Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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- 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
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.
WTO affirms non-compliance in Airbus-WTO case; another appeal expected
Dec. 2, 2019, © Leeham News: Boeing and the US won another round at the World Trade Organization today when the compliance panel upheld a decision to impose tariffs on the European Union, including Airbus airplanes, in the 15-year trade dispute between the US and the EU.
The compliance panel did hand a minor win to Airbus and the EU by reducing the impact of “harm” to Boeing over the A380. Airbus argued that there should be no impact because the program is being terminated in 2021. In a partial victory, the WTO compliance panel agreed that the impact of the A380 is reduced with the decision to terminate the program in 2021.
But, according to a Reuters report, because the airplane continues to be delivered into 2021, the impact is not entirely eliminated.
Understanding Rolls-Royce’s financials
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By Vincent Valery
Introduction
Dec. 2, 2019, © Leeham News: Rolls-Royce continues to be in the spotlight for the Trent 1000 durability issues, with no end in sight. The engine manufacturer recently increased the total disruption cost estimate to £2.4bn.
The engine-related charges and substantial research and development expenditures have raised questions about Rolls-Royce’s fin
ancial health. As of the end of 2018, the company had a net negative £1bn equity on its balance sheet.
However, the company has a market capitalization of around £14bn and holds a credit rating comfortably in Investment Grade territory.
This article analyzes the reasons for the disconnect between the company book value and market capitalization. Accounting differences between the USA’s GAAP and Europe’s IFRS play a significant role.
Rolls-Royce’s strategic choices in the early 2010s will have ramifications for engine development on future commercial aircraft programs.
Summary
- A tumultuous history;
- From cash cow to binge development spending;
- Brexit and IFRS accounting paint bleaker pictures than reality;
- Strategic decision bites back;
- A lifeline and future engine programs.
Pontification: A320 production challenges may extend to 2022/23
By Scott Hamilton
- Update of Boeing 737 NG Pickle Fork cracking issues.
Dec. 2, 2019, © Leeham News: Airbus sees struggles for A320 production continuing throughout next year, into 2021 and spilling into 2022/23 as the Air Space cabin is introduced on the A321XLR.
Executives also see lower margins than the target 15% for the A350 and losses on the A220 continuing into the middle of the next decade.
Even so, profit targets are expected to be met and officials still want to ramp up production rates on the A320.
This mixed picture was presented by Airbus CFO Dominik Asam during series of investors meetings last month in Asia, arranged by Citi Research’s London office.
In a research note issued Nov. 22, Citi summarized the three days of meetings with investors in Australia, New Zealand and Tokyo.
Converting customers to the FSA
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By Vincent Valery
Introduction
Nov. 28, 2019, © Leeham News: As Boeing works its way through the 737 MAX crisis, all consideration whether to launch the New Midmarket Aircraft (NMA) is on hold.
But the Boeing sales force has been testing the market with a single-aisle concept, the Future Small Airplane (FSA) to replace the MAX.
This highly confidential effort has been underway for months. Some lessors have been approached to swap some MAX orders for the FSA—there was a supply-demand imbalance for lessor-ordered MAXes even before the grounding—and airlines across the globe have been approached to gauge interest.
Summary
- Solving a lessor placement headache;
- Older 737 NG replacement;
- Accommodating airlines that over-ordered;
- Brand new (non) metal for old carriers.
Several aircraft programs beset by engine woes
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By Judson Rollins
Nov. 25, 2019, © Leeham News: Nearly every manufacturer of jet engines is experiencing problems with various models, which is causing delays for several prominent Boeing and Airbus programs. The Airbus A220, A320neo, A330neo and Boeing 787, 777X are all experiencing engine-related setbacks.
Grounded 787s at London Heathrow. Source: Twitter / Alex Macheras.
Summary
- Pratt & Whitney geared turbofan (GTF) operational limitations on A220, A320neo.
- CFM LEAP said to be causing renewed A320neo delivery delays.
- Multiple new airworthiness directives on Trent 1000, 7000.
- GE9x component issues causing delays to first 777X test flight.
Pontifications: Good, and Bad, news from the Dubai Air Show
By Scott Hamilton
Nov. 25, 2019, © Leeham News: The Dubai Air Show proved to be a mixed bag for Airbus and Boeing.
Each company picked up important orders and commitments.
But each company saw some previously announced commitments reduced in the process, including, for Boeing, a reduction in the backlog for the slow-selling 777X.