 into Delta. Boeing had counted on Delta being a launch customer of the airplane in 2017. As reported in my book, Air Wars, The Global Combat Between Airbus and Boeing, the bake-off between the MAX 10 and the Airbus A321neo came down in favor of the MAX 10. But CFM declined to grant Delta TechOps rights to perform maintenance, repair and overhaul for other airlines and lessors. Pratt & Whitney agreed, tipping the order to Airbus.
Also during the competition, Boeing was engaged in a trade complaint over Bombardier’s sale of the C Series to Delta. Boeing alleged Bombardier engaged in price-dumping, contrary to trade laws. Boeing won the trade complaint and a tariff of 292% was assessed on each C Series imported from Canada. However, the final review found no harm to Boeing, which hadn’t competed for the order, a required element to impose the tariff. Many observers thought Boeing’s timing concurrent with the MAX-neo campaign affected the decision. But as reported in Air Wars, Delta officials said this wasn’t a factor.
Airbus prepares contrail flight tests
July 21, 2022, © Leeham News at Farnborough Air Show: Airbus is converting two Arcus high-altitude gliders to check if the contrails produced by hydrogen combustion engines create an environmental problem.
The background is that experts can’t agree if the water vapor produced by hydrogen combustion (which merges hydrogen with oxygen to water) can cause global warming or not. The only way to resolve the dispute and gain fundamental knowledge is to fly and measure.
Figure 1. First flight with the Blue Condor program’s test aircraft. Source: Airbus.