Pontifications: Getting around as airline service tanks

By Scott Hamilton

March 23, 2020, © Leeham News: There were times last week when the number of private airplanes in the air seemed to outnumber the airliners.

Periodic checks on FlightRadar24 of the skies around Seattle showed a dearth of commercial flights. By Friday, the US carriers already sharply pulled down operations. International flights were largely canceled.

Most cutbacks are likely.

With passenger traffic all but dried up—some flights had load factors of 20%-30% and others only one or two passengers—how might people get around while minimizing exposure to the coronavirus?

The private, general aviation airplanes are one choice.

Using corporate jets is another. But this option isn’t inexpensive, even when consolidating passengers.

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Can the Airbus A321XLR fly trans-Oceanic routes?

By Bjorn Fehrm

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March 19, 2020, © Leeham News: Over the last weeks, we compared the Airbus A330-900 to the A350-900 when flying the long routes over the Pacific Ocean. Now we pose the question: To what extent is an A321XLR a possible alternative or complement to these long-rangers for Oceanic routes?

The A31XLR has the range to be a credible trans-Atlantic aircraft since its 700nm range hike over the A321LR. But can it be used over the Pacific Ocean as well? We check it out.

  • Direct routing US West Coast to East Asia is too long for the A321XLR.
  • But there are interesting US to Asia routings where the A321XLR is the enabler for the route structure.

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Why bailouts make sense under these circumstances

By Scott Hamilton


By Scott Hamilton

March 18, 2020, © Leeham News: The Federal government is preparing a bailout, said to be more than $1 trillion, to pump into the US economy.

Airlines want $50bn. Boeing wants $60bn for the aerospace industry. It’s unclear how much is for Boeing and how much is for industry.

Opposition for the airlines and Boeing was quick to emerge. The objection: how much each spent in recent years on shareholder buybacks.

The bailout package goes across the US economy and includes direct cash grants to individuals. In keeping with LNA’s business, I focus in the column only on aviation.

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US carriers not at imminent risk of bankruptcy despite potential shutdown

By Judson Rollins

March 16, 2020, © Leeham News: Throughout Sunday afternoon and evening, reports – all unconfirmed – began to emerge in the US that as early as today, the Trump administration may announce a suspension of US passenger flights domestically for 2-4 weeks. The suspension, if confirmed, could begin this week. Investors are scrambling to understand how long US airlines can survive on their current cash balances.

LNA reviewed the balance sheets of carriers worldwide in anticipation of such dramatic events. In this article, we will show that US airlines have plenty of time for demand to recover – or the US government to step in with emergency loans or grants similar to those doled out by the Air Transportation Stabilization Board from 2001 to 2003.

This airplane line-up at Chicago O’Hare Airport could be a thing of the past very soon. Source: Pinterest.

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Pontifications: What kind of aid could US airlines get?

By Scott Hamilton

March 16, 2020, © Leeham News: Airlines in Europe already asked governments for financial aid as coronavirus forces massive schedule cutbacks and in some cases, complete service suspension.

In the US, talk of aid began in earnest last week.

Delta Air Lines, which is parking 300 airplanes and cutting 40% of its capacity, said it plans to seek US financial assistance.

There is increasing talk that the US may order a complete suspension of domestic air service. If so, this would be like 9/11, when for the first time in history the US shut down its skies.

Trans-Atlantic flights were diverted to Gander as 9/11 unfolded. Source: i.pinimg.com

That lasted only three days.

With federal officials saying the crisis hasn’t peaked in the US and it may be a couple of months before the crisis subsides.

US carriers will almost certainly seek government assistance.

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Airlines seek rent relief as coronavirus impacts widen

By Scott Hamilton

March 11, 2020, © Leeham News: Some airlines already are asking for rent relief as a result of widespread groundings of aircraft because of the coronavirus.

BOC Aviation, Avolon and Air Lease Corp are just three lessors acknowledging they’ve already been asked for relief. They spoke on the sidelines of an aviation industry conference in Austin last week.

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Heard on the Ramp: Boeing has its 777X sales challenges; Airbus A330neo appears to be next

Heard on the Ramp

We introduce today a new feature, Heard on the Ramp. This column contains news briefs LNA picks up in the market that aren’t expansive enough for stand-alone articles but which are items of interest. Publication will be on an as-needed basis.

By the Leeham News staff

March 10, 2020, © Leeham News: Last year revealed Boeing 777X order problems, with a small customer base and cancellations or deferrals. Perhaps this year will be the Airbus A330neo’s turn.

Out of 337 orders, 156 A330neos are with airlines in trouble or can’t take aircraft (AirAsiaX, Iran Air, HNA), or 46%.

This is without counting the second level of trouble airlines and lessor orders, which may have challenges placing aircraft in today’s unsettled market.

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An upcoming shakeup in European skies

By Vincent Valery


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.

  • A global COVID-19 outbreak;
  • Emergency airline measures to reduce capacity;
  • Almost all OEM 2020 scheduled deliveries affected;
  • Financial vulnerability at European airlines.

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Coronavirus dominates sideline talk at aviation conference

By Scott Hamilton

March 2, 2020, © Leeham News, Austin (TX): The global impact of COVID-19, the coronavirus, was the dominant talk on the sidelines of an aviation conference here.

Source: KRDO.com

Industry professionals predict the reduction in airline service will only grow and could grow dramatically. Aircraft groundings could escalate sharply. Carriers are already seeking payment relief. Lessors are gearing up to repossess airplanes.

And universally, these professionals think the worst is yet to come.

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Leasing industry sees a role in airline sustainability work

By Bjorn Fehrm

January 22, 2020, ©. Leeham News, Dublin: The yearly Air Finance Journal conference finished its second day with a Q&A with the top executives of the Leasing industry.

The Leasing companies buy 40% of all new airliners from the likes of Airbus and Boeing, to later rent them to the airlines on a monthly basis.

With 40% of all new aircraft delivered to these companies, their view on where we are in the cycle and what are the main challenges facing air transport is important.

The main topics during the three-day conference are the state of the airlines, the ease or difficulty to finance the purchase of $50bn of aircraft per year and the growing issue of air transport and the environment.

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