Coronavirus impact to Boeing still unfolding

By Judson Rollins

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March 16, 2020, © Leeham News: Boeing stock sold off 28% last week on news that the company would draw down the remainder of a $13.8bn loan it arranged in February to cover ongoing expenses related to the 737 MAX.

In addition to MAX-related charges, the company is also hoping to close its joint venture with Embraer and has looming debt maturities later this year. But the company’s airplane sales prospects are an increasing source of worry for investors.

The coronavirus and its impacts – which are still unfolding – put up significant obstacles to Boeing’s recovery, even as it hopes to finally see the MAX recertified within a few months. Read more

“We’re sick and tired of new technologies:” Avolon CEO

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Introduction

By Scott Hamilton

March 16, 2020, © Leeham News: “I can tell you from our perspective, we’re kind of sick and tired of new, new technology. It’s not proven to be the home run.”

This blunt assessment comes from the chief executive officer of the big aircraft lessor, Avolon.

Domhnal Slattery

Domhnal Slattery, the CEO, was giving his critique of whether Boeing should launch a new airplane once the 737 MAX crisis is over.

Boeing was on a path to decide whether to launch the New Midmarket Airplane when the MAX was grounded one year ago this month.

Airbus was waiting for Boeing to move before deciding how to respond.

Summary
  • Airbus and Boeing should “stick to their knitting.”
  • Focus on incremental improvements for now.
  • 2030s to 2050s will be the next big advance in technologies.

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Boeing down sharply second day in a row. Airbus stock in similar decline

By Scott Hamilton

March 12, 2020, © Leeham News: Boeing stock is in another sharp decline today.

Yesterday, the stock fell 18%, to close under $200 for the first time since May 2017.

Today, the stock was off 15% in early morning trading, to a low of $156. At this writing, Boeing is down 13.5% at $163. The Dow Jones was down 7%.

Year-to-date, Boeing is off 52%.

While here in the US, focus is on Boeing, looking at the Paris stock exchange, Airbus stock also in in a similar decline—without all the baggage Boeing has.

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Engineers OK Boeing contract extension; techs say no

By Bryan Corliss

March 11, 2020 © Leeham News – New Boeing CEO Dave Calhoun earned a split decision in his first major labor relations test Monday, as unionized engineers with the company’s Commercial Airplanes division narrowly approved a contract extension. A second unit, for technical workers, rejected a similar proposal.

The news came as Boeing announced the first case of COVID-19 among its 70,000-member Puget Sound workforce: an unidentified employee at the company’s Everett plant.

The proposal for engineers belonging to SPEEA (the Society of Professional Engineering Employees in Aerospace) was approved with a 51.2% yes vote, the union reported shortly before midnight (Pacific Time). Technical workers, however, rejected a similar deal with 56.7% “no” vote.

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Heard on the Ramp: Boeing has its 777X sales challenges; Airbus A330neo appears to be next

Heard on the Ramp

We introduce today a new feature, Heard on the Ramp. This column contains news briefs LNA picks up in the market that aren’t expansive enough for stand-alone articles but which are items of interest. Publication will be on an as-needed basis.

By the Leeham News staff

March 10, 2020, © Leeham News: Last year revealed Boeing 777X order problems, with a small customer base and cancellations or deferrals. Perhaps this year will be the Airbus A330neo’s turn.

Out of 337 orders, 156 A330neos are with airlines in trouble or can’t take aircraft (AirAsiaX, Iran Air, HNA), or 46%.

This is without counting the second level of trouble airlines and lessor orders, which may have challenges placing aircraft in today’s unsettled market.

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European airline struggles add risk to 15% of Airbus, Boeing orders

By Judson Rollins

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Introduction

Earlier this week, LNA examined the potential for a shakeout among European carriers as the coronavirus outbreak spreads to the continent.

Five European countries now rank among the ten hardest hit – travel demand is plummeting nearly as rapidly as after the September 11 attacks in the US.

On Thursday, UK-based Flybe went into bankruptcy after long-time financial struggles. The airline had 54 De Havilland Canada Dash-8-400s and nine Embraer E175-E1s in its fleet, more than half of which were leased from Nordic Aviation Capital and HEH Aviation Management.

LNA reviewed aircraft ownership data to understand top manufacturer and lessor exposure to European carriers, particularly those with known profitability issues and high debt loads.

