Leeham News and Analysis
There's more to real news than a news release.
American wants to decide A350 fate within six months
Sept. 28, 2017, © Leeham Co., Grapevine (TX): American Airlines would like to decide within six months what it will do with its order for 22 Airbus A350-900s, a left-over deal from US Airways before the latter acquired the former.
Derek Kerr, EVP and CFO, told LNC on the sidelines of American’s investors/media day here in a Dallas suburb that the A350s were intended to replace US Airways’ A330s. The airline ordered 22 of the airplanes.
American, however, selected the Boeing 787-8/9 for its mid-size, long haul fleet, ordering 74 42. The new American deferred delivery of the A350s to 2020 and Kerr said a deadline is approaching to decide what to do with the order.
Cracks in Ryanair’s lowest cost model
By Bjorn Fehrm
September 27, 2016, ©. Leeham Co: Ryanair has canceled 2,000 flight over the last few weeks. The background is a lack of pilots, after a change of holiday accounting period.
The cancellations come against a backdrop of pilots leaving for other companies (notably Norwegian) and an EU ruling in favor of Ryanair’s flight crews.
Boeing’s bold ambition
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Introduction
Sept. 25, 2017, © Leeham Co.: The ambitious plan of Boeing CEO Dennis Muilenburg to grow after-market services from today’s $14bn in revenues to $50bn in 5-10
Stan Deal, CEO of Boeing Global Services.
years was announced nearly a year ago—Nov. 21.
Boeing Global Services, or BGS, combines separate operations in Boeing Commercial Airplanes and Boeing Defense, Space and Security (BCA and BDS respectively).
The growth depends on a combination of improving its current operations, growing organically and through mergers and acquisitions.
Wall Street aerospace analysts generally regard the timeline as ambitious.
In an interview with LNC, the CEO of BGS, Stan Deal, agreed.
Summary
- Muilenburg’s bold ambition.
- The next 100 years.
- Creating a value proposition.
Assessing the 25 YOA aircraft factor
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Introduction
Click on image to enlarge.
Sept. 21, 2017 © Leeham Co.: Airbus and Boeing look ahead to 2021 and the next several years when wide-body aircraft begin turning 25 years old to spur orders for this sector.
Boeing specifically points to this period as one reason for the announcement last week that it will boost production of the 787 to 14/mo beginning in 2019.
Summary
- There already are 1.4 times more wide-body airplanes scheduled for delivery in 2021-2025 than there are aircraft turning 25 years old.
- The next surge in aging aircraft comes ~2030.
- Middle of the Market aircraft isn’t factored in.
Assessing the 787 production rate increase
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Introduction
Sept. 18, 2017, © Leeham Co.: Boeing last week announced it will take the production rate of the 787 from 12/mo to 14/mo in 2019.
Boeing 787-9. Source: Boeing.
The decision to do so was couched in a strong backlog and strong forthcoming demand by CEO Dennis Muilenburg at a Morgan Stanley conference.
But analysts think the move is more about boosting free cash flow and hitting margins than it is about demand.
Summary
- Boeing sees demand surging from 2019 for widebodies generally and the 787 specifically.
- Muilenburg says Boeing is working “skyline” positions in 2019 and 2020 (LNC saw these years as already filled).
- Widebody jets hitting 25 years old early next decade.
- Airbus concurs.
Pratt & Whitney Canada continues development of new airliner turboprop
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Introduction
Sept. 14, 2017, © Leeham Co., Montreal: The prospect of a clean-sheet design turboprop to replace the Bombardier Q400 and ATR series likely has moved to the right by two to three years,
Frederic Lefebvre, Pratt & Whitney Canada.
and the total market remains small, but Pratt & Whitney Canada is forging ahead with development of the next generation engine.
- Update: Embraer is considering reentering the turboprop market, reports The Wall Street Journal.
The goal is to reduce fuel consumption by 15%-20% compared with today’s ubiquitous PW127 and PW150, which continue to see reductions in fuel burn through product improvement packages.
Frederic Lefebvre, VP-Marketing for Regional Airlines, now sees development of the new turboprop slipping to 2022-2026 compared with previous forecasts of an EIS in 2020-2023.
Summary
- The Next Generation Regional Turboprop (NGRT) has major challenges to improve upon the current generation of engines.
- PWC sees a much larger market for a 90-seat turboprop than others.
- Emerging markets key to new opportunities.
Assessing the United A350-900 order
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Introduction
United Airlines last week returned to the Airbus A350-900 it originally ordered. It will replace Boeing 777-200ERs beginning in 2022. Image via Google.
Sept. 11, 2017, © Leeham Co.: The deal last week between United Airlines and Airbus was a winner for the carrier and a mixed win for the OEM.
Boeing was also a mixed winner.
Summary
- United was in the best position to come out ahead, and it did.
- Airbus kept a high-profile US customer, but the A350-1000 program took a hit.
- Boeing’s strategy of putting 777-300ERs into United hurt the A350-1000, but UAL remained an A350 customer.
Costs for IAG’s low-cost airlines
By Bjorn Fehrm
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Introduction
September 07, 2016, ©. Leeham Co: Yesterday we described International Airlines Group’s (IAG) Vueling and LEVEL LCCs. Now we look at their cost and compare these to the direct competition; Ryanair, easyJet, Norwegian and Eurowings.
For Vueling and its competition, we have cost data from 2016 and 1H2017. For LEVEL, it’s too early. It started operations in June 2017. Here we compare the seat-mile costs of the chosen Airbus A330-200 to Norwegian Air Shuttle’s (Norwegian) Boeing 787-8.
Summary:
- Vueling has higher operating costs than its direct competition, mainly caused by lower load factors and lower fleet utilization.
- At present fuel prices, the A330-200 used by LEVEL does not have a Direct Operating Cost (DOC) disadvantage compared with Norwegian’s 787-8.