Leeham News and Analysis
There's more to real news than a news release.
CSeries effect on Airbus, Boeing product strategies
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Introduction
Nov. 6, 2017, © Leeham Co.: Boeing took a pass on assuming ownership of the Bombardier CSeries, according to a report in the Toronto Globe and Mail—the same deal rival Airbus took.
In doing so, Boeing passed on acquiring a new airplane program at pretty much zero risk, no cash investment and no research-and-development cost. The market demand ranges from 4,000 to 6,000, depending on whose study you believe.
Rival Airbus wouldn’t have a response and, given its current turmoil, would have been unlikely to pursue a response.
Instead, Boeing may embark on a risky, high-cost development of the New Midrange Aircraft for which market demand remains a controversy, suppliers are reluctant to take risk-sharing positions and which will almost certainly provoke a response from Airbus.
Artist concept of Boeing 797-7. Source: fs2000.org.
Summary
- Boeing says it’s not worried about Airbus stake in CSeries program; it remains satisfied with its product strategy.
- But 100-160 seat sector won’t be covered by a 737 replacement. Airbus has this covered with CSeries.
- New Midmarket Airplane figures into CSeries impact.
Pontifications: Small Mississippi airport plays key role in state’s aerospace industry
By Scott Hamilton
Nov. 6, 2017, © Leeham Co.: One of my stops during my October visit along the I-10 corridor from Mobile (AL) to New Orleans, through Mississippi, visiting aerospace interests was the Stennis International Airport.
The airport is in Hancock County, an hour’s drive east of New Orleans.
This is on the eastern edge of the Stennis Space Center I wrote about last week and it benefits from being in the Space Center’s shadow. The Space Center is exempt from noise regulations. So is the airport, which enables this one-runway field to be a way point for noisy military jets and trainers and a training location for helicopter-based special forces. These are all noisy aircraft that locals view as routine, says Kevin Carlisle, director of the airport.
50% increase in CSeries sales forecast–but what does this mean?
Nov. 1, 2017, © Leeham Co.: For years, Bombardier forecast the 20-year market demand in the 100-150 seat sector as between 6,000 and 7,200, depending on the 
year of the forecast.
Airbus in 2014, the last year the OEM segmented the sector in its 20-year forecast, predicted a demand of 4,363 aircraft.
Boeing, which hasn’t publicly segmented the sector, is believed to have forecast a demand between 4,185 and 6,275 in 2013, based on information revealed during various executive presentations. The mid-point was 5,230.
In announcing the acquisition by Airbus of 50.01% of the CSeries program, Airbus CEO Tom Enders cited a 20-year demand of 6,000 aircraft.
Bombardier consistently claimed it would capture 50% of the demand it saw, or 3,000 to 3,600 aircraft, over 20 years.
But the numbers don’t match up.
Suppliers conference in Mobile focuses on US aerospace sector in Southeast
Click on image for an enlarged, crisp view.
Oct. 31, 2017: A new event, the Southeast Aerospace and Defence Conference (SADC) scheduled for June 25-27 in Mobile (AL), will examine the commercial, defense, space and corporate aerospace sectors in the US Southeast.
The conference is organized by Airfinance Journal and Leeham Co., the first joint venture between the two companies.
The US Southeast is a growing aerospace center. Defense and space clusters have decades-long histories in the Southeast. Corporate and commercial clusters are more recent developments, albeit in some cases now well within a second decade.
Airbus’ A320 family Final Assembly Line in Mobile opened in September 2015. The FAL is producing 3.5 A320s per month and will reach its initial target of 4/mo by year end, slightly ahead of schedule. There is land capacity to expand to 8/mo.
Earlier this month, Airbus and Bombardier announced that their new venture will establish an FAL in Mobile.
Aviation journalist Ben Sandilands passes
Ben Sandilands
Oct. 31, 2017: Ben Sandilands, the cranky, crusty curmudgeonly writer of Australia’s Plane Talking (Crikey), died Friday after a long illness. He was 73. Cancer was the cause of death.
We only met Sandilands on a couple of occasions but avidly followed his blog for years.
He was controversial in Australia. Sandilands was a long-time critic of the Australian Transportation Safety Board and of Alan Joyce, CEO of Qantas Airways. His persistent criticism won him no friends in officialdom.
But having writing aviation for 60 years, Sandilands had sources through Australian aviation and often wrote penetrating pieces about whatever topic he happened to be pursuing at the time.