Source: Twitter / @AirportWebcams

Summary
  • Airbus’s exposure to Europe is 16% on single-aisles and 19% on twin-aisles;
  • Boeing has just under 15% of its single- and twin-aisle orders from Europe;
  • Embraer’s E2 jet program has 27% exposure to the region;
  • ATR, De Havilland Canada, COMAC face little to no threat from European airline woes;
  • Norwegian, TAP, SAS, TUI are likely the most imminent threats to manufacturers and lessors.

Read more

Pontifications: The nuts and bolts of air disasters

March 9, 2020, © Leeham News: Commercial aviation accidents are high profile news events.

By Scott Hamilton

These happen rarely. Many times, a lot of people are killed. (It should be noted that often survivors may outnumber those killed as safety improved.)

In this era of 24/7 cable news and minute-by minute social media, everyone wants instant answers as to causes.

Finding answers is not simple. A typical accident investigation usually takes 12-18 months before the investigators issue a final report with a probable cause.

One reason for this is that sometimes, the cause of an accident comes down to a single bolt, or even a single cotter pin.

This is where the new book, Flight Failure, Investigating the Nuts and Bolts of Air Disasters and Aviation Safety, serves to remind us of just how intricate accident investigation is.

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Does the new weight bump turn the A330-900 to a trans-Pacific aircraft?

By Bjorn Fehrm

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Introduction

March 5, 2020, © Leeham News: Airbus gave an update on their new 251t variant of the A330-900 this week. With a 251t Maximum Take Off Weight (MTOW), the former mid-ranger is mutating to an able long-hauler.

The true long-haul aircraft in the Airbus lineup is the A350, the go-to aircraft from Airbus for Pacific-Ocean crossings. But with a nominal 7,200nm range, the A330-900 is no longer the trans-Atlantic aircraft it was. It will be an alternative to the A350 for many trans-Pacific routes.

Summary:
  • The A330 started as a mid-range aircraft with less than 4,000nm range. At the time, the A340-300 was positioned as the long-ranger.
  • With the A340 out of the way and to compete with Boeing’s 787, the A330 grew its range 85%. Is it now an alternative to the A350?

Read more

An upcoming shakeup in European skies

By Vincent Valery

Introduction  

Mar. 3, 2020, © Leeham News: After the 2012-2014 European sovereign debt crisis, passenger traffic grew briskly in Europe. The expansion of low-cost airlines, combined with increasing passenger traffic from Asia, contributed to this passenger boom on the old continent.

Despite the passenger traffic boom, the last few years have been challenging for most European airlines. Apart from a few notable exceptions, profitability is materially lower than at US carriers. There were several high-profile bankruptcies, notably Air Berlin, Alitalia, and Monarch, in 2017, followed by Thomas Cook last year.

LNA wrote a series last year on the struggling European carriers.

After starting in mainland China, there have been significant COVID-19 outbreaks in South Korea, Iran, and Italy. The number of diagnosed cases is increasing rapidly around the world, and notably in Europe.

Until two weeks ago, European airlines canceled most of their services to mainland China and reduced frequencies to other Asian destinations. However, with the outbreak intensifying in Europe, numerous carriers took emergency measures to reduce service on intra-Europe services.

European airlines are facing the COVID-19 disruptions with weakened balance sheets. To make matters worse, they have become the target of numerous environmental groups in Western Europe. The ongoing slump in passenger traffic will stretch some carriers’ finances beyond recovery. The much-discussed consolidation wave seems a matter of when, not if.

The financial challenges will undoubtedly affect OEMs, notably Airbus and Boeing.

In this article, LNA lists the scheduled OEM deliveries in countries affected by the COVID-19 outbreak, then assesses the financial vulnerability of major European airline groups.

Summary
  • A global COVID-19 outbreak;
  • Emergency airline measures to reduce capacity;
  • Almost all OEM 2020 scheduled deliveries affected;
  • Financial vulnerability at European airlines.

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Grounding takes toll on Boeing 737 MAX investment desires

By Scott Hamilton

March 2, 2020, © Leeham News, Austin (TX): A poll of people attending a major aerospace conference here today illustrates the hit Boeing took from the trouble with the 737 MAX.

The audience was asked to rate the Airbus A320neo against the 737-8 MAX for financier/lessor risk-reward investment.

The A320neo was rated favorably by 70% of the those voting. The MAX 8 was rated favorably by just 19%. The remainder rated the two planes equally.

In the era of the A320ceo and 737-800, the Boeing tended to have an edge by a few percentage points in this largely American audience. Audiences at similar European conference tended to tilt toward the A320ceo in past surveys.

In the same polling at this year’s conference 75% of those voting believe Airbus has the better narrow-body product line. Only 19% chose Boeing.

Read more