Odds and Ends: 367-80 roll-out 60 years ago; Air Canada deals blow to BBD

367-80 rollout: Boeing rolled out the 707 prototype, the 367-80, 60 years ago yesterday. The Seattle Post Intelligencer has this story. The name 367-80 was an effort to infer the project was merely a derivative of the C-97 cargo airplane (the military Stratocruiser; the commercial designation was B-377), with the “80” indicating the 80th iteration of designs.

The 707 prototype is in the Smithsonian’s Udvar-Hazy wing at Washington Dulles Airport.

Air Canada keeps E-Jets: Bloomberg reports that Air Canada will keep its 25 remaining E-190 E1s, dealing a blow to Bombardier, which had hoped to sell its CSeries to Air Canada in a deal that would take out the E1s.

It’s got to be a major disappointment for Bombardier, which had hoped to sell 25 CSeries to AC in a deal that would have taken the E-190 in on trade. Boeing previously won a 737 MAX deal that will take 20 E-190s in on trade.

While a blow to BBD, looking under the hood, so-to-speak, indicates that this is an Air Canada issue and not a CSeries issue. Air Canada reported a loss of C$341m for the first quarter. Although officials attempted to dress up the loss, this is a big number, and Air Canada said it will keep the remaining E-195s to avoid incurring more debt:

With respect to the remaining 25 Embraer 190 aircraft in the airline’s fleet, after careful consideration, Air Canada has decided to continue to operate the aircraft given their young age, productivity and high customer acceptance on existing
routes and to avoid additional capital expenditures and debt.

The E-190s are also on AC’s books above current market value, according to our information, making disposal a challenging issue if the airline is to avoid an impairment charge.

 

 

Airbus Group beats expections for first quarter results

Airbus Group beat expectations for its first quarter profit. Continuing research and development costs weighed on earnings before one-time charges. Earnings before interest and the charges were actually down slightly vs 2013 but were better than expectations.

Group still expects the A350 to enter service with Qatar Airways late this year. According to Ascend, there will be one airplane delivered in December (at one time we thought it would slip to January, so we may not be far off). Group continues to call the A350 program “challenging” and notes there could be more charges against earnings. Under European rules, Airbus writes off charges as they occur rather than using Boeing’s program accounting method that spreads charges across hundreds of airplanes.

Cash declined nearly 1bn euros year-over-year to 13.1bn euros.

Links to the PPT presentation and financial statements may be found here.

Separately:

  • Philippine Airlines is retiring its Boeing 747-400 fleet, replacing it with the 777-300ER.
  • Virgin America beat Southwest Airlines for two gates at Dallas Love Field. The gates were leased to American Airlines, which had to give them up as a condition of its merger with US Airways.

Update, 0800 PDT:

  • The prospect of an A330neo continues to gain momentum. Aeroturbopower has this recap from the Air Lease Corp earnings call. Boeing delivers its last passenger 767-300ER this week to Air Astana. Flight Global has this analysis, including thoughts on the A330neo. More intriguing is the possibility of the 767-300ER replacing the aging, and out-of-production, 757. Bloomberg News has this story about the A330neo, originating from the Airbus Group earnings call.

 

 

Odds and Ends: Cockpit changes in the 777X; CSeries test progress; order bubble; MH370

Cockpit changes in 777X: Aviation Week has a detailed article about changes in the cockpit for the Boeing 777X, including displays and its fly-by-wire system. The changes enable a common type rating with the 787, according to Aviation Week. Along with changes planned for the cockpit of the 737 MAX, Boeing is moving toward the Airbus philosophy of common cockpits throughout the family line, a feature that Airbus was able to adopt having been able to start from scratch with its airplane families while Boeing was more constrained, having airplanes that spanned decades.

Airbus has used the common cockpit approach as a key element of its sales campaigns.

CSeries test progress: Bombardier’s CSeries flight testing has cleared flight envelope extremes, according to Flight Global.

