Leeham News and Analysis
There's more to real news than a news release.
Airbus holds the line on A350 production rate
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Introduction
Sept. 4, 2019, © Leeham News: Airbus’ decision a few months ago to keep the A350 production rate at 10/mo appears to be a wise one, considering that there is a small production gap in 2022 but increasingly large ones from 2023.
Boeing boosted rates this year of the 787, which competes with the A350-900 but not the -1000, to 14/mo. Boeing is sold out at this rate
in 2020 and 2021, but has a big gap in 2022 and larger gaps thereafter.
Both companies bank on a splurge of orders early next decade to fill the production gaps. Each says there will be a retirement surge beginning in about 2022.
Airbus offers the A330neo and A350. Boeing pitches the 787 and 777X—with a combined production capacity of 35/mo or 389/yr at current rates.
Summary
- Skyline quality is generally good, but weak spots and one blue-chip order bear watching.
- Some significant production gaps emerge in 2023.
- A330-900 competes with A350-900 for orders.
Pontifications: Catching up on Odds and Ends-Alaska’s Airbus fleet, first E195-E2 delivery, Boeing’s MAX rebranding question
- Take our Boeing 737 MAX rebranding poll at the end of this post.
Sept. 2, 2019, © Leeham News: It’s time to catch up on Odds and Ends.
Alaska Airlines
In its second quarter earnings call and 10Q Securities and Exchange Filing, Alaska Airlines said it was returning one Airbus A319 and two A320s off lease this year and next.
By Scott Hamilton
These airplanes are from its Virgin America acquisition, which introduced the Airbus family into the all-Boeing Alaska mainline operations.
Alaska officials have said several times they are evaluating whether to phase out all Airbuses and return to an all-Boeing fleet, or keep the Airbuses and operate a mixed fleet indefinitely.
I wondered if this was the start of the phase out.
“We are planning to return 1 A319 this year and 2 A320s next year at normal lease expiration,” Brandon Pederson, EVP and CFO of the company, wrote LNA. “This is not part of a broader fleet decision, nor a phase out of the smaller Airbus aircraft. Leases on the remaining 50 A319/A320 aircraft in the fleet have varying maturities through 2025.”
Opportunity and challenges of a 787-10ER, Part 2.
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By Bjorn Fehrm
Introduction
August 29, 2019, ©. Leeham News: In last week’s article we went through the reasons for a longer range 787-10, a 787-10ER version (ER for Extended Range). We could conclude it would be an attractive aircraft for the market if it could get another 1,000nm in range.
We use our airliner performane model to analyze how this can be achieved and if Boeing would face large engineering challenges to get to this range.
Summary:
- The 787 program would benefit from a longer range 787-10 as described in our first article
- Now we analyze how to achieve the extra range and what trades will be necessary to convert the 787-10 to a 787-10ER.
Pontifications: Embraer sees E175-E2 orders this year outside US
By Scott Hamilton
Aug. 26, 2019, © Leeham News: My column July 22 entitled Embraer counts on Boeing heft for E2 sales boost raised a few hackles in Sao Jose dos Campos, headquarters of Embraer.
It wasn’t meant to. Rather, slow sales of the E-Jet E2 this year caught the attention of more than a few in the market, so I thought putting some perspective on the issue was worthwhile.
After all, sales of the Bombardier C Series were slow between the announcement of selling 50.01% of the program and consummation of the deal nearly a year later.
Such is the case with E2 sales pending consummation of the Boeing-Embraer joint venture, which has a target date of closing by year end, I wrote.
Airbus faces challenges for A330neo
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Aug. 26, 2019, © Leeham News: Airbus faces near-term challenges with its production skyline for the A330, even at a reduce rate of 4/mo, an analysis shows.
Looking forward from next year, when there are slightly more deliveries scheduled than production rates—a function of some leftover 2019 builds—Airbus faces an easily-filled gap in 2021 but huge production gaps beginning in 2022.
Even if Letters of Intent and options were fully converted to firm orders, big production gaps will exist.
A production rate cut seems inevitable in the near future.
Summary
- Key Emirates order not yet firmed up.
- Big, 200 unit A330-200R LOI no longer appears in data.
- Why keep the A330neo in the product line?
