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By Bjorn Fehrm
Introduction
Dec. 16 2015, ©. Leeham Co: Fuel prices at a record low changes a lot of short- and mid-term planning scenarios for airlines. An introduction of a used aircraft with higher fuel burn for a typical lease period of five to six years is possible without endangering the airline’s economics.
The risk of oil prices going sky high in such a period is low, hence the attractiveness of complementing ones fleet with leased older aircraft like Canada’s WestJet has done. It will introduce ex. Qantas 767-300ERs on several traditional 757 destinations like Hawaii and presumably West Europe.
We therefore expand our in dept look of the deployment of used aircraft with a look at the WestJet choice; Boeing’s 767-300ER and compare it to a more contemporary twin, Airbus A330-200.
Summary:
⦁ The 767-300ER is around 25 seats smaller than our benchmark aircraft, the more modern A330-200.
⦁ The A330-200 previously put the 767 under pressure and Boeing responded with the 787-8. We will check if this is still the case when oil is below $40 a barrel and leasing cost for a used 767 is below $300,000.
⦁ We will also check what load-factors an airline like WestJet has to attain on the 767 to reach the same seat-mile costs as for the 757 that the route was up-gauged from.
⦁ We will follow the scheme of the 777-200ER vs. A340-300E comparison, Part 1 compares the aircraft, Part 2 the costs and Part 3 the revenue and margin performance of the aircraft.
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Top 10 Stories in 2015
Here are the Top 10 stories on Leeham News and Comment for 2015:
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10 Comments
Posted on December 23, 2015 by Scott Hamilton
Airbus, Airlines, Boeing, Emirates Airlines, GE Aviation, Leeham News and Comment, Malaysian Airlines, MH370
737, 737-8, 737-8ERX, 737-9, 747-8, A320, A321LR, A321NEO, A350-900LR, A380neo, Airbus, Boeing, Emirates Airline, Malaysia Airlines, Singapore Airlines
CS100 certified; We review CS100’s birth with VP CSeries, Rob Dewar
Introduction
By Bjorn Fehrm
21 December 2015, ©. Leeham Co: Bombardier (BBD) received certification of the smaller CSeries, the CS100, by Transport Canada Thursday. Rob Dewar, vice president of CSeries, reflected on the journey to certification in an exclusive interview with LNC.
CSeries VP Rob Dewar with CS100 Certificate. Source: Bombardier.
The interview was done against a backdrop of more than two years of delays, which in turn drained the coffers of BBD. To save the project and let it prove its game-changing character, management sold 49.50% of the CSeries program to the Province of Quebec for $1bn and 30% of its train division to Caisse de dépôt et placement du Québec, for an additional $1.5bn.
Dewar has managed the project from the program launch in 2008. The transcript of the interview follows.
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16 Comments
Posted on December 21, 2015 by Bjorn Fehrm
Airbus, Airlines, Boeing, Bombardier, CSeries, Pratt & Whitney, Rockwell Collins
737 MAX, 737 MAX 7, A319neo, Airbus, Boeing, Bombardier, CSeries, Pratt & Whitney
How good is a used 767-300ER?
Subscription required
By Bjorn Fehrm
Introduction
Dec. 16 2015, ©. Leeham Co: Fuel prices at a record low changes a lot of short- and mid-term planning scenarios for airlines. An introduction of a used aircraft with higher fuel burn for a typical lease period of five to six years is possible without endangering the airline’s economics.
The risk of oil prices going sky high in such a period is low, hence the attractiveness of complementing ones fleet with leased older aircraft like Canada’s WestJet has done. It will introduce ex. Qantas 767-300ERs on several traditional 757 destinations like Hawaii and presumably West Europe.
We therefore expand our in dept look of the deployment of used aircraft with a look at the WestJet choice; Boeing’s 767-300ER and compare it to a more contemporary twin, Airbus A330-200.
Summary:
⦁ The 767-300ER is around 25 seats smaller than our benchmark aircraft, the more modern A330-200.
⦁ The A330-200 previously put the 767 under pressure and Boeing responded with the 787-8. We will check if this is still the case when oil is below $40 a barrel and leasing cost for a used 767 is below $300,000.