Order bubble? There is a perpetual question whether there is an order bubble in which airlines have over-ordered airplanes from the Big Two. (The Smaller Two don’t seem to count in the debate.) David Strauss of UBS has long believed this to be the case. Ascend consultancy will have a webinar May 22 to discuss this issue.

MH370: The Wall Street Journal reports that some investigators now have doubts about the validity of the pings detected in the search for Malaysian Airlines flight MH370.

Early IAM vote results back incumbents, reformers to protest

Update, 10:30am PDT: IAM International posted this press release about the election results, claiming the incumbents won by a 2-1 margin.

Original post:

Just posted on IAM Reform’s Facebook Account:

IAM REFORM TO DISPUTE ELECTION RESULTS, WILL FILE PROTEST WITH U.S. DEPARTMENT OF LABOR
Preliminary IAM Election results reveal Tom Buffenbarger and the nine other incumbent executive officers won enough votes to retain their positions. But IAM Reform candidates, buoyed by the support and votes of IAM members internationally, plan to immediately dispute the election results and file a protest with the U.S. Department of Labor, following federal election rules.

Throughout the April election, IAM Reform documented illegal activity by the incumbents’ campaign including:
1. The incumbents’ team illegally threatening union leaders to campaign and vote for the incumbents or lose their jobs and control over their lodges via trusteeship
2. The incumbents’ team illegally using union funds to campaign
2. Evidence of significant anomalies in the voting results to raise serious concerns about the legitimacy of thousands of votes for the incumbents.

“On behalf of every supporter of IAM Reform, we intend to ask the Department of Labor to investigate these serious violations, through every avenue available to us,” said Jay Cronk, Reform candidate for International President running against Tom Buffenbarger. “Unseating a corrupt and entrenched bureaucracy will require our continued strength and focus. With the support shown for our Reform goals and platform, our conviction to achieve these goals on behalf of our membership has been reinforced.”

Per election rules, candidates may file a protest and ask the Department of Labor to investigate violations.

Boeing’s approach in creating the passenger experience

Passenger experience continues to become more and more of a focus for the Original Equipment Manufacturers, who try to create an atmosphere that’s appealing even as airlines cram more and more seats into airplanes to gain revenue in an environment where ancillary fees often mean the difference between profit and loss.

Cabin ambiance for mainline, and especially intercontinental, jets is a battle that hasn’t gotten much attention until the advent of the Boeing 787. The creation of the Boeing 747, of course, provided unprecedented space and ambiance and the “wide-body” was followed quickly by the McDonnell Douglas DC-10 and Lockheed L-1011. Creating the wide-body look for the single aisle airplanes followed, with improvements subsequently in overhead bins and the look of the ceiling. But it wasn’t until the 787 that there was a dramatic change in the cabin interior look and feel. Boeing expanded this look to the 747-8 and the 737.

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Odds and Ends: Snookered by Boeing; Superman; Me2Al; Odyssey Airlines

Snookered by Boeing: That’s how one legislator in Washington State put it in the outcry aftermath of Boeing moving engineering jobs out of state despite an $8.7bn set of tax breaks to land the 777X wing production and assembly site here. She went on to say she wouldn’t have voted for the breaks had she known, and she’s so tired of Boeing.

Sound similar to what legislators said after voting for the $3.7bn in tax breaks in 2003 to land the 787 assembly line. Six years later Boeing put 787 Line 2 in Charleston, revealing that the State had failed to add strings to that set of tax breaks to assure all 787 assembly would be done here.

Snookered then and snookered now. What strikes us is that any legislator thought anything different would happen.

Boeing’s job strategy has been very, very clear for years: move engineering, IT and other non-touch labor jobs out of Washington as fast as it can. Move component work out of Washington. And for the 777X assembly work: can you say “robotics”?

IAM 751, the touch-labor union, claimed all along Boeing was snookering membership and the State of Washington and was going to assemble the 777X here anyway, regardless of the contract vote and state incentives (we disagreed, but only McNerney knows for sure).

