Leeham News and Analysis
There's more to real news than a news release.
Bombardier snares Lufthansa’s Nico Buchholz
Bombardier scored a major executive coup with the appointment of Nico Buchholz as Chief of Procurement for the entire company.
Nico Buchholz, the new Head of Procurement for Bombardier. Photo via Google images.
Buchholz was Executive VP Group Fleet Management for Lufthansa Airlines and Group, with various fleet management titles, since 2001. He previously was an executive at Airbus.
Buchholz was the launch customer for the CSeries, placing an order in 2009 for 30+30 CS100s and CS300s. Lufthansa Group’s Swiss International Airlines subsidiary will become the first operator when the deliveries begin next year. While the Middle Eastern airlines get the headlines for being launch customers for the Boeing 777X, in fact it was Buchholz who bought the airplane for Lufthansa, which is the first 777-9 customer.
Buchholz is a major “get” for Bombardier.
A320 oversold in bridge from ceo to neo
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Introduction
Airbus A320neo. Source: Airbus
Sept. 7, 2015, © Leeham Co. Airbus is oversold in its A320 family positions as it transitions from the ceo to the neo, an analysis shows.
The first delivery of the A320neo is scheduled for December. Airbus plans to phase out the A320ceo family over two years (as does Boeing with the 737NG in favor of the 737MAX).
We analyzed the 737NG bridge to the 737MAX last week and concluded Boeing faces a production gap of between 100-200 aircraft, depending on how delivery dates of 737MAXes for Unidentified customers are scheduled. We indirectly received push back from Boeing on this, which we also address in today’s report.
Summary
- Airbus is oversold in 2016 and 2017.
- A gap appears in 2018, but this depends in part how “TBA” delivery dates are allocated for Unidentified customers.
- Boeing says Options and Overbooked orders fill its apparent 737 gap.
- We update our 737 production gap analysis to include Options and find a gap still exists.
- Boeing wants to accelerate MAX deliveries from 2018 into 2017.
Pontifications: Airbus flies past Boeing in order race
By Scott Hamilton
Sept. 7, 2015, © Leeham Co.: Airbus flew past Boeing in the annual orders race when the August numbers were reported last week by both companies.
With the order for 250 A320s finally firmed up by India’s Indigo Airlines (it was announced last year), and an order for 45 A330ceos announced by China, the outcome was clear.
Through August, Airbus now has a 66% market share of single-aisle orders. Boeing has a 60% share of wide-body orders, thanks to a boost from FedEx for 50 767-300ERFs. (Boeing reported 48 767 orders net of cancellations.)
But if you remove the FedEx orders and just look at passenger airplanes, Airbus edges out Boeing in the year-to-date wide-body market share.
Boeing faces 737 production gap: analysis
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Introduction
Sept. 2, 2015, (c) Leeham Co. Boeing faces a production gap for the 737, based on an analysis of the delivery streams of the 737NG and the 737 MAX.
There’s a production gap for the Boeing 737 more than 100 airplanes, according to a Leeham Co. analysis. Boeing photo.
While focus of Boeing production gaps has been on the 777 Classic and, to a lesser extent, the 747-8, few have analyzed the production gap for the 737 line. Boeing announced rate increased from 42/mo to 47/mo in 2017, the year the MAX enters service, and again to 52/mo the following year. The company is studying taking rates even higher, to 60/mo, by 2020. Boeing cites a large backlog and continued demand for the 737 for boosting production rates.
But Market Intelligence indicates emerging concerns about the gap.
Summary
- We see a gap of perhaps 100-200 737s in 2017 and 2018, even as the 737 MAX is “feathered” into production of the 737NG.
- Beyond 2018, the apparent gap depends largely on the delivery stream of Unidentified MAX customers accounting for nearly 600 orders identified by the Ascend data base. Boeing lists just over 1,000 Unidentified 737 orders through July (August figures aren’t out yet), sharply higher than the Ascend data base.
