Nov. 25, 2014: E-175s for Alaska Airlines: SkyWest Airlines of the USA, a provider of contract service to several US carriers, ordered seven Embraer E-175s for planned service for Alaska Airlines. Simultaneously, Alaska announced new service from its Seattle hub, using E-175s from SkyWest to Milwaukee, Oklahoma City, and from Portland to St. Louis.
This is Alaska’s first use of the E-Jet in its system. All service to now has been with Bombardier Q400s from ALK’s sister, Horizon Air, or Bombardier CRJs from SkyWest.
Alaska is in a market battle with Delta Air Lines, which is expanding its hub at Seattle.
AirAsia X and Norwegian Air: CAPA, the Centre for Asia-Pacific Aviation, has a very good analysis about AirAsia X, the long-haul, low-fare carrier that has reported big losses for the last several quarters. This airline made it on our Storm Warning Flag list last spring. It’s got a big backlog of Airbus A330-300s, A330-900s and A350-900s and it’s announced some deferrals of the -300s. We consider this to be a shaky skyline for Airbus, particularly with the -300s.
Aviation Week has a good story about Norwegian Air Shuttle, another airline on our Storm Warning Flag list. NAS is building a long-haul business model based on the Boeing 787 in additional to plans to greatly expand its Boeing 737-based LCC model in Europe.
Production rates: We’ve written a great deal about production rates and production gaps. Flight Global’s sister company, Ascend, provides this broad look (free registration required in a particularly annoying process). The analysis missed the Airbus notice to the industry to plan to take production rates of the A320 to 54/mo in 2018, but otherwise this is a good analysis which happens to pretty well coincide with our views we’ve expressed throughout the year. This is a good one-stop piece.
Delta Air Lines wants to double the number of its gates at Seattle, potentially allowing more than 300 flights a day, Bloomberg News reports. The story appeared just weeks before Delta will make its decision whether to order 50 wide-body jets from Airbus or Boeing, with about half of them planned for trans-Pacific service from Seattle and Delta’s Detroit hub; and the other half for trans-Atlantic service from New York and Atlanta.
Best-and-final-offers from Airbus and Boeing were due last week or this week and an internal decision is due after Thanksgiving, we are told. Delta is expected to announce its decision at its annual investors day, which is December 11 this year.
Airbus has its annual investors days December 10-11 in London. We don’t ascribe any significance to the concurrent dates, since these are dates of long-standing in years past.
GAO report on ‘Boeing’s bank:’ The US Government Accounting Office, a non-partisan investigating agency, completed a study of the funding and guarantees provided by the US ExIm Bank, which is under criticism from Congressional Republicans, and concluded non-US airlines do benefit from what amounts to subsidies.
These put US competitors at a disadvantage, GAO concludes. The full 29 page PDF may be found here.
The study period covered the global financial crisis, during which a good deal of private capital funding dried up. Airbus and Boeing each relied more heavily on export credit agencies for customer financing–ExIm in Boeing’s case and collectively European Credit Agencies, or ECAs, for Airbus.
The GAO found that ExIm funded or guaranteed financing for 789 Boeing wide body aircraft while the ECAs supported 821 Airbus wide-bodies.
Parenthetically, this statistic alone should demonstrate to Congress the need for ExIm to continue to be available for Boeing airplanes.
National media and trade magazines are paying attention to the increasing battle between Alaska Air Group (Alaska Airlines and Horizon Airlines) and Delta Air Lines (including its regional airline partners) in the Battle in Seattle as the latter dramatically increases its presence here, but the focus appears to be on the wrong parties.
While the headlines and stories point to the “Delta challenge” to Alaska, a review of the traffic statistics and market share data provided to us by Sea-Tac Airport yesterday show that Alaska and its regional sibling, Horizon Air, and Delta with its regional partners are growing at the expense of United Airlines and Southwest Airlines.
Airbus’ Enders: Airbus Group CEO Tom Enders muses about what he will do when his current term ends in two years. He might seek another three year term as CEO or he could move on. In the Byzantine structure at Airbus, the CEO’s job rotates between a German and Frenchman with the opposite nationality heading Airbus (the airplanes) during the term. Enders has made great progress in bringing Airbus Group into the real corporate world and away from the government meddling that has proved the bane of the company’s existence. He still has things to accomplish, including a more traditional executive office structure regardless of nationalities and term limits.
Smooth A320neo introduction: Meantime, Enders says it’s imperative that the introduction next year of the A320neo go smoothly and that A350 program still has “challenges.” The A350 is supposed to enter service by the end of this year.
Ex-Im Bank: The Seattle Times editorialized that the Ex-Im Bank authorization should be renewed by Congress, and as readers know, we agree. Boeing will be put at a disadvantage to Airbus because the European Union Export Credit Agencies will continue to provide ECA financing for Airbus. Write your Congressman. Ex-Im is more than just Boeing, too.
Delta vs Alaska: The air wars continue between giant Delta Air Lines and Alaska Airlines, the smallest of the US legacy carriers. Delta announced it is adding more service to Seattle, Alaska’s largest hub, on routes that compete with Alaska. The latter announced it will increase service by 11% in Seattle, mostly (but not entirely) to cities that don’t directly compete with Delta.
