Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- JetZero readies effort for private equity fund raising May 5, 2025
- 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
Pontifications: Airbus almost certain to be hurt by MAX crisis
By Scott Hamilton
Jan. 6, 2020, © Leeham News: This may be the year that Airbus is hit with the negative consequences of the Boeing 737 MAX crisis.
Most observers see Airbus benefitting with greater A320 family sales while the MAX remains grounded.
In LNA’s 2020 Outlook last week, we pointed out that the long-running trade war between the US and European Union could be coming to a head this year. Airbus and the EU are waiting for the World Trade Organization’s authorization to impose tariffs on US products. This decision is expected in May or June. Boeing is expected to be the first target. The Trump Administration last year imposed a 10% tariff on Airbus aircraft.
The MAX crisis could ratchet up tariffs on Airbus aircraft.
2020 Outlook for Airbus, Boeing, et al
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Introduction
By the Leeham News team.
Jan. 2, 2020, © Leeham News: This will be a pivotal year for Boeing.
It will be a year of challenges for Airbus.
Embraer Commercial Aviation should disappear.
Mitsubishi Heavy Industries faces final decisions for the SpaceJet.
Overhanging international trade is the US presidential election.
These are just some of the headlines to look for in 2020.
Leeham News and Analysis provides its annual outlook as the new year, and the new decade, begins.
Boeing MAX crisis dominated 2019 Top stories
By Scott Hamilton
Dec. 30, 2019, © Leeham News: Boeing and the 737 MAX dominated the Top 10 Stories on Leeham News in 2019.
This should surprise no one.
The year-end late-breaking news that Boeing CEO Dennis Muilenburg had been fired by the Board of Directors should be in the Top 10 Stories of 2019.
But coming as it did on Dec. 23, the start of Christmas week, it failed to make it into LNA’s Top 10 list.
Readership, obviously, falls off dramatically over the Christmas holidays. The fall-off continues between Christmas and New Year’s evidenced by LNA’s own decision to take a holiday (except for breaking news).
The Ethiopian Airlines crash on March 10 grabbed three of the Top 10 stories and shared, with Lion Air 610 (the Oct. 29, 2018, crash) a fourth story.
Boeing photo.
Boeing’s pickle with the 737 NG pickle fork cracking was of the Top 10 stories.
An historical review that Boeing didn’t want to re-engine the 737, preferring instead a new airplane in 2011 when what became the MAX was launched, was in the Top 10.
An April 2018 story about a potential Blended Wing Body airplane from Boeing hit the Top 10 after an enthusiast site linked it to its forum.
Other MAX MCAS stories were in the Top 10. Finally, anticipated announcements by Mitsubishi for the Paris Air Show was the only non-Boeing story to be in the Top 10 reads for the year.
Airbus didn’t hit the Top 10 but did have a #11 story concerning a pitch-up issue on the A321.
The Boeing stories propelled record readership on LNA in 2019.
Here is the rundown.
Pontifications: There was other news in 2019 besides MAX. Really.
By Scott Hamilton
Dec. 23, 2019, © Leeham News: The Boeing 737 MAX crisis clearly dominated the news this year.
It’s felt like the aviation stories have been all-MAX, all-the-time.
Believe it or not, there was aviation news other than the MAX.
Why did Qantas choose Airbus’ A350-1000 for project Sunrise?
By Bjorn Fehrm
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Introduction
December 19, 2019, © Leeham News: Qantas Airways declared the Airbus A350-1000 the winner for its project Sunrise last week. After two years of competition with Boeing’s 777-8, it was the preferred aircraft for what many say is the holy grail of airline routes, the Sydney-London route.
Many speculate it’s the delay in the availability of the 777-8 that was the deciding factor. We use our airliner performance model to check if this is true or if there are other factors that turned the A350-1000 the favorite.
A350-1000 chosen for project Sunrise. Source: Qantas.
Summary:
- The A350-1000 is a stretch from the A350-900 while the 777-8 is a shrink from the larger 777-9.
- A derivative based on a stretch is often more efficient than one based on a shrink.
- When Airbus adjusts the Maximum Take-Off Weight and fuel capacity of the A350-1000, it can fly the routes Qantas asks for.
US trade rep rejects Airbus tariff reduction claim
Dec. 9. 2019, © Leeham News: The US Trade Representative (USTR) Friday dismissed Airbus; conclusion last week that the tariff authorized by the World Trade 
Organization (WTO) should be lowered by about $2bn.
