Leeham News and Analysis
There's more to real news than a news release.
CS100 certified; We review CS100’s birth with VP CSeries, Rob Dewar
Introduction
By Bjorn Fehrm
21 December 2015, ©. Leeham Co: Bombardier (BBD) received certification of the smaller CSeries, the CS100, by Transport Canada Thursday. Rob Dewar, vice president of CSeries, reflected on the journey to certification in an exclusive interview with LNC.
CSeries VP Rob Dewar with CS100 Certificate. Source: Bombardier.
The interview was done against a backdrop of more than two years of delays, which in turn drained the coffers of BBD. To save the project and let it prove its game-changing character, management sold 49.50% of the CSeries program to the Province of Quebec for $1bn and 30% of its train division to Caisse de dépôt et placement du Québec, for an additional $1.5bn.
Dewar has managed the project from the program launch in 2008. The transcript of the interview follows.
How good is a used 767-300ER, Part 2
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Introduction
By Bjorn Fehrm
Dec. 21 2015, ©. Leeham Co: Last week we started our Boeing 767-300ER article series around acquiring used twin-aisle 767 aircraft to upgrade 757-based long haul services, like Canada’s WestJet has done. We compared the aircraft and looked at the base data for the aircraft in article one.
Now we continue by analyzing the Cash Operating Cost (COC) of the aircraft in a typical long haul configuration, using our normalized seating. We are assuming that the 767 and the 757 are a half-life state between overhauls of engines and airframe.
Our benchmark aircraft is an Airbus A330-200 which is flying in a mainline airline. Here we assume that it is 25% deteriorated since new for engines and airframe.
Summary
- The 767-300ER and A330-200 differ in fuel and crew costs per seat mile but are close in most other cost items for COC.
- The 757-200W has lower fuel operating and crew costs than a 767 for the sectors it can perform. It is more expensive in maintenance and landing/underway fees on a per-seat basis.
- Overall the 767 is sufficiently within range of the A330-200 for cash operating costs so that when we add capital costs, it could be close to a draw.
- Finally, we will look at the earnings capabilities of the aircraft by adding standard yields for the payloads the aircraft can carry.
Bjorn’s Corner: Engine efficiency revisited
By Bjorn Fehrm
18 December 2015, © Leeham Co:Part of the discussion following last week’s article around quad or twin engine airliner designs was about engine efficiency and specifically around the engine’s thermal efficiency as a function of Pressure Ratio, PR.
I got the question, if an engine working at a higher pressure ratio was therefore working at a higher thermal efficiency. I knew enough on the subject to know I did not have a good answer without doing a bit of checking; jet engines are no simple contraptions.
I have previously written about turbofan efficiency in a Corner. The article was focused around propulsive efficiency. Now we will have a look at the other part of overall engine efficiency, the thermal efficiency or the efficiency of the core.
How good is a used 767-300ER?
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By Bjorn Fehrm
Introduction
Dec. 16 2015, ©. Leeham Co: Fuel prices at a record low changes a lot of short- and mid-term planning scenarios for airlines. An introduction of a used aircraft with higher fuel burn for a typical lease period of five to six years is possible without endangering the airline’s economics.
The risk of oil prices going sky high in such a period is low, hence the attractiveness of complementing ones fleet with leased older aircraft like Canada’s WestJet has done. It will introduce ex. Qantas 767-300ERs on several traditional 757 destinations like Hawaii and presumably West Europe.
We therefore expand our in dept look of the deployment of used aircraft with a look at the WestJet choice; Boeing’s 767-300ER and compare it to a more contemporary twin, Airbus A330-200.
Summary:
⦁ The 767-300ER is around 25 seats smaller than our benchmark aircraft, the more modern A330-200.
⦁ The A330-200 previously put the 767 under pressure and Boeing responded with the 787-8. We will check if this is still the case when oil is below $40 a barrel and leasing cost for a used 767 is below $300,000.
⦁ We will also check what load-factors an airline like WestJet has to attain on the 767 to reach the same seat-mile costs as for the 757 that the route was up-gauged from.
⦁ We will follow the scheme of the 777-200ER vs. A340-300E comparison, Part 1 compares the aircraft, Part 2 the costs and Part 3 the revenue and margin performance of the aircraft.
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