Leeham News and Analysis
There's more to real news than a news release.
Pontifications: Countdown to Delta’s single-aisle decision
By Scott Hamilton
Dec. 11, 2017, © Leeham Co.: Eyes will watch Atlanta (GA) this week, when the Delta Air Lines Board of Directors decides to award a big order for the re-engined Airbus and Boeing single aisle airplanes.
The Board meeting is believed to be Thursday. At stake: 100 orders and 100 options for either the Airbus A320neo or Boeing 737 MAX families.
I wrote about this last week. Here’s an update.
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Airbus’ strategy for the A330-800
By Scott Hamilton
Dec. 6, 2017, © Leeham Co.: The A330-800 entered the final assembly line last week at the Airbus production plant in Toulouse, France, amid doubts in the industry that the airplane will be produced beyond the prototype.
The first A330-800 is on the Final Assembly Line at Airbus. Source: Airbus.
There is only one order for the sub-type, six from Hawaiian Airlines—and Hawaiian is expected to cancel the order. The airline is running a competition between the Airbus A350-900 and the Boeing 787-8/9, according to market intelligence.
Boeing moves EIS target for NMA to 2027: sources
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Introduction
Dec. 4, 2017, © Leeham Co.: Officially, Boeing says the New Midmarket Aircraft (NMA, or 797) entry-into-service will be around 2024-25 if the program is launched.
LNC has learned the target date now being discussed is 2027.
Boeing 797 concept. Source: Boeing.
This means the 737 replacement likewise slips, with EIS after 2030 instead of late next decade or in 2030.
The new NMA target date, which we’ve heard from the supply chain and customer base, gives further impetus to the prospect of restarting the 767-300ER passenger production, a decision that is supposed to be made by the end of this year.
Summary
- Technology is at the heart of the new target EIS for the NMA.
- The 737 replacement was always intended to follow the NMA.
- Supply chain asked for 767 production rate ramp-up feasibility.
Pontifications: Delta’s decision on neo vs MAX near
By Scott Hamilton
Dec. 4, 2017, © Leeham Co.: The Delta Air Lines management decision for an order for 100 Airbus A321neos or Boeing 737 MAXes, plus an equal number of options, is expected this week. A decision by the Board of Directors is expected next week.
Competition between the two companies was heated. Commercial terms were aggressive. Airbus and Boeing each want this deal badly. An Airbus win speaks for itself. For Boeing, a MAX order would give a boost to the MAX 10. A blocking move on Airbus is desired. For Boeing, a win would be especially meaningful.
Relations between Boeing and Delta are notoriously strained. These were exacerbated by Boeing’s complaint with the US government over the Bombardier C Series order, in which Boeing alleged price dumping and illegal subsidies. To no surprise, the Trump-led Department of Commerce found in favor of Boeing on both.
Would a 767 stopgap make sense while waiting for NMA?
By Bjorn Fehrm
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Now open to all readers.
Introduction
November 30, 2017, © Leeham Co.: We have covered Boeing’s deliberations whether to restart 767-300ER passenger version production here and here.
To understand how good a stopgap the 767-300ER would be for an airline needing to replace ageing 767s, and the Boeing 797 not being there in time, we check its economics versus the alternatives.
Should an airline buy additional 767-300ERs (if offered) or the overqualified and therefore more expensive 787-8? Or is defecting to the Airbus A330-200/-800 a better option?
Summary:
- The 767-300ER takes about 30 fewer passengers than the 787-8 or A330-200/-800.
- It’s lighter than the longer range 787 and A330s; therefore landing fees will be lower.
- Its lower weight and smaller size also lowers crew costs.
- The lower costs for fees and crew can’t fully compensate for higher fuel and maintenance costs per passenger.
- It will be up to aggressive pricing to close the gap to the more capable and lower cost 787-8 or A330-200/-800, should Boeing restart the passenger 767 line.
Leahy reflects on 33 years at Airbus
John Leahy will retire in January and stay for a short transition to help his successor, Eric Schulz, who was named EVP, Chief of Sales, Marketing and Contracts. Leahy is Chief Operating Officer-Customers. During his three-decade long tenure at Airbus, the company moved from a single-digit market share to surpassing Boeing for more than a decade in sales. Leahy spoke with LNC about his retirement.
