By the Leeham News Team
Nov. 5, 2020, © Leeham News: Research and Development spending by the Airbus and Boeing commercial units declined year-over-year.
Boeing’s spending typically lags Airbus. Richard Aboulafia, a consultant with Teal Group, for years criticized Boeing over its smaller spending, favoring instead shareholder value. Airbus overtook Boeing is innovative single-aisle airplane development years ago. Boeing’s choice of creating a 777 derivative instead of a new design to compete with the A350-1000 proved to be a weak move. There are only a handful of customers and the skyline is weak.
By Kathryn B. Creedy
Air Lease Executive Chair Steven Udvar Hazy expects lessors to play a larger role in aircraft fleeting in the future, according to comments made during yesterday’s Aviation Week Fireside Chat with the lessor.
“I don’t see lessors going below 40%,” he told Air Transport World Editor Karen Walker. “I see it creeping up to perhaps 50% or 55% and that includes operating leases and various other exotic mechanisms.”
Udvar Hazy pointed to the poor financial shape of the world’s airlines which have used all their current levers to increase liquidity to ride out the Covid 19 crisis.
By Vincent Valery
Sept. 28, 2020, © Leeham News: The end of September marks the time when airlines in the Northern Hemisphere assess their summer season financial performance. Depending on the outcome, they adjust their capacity and evaluate their cash needs to see through the lower demand winter months.
This summer was significantly different from what airlines envisioned earlier this year. They had to re-arrange schedules on short notice to capitalize on the uptick in passenger demand after the lifting of some travel restrictions put in place during Spring.
With a resurgent COVID-19 spread in some countries and the re-establishment of movement restrictions, airlines need to, once again, adjust their plans for winter months.
By Bjorn Fehrm
September 28, 2020, © Leeham News: The worldwide COVID-19 pandemic is shaking the air travel and airliner manufacturing industries like no crisis before.
More than 9/11, the oil crisis of 1973 or 2005 or the financial crisis of 2008. The problems for the airlines and the airframe OEMs are on the front pages of the world’s media.
The part of the airliner industry that is not so visible but is perhaps hardest hit, is the engine industry. Its weird business model amplifies the effects of the crisis.
By the Leeham News Staff
Sept. 9, 2020, © Leeham News: Morgan Stanley has a new aerospace analyst, Kristine Liwag, who initiated coverage on a half dozen companies over two days last week.
One of the conclusions in one of her notes:
“Assuming that some orders for growth and those ordered by lessors are cancelled in the 2020-2025 timeframe, we estimate that there is $73bn downside risk to Boeing’s revenue from 2020-2025. We note that our Bull case scenario assumes that the entire current order book converts to revenue.”
Liwag and her team also write, “there is an underappreciated risk that Boeing is particularly vulnerable to cancellations as the 737 MAX grounding (March 2019) opened up cancellation rights (without penalty) for aircraft deliveries that were delayed a year.”
But Morgan Stanley doesn’t let Airbus off the hook
“Boeing and Airbus manufacture aircraft to an order book. White tails, which are aircraft without owners, are uncommon and undesired. When demand is strong and the production skyline is sold out, as we have seen in the past few years, a new aircraft is a scarce commodity that airlines and lessors want. In times of uncertainty, a new aircraft, with a capital cost of $50mn-$200mn per unit, becomes a white elephant.”
By the Leeham News Staff
LNA’s monthly tracking of failed carriers adds Virgin Atlantic, EasyFly, Go2Sky, ExpressJet, and the Smartwings Group to the list of carriers in bankruptcy or court-supervised restructuring since COVID collapsed the global airline industry beginning in mid-March.
Among those five, Go2Sky and ExpressJet announced that they would cease operations. Virgin Atlantic won the support of its creditor for a court-supervised restructuring.
By Kathryn B. Creedy
Third in a Series. Previous articles:
Aug. 31, 2020, (c) Leeham News: European regionals face far greater challenges than Covid and, sadly, much of what is happening to the industry is beyond its control. The result is similar to failures seen in the U.S. Flybe’s recent loss resulted from pre-Covid problems which also led to the pre-Covid failures of such airlines as Flybmi and Cobalt.
The failures illustrate, however, the three reasons why European regionals are so fragile – low-cost competition, geography, and challenging government policy.
By Scott Hamilton
Boeing hoped to advance the timeline for the launch of the 777-8F. The original plan for the 777X family was entry-into-service of the -9 in late 2019 or early 2020. The 777-8 passenger model (8P) would follow by two years. The -8F would follow two years after that.
As the -9 EIS slipped to late 2020 and the 737 MAX grounding took its toll, -8 development was suspended. The -8P EIS was unofficially reset to 2024.
Now, the 777-9 EIS is rescheduled to 2022. Production of the 777 line is going to 2/mo. With freight demand spiking due to COVID and widebody passenger production not expected to recover until 2025, Boeing thought advancing the -8F launch could boost the X line.
It’s not to be.
By Vincent Valery
Aug. 11, 2020, © Leeham News: There is a shake-up still to come for European airlines.
LNA wrote in early March about the financial vulnerability of several European airlines as the COVID-19 outbreak was intensifying. The article was released before European countries closed their borders, and the US banned inbound travel for non-residents from the old continent.
Fast forward five months, and the airline industry is in its gravest crisis since World War II. After bouncing from the lows in April and May, a passenger traffic recovery remains elusive. Some European countries are re-implementing travel restrictions as new (for now localized) outbreaks emerge.
Despite the unprecedented slump in passenger traffic, Flybe is the only sizable European carrier to have ceased operations since the beginning of the COVID-19 outbreak. Several smaller carriers declared bankruptcies or ceased operations.
LNA analyzes why some carriers went under while others did not, and assesses how various market segments might recover.
Aug. 10, 2020, © Leeham News: Frontier Airlines’ CEO Barry Biffle says “it’s time to fly,” reports The Points Guy.
Well, good luck with that.
Air fares are ridiculously cheap. Some airlines in the US continue to block middle seats and now require passengers to wear masks throughout the flight. Extra efforts are made to clean the airplanes. (Southwest Airlines, in a truly bizarre move, ceased cleaning seat belts and arm rests between flights—two things passengers are guaranteed to touch.)
Travel count in in the US is now up to about 800,000 passengers a day. This compares with nearly 3m a day pre-COVID.
I wrote July 6 why I won’t be flying any time soon. I wasn’t concerned about the airplane experience (except for those passengers who refused to wear masks). I was concerned about the experience getting to, from and at the airports and at hotels.
Now, there’s another reason why it’s not time to fly.