Pontifications: Workforce shortage hurts entire supply chain

By Scott Hamilton

Aug. 20, 2018, © Leeham News: A growing shortage of workers is exacerbating pressure on suppliers as they struggle to meet current aircraft production rates, even as Airbus and Boeing want to raise them even more.

Add to this the thousands of retirements facing the OEMs in the next 5-10 years, and you can see the strain facing Airbus, Boeing, the engine makers and the suppliers feeding into them.

It also partly explains the shifting trend toward automation. Setting aside the obvious benefits of automation—quality control, accuracy, boring repetitive work, etc—the supply chain in simply facing a growing shortage of workers for which there is no easy answer.

Read more

Can an Airbus A321XLR kill NMA’s business case?

By Bjorn Fehrm

Subscription Required

Introduction

August 16, 2018, © Leeham News.: Airbus is working on improving the A321LR so it can fly more of the missions Boeing’s NMA is aimed for, according to Aviation Week. By it, Airbus could ideally make the NMA business case a No-Go.

To understand how much of the NMA market an A321XLR can address we need to understand the limitations of the A321LR and what can be done about them. And how fast such improvements could be implemented.

Summary:

  • The A321LR is limited in both Take-Off Weight and fuel capacity to fly further than today’s aircraft.
  • How to lift these limitations without imposing large changes is the subject of this week’s article and a follow-up article next week.

Read more

Some suppliers consider sitting out Boeing’s NMA program

By Dan Catchpole

August 15, 2018, © Leeham News: If Boeing launches its New Midsize Airplane (NMA or 797), it is expected to use the cleansheet program to force new contract terms on suppliers. And that has some suppliers wondering if it is worth participating in the program at all.

Speaking on background, executives from several suppliers told LNC in recent months that they might not bid on NMA work if it means greater price concessions up front, as well as surrendering lucrative aftermarket sales to Boeing.

Bidding will depend, in part, on whether suppliers can pass cost cuts down to their own suppliers,  and if Boeing takes on more risk and development costs to offset lost aftermarket revenue. One exec wondered what it could mean for the company’s engineering capabilities if they have to bid for essentially procurement orders with Boeing holding onto the IP.

Read more

Airbus Business Line Services ramping up

Subscription Required

Introduction

Aug. 13, 2018, © Leeham News: While Boeing aggressively pushes its new business unit, Boeing Global Services (BGS), on a trajectory for a $50bn revenue target in 10 years, Airbus quietly has its own services operation.

Airbus services has a goal to reach $10bn in revenue over the next decade for its commercial services. In 2017, the Airbus Group revenue of $9bn was split roughly evenly between commercial, helicopters and defense.

BGS’ revenue target includes all services.

Unlike BGS, Airbus services are not a separate business unit/profit center. Ironically, the Airbus website describes the airliner-part as “commercial aircraft services.” Boeing’s airliner services operation was called Commercial Aviation Services, or CAS, before CAS merged with the Boeing defense operation to form BGS. The business line is promoted as Services by Airbus in collateral material.

Read more

Pontifications: Horizon Q400 theft spurs thoughts about solo pilot idea

By Scott Hamilton

Aug. 13, 2018, © Leeham News: The bizarre theft of a Horizon Airlines Bombardier Q400 at Sea-Tac Airport Friday night by a 29-year old employee will take some time for investigators to unravel.

The employee, a ramp agent, appeared to have no other motive in mind other than a last joy ride before ending his life.

Read more

Will rising fuel prices revitalize new aircraft sales? Part 2

By Bjorn Fehrm

Subscription Required

Introduction

August 9, 2018, © Leeham News.: We continue last week’s article about how changing fuel prizes affects fleet plans. Last week we studied how long-term rising fuel prices will favour new, more fuel-efficient single-aisle aircraft.

Now we make the analysis with Widebody aircraft in the segment 250 to 300 seats.

Summary:

  • The crossover fuel price where a new generation Widebody is a good investment is slightly different than for the Narrowbody.
  • As for the Narrowbody, the maintenance costs for a half-life Widebody and how these are handled influence the crossover fuel price.

Read more

777F, 747-8F orders help former’s bridge, solidify Boeing as freighter king

Subscription Required

Introduction

Aug. 6, 2018, © Leeham News: The surge of orders at the Farnborough Air Show for Boeing 777 and 747-8 freighters is welcome news for Boeing, which still had production gaps to bridge between the 777 Classic and the 777X.

The 747-8F orders, for five, helps breathe life into this struggling program.

The orders also add to Boeing’s virtual monopoly in new-build cargo aircraft backlogs.

Summary
  • 777F orders and commitments now nearly double the remaining 777-300ER backlog.
  • Three new-build freighter models swamp Airbus offering of just the A330-200F.
  • Airbus pitching UPS for A330-800F.

Read more

Pontifications: Supply chain meltdown

By Scott Hamilton

Aug. 6, 2018 © Leeham News: It happened to Airbus. It sort of happened to Boeing. It was bound to happen in a much bigger way to Boeing, and it has.

Some 40 737s are now sitting around the Renton assembly plant in a major supply-chain meltdown.

This follows the highly publicized, two-year long supplier meltdown at Airbus as Pratt & Whitney and CFM fell down on engine deliveries and technical problems for their GTF and LEAP-1A engines, respectively.

Tired of the same old marketing talk and bland content? Then Plane Truths: The Next 12 Months is a conference you should attend Sept. 11-12 in Chicago. For more information, click here.

Read more

Will increasing fuel prices revitalize new aircraft sales?

By Bjorn Fehrm

Subscription Required

Introduction

August 2, 2018, © Leeham News.: As outlined in our Monday article the changing fuel price is affecting fleet plans. With increasing cost of fuel one would expect the airlines to order more new fuel-efficient aircraft.

The reaction from some US carriers has been the opposite, deferral of deliveries of new aircraft. While this might be a short-term reaction, long-term rising fuel prices will favor new, fuel-efficient aircraft. The fuel price level when this happens is today’s subject.

Summary:

  • There are more factors than fuel and capital costs which influence buy new or keep old fleet, but the fuel and capital costs are the key variables.
  • We also explore if there is a difference in crossover fuel price between Narrowbody or Widebody fleets.

Read more

Rising fuel prices hit earnings, but there’s a silver lining for OEMs

Subscription Required

Introduction

July 30, 2018, © Leeham Co.: Fuel prices are spiking and it’s already causing airlines to adjust growth and fleet plans.

But rising fuel prices could mean orders for slow-selling aircraft might pick up. Still, there are mixed signals on this front.

Summary
  • American and Southwest airlines are curbing growth and American is deferring airplanes due to rising fuel prices.
  • Alaska Airlines reported fuel prices were up 10 consecutive quarters, adding $850m to expenses.
  • Fuel prices were just under $80bbl on the US spot market last Thursday.
  • The inflection point between keeping current generation planes and ordering new ones with more efficient engines is fast approaching.
  • This could be a boost to the slow-selling Airbus A330neo and accelerate demand for the Embraer EJet-E2 and the Airbus A220 (nee Bombardier C Series).

Read more