Bombardier’s “fatal error” in trade dispute
Oct. 30, 2017, © Leeham Co.: Bombardier made a fatal error in the Boeing/US trade dispute that almost certainly precludes a negotiated settlement and which the Airbus-CSeries joint venture is highly unlikely to cure, an expert trade lawyer says.
William Perry, of the Seattle law firm Harris Bricken, focuses on anti-dumping and countervailing duty cases, the two issues at the heart of the Bombardier CSeries
William Perry. Photo via Google.
case. He previously worked for the US Department of Commerce on trade cases.
He also was an attorney for the US International Trade Commission, where Commerce’s decision to impose tariffs of 219% on the CVD element and 79% in the anti-dumping case goes for judgment.
Perry says flatly, Bombardier will lose at ITC.
Why?
Assessing Alaska Air Group’s fleet requirements
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Introduction
Oct. 27, 2017, © Leeham Co.: Alaska Airlines Group (AAG) acquired Virgin America (VA) and with it, Virgin’s exclusive fleet of Airbus A320ceos with orders for A320neos and A321neos.
With Alaska Airlines (AS) being an all Boeing 737 operator, the question immediately arose: what will AAG do with the Virgin fleet.
AAG CEO Brad Tilden strongly hinted the Airbuses will eventually go away. But on earnings calls, officials say they’re studying the matter and there’s plenty of time before they must decide since the first leases don’t begin rolling off until 2019.
Even if AAG decides to consolidate around the 737—an issue still very much in doubt—it won’t be any time soon.
The A320 leases continue to 2024. The leases for the new A321neos go longer: these are 12-year leases and they are non-cancellable. The A321neos will be around at least until 2030.
Pontifications: Going to space through Mississippi
By Scott Hamilton
Oct. 30, 2017, © Leeham Co., Hancock County (MS): The US Space Shuttle program ended in 2011 and NASA is sending US astronauts to the International Space Station using Russian-made rockets.
But officials want to end reliance on those launch vehicles and are working with US companies to supply the boosters and prepare for a mission to Mars.
Last week, I wrote about Boeing’s efforts to develop the Space Launch System (SLS). I spent the week of Oct. 9 going from Mobile (AL) through the I-10 corridor in Mississippi and ending in New Orleans, gaining a high level understanding of the aerospace footprint in the US Southeast.
The Mississippi portion was arranged by the Mississippi Development Authority. I’ll provide additional reporting in the coming weeks. This week, I focus on NASA’s John C. Stennis Space Center in Hancock County (MS), an hour’s drive east of New Orleans.
US ponders Russia sanctions, some affecting US aerospace
Oct. 27, 2017, © Leeham Co.: The US is considering new trade sanctions against Russia, and Russia is considering retaliatory sanctions, that could have major implications in US aerospace—including on Boeing.
The US sanctions would be for meddling in the US presidential election in 2016 and for activities in Eastern Europe. The Russian sanctions are a tit-for-tat retaliation if the US sanctions are adopted.
Among the Russian companies that may be targeted:
Singapore airlines increases order for 787-10
By Bjorn Fehrm
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Introduction
Oct. 26, 2017, © Leeham Co.: Singapore airlines increased its order for Boeing’s 787-10 from 20 to 39 this week. The first aircraft for the airline rolled off the assembly earlier this month. It will now be prepared for delivery, flying out to Singapore on the new year.
The 787-10 is essentially a 787-9 which can take more passengers. By it, the cost per passenger goes down.
How much better? By comparing with the closest competitor, Airbus A350-900, we can learn by how much.
We will use our performance model to compare the aircraft. It’s a bit apples and oranges, because the A350-900 is a long-range airliner with 8,000nm range, and the 787-10 sacrifices the range of the -9 variant to carry more passengers.
But it’s interesting to see how this sacrifice pays off in efficiency on the type of routes the 787-10 was designed for.
Summary:
- The 787-10 is optimized to carry 330 passengers out to 6,400nm. It does this with a well-packaged fuselage and the wing of the smaller 787-9.
- The A350-900 is larger. It has a larger wing, to fly longer. And its fuselage diameter brings more passenger comfort, especially in economy.
- With both built with weight-saving carbon fiber technology, it’s not surprising the 787-10 is lighter, despite holding a row more of passengers.
- Weight and size always cost fuel. The difference in fuel burn is consistent with the difference in aircraft capabilities.