⦁ We will also check what load-factors an airline like WestJet has to attain on the 767 to reach the same seat-mile costs as for the 757 that the route was up-gauged from.
⦁ We will follow the scheme of the 777-200ER vs. A340-300E comparison, Part 1 compares the aircraft, Part 2 the costs and Part 3 the revenue and margin performance of the aircraft.
Read more
2 Comments
Posted on December 17, 2015 by Bjorn Fehrm
Airbus, Airlines, Boeing, GE Aviation, Pratt & Whitney, Premium
757-200W, 767-300ER, A330-200, Airbus, Boeing, GE Aviation, Pratt & Whitney
Analyzing Air Bridge Cargo plans for Boeing 747-8F
Dec. 15, 2015, (c) Leeham Co.: A plan by Russia’s Air Bridge Cargo to acquire another 18 Boeing 747-8Fs does little to solve Boeing’s production gap and program viability, an analysis by LNC shows.
Bloomberg News published a story yesterday saying the fate of the 747 program rests with Air Bridge Cargo, which announced an MOU for 20 747-8Fs at last summer’s Paris Air Show.
But as LNC reported shortly after the MOU was announced–once we had the opportunity to look behind the hype–it was clear that the news was hardly anything to count on.
This remains the case despite Bloomberg’s story.
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11 Comments
Posted on December 15, 2015 by Scott Hamilton
Airbus, Airlines, Boeing, Paris Air Show
747-8, 747-8F, 777-300ER, 777-9, 787, A330, A350, Air Bridge Cargo, Air Force One, Airbus, Bloomberg News, Boeing, Paris Air Show
Pontifications: Aircraft values vary widely
By Scott Hamilton
Dec. 14, 2015, (c) Leeham Co: Aircraft valuations came to the forefront following comments by Richard Anderson, CEO of Delta Air Lines, over just how much a 10-year old Boeing 777-200ER was worth. He claimed the airplane was only valued at $10m. Boeing’s investor relations department immediately pushed back against this low price, circulating to the aerospace analyst community that a number of appraisers placed the value in the $50m-$60m range.
Anderson later was quoted as saying Boeing Capital Corp. offered Delta the aircraft for that price. BCC didn’t comment.
LNC wrote at the time, and later, that Anderson was correct. We noted, however, there are a lot of caveats that come with the $10m, rooted in the fundamental fact that this price had to be for a “run out” model that would require expensive airframe and engine maintenance, repair and overhaul, and interior reconfiguration. This could add as much as $30m to the price, or $40m all-in–still substantially less than the appraised figures for a “half-life” example.
Appraisals are an inexact exercise that not only depend on the maintenance condition of the airplanes, whether they are “desk-top” or inspection appraisals and the methodology of the various appraisal companies, backed by market intelligence data.
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13 Comments
Posted on December 14, 2015 by Scott Hamilton
Airbus, Airlines, Boeing, Delta Air Lines, Embraer
737-700, 737-900ER, 777-300ER, 787, A320, A321, A330-300, Airbus, aircraft appraisals, BOC Aviation, Boeing, Delta Air Lines, E-190, Embraer, SAIL
737 MAX to roll out to Boeing product strategy challenges
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Introduction
The Boeing 737-8 rolls out tomorrow to challenges to Boeing’s product strategy. Image via Google images.
Dec. 7, 2015, © Leeham Co: Boeing rolls out its first 737 MAX tomorrow to no press fanfare. Today there is a limited press tour of the assembly line, but, according to reporters who were invited, there will be no press briefings.
It’s an inexplicably low-key event for what Boeing otherwise touts as a major evolution of the venerable 737 line.
As good as Boeing claims the airplane will be, and as much spin as Boeing’s marketing department tries to put on the rivalry vs the Airbus A320neo, the 737 MAX clearly is second fiddle—and it’s not going to get better.
Summary
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1 Comment
Posted on December 7, 2015 by Scott Hamilton
Airbus, Airlines, American Airlines, Boeing, CFM, Comac, MOM, Premium
737 MAX, A320NEO, Airbus, American Airlines, Boeing, Jim Albaugh, Jim McNerney, Southwest Airlines
Pontifications: Assessing the benefit of new airplanes in low oil pricing
By Scott Hamilton
Dec. 7, 2015, © Leeham Co.: Oil for West Texas Intermediate Crude closed Friday at $39.97. International Brent closed at $43.05. These figures continue to breathe life into used aircraft and raise questions about new orders.
