Bombardier and American Airlines: Bloomberg has an analysis of the campaign at American Airlines for a large regional jet order, and how vital it is to Bombardier to win the deal. Embraer won three previous important orders from the US major airlines, leaving American the last remaining prize in the near-term.
C919 Entry-into-Service: Reuters has an analysis about the Chinese effort to challenge Airbus and Boeing with the COMAC C919, and the continued challenges to do so. EIS is now figured for 2018.
Europe blinks on emissions: The European Union blinked on its long-running effort to force all airlines to pay a fine if they don’t meet emission standards. The effort met with international resistance, with China leading the way. Chinese orders for Airbus A320s and A330s had been held up. The Chinese earlier ordered the A320s, but still blocked A330 purchases by its airlines. We’ll see how quickly these orders come through.
Posted on October 3, 2013 by Scott Hamilton
American Airlines and US Airways filed their responses to the DOJ lawsuit seeking to block the merger. The Dallas Morning News has this synopsis. The full, 50-page US Airways response is here.
There’s one element that particularly caught our eye, and that is market share. While DOJ points out that the New American, along with Delta Air Lines and United Airlines, would control some 80% of the available seat miles (a statistically correct figure), AA and US point out that in terms of domestic market share, Southwest Airlines, other LCCs plus Alaska Airlines and Hawaiian Airlines control 40% of all domestic passengers.
The Complaint’s focus on legacy airlines causes it to ignore the most meaningful competitive development in the airline industry since deregulation: the emergence of low cost carriers. Southwest, which in 1978 was an oddity limited to intrastate flying in Texas, is now the country’s largest domestic airline, carrying more passengers last year than any legacy carrier and more than US Airways and American combined. Other low cost carriers, including JetBlue, Spirit Airlines, Virgin America, Sun Country, and Allegiant, are expanding at dramatic rates. These carriers, together with Southwest and regional competitors Alaska Airlines and Hawaiian Airlines, now transport over 40% of all domestic passengers, and that share continues to grow. The demonstrable success of low cost carriers is a market driven response to consumer demand, but the Complaint inexplicably ignores their profound and permanent effect on industry competition.
In fact, Southwest has for many years carried more domestic passengers than any other airline–which begs the question, why didn’t DOJ block the Southwest-AirTran merger, which would only increase and consolidate this concentration?
The court should find for AA and US. This lawsuit is an embarrassment to DOJ for its political motivations, poor research and lack of understanding of the airline industry.
Posted on September 11, 2013 by Scott Hamilton
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.
Posted on September 9, 2013 by Scott Hamilton
FedEx took delivery of its first Boeing 767-300ERF yesterday.
Boeing Photo
As we reported way back on June 16, our market intelligence tells us FDX is lined up to become the first commercial customers of the 767-2C, the new platform on which the KC-46A tanker is based. The 767-2C is about six feet longer (165 ft 6 in) than the 767-200ER (159 ft 2 in) on which the 2C is based but shorter than the -300ER.
Boeing rendering
Separately:
Posted on September 5, 2013 by Scott Hamilton
Delta Air Lines announced an order today for 30 A321ceos and 10 A330-300 HGW. This is the first Airbus order from Delta in two decades; the only previous order was for nine A310-300s during the days of CEO Ron Allen. Allen ordered these aircraft shortly after acquiring A310-200s/300s when Delta bought part of the failing Pan Am.
But when the 1991 Gulf War happened and the US airline industry went into a tail-spin, Allen undertook a cost-cutting procedure that eliminated all A310s from the fleet, including the new orders–before all nine had even been delivered.
Delta subsequently was one of three US airlines to sign a 20-year exclusive supplier agreement with Boeing; American Airlines and Continental Airlines were the other two. But when, in 1997, Boeing and McDonnell Douglas proposed merging, the European Union demanded that the exclusive supplier agreements be voided. Boeing agreed not to enforce them. Still, Delta did not order Airbus until now.
But the current Delta management, led by Richard Anderson,* once ran Northwest Airlines. This management took over Delta upon its exit from bankruptcy following 9/11 turmoil that decimated the US airline industry. Anderson and his team ordered from both Airbus and Boeing while running Northwest, preferring to maintain a dual-source supply of airplanes. Anderson’s Delta previously ordered 100 Boeing 737-900ERs.
