Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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- Bjorn’s Corner: Air Transport’s route to 2050. Part 22. May 16, 2025
- Services are driving revenues and profits in difficult times, Part I May 15, 2025
- The BWB has a long way to go before flying passengers, freight May 12, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
Reaction mixed to Boeing increase in share buyback, dividend hike
Dec. 16, 2015: Reaction among Wall Street analysts was mixed following the announcement by The Boeing Co. that the board of directors approved a hike in the stock dividend payments and the share buyback.
The announcement had been expected. The share buyback was increased from $12bn to $14bn in aggregate and the dividend was increased by 20%, to $1.09 per share. The latter was somewhat higher than expected. Boeing has repurchased $6.75bn in stock so far.
Initial reaction from analysts ranged from positive to cautious.
Analyzing Air Bridge Cargo plans for Boeing 747-8F
Dec. 15, 2015, (c) Leeham Co.: A plan by Russia’s Air Bridge Cargo to acquire another 18 Boeing 747-8Fs does little to solve Boeing’s production gap and program viability, an analysis by LNC shows.
Bloomberg News published a story yesterday saying the fate of the 747 program rests with Air Bridge Cargo, which announced an MOU for 20 747-8Fs at last summer’s Paris Air Show.
But as LNC reported shortly after the MOU was announced–once we had the opportunity to look behind the hype–it was clear that the news was hardly anything to count on.
This remains the case despite Bloomberg’s story.
4-engine single-aisle airplanes could make comeback, says technology VP
Dec. 15, 2015, © Leeham Co: LNC’s Bjorn Fehrm started a firestorm of discussion last Friday with his Corner about twins-vs-quads column. His focus was on the Very
Could a four-engine, single-aisle airliner make a comeback? It’s something that might be possible. Photo via Google images.
Large Aircraft sector. Overlooked in all of the discussion was a piece of information LNC wrote April 6 from an interview with Alan Epstein, VP of technology and environment of Pratt & Whitney, in which he mused that quads could make a comeback—on smaller airplanes.
The original article was behind our Paywall, but the Summary with this reference was in the freewall portion. We’ve now opened the article to full freewall and it may be found here.
Pontifications: Aircraft values vary widely
By Scott Hamilton
Dec. 14, 2015, (c) Leeham Co: Aircraft valuations came to the forefront following comments by Richard Anderson, CEO of Delta Air Lines, over just how much a 10-year old Boeing 777-200ER was worth. He claimed the airplane was only valued at $10m. Boeing’s investor relations department immediately pushed back against this low price, circulating to the aerospace analyst community that a number of appraisers placed the value in the $50m-$60m range.
Anderson later was quoted as saying Boeing Capital Corp. offered Delta the aircraft for that price. BCC didn’t comment.
LNC wrote at the time, and later, that Anderson was correct. We noted, however, there are a lot of caveats that come with the $10m, rooted in the fundamental fact that this price had to be for a “run out” model that would require expensive airframe and engine maintenance, repair and overhaul, and interior reconfiguration. This could add as much as $30m to the price, or $40m all-in–still substantially less than the appraised figures for a “half-life” example.
Appraisals are an inexact exercise that not only depend on the maintenance condition of the airplanes, whether they are “desk-top” or inspection appraisals and the methodology of the various appraisal companies, backed by market intelligence data.
Bjorn’s Corner: Twins or quads?
By Bjorn Fehrm
11 December 2015, ©. Leeham Co: The debate over two or four engines for long range aircraft is as old as the jet airliner. A number of myths have been pedaled over the years over the virtues of the one over the other. The myths have even been presented by airline CEOs as “facts that are known in the industry.”
Having done several in-depth comparisons of two-vs-four engined long range aircraft, we can’t find the patterns that these myths propel: that a quad is less efficient than a twin and should have higher maintenance costs. What we see is that it is all dependent on what one compares and to what technology generation the one or the other aircraft belong.
When we didn’t get the same results as the myths on a number of areas, we started to wonder what could have created the myths in the first place. Looking at what four engined airliners could have been the source of the rumours, we started to see a pattern. It was a pattern of apple-and-oranges being compared and wide ranging conclusions being drawn.
Here is what we found. Read more
IBA recaps Boeing 777 focus conference
Dec. 9, 2015: The aircraft appraisal firm IBA, headquarter in the UK, issued a recap of the Airline Economics one day conference about the Boeing 777 market that focused on values and marketability of the aircraft. These have been topics of international discussion ever since Boeing launched the 777X (and, really, for some time before) and Boeing faced the challenge of bridging the production gap between the 777 Classic and the 777X.
Used B777-200ER or A340-300, Part 3
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Introduction
By Bjorn Fehrm
Dec. 9 2015, ©. Leeham Co: We have now covered the Cash and Direct Operating Costs (COC, DOC) for our acquired and refurbished Airbus A340-300E and Boeing 777-200ER. We will now finish the article series by looking at the earnings capability of the aircraft and compare these to the cost.
We will start by examining the payload carrying capability of the aircraft over different stage lengths by means of the aircraft’s payload-range diagram. Any excess payload capability over a cabin filled to a normal load-factor will be used to add cargo to the revenue stream.
Finally, we will value the payload according to the market’s standard yields for Business, Economy and Cargo payload. With the revenue from our long range mission, we can then establish mission margins and see which aircraft is suitable for what mission type.
Summary
- The 777-200ER and A340-300 are very close in operating costs in their base versions.
- With the use of payload-range curves for the aircraft we can see that the 777-200ER not only has a higher passenger capacity (six seats, stretched to 30 with the refurbishment), it can also take more payload weight.
- Excess weight capability can be used to load cargo but only if there is space available for the cargo modules when passenger bags has been loaded. We check if this is the case.
- Finally, we check if the higher purchase price and conversion cost for the 777-200ER can be covered by its earnings advantage.
Airbus passes Boeing in wide-body passenger aircraft sales
Dec. 8, 2015, © Leeham Co. Airbus surpassed Boeing in wide-body passenger orders through November, data released yesterday by Airbus shows.
Airbus released its November YTD order book yesterday. Boeing last week updated its weekly order tallies through Dec. 2.
Sources: Airbus and Boeing, YTD November 2015. Click on image to enlarge.
Airbus trailed Boeing in wide-body passenger aircraft orders throughout the year, but now posted 134 orders to 113 for passenger wide-body aircraft. The orders were for 134 A330ceos/neos and for 42 777 Classics and Xs. Cancellations for 19 A350-900s were offset by an equal number of A330-900s as TAP Portugal swapped one model for the other. There were 14 new orders for A350s, leaving a net cancellation of five YTD. This left Airbus with a net of 127 wide-body passenger orders for the year compared with Boeing’s 113.