John Leahy, right, with William Franke, CEO of Indigo Partners at a history-making deal for 430 A320neos, announced at the Dubai Air Show. Photo via Google images.
Nov. 28, 2017, © Leeham Co.: John Leahy was a salesman at Piper Aircraft, a small general aviation aircraft producer when he received a call from a headhunter to join Airbus North America as its top salesman.
Leahy was head of marketing at Piper. With a pilot’s license, he would take various Piper aircraft to conventions or air shows and on sales calls for demonstration.
“It was great fun,” he said. “It was really an enjoyable job.” Leahy said Piper was consolidating everything in Vero Beach (FL) and he wasn’t sure he wanted to move there. He wanted a more direct sales role and accepted a position with Piper in Geneva, Switzerland, as Director of the Eastern Hemisphere. “I felt that was pretty cool.”
Before moving, the headhunter called.
Boeing’s good year for wide-body orders
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Introduction
Nov. 27, 2017, © Leeham Co.: Officials from Airbus and Boeing each said this year that wide-body orders, languishing for the past couple of years, should pick up by the turn of the decade as the in-service fleet reaches 20-25 years old.
Aerolineas Argentinas plans a wide-body competition for deliveries around 2020-2021. Photo via Google images.
But Boeing has had an exemplary year through Nov. 21, the most recent update of its Orders and Deliveries website. The company reported 160 net orders for the 767, 777 and 787, with 88 for the latter. Commitments for 40 more at the Dubai Air Show are not included, as these have not yet been firmed up.
Airbus hasn’t done nearly as well: just 56 net orders for the A330 and A350 families through October, its most recently reported data.
Have Boeing’s results indicated a sooner-than-expected uptick in orders?
Summary
- Not enough data to draw definitive conclusions, but uptick may be arriving early.
- Aerolineas Argentinas and Thai Airways are looking at wide-body aircraft orders. See the stories here and here.
- Early this year, 5-year slump was seen. By August, strong market seen.
Pontifications: Scrutiny of HNA intensifies
By Scott Hamilton
Nov. 27, 2017, © Leeham Co.: Time for some catch-up in the world of commercial aviation.
Scrutiny of HNA Group is intensifying as regulators in Switzerland claim the Chinese company provided false information in the takeover of a Swiss aerospace company.
Additionally, Airfinance Journal reports that at least five lessors have seen delayed lease payments from HNA Group airlines ”as HNA pumps cash from those carriers into other areas of the highly leveraged conglomerate.”
And HNA’s Hong Kong Express low-cost carrier has been barred from further expansion until it fixes problems identified by the Chinese government.
LNC reported in September that HNA was coming under credit pressure due to its high leverage.
In addition to a plethora of airline investments, HNA owns one of the world’s largest aircraft leasing companies, Avolon.
Airbus A350-1000 certified. How good is it?
By Bjorn Fehrm
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Introduction
November 23, 2017, © Leeham Co.: The Airbus A350-1000 received its airworthiness certificate Tuesday, after a smooth flight test campaign. The first serial aircraft is in final assembly, for delivery to Qatar Airways next month.
With the A350-1000 now on the market, we check the efficiency difference between the A350-1000 and its main competitor, Boeing’s 777.
Figure 1. A350-1000 at cold weather testing in North Canada. Source: Airbus.
With the 777-8 five years away, we compare the A350-1000 to the present 777, the -300ER. The changed fuel prices create a different yardstick since our last comparison of the 777-300ER and A350-1000.
While at it, we also check how much better the A350-1000 score on costs versus the smaller A350-900.
Summary:
- The A350-1000 is the most efficient aircraft of the three.
- The A350-900 is smaller. It has Cash Operating Costs per seat mile which are close to the A350-1000.
- The 777-300ER is the most expensive to operate, also at today’s fuel prices. Pricing must be very aggressive to compensate operating cost differences to the A350-1000.
- With A350-1000 deliveries starting, the 777-300ER’s reign as the twin to have for 350-seat long range is ending.