Alaska strikes back: Alaska Airlines has finally struck back at Delta Air Lines, which has been announcing loads of new service into Alaska’s Seattle hub. Alaska announced this morning:
Alaska Airlines will begin daily nonstop service between Salt Lake City and Portland, Ore., Los Angeles, San Diego and San Jose, Calif., starting June 9, and will add a third nonstop flight to its existing service between Salt Lake City and Seattle. Sale fares on the new flights will be available for booking Tuesday, Dec. 10.
Salt Lake City is a major Delta hub.
Boost for Q400: Bombardier inked a Letter of Intent for 30 firm orders for the Q400 turbo-props with Nantong Tongzhou Bay Aviation Industry Co., Ltd. Nantong plans to launch commercial airline service in China through a new carrier called Sutong Airlines.
Airbus CEO speaks: Arabian Business has a long interview with Airbus CEO Fabrice Bregier. Once you get past the fluff, there is some interesting information.
Groveling: This story via ABC has nothing new but we love the headline. Add Georgia to the list of grovelers.
This article discusses the prospects of Huntsville (AL) in the competition for Boeing’s 777X assembly site.
The IAM 837 union head at Boeing’s plant in St. Louis has reversed course (and declared a news blackout). More goofiness from the International Association of Machinists.
Bloomberg has a good story looking beyond the Boeing 787 issues at the FAA’s reliance on industry to certify airplanes. The story details a number of cases where flaws crept through the system, leading to deaths–a circumstance, of course, that did not happen with the 787.
We have written a couple of posts about the relationship between the FAA and industry in response to focus following the 787 battery issues. We pointed out this relationship is nothing new.
The Bloomberg piece is well worth reading.
The FAA has released a list of air traffic control facilities that could close with Sequestration, which is due to take effect March 1.
The following facilities in Washington State are on the list:
ALW Walla Walla Regional Walla Walla WA
MWH Grant County International Moses Lake WA
OLM Olympia Regional Olympia WA
PAE Snohomish County Airport (Paine Field) Everett WA
RNT Renton Municipal Renton WA
SFF Felts Field Spokane WA
TIW Tacoma Narrows Tacoma WA
YKM Yakima Air Terminal/McAllister Field Yakima WA
Additionally, the over night shifts in the following control towers are at risk:
BFI Boeing Tower Seattle WA
GEG Spokane Tower Spokane WA
The FAA warns that passengers at TSA lines could be up to three hours and tarmac delays at major hub airports could be up to 90 minutes.
No 777X before 2020: Bernstein Research, in a note issued today, says it doesn’t see delivery of the Boeing 777X before 2020. Also: on a recently completed trip to Asia, Bernstein wrote this:
There’s clearly huge demand for the 787. There was a lot of excitement about it, but Boeing was heavily promoting the 747-8, for which the company is certainly seeking more orders, with few orders for the passenger version and the air freight market being very weak. To date, the majority of orders for that airplane have been freighter orders. This is a relatively small program, but we think it is the most difficult within Boeing’s portfolio right now. …[Y]ou’re probably not going to see the growth that Boeing had once hoped for there. That’s certainly how we have been making assumptions, as well.
Alaska, Frontier and Competition: The Centre for Asia Pacific Aviation has this analysis about Alaska and Frontier airlines, which aside from being a little geographically-challenged, is one of CAPA’s usual well-researched and thought-0ut looks at airlines. (In fairness, CAPA often strays from the Asia-Pacific, but we couldn’t resist the quip.) CAPA now actually calls itself Centre for Aviation.
A380 Repair Costs: Aviation Week has this article detailing the costs to Emirates Airlines for repairs to the Airbus A380 wing bracket cracks.
Boeing Labor Challenges: Boeing seems headed for war again with labor unions. Here’s an article from The Everett Herald with several links within it; one from MyNorthwest.com about SPEEA; and one from The Seattle Times about SPEEA.
Cargolux and Qatar: We posted some news about Cargolux and Qatar yesterday; The Seattle Times has this piece about the threat to the Boeing 747-8F from Cargolux’s problems.
Odds and Ends: 787 donation; Alenia sues Bombardier over CSeries; 2016 777 delivery slots opening up
787 donation: The Boeing Co. handed over 787 test airplane #3 (ZA003) to the Museum of Flight Saturday in an elaborate ceremony marking an unprecedented donation of a modern airliner to an aviation museum.
Boeing 787 ZA003, which went on a world sales tour, was donated to Seattle’s Museum of Flight Nov. 8, 2014. The logos of customers bracket the #2 door. Photo by Leeham News and Comment. click to enlage.
To be sure, the donation was made possible by the fact that ZA003 (and 002 and 001) can’t be sold due to the massive rework necessary, and these three airplanes have been written off for more than $2bn. But this doesn’t make the event any less significant.
Posted on November 9, 2014 by Scott Hamilton
Alaska Airlines, American Airlines, Boeing, Bombardier, CSeries, Douglas Aircraft Co, GE Aviation, Leeham News and Comment, Rolls-Royce
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