Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Five for Five: Air India crash points to systemic problems at Boeing that CEO Ortberg must fix June 15, 2025
- Airbus sees Boeing as medium-term competitor, with Comac next June 14, 2025
- Boeing bullish on 20-year forecast, despite short-term headwinds June 14, 2025
- Embraer’s 20-year market forecast under 150 seats: fewer turboprops, jets about the same June 14, 2025
- Airbus Canada CEO: Airbus is here to stay in Canada June 14, 2025
Weekly Analyst Synopsis: Rolls, Boeing and leasing companies
Sept. 28, 2016: This week’s aerospace analyst research synopsis looks at Rolls-Royce. aircraft leasing companies and the implications to supply-and-demand, and the Iran Air order clearance by the US for Boeing.
No sanctions will be levied on Airbus and Boeing in WTO dispute
Subscription Required
Now open to all readers.
Introduction
Sept. 26, 2016, © Leeham Co.: It’s hazardous to use the word “never,” but the US and European Union will never impose trade sanctions or tariffs on Airbus or Boeing airplanes.
No sane president would do so. (Cue Donald Trump.) It would start a devastating trade war and the collateral damage on innocents in the Airbus-Boeing illegal subsidies disputes would be severely harmed.
Summary
- US tariffs on Airbus aircraft and EU tariffs on Boeing aircraft would hurt engine makers, suppliers—innocents in the illegal subsidy disputes.
- Some key customers order from Airbus and Boeing. Tariffs on one or the other company risk alienating these customers.
- Sanctions/tariffs permitted on other companies, industries.
- Canada, Brazil never imposed sanctions in Bombard-Embraer violations.
Pontifications: Hypocrisy and illegal subsidies at the WTO
By Scott Hamilton
Sept. 26, 2016, © Leeham Co.: There are two airplanes under development that are in the 150-220 passenger space.
Both are under development by companies that get state aid and make no bones about it. The aid would likely be found in violation of World Trade Organization (WTO) rules.
But the most vociferous opponent to illegal subsidies hasn’t said a peep about it.
Neither has the opponent’s rival—although this company publicly recognizes the irony of it all.
I call it hypocrisy.
WTO slams EU, Airbus
.svg/1280px-World_Trade_Organization_(logo_and_wordmark).svg.png)
Sept. 22, 2016: The World Trade Organization (WTO) today found that the European Union not only did not cure its previous finding that Airbus received illegal financing aid in launching the A300 through A380, it further violated rules by obtaining launch aid for the A350 XWB.
Stories are here and here. The Seattle Times has some specific detail here.
The WTO has yet to issue a ruling on an appeal that Boeing failed to comply with the EU’s finding that the US provided illegal subsidies to Boeing. The Wall Street Journal reported yesterday that the WTO is expected to do so.
The EU can appeal the latest finding, which allows the US to impose up to $10bn in sanctions. The US doesn’t have to do so but if it does, it doesn’t even have to be against Airbus–it can be against entirely unrelated industries.
Boeing issued a press statement that was predictable in its tone. It is reproduced below the jump.
Airbus, predictably, has a different spin. Its press release follows Boeing’s.
The WTO’s synopsis is here. The full report is here. The excerpt of the Conclusions and Findings are here. Summaries of key findings are here.
Boeing positioned to narrow market share gap
Subscription Required
Now open to all readers.
Introduction
Market sahre data from February–little has changed since–for sales of the A320neo vs 737 MAX families.
Sept. 22, 2016, © Leeham Co.: Early this year Boeing officials began a new message in pushing back against market data that show Airbus captured about 60% of the single aisle market in the A320neo vs 737 MAX sector.
There’s plenty of time, Boeing said, for the MAX to catch up to the neo. Just look, officials said. Southwest Airlines and Ryanair ordered only a fraction of the MAXes they need to replace the 737s they currently operate.
Airbus, on the other hand, has hundreds more neos ordered by the likes of new airlines such as AirAsia and Indigo.
The implication is that the AirAsia and Indigo orders are not as solid as the potential for Southwest and Ryanair.
It’s a fair point.
But it’s not the whole story.
Summary
- An analysis of airlines that have not ordered the A320neo or 737 MAX families shows Boeing has more upside potential.
- Boeing companies still have thousands of orders yet to be placed.
- Forecasting ahead, Boeing has a solid prospect of narrowing the market share gap with Airbus—but probably not closing it entirely.
LCC changes face of long-haul
By Bjorn Fehrm
21 September 2016, ©. Leeham Co: Norwegian has announced that it has now flown its three millionth passenger on their long-haul network.
Figure 1. Norwegian Air Shuttle long-haul 787. Source: Wikimedia.
Norwegian first launched low-cost flights from Scandinavia to the U.S. in May 2013, followed by services from London to the US beginning in July 2014. Today, the airline offers 37 nonstop routes between Europe and the U.S. with a steady load factor of 90 per cent or more – in August this year, Norwegian’s long-haul flights achieved a 96 per cent load factor.
As we wrote last week the carrier will augment this network with the arrival of the Boeing 737 MAX 8 next spring. Norwegian has now obtained a UK Operating License which allows the airline access to markets in Asia, Africa and South America. With the MAX 8 and the 787 Norwegian will have a powerful fleet which can operate both on thin long-haul destination as well as larger ones.
Southwest Airlines, Ryanair and JetBlue is also eyeing long haul when they get their longer range 737 MAX and Airbus A320neo. Add to that the established AirAsia X and Jetstar are now on a steady long-haul expansion. The world-wide long-haul market is in for a major change. Read more
Weekly analyst update: focus on Boeing, Zodiac and defense stocks
Sept. 21, 2016: Today’s weekly analyst synopsis includes commentary on the US presidential election on defense stocks; some updates about Boeing and its recent appearance before the Morgan Stanley conference; and improvements at Zodiac, which affect Airbus.
Analysts continue to believe Boeing will further cut the 777 Classic production rate, with an annoucnement toward the end of this year.
Airbus, Boeing cost-cutting
Sept. 20, 2016: Airbus is planning cost-cutting measures to offset program write-offs and delivery delays, according to The Financial Times.
One of these delays involves the well-publicized problems with the Pratt & Whitney Geared Turbo Fan engine on the A320neo.
The CEO of United Technologies, parent of PW, last week said engine deliveries could fall 50-100 engines short of the 200 originally projected for the year, with a likely shortfall of about 50.
The A320neo “gliders” (as an Airbus executive put it) are well known. Bombardier also said it will deliver about half the number of CSeries this year because of GTF issues.
Sam Pearlstein, the aerospace analyst at Wells Fargo, had this synopsis:
Pontifications: A380 “oh-woe-is-me” valid, if premature
By Scott Hamilton
Sept. 19, 2016, © Leeham Co. The real (very boring) headline should be: “Aircraft lease reaches end.”
This was the wry comment by Alasdair Whyte of Aircraft Investor last week, reporting on media coverage of Singapore Airlines’ decision to return its first Airbus A380 at the end of its lease term.
The “oh-woe-is-me” series of media stories ignored that Singapore routinely flips its fleet about every 10-12 years. SQ also has five A380s on order that, wonder of wonders, arrive as the earliest models become of age.
It is particularly distressing that one trade publication that should know better jumped on the woe-is-me bandwagon.