Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- China bans Boeing, US parts imports in tariff war April 15, 2025
- Boeing welcomes COMAC competition as Asia-Pacific demand soars April 15, 2025
- How good is the C929? April 14, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 17. April 11, 2025
- Uncertainty plagues airline, aerospace, lessor industries over tariffs April 10, 2025
Odds and Ends: AA, US and DOJ have mediator; new C919 order; A380 break even
Movement on AA-US merger: Terry Maxon of The Dallas Morning News reports that American Airlines, US Airways and the Department of Justice have picked a mediator to sort out the DOJ’s lawsuit to block the AA-US merger. See also this Maxon report.
Maxon has a long piece, asking several pontificators (including yours truly) what they think the outcome will be.
Bloomberg reports that American CEO Tom Horton “sees a way” to a settlement but did not elaborate.
COMAC orders: COMAC says it received 20 more orders for the C919, but it once again is from a Chinese lessor, not an airline. A majority of orders for the C919 are from Chinese lessors, in stark contrast to standard practice among established lessors that they want to see a solid base (or a likely solid base) for a new aircraft type from airlines before signing up.
Although COMAC says this latest order brings the total up to 400, a data base shows only 275 so far (meaning the other 125 haven’t been converted to firm orders yet).
A380 Break Even: Airbus CEO Fabrice Bregier says hitting break even on the A380 program in 2015, which is the current plan, will be difficult if deliveries fall below the target of 30 per year. Airbus should deliver 25 this year, he said.
Odds and Ends: Supply chain demands; Southwest hints?; Retrospective on A320/737 replacements
Supply chain demands: Earlier this week, we talked about the prospect of production wars as Airbus and Boeing ramp up over the next five years, combined with the new entrants and the new offerings from Bombardier and Embraer.
We noted that this will mean opportunity and risk for the supply chain. Ryan Murphy from Salem Partners has a long analysis the starts with the finishing sector but which goes beyond this to discuss the broader implications. It makes for an interesting read.
Southwest: Hints of things to come? Yesterday we wrote about Southwest Airlines and the demise of the Wright Amendment that restricts travel from Dallas Love Field. We suggested several routes that Southwest would launch from Love once the Amendment passes into history.
Here’s a display Southwest erected on its countdown to the end of the Wright Amendment. We think it hints at things to come. Going clockwise: Chicago, New York and Charlotte seem to be where the airplanes are going. Then Los Angeles and Salt Lake City seem to be implied destinations. But the last one? Boise, or some other obscure city?
Or are we reading too much into the placement of these airplanes?
Source: Dallas Morning News
Our thoughts:
Retrospective: We were looking at previous posts for some specific information and in the process re-read one about replacing the Airbus A320 and Boeing 737. The post dates from 2009. In light of subsequent events, it makes for interesting re-reading. We discuss the internal views of Airbus and Boeing about replacement or re-engining their aircraft and the engines from Pratt & Whitney and GE Aviation/CFM. We also touch on Boeing leaning toward not replacing the 777.
Retrospective, Part 2: Airchive has a nice set of historical looks at the development of the Boeing factory at Everett: Part One and Part Two.
Southwest’s forthcoming expansion will offset AA-US consolidation
Southwest Airlines has begun a one year countdown to the day the Wright Amendment will disappear.
The Amendment, named after former US House Speaker Jim Wright, restricts Southwest’s ability to fly from in-town Dallas Love Field. Originally Southwest was restricted to Texas and the immediately adjacent states. The Amendment has been modified several times. Today the carrier may fly anywhere within the US beyond the exceptions with one stop. Love Field is now restricted to 20 gates; Southwest controls all but a few of them.
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The restrictions were put into place to protect the then-new Dallas-Ft. Worth Regional Airport, which was constructed mid-way between the two cities. All the airlines at the time served Love Field and when DFW was created, they all agreed to move to the new airport and close Love Field to airline traffic. Except Southwest, which didn’t exist at the time of the agreement but which began service from Love in the interim between the signing of the agreement and the opening of DFW. The attempts by Braniff International Airways and Trans Texas International (nee TRANS Texas) to put Southwest out of business are industry folklore.