In recent weeks, we’ve seen Delta Air Lines extend use of 15 Boeing 757s. Earlier United Airlines decided to refurbish 21 Boeing 767-300ERs. United is also leasing in 38 used Airbus A319s. Southwest Airlines is acquiring more than 20 used Boeing 737-700s through leases.
New aircraft orders are off for Boeing this year. Through Dec. 2, Boeing posted 568 net orders. Unless there is an explosive month in the remaining 24 days of this year, Boeing won’t meet a book-to-bill rate of one.
Airbus hadn’t posted its November orders as of Friday, but through October, the company recorded 850 net orders, comfortably more than a 1:1 book:bill. It announced 108 firm orders in November, with 14 of these representing a swap from A350-900s to A330-900s.
What is the affect of lower oil prices on the new airplanes?
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18 Comments
Posted on December 7, 2015 by Scott Hamilton
Airbus, Airlines, Boeing, Pontifications
737-700, 787, A319, A320ceo, A320NEO, A330-900, A350, A350-900, Aengus Kelly, AerCap, Airbus, Boeing, Delta Air Lines, Deutsche Bank, Michael Linenberg, Southwest Airlines, United Airlines
Pontifications: Looking to year-end
Nov. 30, 2015, © Leeham Co.: One month to go to the end of 2015. What’s left to come?
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56 Comments
Posted on November 30, 2015 by Scott Hamilton
Airbus, Airlines, Boeing, Bombardier, Embraer, United Airlines
737 MAX, 737-700, A319, A320, AerCap, Aerolineas Argentinas, Airbus, Boeing, Bombardier, China Eastern Airlines, China Southern Airlines, E-Jets, Embraer, Southwest Airlines, Spirit Airlines, Transaero, United Airlines
Pontifications: “I’m glad you’re not going far.”
By Scott Hamilton
Nov. 23, 2015, (c) Leeham Co. An Airbus A321 is blown out of the sky over Egypt.
Two Air France jumbo jets are diverted due to bomb threats.
ISIS stages multiple, simultaneous attacks in Paris. Additional attacks are thwarted. Police raids in Belgium take place.
ISIS is declared a clear and present danger in Europe and the US.
The worries on a global basis are obvious. Being far more parochial, given the focus of LNC, what is the impact and potential impact on commercial aviation?
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55 Comments
Posted on November 23, 2015 by Scott Hamilton
Airbus, Airlines, Boeing, Delta Air Lines, Pontifications
737, A320, Airbus, Boeing, British Airways, Delta Air Lines, Icelandair, ISIS, Metrojet, Pontifications, Transportation Security Adminstration, TSA
Europe’s airlines: LCC, the winning formula
By Bjorn Fehrm
Nov. 18 2015, ©. Leeham Co: Easyjet revealed record numbers yesterday with pretax profits now at 14.6% of a year turnover of £4,686m. The load-factors for their aircraft are at a record 91.5% on a 12 month basis, with an increase of 1.5% for the period. The return on employed capital has increased to a high 22.2% from 20.5%.
The LCC now transports 69m passenger per year and continues to increase its capacity and efficiency. Airbus yesterday announced that easyJet has signed a firm order for a further 36 A320 Family aircraft, taking its cumulative order for the type to 451. The agreement for six A320ceos and 30 A320neos makes easyJet one of the world’s biggest airline customers for the A320ceo Family with 321 ordered and also for the A320neo, with 130 on order.
Earlier in November Ryanair had announced their record results, further manifesting their investment grade rating. At the same time Europe’s largest airlines, Lufthansa and Air France-KLM, are engaged in difficult negotiations to reduce their personnel costs, a mission riddled with strikes and confrontation. The once reliable Lufthansa is no longer.
What is the reason for this divergence in the market? Read more
18 Comments
Posted on November 18, 2015 by Bjorn Fehrm
Airbus, Airlines, Boeing
737, A320, A320NEO, Air France-KLM, Airbus, Boeing, easyJet, Lufthansa, Ryanair
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