The WTO’s Compliance Panel last Monday largely rejected the European Union’s appeal of the amount the Arbitration Panel set in October that $7.5bn in tariffs could be levied by the US.
The Trump Administration levied tariffs on a wide variety of non-aerospace goods from across the EU. It also levied a 10% tariff on Airbus airplanes imported into the US. It exempted the A320 family of planes assembled at the Mobile (AL) plant.
Airbus responded to the Compliance Panel’s decision by noting it viewed reduced the “harm” to Boeing as a result of the decision in February by Airbus to cease production of the A380 in 2021.
Accordingly, Airbus asserted that the tariff should be reduced by about $2bn.
Contesting the assertion
The USTR issued a statement Friday rejecting this claim.
“Two months ago, the WTO arbitrator found that the EU’s subsidies caused adverse effects worth $7.5bn per year,” the USTR said. “Nothing in the WTO report even suggests that the compliance panel found that the amount has decreased. There is accordingly no basis for Airbus’s assertions that the report “implies” that the U.S. countermeasures should be reduced by $2bn.
A tectonic shift towards large narrowbody
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By Vincent Valery
Introduction
A321XLR. Source: Airbus.
Dec. 9, 2019, © Leeham News: There are now more firm orders for the Airbus A321neo than all the latest generation widebody programs combined: Airbus A330neo and A350, Boeing 787 and 777X. The largest Airbus narrowbody makes up 44% of all A320neo family orders, compared to 22% for the A320ceo family.
After peaking in 2015, twin-aisle aircraft now represent a smaller portion of all deliveries. Boeing will lower the future Dreamliner production rate from 14 to 12 per month, while Airbus did not proceed with an A350 rate hike.
Being at a later point in the cycle, economic slowdown, and trade tensions explain part of the lower demand for widebody aircraft. However, there are good reasons to believe something more fundamental is at play.
LNA wrote a few months ago that Trans-Atlantic market fragmentation is hurting large widebody sales. This article analyzed the strategic shift occurring at numerous airlines that is hurting all twin-aisle sales, including the smaller A330neo and 787.
Summary
- Late cycle and trade war hurt widebody demand;
- Mitigating operating cost pressures on shorter routes;
- Narrowbody capital efficiency cannibalizes widebody;
- Monitoring the highest traffic growth region;
- Consequences for future programs.
Pontifications: Stop hitting the snooze button, Boeing
By Scott Hamilton
Dec. 9, 2019, © Leeham News: I know Boeing is preoccupied right now. But it has to get off the pot and decide to proceed with a new airplane.
We believe the New Midmarket Airplane is still required. But Boeing salesmen have also floated the concept of a new, single-aisle airplane to key players in the market. Either way, Boeing has to do something.
At least, that’s how we see it at Leeham Co.
The order last week by United Airlines for 50 Airbus A321XLRs should be a wake up call.
It’s not the only one Boeing has had.
WTO compliance decision poses new risks for Airbus, US customers
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Now open to all readers.
Introduction
Dec. 5, 2019, © Leeham News: The Trump Administration Tuesday threatened to increase the tariffs on European goods after a World Trade Organization (WTO) compliance panel concluded Airbus and the European Union have not fully cured illegal subsidies on the A350 and some residual “harm” to Boeing remains as the A380 program winds down.
The EU and Airbus criticized the conclusions as faulty. The EU is expected to appeal by next Wednesday.
The Administration already imposed a 10% tax on the A320 family, the A330neo and A350 imported into the US. So far, the A320 family assembled at Airbus’ Mobile (AL) plant are exempt.
US airlines and lessors whose lessees are US carriers are required to pay the tax. Airbus and its customers are working the problem behind the scenes.
Summary
- The EU awaits a WTO arbitration decision next spring and is prepared to retaliate with taxes on Boeing airplanes.
- Airbus believes it will be in a stronger position than Boeing once the WTO acts.
- US customers are liable for tax.
United orders 50 A321XLRs
Dec. 3, 2019, © Leeham News: United Airlines today announced an order for 50 Airbus A321XLRs.
The airplane has an advertised range of 4,700nm (5,400 statute miles), or a nine hour flight.
Airbus A321XLR in United Airlines “swoop” colors. Source: Airbus.
UAL will replace its aging Boeing 757s on a one-for-one basis beginning in 2024.
The XLR’s targeted entry into service is 2023.