Leeham News and Analysis
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Leeham News and Analysis
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- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
- Supplier Howmet exceeds expectations despite tariffs May 1, 2025
- Airbus 1Q2025 results: So far, so good, but US tariffs make future results unpredictable May 1, 2025
- Does an Airbus A220-500 need a new wing and engines? May 1, 2025
European airline struggles add risk to 15% of Airbus, Boeing orders
By Judson Rollins
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Introduction
Earlier this week, LNA examined the potential for a shakeout among European carriers as the coronavirus outbreak spreads to the continent.
Five European countries now rank among the ten hardest hit – travel demand is plummeting nearly as rapidly as after the September 11 attacks in the US.
On Thursday, UK-based Flybe went into bankruptcy after long-time financial struggles. The airline had 54 De Havilland Canada Dash-8-400s and nine Embraer E175-E1s in its fleet, more than half of which were leased from Nordic Aviation Capital and HEH Aviation Management.
LNA reviewed aircraft ownership data to understand top manufacturer and lessor exposure to European carriers, particularly those with known profitability issues and high debt loads.
Source: Twitter / @AirportWebcams
Summary
- Airbus’s exposure to Europe is 16% on single-aisles and 19% on twin-aisles;
- Boeing has just under 15% of its single- and twin-aisle orders from Europe;
- Embraer’s E2 jet program has 27% exposure to the region;
- ATR, De Havilland Canada, COMAC face little to no threat from European airline woes;
- Norwegian, TAP, SAS, TUI are likely the most imminent threats to manufacturers and lessors.
Does the new weight bump turn the A330-900 to a trans-Pacific aircraft?
By Bjorn Fehrm
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Introduction
March 5, 2020, © Leeham News: Airbus gave an update on their new 251t variant of the A330-900 this week. With a 251t Maximum Take Off Weight (MTOW), the former mid-ranger is mutating to an able long-hauler.
The true long-haul aircraft in the Airbus lineup is the A350, the go-to aircraft from Airbus for Pacific-Ocean crossings. But with a nominal 7,200nm range, the A330-900 is no longer the trans-Atlantic aircraft it was. It will be an alternative to the A350 for many trans-Pacific routes.
Summary:
- The A330 started as a mid-range aircraft with less than 4,000nm range. At the time, the A340-300 was positioned as the long-ranger.
- With the A340 out of the way and to compete with Boeing’s 787, the A330 grew its range 85%. Is it now an alternative to the A350?
US imposed $22m in Airbus tariffs in 2019
By Scott Hamilton
Exclusive
March 3, 2020, © Leeham News: The US Customs and Border Patrol collected $277m in tariffs last year in connection with the Airbus trade war.
Airbus’ A320 final assembly line in Mobile helped reduce the tariff exposure.
But only $22.1m was from tariffs placed directly on Airbus airplanes imported into the United States, LNA learned.
Information obtained by LNA confirmed that most of the tariffs were levied on industries and products unconnected to Airbus.
Airbus to deliver 251 tonnes version of A330-900 by mid-year
By Bjorn Fehrm
March 3, 2020, ©. Leeham News: Airbus has started the additional flight testing needed to certify the 251t version of the A330-900. It needs to verify the handling of the aircraft at the higher weight allowed by a 251t MTOW (Maximum Take-Off Weight, up from 242t for today’s A330-900).
The flight test campaign is short, about 40 hours in all. This allows for certification and first deliveries by mid-year. The smaller A330-800 will certify the 251t version next year.
An upcoming shakeup in European skies
By Vincent Valery
Introduction
Mar. 3, 2020, © Leeham News: After the 2012-2014 European sovereign debt crisis, passenger traffic grew briskly in Europe. The expansion of low-cost airlines, combined with increasing passenger traffic from Asia, contributed to this passenger boom on the old continent.
Despite the passenger traffic boom, the last few years have been challenging for most European airlines. Apart from a few notable exceptions, profitability is materially lower than at US carriers. There were several high-profile bankruptcies, notably Air Berlin, Alitalia, and Monarch, in 2017, followed by Thomas Cook last year.
LNA wrote a series last year on the struggling European carriers.
After starting in mainland China, there have been significant COVID-19 outbreaks in South Korea, Iran, and Italy. The number of diagnosed cases is increasing rapidly around the world, and notably in Europe.
Until two weeks ago, European airlines canceled most of their services to mainland China and reduced frequencies to other Asian destinations. However, with the outbreak intensifying in Europe, numerous carriers took emergency measures to reduce service on intra-Europe services.
European airlines are facing the COVID-19 disruptions with weakened balance sheets. To make matters worse, they have become the target of numerous environmental groups in Western Europe. The ongoing slump in passenger traffic will stretch some carriers’ finances beyond recovery. The much-discussed consolidation wave seems a matter of when, not if.
The financial challenges will undoubtedly affect OEMs, notably Airbus and Boeing.
In this article, LNA lists the scheduled OEM deliveries in countries affected by the COVID-19 outbreak, then assesses the financial vulnerability of major European airline groups.
