Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
- Boeing First Quarter Results: Tariffs, Return flights, $10.55bn asset sale April 23, 2025
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
Delta Air sees 777 surplus developing
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Oct. 14, 2015, © Leeham Co.: Delta Air Lines sees a major surplus of young Boeing 777s developing in the near term as key operators plan to let the aircraft go from
leases or retirements. The looming surplus makes it more likely that increased pressure on Boeing’s efforts to sell new 777s, and to sell them at reasonable margins, will become increasingly difficult.
Goldman Sachs, the investment bank, sees Delta’s comments as further evidence supporting the likelihood there will be a sharp production rate reduction as early as 2017, perhaps down to six/mo.
Separately, Bernstein Research’s aerospace analyst Doug Harned, also see 777 rates coming down to the equivalent of 6.5/mo in 2017, six in 2018 and five in 2019. The first 777X isn’t scheduled for delivery until 2020, when Harned predicts only five deliveries of the X.
Qantas robbed of longest flight by Emirates and then Singapore airlines
By Bjorn Fehrm
Oct. 14 2015, ©. Leeham Co: The planned “Flight 21” of Singapore Airlines between Singapore and New York would rob Qantas Airways of the title of flying the longest direct flight in the world come 2018.
Qantas operates today’s longest flight, the one between Sydney (SYD) and Dallas- Ft. Worth (TX) (DFW), using its Airbus A380. Emirates plans to take that crown next year with a Dubai (DXB) to Panama City (PTY) flight, Figure 1. It’s fractionally longer than the Qantas flight when comparing great circle distances (the 2015 and 2016 label).
Qantas CEO Allen Joyce just announced that the airline plans to take that title back when the Boeing 787-9 arrives in 2017. This aircraft enables direct service to London Heathrow (LHR) with flights from Perth (PER) in Western Australia, a flight of 7830nm or 18 hours, labeled 2017 in Figure 1.
Figure 1. Worlds longest flights 2015 to 2018. Source: Great Circle Mapper.
KC-46A refueling boom, drogue testing
Oct. 13. 2015: The US Air Force and Boeing released photos of the KC-46A aerial refueling tanker with the boom and the drogue deployed. Photos by John D. Parker. Click on images to enlarge.
CSeries dilemma: a saga of missed opportunities, bad decisions, stiff competition
By Scott Hamilton
Oct. 12, 2015, © Leeham Co.: The news agencies, stock markets and aerospace analysts last week went wild when Reuters reported there were talks going on between Bombardier and Airbus whereby the latter would take a majority stake in the CSeries program.
Within hours, both companies said talks had ended. As could be expected, the stock went into another tailspin.
Then United Airlines said it wants pilots to approve a contract, and is dangling a 100-seat airplane order for mainline operations as an incentive. The CS100 fits into this category, as does the Embraer E195 E2.
It is worth recapturing reasons BBD finds itself in its current predicament.
Analysis: Airbus A350 production and accounting strategy
By Bjorn Fehrm
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Introduction
Oct. 12 2015, ©. Leeham Co: Airbus is ramping up the A350 program at a rather slow pace. For the first year of production, 2015, it plans 15 deliveries and “a little more than double that” for 2016. Airbus is also introducing “contract accounting” for the first A350 deliveries.
As initial costs for producing a new aircraft model can be 400%-500% higher than the ultimate run-in production cost, Airbus introduces this novel accounting principle to maintain 2015 and 2016 profits “at about the same level.”
We use our aircraft model to understand why Airbus is ramping the A350 as it is and why it uses “contract accounting.” We also show what would be the effects on Airbus profits should A350 not ramp slowly and Airbus use special accounting to keep group quarterly results from surprises.
Summary:
- The ramp of production of a new aircraft type is extremely expensive. Initial costs exceed what the customer pays for the aircraft with 400%-500%. This can generate company losses if no special actions are taken.
- We use our aircraft model to show what has been done for the A350 program and why.
- The wish to have a steady quarterly profit has forced Airbus to use the same accounting practices that is Boeing’s way to keep profits looking good, but with a shorter duration.
- We explain how this accounting works and what it will mean for Airbus profits.
Airbus and Boeing swing it out at ISTAT Europe 2015
By Bjorn Fehrm
07 October 2015, ©. Leeham Co: This year’s ISTAT Europe conference had been characterized by a “Steady as you go” ambiance until the traditional match between Airbus and Boeing on “Large aircraft segment” panel got going. This is normally when things can get a bit more exiting and this year’s version did not disappoint.