The fear was that Southwest and Love would hurt DFW and the airlines competing from the distant airport, including American Airlines. When Southwest a few years ago launched a full-scale attack on the Wright Amendment, American led the charge to block the effort. The compromise was the gate restriction, the one-stop service and a five year phase out.
Who could have foreseen that this now could help come to the rescue of American and US Airways as they fight the US Department of Justice’s attempt to block the merger of these two carriers?
Here’s why.
United’s new effort for airline passenger exerience comfort
United Airlines announced it is adopting a new seat in coach to improve the passenger experience.
Its press release is here.
UAL’s overview:
The new design includes:
- Bold elements, such as multi-tonal leather seat covers, distinctive double-stitch patterns, sculpted contouring and a new United-branded tag
- More ergonomic and supportive cushioning and additional seat-back storage space in United Economy Plus and United Economy
- Technology that makes the seats more environmentally friendly by reducing seat weight and volume, contributing to less fuel burn
We’re impressed.
Odds and Ends: S&P; C-17; AA-US merger (again); 777X wing work; WA aerospace future
S&P says don’t pay attention to our ratings: On the same day Delta Air Lines was named to the S&P 500, The Los Angeles Times had this article commenting on Standard & Poor’s legal defense of its investment grade credit ratings of companies involved in the 2008 financial collapse in the US that led to the global recession in 2008, affects of which are still felt today.
S&P’s defense included the argument that nobody should pay attention to its ratings, according to the article.
The ratings issue is important because airlines, lessors (and, of course, others outside aviation) covet investment grade ratings for the capital-intensive aerospace industry. Airlines and lessors need “cheap” money to buy airplanes. Air Lease Corp recently obtained its first investment grade rating, for example, something for which it issued a press release. Delta gained headlines for its return to investment grade status. Airlines have long used S&P, Moody’s and Fitch for rating equipment trust certificates used to finance airplanes.
The columnist for the LA Times is incredulous that S&P’s legal defense in the federal lawsuit is, essentially, nobody should pay attention to its ratings. It is indeed remarkable.
Final C-17 for US Military: Boeing’s C-17 program has been struggling to stay alive for the past several years and the challenge will get worse when Boeing hands over the final order to the USAF. The airplane’s survival depends now entirely on non-US sales, and these come few and far between. It’s also the last program of McDonnell Douglas; Boeing killed the MD-11, MD-80, MD-90 and MD-95 lines not that long after the two firms merged, though it did keep the MD-95 alive for a short time, renamed the Boeing 717.
The Long Beach Press-Telegram has a couple of additional stories here and here.
Why States opposes AA-US merger: Micheline Maynard writes in Forbes why she thinks states have joined the US Department of Justice lawsuit to block the merger between American Airlines and US Airways. The actions have nothing to do with consumer protection, the alleged motive of the DOJ, she opines. Rather, the states’ interests are far more parochial.
ElectroImpact competes for 777X work: ElectroImpact makes wings for the Airbus A380 and A350 XWB and it’s headquartered in Boeing’s back yard at Everett (WA). Now it’s hoping to build wings for the 777X. This Seattle Times report tells the story.
Washington State’s future in aerospace: The Pacific Northwest Aerospace Alliance hosts its second annual series of luncheons with members of the Washington State Legislature to talk about what needs to be done for the future of aerospace in this state. The first lunch is in Bellevue (WA) September 24 and the second is September 26 in Spokane, the other major aerospace cluster in the state.
Confirmed Bellevue Panelists
• Sen. Nick Harper (D), District 38 – Everett
• Sen. Paull Shin (D), District 21 – Lynnwood
• Rep. Mike Sells (D), District 38 – Everett
• Rep. Bruce Chandler (R), District 1 – Yakima
• Rep. Larry Springer (D), District 45 – Kirkland
Confirmed Spokane Panelists
• Sen. Michael Baumgartner (R), District 6 – Spokane
• Rep. Timm Ormsby (D), District 3 – Spokane
• Rep. Kevin Parker (R), District 6 – Spokane
• Rep. Mark Schoesler (R), District 9 – Ritzville
Information and registration for Bellevue is here.
information and registration for Spokane is here.
Clever headline: The Street.com column has a clever headline this morning in a post written by Ted Reed concerning the on-going sales battles between Airbus and Boeing.