Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- 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
- Teamsters, Boeing have a new contract April 29, 2025
Airbus fights delivery challenges on several fronts
By Bjorn Fehrm
October 31, 2018, ©. Leeham Co: Airbus announced 3Q 2018 results today. The company is wrestling with delivery problems for several of its aircraft programs. Its inventory of finished aircraft which can’t be delivered has increased by €5bn as a result.
On the positive side is a smooth running A350 program and that the A220 program, which is consolidated into Airbus for the first time, seems void of unpleasant surprises.
Airbus’ disadvantages in widebody campaigns
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Introduction
Oct. 29, 2018, © Leeham Co.: Airbus faces a key disadvantage when it comes to winning current wide-body campaigns against Boeing.
The disadvantage is entirely out of its control.
It’s not about whether the A330neo or A350 vs the 787 economics are out of kilter. They’re not.
It’s about the engines, LNC is told by multiple market sources. Specifically Rolls-Royce engines, which exclusively power the Airbus wide-bodies.
Summary
- Airlines affected by Rolls-Royce-powered 787 problems are hopping mad.
- The negative halo effect puts questions over the Trent 7000-powered A330neo.
- While less affected, there is a negative halo effect over the Trent XWB-powered A350.
- Airlines considering follow-on ordered of 787s are ready to jump from RR to GE.
Pontifications: Engines, engines, engines
By Scott Hamilton
Oct. 29, 2018, © Leeham Co.: Engines, engines, engines.
News emerged last week that Rolls-Royce admitted its continuing problems with the Trent 1000 that powers the Boeing 787 now bled over to the Trent 7000.
RR will fall short of delivering the number of engines need to Airbus for the A330neo, meaning fewer deliveries of the airplane this year.
Boeing said it is clearing its inventory of 737 MAXes, but CFM LEAP engines are still late, slowing the effort.
Pratt & Whitney’s GTF engine deliveries to Airbus are caught up, but technical issues still plague in-service engines. CFM still has technical issues as well, though not as severe or persistent as with GTF, with its LEAP engines. Read more
Boeing’s growing 777X challenge
- Boeing 3Q earnings call Oct. 24, 10:30am EDT.
Oct. 23, 2018, © Leeham News: Boeing has been confident it has bottomed out the production rate of the 777 line, successfully bridging between the Classic and the X models.
CEO Dennis Muilenburg nevertheless typically couches this confidence with “with still have some work to do.”
But during LNC’s trip last week to New York, sources said this bridge may be moving to the right.
Etihad Airways was a launch customer for the Boeing 777X. It’s deferred delivers once. It may do so again. LNC has been on this story since January 2017. Image via Google images.
Bombardier squeezed by ATR, Embraer, Mitsubishi
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Introduction
Oct. 22, 2018, © Leeham News: Bombardier has a firm backlog of 67 Q400 turboprops. ATR has a backlog of 256 through Oct. 20, according to the Airfinance Journal Fleet Tracker.
This is an 80% market share for ATR.
Bombardier has 83 CRJ jets of all models in backlog. Embraer has 442 orders for all E-Jet models. Mitsubishi has 213 firm orders for its MRJ70/90.
This is just an 11% market share for the CRJ.
These figures illustrate why the market doubts Bombardier’s long-term future in commercial aerospace.
Summary
- The Q400 and CRJ are aging aircraft designs.
- Minor enhancements don’t address the underlying issues.
- New competition is squeezing BBD.
Pontifications: Market Intelligence from NY
By Scott Hamilton
Oct. 22, 2018, © Leeham News: I was in New York City last week for a series of meetings. Here’s what “the street” is talking about. I make no judgment calls about whether the thoughts are on target or not. Read more
Boeing’s transition in supply chain management aims to save hundreds of millions of dollars
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Introduction
Oct. 8, 2018, © Leeham News: As Boeing moves toward more automation, digital twins and 3D printing to streamline manufacturing and reduce costs, behind the 
scenes another major initiative has been underway for more than a year.
It’s the shift from its decades-old Enterprise Resource Planning system to a new, expanded one called Systems Applications Projects.
ERP manages parts and inventory. SAP is an evolution of ERP, important as Boeing plans to up production of the 737 and 787 and nears a decision whether to launch the New Midmarket Aircraft (NMA).
The transition is complex and will take years to fully accomplish.
Synergizing scores of old processes covering a billion parts, requiring meticulous data entry, is a daunting task. In fact, after running into problems in June, Boeing Commercial Airplanes’ transition has been delayed, reports the aerospace analyst for Cowen & Co.
A glitch in the system can have ramifications that interrupt production and create traveled work that can delay airplane deliveries to customers.
A system that works as it should streamlines delivery of parts and reduces costs for Boeing—and, theoretically, also its suppliers.
It’s a delicate balance where one misidentified entry into the computer can create problems.
Pontifications: Amazon’s quiet plans to grow its airline
By Scott Hamilton
Oct. 8, 2018, © Leeham News: Amazon, the giant on-line retailer, continues to move quietly to expand its Amazon Air cargo carrier, with plans to grow the airline to a size that could rival FedEx, market sources tell LNC.
Amazon’s contracting with Atlas Air, ATSG and others for Boeing 767F services is well known.
So are plans for a $1.5bn cargo center at the Cincinnati (OH) airport (which is really across the state line in Kentucky). This expansion will support more than 100 airplanes. Operations are targeted to begin in 2020.
Prime operates about 40 through its airline partners and is in the market for 10 more, LNC is told.
But this is just the tip of the iceberg. Read more
Huge surge of A320 orders greatly exceed near-, mid-term A320 retirements
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Introduction
Oct. 4, 2018, © Leeham News: The huge surge of orders for the Airbus A320 family far outstrips the aging aircraft statistics, an analysis shows.
Airbus has a backlog of more than 6,000 A320 family members, with more than 1,700 sales potential just for retirements.
There is a backlog of more than 6,000 A320neo family members, with the near- and mid-term delivery schedule far exceeding A320 retirements. Photo credit: Airbus.
There are more than 4,300 A320s scheduled for delivery from 2019 through 2025.
There are just 765 A320s that hit 25 years old during the same period.
The surge in A320-family aging aircraft begins in 2030, just as the bulk of the current backlog ends, according to data bases maintained by Ascend and Airfinance Journal’s Fleet Tracker.
Summary
- Useful lives of A320s in passenger service historically have been 25 years. Till now, no P2F programs existed to extend the useful lives.
- But, some passenger airlines are returning A320s off lease in 12 years or less—accounting for some of the surge in orders vs aging aircraft.
- Supply-demand imbalance in the secondary markets could emerge.
Suppliers are paying more, waiting longer for aluminum and other materials
danieljcatchpole(at)gmail(dot)com
An infographic highlights the role of aluminum in commercial aircraft production. (Image via Google Images)
Oct. 3, 2018, © Leeham News: United States-based aerospace suppliers say lead times and prices have significantly increased for aluminum, steel and other high-grade materials used to make commercial and military aircraft. But, they say, they have taken the increases in stride.
Aerospace suppliers based outside the U.S. generally have been less affected by the increases in lead times and prices for high-grade aluminum and steel, which President Donald Trump slapped tariffs on in March.