Delta is one of the few airlines that has yet to order the re-engined Airbus or Boeing single-aisle airplanes. The philosophy is that it wants to see the new technology in action before signing on. Northwest Airlines was the US launch customer for the Boeing 787, an order placed after Anderson’s team left NWA. Delta inherited this order when NWA was acquired, but Anderson’s team didn’t like what was happening with the 787-8 program and deferred the 787 order to at least 2020, according to the data base Ascend. Many think Delta may never take the 787, but this remains to be seen.
Delta came very close to ordering the Bombardier CSeries, but its caution against new technology and a worsening economy at the time killed the order for the time being.
Posted on September 4, 2013 by Scott Hamilton
Slowing Jet Sales: Within a few days, Bloomberg, Reuters and The Seattle Times each had stories about slowing jet sales.
Here is the Bloomberg story, focusing on cargo sales.
Here is The Seattle Times story.
The theme of each is worrisome, but with Richard Aboulafia’s comments to The Times, we disagree with his view on American Airlines. American has an ancient fleet of Boeing MD-80s and aging Boeing 757s that have to be replaced, and we believe the Airbus and Boeing orders won’t go away if the merger with US Airways is blocked.
Airbus still trying Japan: Airbus, which has never had a lot of luck penetrating the market in Japan, still appears to have an uphill battle, according to this article. The Reuters piece quotes Airbus’ John Leahy at the Paris Air Show; when we spoke with Leahy by phone from the IATA AGM immediately before the PAS, Leahy wasn’t quite as upbeat as quoted in the Reuters article. Leahy tamped down speculation that he’d have a Japanese order for the A350 at the PAS (and he did not) but neither was he ready to predict any timeline when one might be forthcoming.
Aspire Aviation continues to believe Boeing may place the 777X wing production in Japan as a means to secure 777X orders and block the A350.
Mitsubishi’s delay: Mitsubishi’s latest delay on the MRJ90 program is being blamed on not following FAA process, according to this article.
Poor South Carolina 787 deliveries: All Things 787 reports that Boeing’s Charleston (SC) 787 assembly plant has delivered only four 787s this year.
Crandall on DOJ AA-US lawsuit: Former American Airlines CEO Robert Crandall (who retired in 1998) has a very good analysis of the faults of the Department of Justice lawsuit to block the American-US Airways merger in this Bloomberg TV interview. He’s first up in the 22 minute segment.
Desperation: Kingfisher sued International Aero Engines for $236m over allegedly defective and poorly designed engines on the Airbus A320. This doesn’t pass the laugh test and smacks of desperation. The V2500 has been on the A320 for decades and seems to have been designed just fine and performing well.
Posted on September 3, 2013 by Scott Hamilton
Airbus, American Airlines, Boeing, Mitsubishi, US Airways
777X, 787, A350, American Airlines, Bloomberg News, Boeing, Boeing Charleston, International Aero Engines, John Leahy, Kingfisher, Mitsubishi, Mitsubishi MRJ, MRJ90, Reuters, Robert Crandall, The Seattle Times, US Airways, US Department of Justice
It’s an unusually busy news day for a Friday. Bombardier received its clearance from Transport Canada to conduct the first flight of the CSeries. BBD has not announced a date, which will be contingent upon weather and the airplane, but word has leaked out that BBD has a VIP event of some kind on Sept. 17, a Tuesday. The Toronto Globe and Mail reported the date but BBD told the paper that date remains tentative and it is not necessarily the date the first flight will take place. Reuters reports the first flight should precede the 17th. The Financial Post reports that the CSeries will fly during the Sept. 17 event, which is to celebrate the launch for the flight testing program.
BBD will webcast the first flight here.
Here is BBD’s press release about receiving Transport Canada’s authorization.
The other big news today is the win by American Airlines and US Airways for a November 25 trial date over the US Department of Justice lawsuit seeking to block the merger. The lawsuit is also holding up American’s exit from bankruptcy. The federal judge overseeing the bankruptcy case set a hearing on Sept. 12 on motions to approve AA’s exit.