Summary
- A global COVID-19 outbreak;
- Emergency airline measures to reduce capacity;
- Almost all OEM 2020 scheduled deliveries affected;
- Financial vulnerability at European airlines.
Grounding takes toll on Boeing 737 MAX investment desires
By Scott Hamilton
March 2, 2020, © Leeham News, Austin (TX): A poll of people attending a major aerospace conference here today illustrates the hit Boeing took from the trouble with the 737 MAX.
The audience was asked to rate the Airbus A320neo against the 737-8 MAX for financier/lessor risk-reward investment.
The A320neo was rated favorably by 70% of the those voting. The MAX 8 was rated favorably by just 19%. The remainder rated the two planes equally.
In the era of the A320ceo and 737-800, the Boeing tended to have an edge by a few percentage points in this largely American audience. Audiences at similar European conference tended to tilt toward the A320ceo in past surveys.
In the same polling at this year’s conference 75% of those voting believe Airbus has the better narrow-body product line. Only 19% chose Boeing.
Asian airline troubles could affect up to 20% of Airbus, Boeing backlogs
By Judson Rollins
Subscription Required
In last week’s analysis, LNA examined which airlines in greater China and the rest of Asia may be in imminent risk of financial distress due to the growing coronavirus outbreak. We found that airlines from Malaysia to Japan have significant exposure to the Chinese market. Several have shaky balance sheets and were already losing money prior to the outbreak, most notably AirAsia, AirAsiaX, Thai Airways, Nok Air, Malaysia Airlines, and Asiana.
The coronavirus outbreak has now spread to Europe and the Middle East, but we are continuing our focus on Asia as it’s been most greatly affected so far. Additional analysis focusing on Europe will follow, with particular attention to the potential for further airline consolidation on the continent.
LNA reviewed ownership and operating data on aircraft to understand top manufacturer and lessor exposure to greater China, which includes Hong Kong and Macau, and the rest of East Asia.
Summary
- Airbus has greater exposure to China and the rest of East Asia, especially in widebodies;
- Boeing’s 787, 777X difficulties will be exacerbated by Asian airline troubles;
- COMAC’s sales book is almost exclusively in China, but government support is likely;
- ATR has material exposure to Southeast Asia; other regional aircraft OEMs are largely unaffected.
Pontifications: Boeing’s alphabet soup of airplanes and more
- It’s time for catching up on Odds and Ends.
By Scott Hamilton
March 2, 2020, © Leeham News: NMA. NSA (version 1). NSA (version 2). NLT. FSA. MOM.
By Scott Hamilton
These are Boeing’s acronyms for its next airplane. Whatever it will be.
NMA stands for New Midmarket Airplane.
NSA version 1 stood for New Single Aisle Airplane. It was replaced by version 2, New Small Airplane. This was replaced by FSA, Future Small Airplane. Some called this the Future Single Aisle airplane.
Then there is NLT, New Light Twin, from 2011. Which really begot the NMA, which was initially the MOM, or Middle of the Market Airplane. We called it MOMA at times.
It’s all very confusing. The Next Boeing Airplane is such a moving target. Maybe it should be called the NBA, although some association involving basketball might object. (The Next Airbus Airplane logically would become the NAA.)
Then there is the next new airplane from Embraer, after its joint venture with Boeing is finally approved (as I believe it will be).
Embraer CEO John Slattery want to do a turboprop. So does this become the E3TP?
The JV agreement calls for Embraer (to be named Boeing Brasil-Commercial) to do the next jet in the 100-150 seat category. Does this become the E3150, E3JET, BBCX or something else?
Why was the 737-8 losing market to the A320neo before the MAX crisis?
By Bjorn Fehrm
Subscription Required
Introduction
February 27, 2020, © Leeham News: While we wait on the Boeing 737-8 to get back in the air, we take a look at how this best seller in the 737 series compares with its direct rival, the Airbus A320neo.
The 737-800 and its follow on, the 737-8, have been the most popular single-aisles in Boeing’s lineup for decades. The 737-800 sold more units than the A320. But when both got re-engined, this changed. The A320neo is now outselling the 737-8.
We look into why.
Summary:
- The trend where the A320neo is outselling the 737-8 started well before the MAX crisis. Is the root cause better airframe performance?
- We find the cause to be another. The difference is not about a change in relative airframe performance between the two.
Europe to Boeing: Not so fast on your WTO move; tariffs still likely
By Scott Hamilton
Feb. 24, 2020, © Leeham News: Not so fast, Europe says about Boeing’s claim it is curing illegal tax breaks from Washington State.
The World Trade Organization has to agree to Boeing’s interpretation. This will take at least a year. In the meantime, be prepared for tariffs to be levied on Boeing airplanes by this summer, just as the company hopes the 737 MAX is recertified and deliveries can resume.
Boeing must get the WTO’s approval that the move to suspend the tax breaks will bring the US and Boeing into compliance with a ruling they are illegal.
This process could take a year, said a person familiar with the process. He spoke on the condition of anonymity in order to speak freely.
In the meantime, tariffs that have been authorized for the European Union to impose on Boeing, and other US products, may take effect once the amount is approved. This decision is due in May or June.