- The current low fuel price environment is a concern.
Pontifications: Casting eyes toward Dubai Air Show
By Scott Hamilton
Aug. 31, 2015, © Leeham Co. September begins tomorrow and we’re only nine weeks away to the 2015 Dubai Air Show.
We’re looking to this event to be the last big opportunity for major airplane orders for this year. While it’s true that Airbus, Boeing and the other 
OEMs make a big year-end push to top off the order book, the Dubai show has become increasingly on a par with the Farnborough and Paris air shows, but focused on wide-body orders and program launches.
Eyes on the Dubai Air Show will be watching for what could be would be this year’s prize catch: whether Emirates Airlines will be ready to place the oft-talked about order for 50-70 Airbus A350-900s or Boeing 787-10s. (Some have floated an even higher number.) The other big item of interest: whether Airbus will launch the A380neo.
Boeing’s 767 revitalized as a MOM stop gap, Part 2
By Bjorn Fehrm
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Introduction
Aug. 31 2015, ©. Leeham Co: Last week we started to look at Boeing’s 767 to see if it can serve the passenger and range space which is not well covered by modern aircraft: the 225 passenger/5,000nm sector. Boeing calls this the Middle of the Market or MOM. Boeing recently said that there is some increased interest for the 767. We analyze why and what can be done to increase any chances of it having a new life as a passenger aircraft.
We started with comparing the 767’s different variants to the most likely MOM aircraft from our series “Redefining the 757 replacement requirement for the 225/5000-sector”. We will now continue and look at the 767 in detail, its strong suits and its less efficient areas. We will also discuss what can be made to address the less efficient areas.
Summary:
- Boeing’s 767 has the right cross section for passenger transportation in the 225 passenger/5,000nm segment.
- It also carries cargo containers, not as efficiently this time. We show what the consequences are.
- Finally the wing is not the slender wing of the modern aircraft. We show what impact it will have on overall efficiency.
- Combined with engines from the 1990s, this gives less than stellar fuel economics. We investigate what can be done about this and how much of an impact it will have in today’s low fuel prices.
Bjorn’s Corner: Russian aircraft industry.
By Bjorn Fehrm
22 August 2015, ©. Leeham Co: The Russian air show MAKS is taking place in Moscow, on the airfield of Zhukovsky, Southeast of Moscow. The town of Zhukovsky is called the Aero-City of the Russian federation. It houses not only a 17,800ft runway but also the center of the Russian aeronautical research and test knowledge around the gigantic airfield.
Just a couple of miles from the airfield lies the well-known Russian Central Aerohydrodynamic Institute, TsAGI. It has been involved in designing the aerodynamics of all Russian aircraft, including the latest, the Sukhoi Superjet and Irkut’s new MC-21 competitor to the Boeing 737 MAX and Airbus A320neo.
I have always been interested in the enigma of the Soviet and later Russian aeronautical industry. It had such a different structure to its western counterparts and has therefore struggled. The MC-21 is a good example. Ilyushin says they are working on MC-21, as does Yakolev and Irkut. Irkut says it is their aircraft, yet I had not heard of Irkut as a plane OEM before MC-21.
My household names for Russian airliners were Tupolev and Ilyushin with perhaps Yakolev for the smaller types. If we included Ukraine during the Soviet period, we could add Antonov as a known airliner OEM. But not Irkut. Yet today the main players doing new civil airliners are Sukhoi and Irkut, neither known for building airliners. How does this all fit together? Here is a try to sort it out. Read more
Boeing’s 767 revitalized as a MOM stop gap?
By Bjorn Fehrm
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Introduction
Aug. 27 2015, ©. Leeham Co: In our Monday article, “Boeing sees healthy future for 767,” Boeing’s spokesperson said, “We are continuing to explore additional capabilities and improvements” for the 767. It was not clear what these improvements were other than a 0.5% engine performance improvement package (PIP) that was introduced earlier in the year. With lower and lower fuel prices, existing aircraft get more and more viable as a stop gap to cover market segments that today are not part of the plans for the OEM’s modern products.
