Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing’s 737 North Line and the Everett factory: in transition now June 9, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 25. June 6, 2025
- New RISE powerplant benefits from decades of GE research and development June 5, 2025
- Engine makers emphasizing durability, reliability June 4, 2025
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
HOTR: Airlines, lessors cancel ~250 MAXes since January
By the Leeham News Staff
April 21, 2020, © Leeham News: Since the COVID-19 pandemic went viral beginning in January, there have been nearly 250
cancellations of the Boeing 737 MAX.
Some of these were related more directly to the grounding of the MAX. In fact, it could reasonably be argued that most were. COVID-19 exacerbated the problems, now that passenger demand fell by as much as 95%.
The MAX was grounded globally March 13, 2019. Purchase agreements generally allowed the customer to cancel the contract if delivery is delayed more than 12 months, provided there isn’t an “excusable delay.” Pandemics typically fall under an excusable delay. Grounding by regulators depends on the language in the specific contracts.
Japan seeks to develop aircraft industry ties through Asian trade partnerships
By Judson Rollins
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April 20, 2020, © Leeham News: Japan has long been known as an engineering powerhouse, and Japanese manufacturing titans like Mitsubishi Heavy Industries and Kawasaki Aerospace have been a key part of Boeing and Airbus supply chains for the last two decades.
Japan’s government wants to expand the country’s influence by signing agreements with members of the Association of Southeast Asian Nations (ASEAN) to secure improved cooperation with downstream suppliers. Aircraft and engine OEMs and key tier-one suppliers already have manufacturing operations in Thailand, Singapore, Malaysia, Indonesia, the Philippines, and India.
The first of these agreements is expected to be signed with Malaysia, which declared its ambition to become the biggest aerospace producers in Southeast Asia by 2030.
On the sidelines of February’s Singapore Air Show, LNA met with representatives of Japan’s Ministry of Trade, Economy, and Industry (METI) to discuss the proposed agreement with Malaysia. This article has been withheld until now due to the myriad aerospace issues caused by the COVID-19 crisis.
Summary
- Bilateral agreement postponed due to COVID-19.
- Areas of cooperation include manufacturing, training and more.
- Malaysia’s growing aerospace footprint.
Pontifications: What shape and how long will recovery take?
By Scott Hamilton
April 20, 2020, © Leeham News: There just is little good news for the aerospace industry right now.
Airbus announced it will reduce production by a third across the A-Series airliners. I don’t think this will be the last cut.
Boeing last week said it will resume production in the Seattle area of its wide-body airplanes. It’s also now preparing to restart production of the 737 MAX, clearly a piece of good news. Defense-related production for the P-8 Poseidon and the KC-46A tanker resumed last week.
But Boeing hasn’t laid out its production plans for the 7-Series airplanes. This undoubtedly will come next week. Monday is the shareholders’ annual meeting. This will be held virtually at 9am CDT. Access is via the Boeing website. The first quarterly earnings call will be held two days later, also accessible via the web. Either meeting may outline the production plans for the rest of the year.
Pontifications: Airlines, OEMs step up in virus crisis
By Scott Hamilton
April 13, 2020, © Leeham News: There are plenty of stories and photos floating around the Internet about airlines flying empty or nearly so.
Schedules have been pared back up to 95% across the globe.
Spot-check Flightradar24 at any given moment and there are a lot air freighters flying.
But the passenger airlines are also flying some airliners dedicated to cargo. Some are flying cargo in the below-deck holds only. Others installed plastic protection over the passenger seats and loaded box after box after box of protective masks for shipment. Still others removed the passenger seats entirely and loaded the main deck with lighter-weight cargo.
This article summarizes many airlines that stepped up to fly supplies throughout the world.
Is COVID-19 a Force Majeure event?
Editor’s Note: Airbus, Boeing and Embraer and other OEMs face requests for deferrals and perhaps cancellations of orders as a result of COVID-19. In addition, Boeing now faces cancellation requests for the 737 MAX grounding, now in its 13th month. While Boeing’s contracts generally allow Boeing or the customer to cancel the order after the 12th month, the COVID crisis raises a new element: canceling by Force Majeure and something called the Doctrine of Frustration.
The following analysis appeared March 12, 2020, on the website of the law firm Shearman & Sterling law firm. The authors are listed at the end of this article. It is reprinted here with permission.