DOJ sought a March trial date, a delay which would have effectively killed the merger as much as the lawsuit itself might. DOJ opposed the early date.
Separately, Boeing is conducting ground tests in preparation for the first flight of the 787-9. No date has been set for the flight.
Posted on August 30, 2013 by Scott Hamilton
It’s Actually is Rocket Science: It’s a clever headline from Bloomberg News, explaining why new airplane programs are delayed.
Focusing on smaller airplanes: Steven Udvar-Hazy, one of the craftiest executives in commercial aviation, is profiled in this LA Times story. He discusses his focus on smaller aircraft for his Air Lease Corp.
Boeing 787-9: Boeing rolled out the first 787-9 and is readying pre-flight tests.
Boeing photo
More analysis on DOJ vs AA-US: Here is Part 2 of Airchive’s analysis of the Department of Justice case seeking to block the American Airlines-US Airways merger.
Posted on August 26, 2013 by Scott Hamilton
Replacing the venerable Boeing 747-400s remaining in passenger service is a prime objective of Boeing and of Airbus. The business case for their respective 747-8Is and A380s rests in large part on this approach, though for Airbus the A380 business case also rests on passenger traffic doubling every 15 years and restricted airport slots.
Replacing the 747-400, in fact, doesn’t leave a lot of room. There are just 306 passenger models remaining in service, including VIPs and government uses, according to data provided Leeham News. There are another 23 747-400C (Combis) remaining in service.
Data at July 2013.
Fully 42 747-400 passenger models are in storage. Many 744 “Ps” have been converted to cargo airplanes, supplementing new-build 747-400Fs (above). The 744Ps in storage and in service are obvious candidates for conversion to freighters, and there are a number of 744Fs in storage ready to return to service when the slow-moving global cargo demand recovers–which has proved to be a maddening slow process.
Date as of July 2013
Airbus has been more successful selling its A380 to 747-400 operators than Boeing has in selling its 747-8I. Airbus has likewise been more successful at selling the aircraft to non-747-400 operators, though the customer quality in several cases was dodgy. Kingfisher Airlines has collapsed and it’s unlikely Hong Kong Airlines will take delivery of the A380, openly talking about swapping these orders for smaller aircraft.
And therein lies the rub.
Sources: Airbus, Boeing, Ascend at July 2013
Update: Typo on the Lufthansa remaining orders for A380s: 7, not 17.
Posted on August 26, 2013 by Scott Hamilton
Upgrades for the B-52: The USAF and Boeing are upgrading the Boeing B-52 bomber to further extend the service life. The LA Times via the Seattle Times has this story. This is remarkable; the B-52 was designed in 1948 to be the USA’s aerial backbone against the Soviet Union in the Cold War. It bombed Iraq in the 1991 Gulf War and continues to out-perform the B-1B bomber, which was supposed to replace the old gal, nicknamed by some as BUFF.
More on MRJ Delay: Mitsubishi made it official: the MRJ 90 passenger regional jet will be delayed another year. There are several stories via Google News; this Reuters piece is typical. Aviation Week has a good timeline recap.
Here’s how pending new airplane programs now appear to line up for Entry into Service:
Original | Current | |
CS100 | Dec-13 | e4Q2014* |
MRJ | 4Q2013 | 2Q2017 |
ARJ21 | 2006 | Good Question |
C919 | 2016 | 2018–> |
A320neo | Oct-15 | Oct-15 |
737-8 | Jul-17 | Jul-17 |
777X | e12-2019** | |
EJet E2 | 2018 | 2018 |
* One analyst suggests early 2015 | ||
** Market Intelligence estimate. |
We don’t have enough visibility on the Irkut MS-21 for inclusion in the Table.
Here’s a real oddity: A man in underwear broke into the German Chancellor’s airplane.
American-US Airways: Airchive has this long analysis (and it’s only Part 1 of 2), taking a look at the DOJ complaint. It’s 15 pages even after copy-and-paste into Word and re-sized to 10 point type.
Posted on August 22, 2013 by Scott Hamilton