Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- FAA’s data of accident, incidents, often not shared May 19, 2025
- 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
State investment in Bombardier further mockery of WTO
Nov. 24, 2015, (c) Leeham Co. With the $1bn investment by the Province of Quebec in the Bombardier 
CSeries program, another example of government funding emerges in commercial aviation development.
Setting aside whether the investment might be challenged before the World Trade Organization—and whether this makes good business sense for Quebec—the move makes a mockery of the entire concept of avoiding government support.
Pontifications: “I’m glad you’re not going far.”
By Scott Hamilton
Nov. 23, 2015, (c) Leeham Co. An Airbus A321 is blown out of the sky over Egypt.
Two Air France jumbo jets are diverted due to bomb threats.
ISIS stages multiple, simultaneous attacks in Paris. Additional attacks are thwarted. Police raids in Belgium take place.
ISIS is declared a clear and present danger in Europe and the US.
The worries on a global basis are obvious. Being far more parochial, given the focus of LNC, what is the impact and potential impact on commercial aviation?
Bjorn’s Corner: Production rates
By Bjorn Fehrm
20 November 2015, ©. Leeham Co: Emirates Airline CEO, Tim Clark, is quoted as having said “it takes them forever to get this thing up.” He was talking about the Airbus A350 production rate and his reasons for delaying Emirates’ decision on what to buy for the airlines medium range needs. Clark said Emirates wants more aircraft in operational use before they can evaluate the operational characteristics of the A350.
Emirates want to see at least 20 aircraft in operation and right now it is about seven to nine that fly every day. Actual deliveries stand at 10 with one month to go before the first anniversary when deliveries started (the first A350-900 was delivered to Qatar Airways on the 22 December 2014).
Looking at how many aircraft that are actually flying, one can agree with him. It seems actual production rate is more like one per month rather than the three to four a month that Airbus talked about at the first delivery ceremony.
So why is this? Is the production of A350 therefore in serious trouble? What is taking them so long? Has Emirates pointed to a weak part of the A350 program?
Europe’s airlines: LCC, the winning formula
By Bjorn Fehrm
Nov. 18 2015, ©. Leeham Co: Easyjet revealed record numbers yesterday with pretax profits now at 14.6% of a year turnover of £4,686m. The load-factors for their aircraft are at a record 91.5% on a 12 month basis, with an increase of 1.5% for the period. The return on employed capital has increased to a high 22.2% from 20.5%.
The LCC now transports 69m passenger per year and continues to increase its capacity and efficiency. Airbus yesterday announced that easyJet has signed a firm order for a further 36 A320 Family aircraft, taking its cumulative order for the type to 451. The agreement for six A320ceos and 30 A320neos makes easyJet one of the world’s biggest airline customers for the A320ceo Family with 321 ordered and also for the A320neo, with 130 on order.
Earlier in November Ryanair had announced their record results, further manifesting their investment grade rating. At the same time Europe’s largest airlines, Lufthansa and Air France-KLM, are engaged in difficult negotiations to reduce their personnel costs, a mission riddled with strikes and confrontation. The once reliable Lufthansa is no longer.
What is the reason for this divergence in the market? Read more
Delta CEO is right about 777-200ER values, says market
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Introduction
Richard Anderson, CEO, Delta Air Lines. Photo via Google images.
Delta Air Lines CEO Richard Anderson is right.
Actual market values for 10-year old Boeing 777-200ERs are around $10m, not the $50m-ish suggested by Boeing and professional appraisal firms.
This is the conclusion of our Market Intelligence of real-world demand for these airplanes, not some theoretical book appraisal.
Furthermore, used 777-300ERs are in little demand.
The costs involved in reconfiguration and maintenance, repair and overhaul (MRO) simply upend traditional expectations.
Summary
- Used 777-200ERs can’t be “given away,” reducing values to scrap regardless of book values carried by owners or appraisers.
- Rolls-Royce-powered -200ERs, caught up in RR maintenance programs, make traditional engine valuations irrelevant.
- A sudden glut of late-model 77-300ERs upend these values.
- Ten year old -300ER lease renewal rates demanded by airlines drop to $325,000 in negotiations.