Following the rapid spread of the novel coronavirus (“COVID-19”) that was first reported in Wuhan, China at the end of 2019, the World Health Organization declared COVID-19 to be a pandemic on March 11, 2020.
In this note, we consider how force majeure provisions in commercial contracts and the related common law doctrine of frustration may be engaged in the context of the COVID-19 outbreak. While this analysis focuses primarily on the position under English law, we have included a PRC law perspective because of the significant impact COVID-19 has had on business in China. We also suggest steps that parties may take to safeguard their positions in view of the evolving situation.
Airbus cut production rates by a third
By Scott Hamilton
Production of the A320 and A220 in Mobile is paused. Airbus hasn’t decided what to do about A220 rates, yet.
April 8, 2020, © Leeham News: Airbus today said it will cut production of the A320, A330, and A350 lines due to COVID-19.
The new rates are:
- A320 to rate 40 per month (from 60-63);
- A330 to rate 2 per month (from 3.5)
- A350 to rate 6 per month (from 10)
HOTR: American sees virtually no travel for up to 7 months
By the Leeham News staff
April 7, 2020, © Leeham News: “Nobody’s traveling in the next 30 or 60 days,” said Vasu Raja, American Airlines Group Inc.’s senior vice president for network strategy. “But nobody is really making any plans to go travel in the next 90 to 150 days, either.
So reported the Wall Street Journal Sunday.
That basically takes you through the end of the year.
Singapore will suspend its Changi Airport Terminal 2 for 18 months from May 1. (Associated Press.)
Pontifications: Assessing the impact of COVID-19: today’s take
By Scott Hamilton
April 6, 2020, © Leeham News: It’s going to be quite a while before there is a clear understanding how coronavirus will change commercial aviation.
LNA already touched on impacts to Airbus, Boeing and Embraer. None of it is good. For Boeing, burdened with the additional stress of the 737 MAX, is in the worst position. Even when the MAX is recertified, there won’t be many—or any—customers in a position to take delivery of the airplane.
Bearing in mind that what’s true today will change in a day, or even an hour, let’s take a rundown of where things seem to stand now.
Shall passenger airliners run as freighters during the COVID-19 crisis?
By Bjorn Fehrm
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Introduction
April 6, 2020, © Leeham News: With the COVID-19 pandemic, the passenger traffic has ground to a halt in many countries. The airliners are parked and their crews sit idle.
At the same time, the air freight market booms. From a decline in demand in the first months of the year, there isn’t enough freighter capacity right now. The freight that traveled in the bellies of the passenger jets had to find new ways and as this was almost half the world’s air cargo, the dedicated freighters can’t absorb the volumes.
Is it time to fly passenger airliners as substitute freighters? Some airlines are doing this on a spot basis. Apart from injecting capacity for needed medical supply freight, does it make economic sense? We run a series of articles on the subject.
Figure 1. Delta flies an A350-900 as a belly freighter between Shanghai and Chicago three times a week from March 30. Source: Delta.
Summary:
- Freight prices soar as capacity collapses when airlines ground passenger jets.
- For the airlines, the cost equation changes with an abundance of free capacity at remaining fixed costs.
- Does it make economic sense to run passenger airliners as freighters in this situation?
Engine maker, lessor see Boeing’s next airplane as a single-aisle design
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Now open to all readers.
By Scott Hamilton
“The NMA is gone. Long live the NMA.”–lessor CEO. Photo: Leeham Co.
April 2, 2020, © Leeham News: Boeing’s New Midmarket Airplane, or a new concept, is the last thing on the plate right now.
But Boeing’s future product strategy nevertheless requires long-term thinking even as the short- to medium-term is in chaos.
Interviews were conducted March 2 at a major aerospace conference in Austin (TX), just days before the coronavirus crisis exploded exponentially across the globe.
The CEO of the major lessor, Avolon, declared the NMA dead and predicted a new single-aisle airplane will be Boeing’s next project.
An executive of Pratt & Whitney offered a similar view.
Summary
- “The NMA is gone. Long live the NMA. That moment has passed.
- Back to the 757 replacement concept and, now, A321XLR competitor.
- Single-aisle vs light twin-aisle is part of the challenge.
- New airplane must be “dramatically” more efficient than MAX, neo.
- 2030 decade is the quickest this dramatic improvement can be achieved.