HOTR: Boeing bear case: $73bn revenue drop 2020-2025

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.

Among them, of course, was Boeing.

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.”

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HOTR: Five more airlines under court restructuring or ceasing operations

By the Leeham News Staff

Aug. 31, 2020, © Leeham News: The Smartwings Group is the latest airline to file for a court restructuring.

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.


European Regionals Face Hostile Operating Environment

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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.






Flybe is just the latest of many regionals to cease operations owing to harsh conditions in Europe.

  • Government Policies Hardest on Regionals
  • LCC Competition Challenging
  • Consumer Protections Crushing
  • Turboprops Have Large Role

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No surge in new-build freighters from COVID expected

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By Scott Hamilton


Aug. 17, 2020, © Leeham News: Coronavirus caused a spike in freight demand. But don’t look for Airbus or Boeing to see a spike in demand for new build freighters.

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.

  • Boeing hoped to launch the 777-8F with 2024 EIS.
  • No market interest scotched the plan.
  • P2F conversions of 777-300ER gain interest.
  • Airbus hopes for A330-900F are dashed.

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A lingering shakeup in European skies

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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.

  • Numerous airlines too interconnected to fail;
  • The worst-case comes true for European regional airlines;
  • Some unlikely (relative) winners and losers;
  • A treacherous road to recovery.

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Pontifications: No, it’s not time to fly

Aug. 10, 2020, © Leeham News: Frontier Airlines’ CEO Barry Biffle says “it’s time to fly,” reports The Points Guy.

By Scott Hamilton

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.

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US Regional Consolidation Began Before Covid

Second in a Series on the Future of Regionals

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By Kathryn B. Creedy

Aug. 6, 2020, (c) Leeham News: Many might assume the recent loss of three regionals – Compass, Trans States and ExpressJet – is Covid related.

What is actually happening is the long-anticipated consolidation of the regional airline industry coupled with fleet restructuring and the most recent fallout of the pilot shortage crisis that began in 2013.

Reducing the number of regional partners also streamlines the inherent inefficiencies of the regional/major model.

  • Regional airline industry is volatile.
  • Mainline-regional model broken for many years.
  • Rising costs eliminate some advantages.

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HOTR: NOK Air, 3 more bite the dust in COVID fall-out

By the Leeham News Staff

July 31, 2020, © Leeham News: NOK Air of Thailand is the latest carrier to filed for bankruptcy.

LNA’s monthly tracking of failed carriers adds NOK, Jet Time, Level and Blue Air to the list of carriers in bankruptcy since COVID collapsed the global airline industry beginning in mid-March.

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Aviation veteran journalist Creedy joins LNA

Kathryn Creedy

July 29, 2020, © Leeham News: Kathryn B. Creedy has joined Leeham News & Analysis as a regular contributor, it was announced today.

Creedy is an award-winning veteran aviation/travel journalist and author who has covered every facet of commercial and business aviation.

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Pontifications: The light bulb goes on


By Scott Hamilton

July 27, 2020, © Leeham News: Airlines across the world are pledging aircraft, slots, airport facilities and real estate to raise money.

Some US airlines recently pledged frequent flyer programs to raise billions of dollars in debt to help carry them through the COVID-19 crisis.

Airfinance Journal last week had a podcast with United Airlines and Goldman Sachs to discuss UAL’s doing this and the larger picture.

The rush to pledge virtually everything to raise money is déjà vu all over again.

I’ve been in this business since 1979. I’ve been through the 1991 Persian Gulf War, SARS, downturns, 9/11 and the Great Recession. The impact to the airline and aerospace industry from the virus crisis is by far the worst.

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