Airbus’ Mark Perman-Wright, Head corporate and Investor marketing, kicked off the jabbing during his coverage of all the usual segments, claiming that Boeing got to know that Airbus held the upper hand in just about all airliner segments.
Randy Tinseth, Vice President Marketing for Boeing, immediately responded that this was all wrong and that indeed Boeing was the market leader in all imaginable measurement dimensions.
The audience of 1.200 financiers, lessors, airlines, consultants, etc., could see that a drastically lower fuel price had changed nothing. Airbus’ and Boeing’s fight over the market dominance, both real and verbal, is as fierce as ever. As we could get a hold of Boeing’s presentation and both OEMs followed the same route through their product programs we will use Tinseth’s slides as a base for our ringside review. Read more
Goldman Sachs predicts rate 5 for 777 in 2017
Oct. 6, 2015: As Boeing prepares to discuss its third quarter October 28, a major Wall Street investment bank predicts Boeing will have to reduce production rates of 
the 777 to five per month in 2017, the year before production begins on the 777X.
Separately, an appraisal company sees values and lease rates of the 777 Classic declining, characterizing the airplane as “struggling” as airplanes come off lease and troubled airlines prematurely dispose of 777s.
In a note published Oct. 4, Goldman Sachs writes that the 777 leasing market has been overlooked by many observers for its impact on new airplane sales Boeing needs to bridge the production gap to the 777X.
“Boeing has a backlog coverage and product transition challenge on the 777,” Goldman writes. “The market appears focused on the total bridge period; but we are more concerned with the large amount of slots that need to be filled for the next 24 months, as well as several existing aircraft coming back in to the market near-term.
Airbus gearing toward 63 A320s per month; Boeing sure to follow
By Scott Hamilton
Oct. 5, 2015, © Leeham Co. Airbus appears to be closing in on a decision to boost the production rate of the A320 family to 63/mo by the end of the decade, a new report from Bernstein Research Group says.
Boeing is sure to follow with rate boosts for the 737, Bernstein writes in an Oct. 1 note.
Leeham Co. has been predicting these moves all year, and in LNC’s interview with Airbus Group CEO Tom Enders last month at the opening of the A320 Final Assembly Line (FAL) in Mobile (AL), Enders indicated the decision to boost rates would be made by the end of the year.
Evaluating airliner performance, Part 4
By Bjorn Fehrm
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Introduction
Oct. 05 2015, ©. Leeham Co: In the final part of our series about comparing and evaluating economic and operational performance of airliners, we will combine the different Cash Operating Costs (COC) with the capital and insurance costs to form the Direct Operating Costs (DOC).
We will also look at typical values for the different costs that make up the DOC for a single aisle Boeing 737 or Airbus A320 aircraft and a typical dual aisle Boeing 787 or Airbus A330neo aircraft.
Summary:
- We describe the cost that form an aircraft’s capital costs and how these differ between an ownership or a lease model.
- When forming the Direct Operating Cost (DOC). The low fuel price of $1.50 per US Gallon has lowered the fuel’s part of DOC to around 20% for single aircraft and 30% for dual aisle aircraft on their typical mission types.
- This means that other costs types in the DOC gets a more dominant role. We show which are the costs to look out for.
- Finally we give the typical CASM (Cost per Available Seat Mile) values for single and dual aircraft in the market.
Bjorn’s Corner: Engine ratings
By Bjorn Fehrm
02 October 2015, ©. Leeham Co: After the article about the role of bypass ratio on a turbofan’s efficiency, we now look at other aspects of civil turbofan engines that are worth some light. It’s about how the engine OEMs create different versions of the same engine to cater for different aircraft variants.
The aircraft OEMs create different size variants from the same base model of aircraft by means of stretches. There is no better example of that than the Boeing 737. Over the years it has had more than 10 major versions. For the present in-service series, 737NG, there is three official variants, from the -700 to the -900ER. Originally it also had a smaller -600 variant.
These require engines from 20klbf to 27klbf. How this is achieved and what it means for engine characteristics and reliability is the focus of today’s Corner. We will also compare it to a typical long range engine, the Rolls-Royce Trent 1000/7000, which powers the Boeing 787 and Airbus A330neo.