Leeham News and Analysis
There's more to real news than a news release.
Airbus may scrap A400M
Airbus may scrap the troubled A400M program, according to this London Telegraph report of a Der Spiegel interview with Airbus CEO Tom Enders.
Peugeot Citroen fired Christian Streiff, who designed the Power8 restructuing program for Airbus but then resigned after three months in a power struggle. Here is the report picked up by The New York Times.
Update, 4:00 PM March 30: Airbus discounted the London Telegraph/Der Spiegel report and says the company remains committed to building the A400M. Here is the Reuters report.
The picture about the future of the A400M is about as clear as this one.
Source: EADS
ILFC in perspective
Update, March 26, 2:20PM PDT: Bloomberg News moved this piece in which ILFC’s CEO says he’ll get the lessor out from under AIG’s “cloud.”
Original Post:
Mega-lessor International Lease Finance Corp. filed its 2009 10K annual report March 25 with the Securities and Exchange Commission. In it, the company discussed possibilities that could create what’s called a “going concern” situation.
In accounting-speak, the reference is all about bankruptcy. If a company or its auditors raise questions about the ability to continue as a “going concern,” this means there is a possibility the company could seek protection in the US bankruptcy courts. This almost always is a Chapter 11 reorganization filing rather than a Chapter 7 liquidation action.
Countdown for ILFC’s 10 A380s
The countdown is underway for the outstanding order of 10 Airbus A380s by mega-lessor International Lease Finance Corp.
ILFC was an early customer for the super-jumbo jet and suffered two year delays along with the other customers when Airbus’ industrial production issues arose for the giant aircraft. As part of the restructured contract for the order as a result of the delays, ILFC obtained the option to cancel the orders in 2010.
It’s Boeing (and Airbus) against the world
We were at the ISTAT conference this week, one of the largest aviation conferences in the world, where 1,000 aviation professionals gather for the Spring Annual General Meeting to assess the current state of the market. And the state of the market is dismal.
ISTAT stands for the International Society of Transport Aircraft Trading.
A major topic, perhaps the major one, was the so-called “funding gap” that exists this year: with $68 billion in aircraft financing required, nearly all observers believe there is a funding shortfall, or gap, of $10 billion to $28 billion, depending on who’s talking.
Except that Boeing, as well as Airbus, doesn’t subscribe to this theory. (Neither does the leasing company AWAS, but this firm is not out front about it.)
Uncertainty exists over fighting composite airplane fires
c. Leeham.net
Uncertainty exists over how airport fire departments will fight fires in the new composite commercial airliners, indicating that the manufacturers still have educating to do.
A top fire official at Denver International Airport, the location of the most recent airport crash and fire in the USA, believes the coming composite-based commercial airliners will require airport fire departments to change they way they fight post-impact fires. DIA is not yet served by the Airbus A380, the only commercial plane flying with more than component parts made out of composites, and the airport is not slated to be among the first served by the Boeing 787—due to enter service in early 2010.
But a platoon captain with the Los Angeles Fire Department stationed at LAX Airport, one of two US airports currently receiving service from an airliner with substantial composite construction (the A380; New York’s JFK is the other), says his airport follows substantially the same guidelines established for fighting post-impact fires of current generation airplanes.
And Boeing told the airport authorities at Everett, WA’s, Paine Field, where the 787 will perform its flight testing, that there isn’t any effective difference between a composite airplane and a traditional one.
Bill Davis, assistant fire chief of the Denver Fire Department assigned to the Denver International Airport, believes tactics have to be changed after reviewing the post-impact fire analysis of the US Air Force Northrop Grumman B-2A bomber in Guam February 23, 2008. The USAF issued its crash report in June 2008.
“This will fundamentally change everything from strategy and tactics and equipment,” Davis said. “It strikes me that we’re definitely going to have to train to and equip ourselves differently. I’ve studied fires in military composites. This (B-2A crash) is the first of an all-composite airplane; usually there are just parts that are composites.”
EADS financial results 2008
EADS, parent of Airbus, posted its financial results for 2008. The press release may be obtained here. EADS summaries of the results:
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Group EBIT* of € 2.8 billion – supported by excellent underlying performance, significant positive foreign currency effects but burdened by programme charges
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Net Income of € 1,572 million (FY 2007: € -446 million)
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Free Cash Flow exceeded expectations with € 2.6 billion
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Robust balance sheet with Net Cash at a record level of € 9.2 billion
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Revenues increased by 11 percent to € 43.3 billion
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Order book grew 18 percent to a record of € 400 billion
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Dividend proposal of € 0.20 per share
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A400M issues with customers and suppliers pending
The analyst call may be obtained by clicking the top right webcast item on this page. The 20 page PDF earnings slide show may be obtained here.
Obama to delay tanker, says report
CQ Politics reported late Monday night that the White House has told the Pentagon to delay procurement of the KC-X tanker. See the story here.
Update, March 10: DOD Buzz has this item speculating the suggestion to cut the tanker program is nothing more than a budgetary ploy.
New analytic tool calculates emissions, range, fuel burn
A new analytic program enables users to calculate emissions, range, fuel burn, payload and other data on about 250 commercial, corporate, Western and Russian aircraft in a matter of minutes. The program, called Piano-X, is offered by Lissys Ltd. of the UK.
A free download with sample data for the Airbus A300-600, the Fokker 70 and the Boeing 787-8 is available through the websites.
Emissions regulations have been adopted in Europe and are under consideration in the US. The Obama Administration is also talking about imposing carbon taxes, though at this stage these seem to be for industry; it’s unclear if aviation will also be included in the potential legislation. Europe is already imposing taxes on airlines that fail to meet emissions standards. In calculating emissions, Piano-X can use the ICAO emissions data. Piano-X enables operators to quickly calculate emissions that will help them understand potential regulatory costs.
The User Guide details various assumptions and qualifications in calculating emissions.
Piano-X also has aircraft performance analysis on a wide variety of metrics. Airbus undertook its own analysis that concluded the initial 787s will fall significantly short of advertised ranges, capable of operating less than 7,000nm. Aeromexico last week told Flight International it expects the 787 it has ordered to fall short of range targets—also identifying 7,000nm. Boeing denied the Airbus conclusion and did not comment to Flight on the Aeromexico statement.
Tanker contest gearing up
The Department of Defense’s JROC (a joint requirement group) met to consider what to do about the next round of the KC-X tanker competition, and US Sen. John McCain threw cold water on the idea promoted by US Rep. John Murtha about a split buy between Northrop Grumman and Boeing.
Boeing delivered its third KC-767J to Japan last week while EADS, partner of Northrop, promoted a milestone for its KC-30A Australian MRTT tanker.
Boeing has yet to deliver its first KC-767I to the Italians.