Pontifications: Boeing to focus on “long-term liabilities” in 2016’s SPEEA contract negotiations
By Scott Hamilton
Nov. 16, 2015, © Leeham Co. Boeing will target “long term liabilities” in its contract negotiations with SPEEA, the engineers union, its president quoted CEO Dennis Muilenburg as telling him in September.
Ryan Rule, president of the local SPEEA union, met for an hour with Muilenburg when he was here for a visit by China’s president Xi Jinping. Rule termed the meeting cordial. He told Leeham News last week that Muilenburg wasn’t specific about the “asks” Boeing will seek in contract negotiations next year, citing only “long term liabilities,” which Rule took to mean health care and pension benefits.
Boeing unions gird for new jobs-for-tax breaks push
Nov. 11, 2015, © Leeham Co. Boeing’s two leading unions, the IAM District 751 and SPEEA, are girding for a second try in the Washington State Legislature to retroactivity tie job retention to $8.7bn in tax breaks given by the state in 2013 in exchange for the 777X final assembly line and the airplane’s wing production factory being located in Everett (WA).
IAM 751 is Boeing’s “touch labor” union that assembles all the 7 Series airplanes in Washington State. The District also represents some Boeing employees outside Washington. SPEEA is the engineers union that represents all in-state engineers 
and technicians under contract to Boeing.
The 787 assembly site in Charleston (SC) is not represented at this time by any union.
Leaders of 751 and SPEEA Monday said they will renew their efforts to tie jobs-for-tax breaks when the next session of the state Legislature convenes in January. Efforts in last January’s session came up short, largely overshadowed by the bi-annual budget session that required special sessions extending into the summer recess because no agreements could be reached.
Emirates’ 615 seat A380, is it more economical?
By Bjorn Fehrm
Subscription required.
Introduction
Nov. 11, 2015, ©. Leeham Co: Emirates Airline showed off its newly delivered two class A380 at this week’s Dubai Air Show. With a record 615 seats, this is the densest A380 that has been delivered by Airbus.
Emirates have reached this record seat number by replacing the first class cabin (and showers) with economy seats. Part of the business area has gone as well. What remains on the Premium side are 58 of the well known lie-flat seats and the ubiquitous Emirates bar.
The aircraft is aimed at high density destinations which are reached within a 12 hours limit, therefore the aircraft has no crew rest facilities.
The question is, what improvements in seat-mile costs does this configuration bring and how does it stack up against a similarly configured Boeing 777-300ER or 777-9?
Will there be a change in the economical pecking order compared to the more classical long range configurations that we looked at December last year?
We used our proprietary performance model to find out.
Summary:
- To be fair to all aircraft, we equipped them with similar high density two class cabins.
- We also kept the ratio of business-to-economy seats the same for all cabins.
- The result is high capacity workhorses that are used for flying passengers and cargo at sector lengths of up to 12 hours. Consequently, none of the aircraft have crew rest facilities.
- We then looked at fuel efficiency, Cash Operating Costs and Direct Operating Costs for these long-haulers now given a mostly mid-haul work scope.
Emirates’ mid-range choice
By Bjorn Fehrm
Nov. 10 2015, ©. Leeham Co: The Dubai Air Show is on its second day and there are no mega orders. The one that should have been, the mid-range requirement for Emirates Airline, has been postponed, not only to “next year” but for “another year.”
What is the reason? Are we seeing a widebody oversupply fueled by used Boeing 777s/Airbus A330s being available in the market “for very low prices,” as suggested by Delta Air Lines CEO Richard Anderson? Are these the first signs of a damping of an order bonanza which has been going on for five years? Will things be more quiet (or should we say normal) going forward?
We don’t think so. Emirates just want to make the right choice and the equation has got more complicated as it has been working the problem. And it is in no hurry.
Pontifications: A380neo? Try A380TXWB. Dubai Air Show and other Odds and Ends
Click on image to enlarge. Airbus photo.
Nov. 9, 2015, (c) Leeham Co. Airbus last week launched its A380 flying test bed with the A350-1000’s Rolls-Royce Trent XWB 97,000 lb engine placed in the number two position.
The first thing that came to mind when I saw the photo was that if Airbus put three more engines on it, you’d have the A380neo. Or maybe call it the A380TXWB. Done and dusted, as they say in England.