We will therefore examine the 767 deeper to understand what can be improved further and how well such an improved model would serve as a stop gap replacement for the lack of a modern Middle of the Market (MOM) aircraft. We explored how a MOM aircraft should look like in our series, “Redefining the 757 replacement requirement for the 225/5000-sector”.
The 767 has several of the attributes that we found optimal for a MOM aircraft, one having a seven abreast cabin cross section. In the 767 variant that is being produced for the US Air Force tanker program, the 767-200ER, the overall fuselage dimensions are also close to the ones we found desirable for a MOM aircraft.
With fuel now well below $2.00 per US Gallon (about $1.35), we will compare the 767 to our MOM specifications and try to understand where there is a fit and what would needed to be changed to improve the 767’s efficiency so that it could serve as a MOM stop gap. Finally, we will check if such changes can be economically viable in different fuel price scenarios.
Summary:
- Different to the 757,the 767 is still produced for the foreseeable future, thanks to the US Air Force tanker program.
- Boeing 767 is the only produced aircraft that has the desired seven abreast cabin, which we found optimal for a MOM aircraft.
- How does the 767 fuselage and wing compare to the ones we found desirable for the MOM?
- Is the cargo capability of the 767 acceptable for a MOM role?
- We explore the primary characteristics in our first article today. We will go deeper with technical and economical analysis in subsequent articles.
World air cargo market struggles continue; ominous sign for new-build main-deck freighters
Figure 1. A330F once tallied more than 60, but many were converted to passenger models. Today there are just 38 orders. The delivery stream shows a tapering off. Click on image to enlarge.
Aug. 26, 2015: World air cargo markets continue to struggle, according to reports yesterday from Cargo Facts newsletter and The Wall Street Journal.
Neither report bodes well for new-build, main deck freights, although Cargo Facts concludes a demand remains.
The Wall Street Journal reported that Europe-to-Asia volume and rates are falling.
“Maritime and air freight rates for some of the world’s busiest trade routes are tumbling as slower growth in China combined with a sluggish eurozone economy dash forecasts for higher volumes during the normally busy late-summer season,” writes WSJ’s Robert Wall, who is based in London. “The air-cargo market is suffering on several fronts. Lower demand in Asia is coming at the same time air-cargo capacity is climbing. A large chunk of the air-cargo market is transported in the hold of passenger planes. With major airlines adding flights globally this year, that is weighing on cargo rates. Falling fuel costs also are delaying plans by airlines to retire older jets, exacerbating the problem.”
Cargo Facts takes a different view on the belly capacity.
Six year turnover in sale/leasebacks put supply-demand balance at risk
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Introduction
August 24, 2015, © Leeham Co. When airlines like Indigo of India, Air Asia, Norwegian Air Shuttle (NAS) and Lion Air have outstanding orders for Airbus A320s and
Boeing 737s that number in the hundreds, far more than operations and growth appears ready to support, the deals raises the natural question: What are they thinking?
As LNC’s Bjorn Fehrm explained Friday, one aspect of these big orders is to “flip” the aircraft every six or seven years, a time that roughly coincides with the maintenance holiday/warranty period. Sale/leasebacks are used to finance these huge purchases.
The practice is hardly new. The USA’s JetBlue Airlines, Ryanair and others practiced this flip for years.
Carriers like the new LCCs mentioned above not only plan to do so to avoid major maintenance costs, but also to fuel their growth. In the case of Lion Air and NAS, these companies also plan to lease out aircraft to other airlines.
But there remain risks involved for the companies and for the industry.
Summary
- The growing practice of flipping aircraft every six or seven years presents risks to lessors.
- Indigo Airlines has 96 aircraft in service, 430 on order.
- Select LCCs in Asia, Europe, India have 1,000 A320s, 737s on order.