Bjorn’s Corner: Fly by Steel or Electrical wire, Part 5
By Bjorn Fehrm
August 23, 2019, ©. Leeham News: In our series about classical flight controls (“fly by steel wire”) and Fly-By-Wire (FBW or “fly by electrical wire”) we now look at practical implementations after discussing the authority of the flight control system last week.
As before we compare the classical 737 system to the A320 FBW system.
Figure 1. The two mechanical control pitch systems of the 737 are visible in the upper left. Each side has a complete system shown at the lower part of the figure (except for the trim which has dual wire sets but one actuator motor/drum). Source: Boeing.
Opportunity and challenges of a 787-10ER
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By Vincent Valery
Introduction
Aug. 22, 2019, © Leeham News: By 2024 the 777-300ER will have been in service for 20 years and the 777-200ER 27 years.
United Airlines 787-10. Credit: United Airlines.
LNA was the first to report the 777-8 entry-into-service will slip by at least two years. Boeing confirmed a delay in the 777-8 development, but not the timeline. Further delays (or an outright cancellation) for the passenger 777-8 are a real possibility. Boeing faces the prospect of not having a latest generation offering in the 330-370 seat market at a time demand for such aircraft is expected to pick up.
As part of the Air New Zealand commitment to purchase eight Boeing 787-10s, Boeing and General Electric are increasing the maximum takeoff weight to add more range.
In a similar fashion to the 777-300ER 20 years ago, Boeing might improve the 787-10 further to turn it into a fully-fledged ER variant. We will analyze the rationale for launching such variant and the challenges Boeing needs to overcome.
Summary
- Remediate a product gap
- Opportunities arising from surging 777 retirements
- A mixed track record of previous stretches and range improvements
- Target range for the 787-10
- Challenges associated with achieving those targets
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Boeing’s Long Term Cash Flows
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By Vincent Valery
Introduction
Aug. 19, 2019, © Leeham News:Boeing’s long-time priorities, adopted after the 787 program finally was past its troubles, is shareholder value.
Boeing has spent tens of billions of dollars over the years in stock buybacks. It has regularly increased dividend payments.
In the context of a global aviation boom, the Commercial Airplanes division has generated the bulk of cash flow growth in recent years for the company. The creation of Boeing Global Services is a move toward achieving mid-teen margins for The Boeing Co.
Just like any aircraft OEM, the ability to generate cash flows rests on having an up-to-date and desirable product line up for customers.
Before the Ethiopian Airlines Boeing 737 MAX crash, things were looking good for Boeing. Assuming a successful resolution of the 737 MAX crisis, Boeing should return to generating strong operating cash flows afterward.
However, how long is the current product line up expected to sustain those cash flows and what could Boeing do about it?
Summary
- Dreamliner: from costly delays to cash flow machine
- Boeing 777 provided strong cash flows at critical time and 737 rode global aviation boom until grounding
- Significant production gaps on 737, 777 and 787 appear from mid 2020s, potentially threatening cash flow generation
- New variants, derivatives and clean sheet design would sustain cash flows longer.
Read more
Pontifications: Trump-China trade war hits Boeing
Aug. 19, 2019 © Leeham News: There have been no widebody orders placed by China with Boeing since President Trump launched a trade war in March 2018, hurting American’s biggest exporter and affecting the US balance of trade.
In fact, there have been no announced orders by China with Boeing since October 2017. Only 22 China orders were announced in 2017.
Boeing has a large number of Unidentified 737s listed on its website. It is widely believed that China accounts for perhaps as many as 25% of these, but Boeing won’t comment.
China historically accounted for between 25% and 33% of Boeing’s annual deliveries.
Since 2011, China took delivery of more than 170 widebody passenger and freighter jets, or 9.3% of all widebodies delivered by Boeing.
Bjorn’s Corner: Fly by steel or electrical wire, Part 4
By Bjorn Fehrm
August 16, 2019, ©. Leeham News: In our series about classical flight controls (“fly by steel wire”) and Fly-By-Wire (FBW or “fly by electrical wire”) we this week discuss the Flight Control System’s authority to execute maneuvers by its different parts and why the authority of these parts is a fundamental parameter when designing the system.
Figure 1. Embraer Phenom 300’s Yaw damper rudder. Source: Embraer.