Washington needs to get used to Boeing moving jobs (hence, our continued refrain of look Beyond Boeing). Aside from Chicago’s long-obvious job transfer plan, robotics and automation will, over time, take an increasingly prominent role in building airplanes. Boeing has been introducing robotics on the 777 Classic line, so expanding this use should be expected.

Superman: This video shows a Boeing 737 being pushed sideways at the gate by strong winds and an icing ramp. The most amazing part of this amazing video is the ramp worker who is trying to stop the airplane. It seems the rampie thinks he can bench press 150,000 lbs.

Me2Al: He’s widely known as U-Turn Al for his propensity to do 180 degrees multiple times on his opinions about airplanes, engines and orders, but now Akbar Al-Baker is becoming Me2Al as well. Long envious of Tim Clark, the president of Emirates Airlines, Al-Baker hooked his wagon to Clark on the 777X last year at the Dubai Air Show, claiming the two carriers negotiated similar specifications at the same time to get a better deal from Boeing.

Now he’s followed Clark’s lead once again, this time jumping on the prospect of the Airbus A380neo.

Odyssey reveals some details: Odyssey Airlines, the business-class start-up carrier that is building its business plan around the Bombardier CSeries, revealed a little bit of its plans in this article. It will have 40 lie-flat seats on the CS100, operate from London City Airport (previously known) and its funding is partially revealed.

Great B-17 Photos: See The Seattle Times montage here.

Logical conclusions: Airbus wide-body decisions

A330 programme. The long range programme presents no new challenges. However, managing the order book beyond 2016 becomes more challenging due to competition from A350 XWB and Boeing 787.

—From the Airbus Group 2013 Annual Report

We have written previously that Airbus faced a production gap, a major drop in backlog orders from 2016, with no orders at all from 2020 (excluding the 27 orders placed in March by China, for which we don’t currently have delivery data yet).  Back on December 29, we noted that the prospect of the A330neo was gaining traction–and it’s even more so today.

Market Intelligence from multiple sources indicate that Airbus will announce at the Farnborough Air Show that it will proceed with re-engining the A330 into a new engine option configuration, including sharklets similar to that on the A320 family.

This will give a needed boost to the A330 line. There have been a dearth of orders, in part, no doubt, to the industry waiting to see whether Airbus will proceed with the A330neo. Recall that there had been a drop in A320 family orders in the run-up to the launch of the A320neo.

We have now completed a comprehensive study about the business case for the A330neo and how competitive it would be vs. the Boeing 787-8 and -9, and what price Airbus has to offer to help make the airplane competitive. This proprietary study is based on our proprietary economic modeling which, along with our own Market analysis, concludes that there is a business case to proceed with the A330neo. We concurrently believe Airbus will discontinue offering the A350-800, although this announcement may not come for some time. Among the reasons: Hawaiian Airlines wants the A350-800 as offering the passenger capacity and the range it desires. The A350-900 is too big, officials currently believe. But an A330-300neo won’t offer the range Hawaiian wants (it will fall about 1,500nm short, according to our estimates). If Airbus discontinues the A350-800, Hawaiian may well re-issue its Request for Proposals that will give Boeing a shot at getting the 787-9 into Hawaiian. Given the planned production boost to the 787 line (12/mo in 2016, 14/m0 in 2018 or 2019), Boeing now has delivery slots to offer to match that of the A350-800 schedule.

But we don’t think Airbus is done once it launches the A330neo. We believe Airbus continues to look at the prospect of re-engining the A380, c.2020, given additional impetus from the large customer for the A380, Tim Clark of Emirates Airlines. This article in The Wall Street Journal is the latest on this topic.

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CSeries FTV 4 to launch this month with PW GTF testing focus

Bombardier’s CSeries flight testing has now passed the 250 hour flight mark, with three Fight Test Vehicles (FTVs) in the program. FTV 4 is due to become airborne in May. This will be a milestone for the program because this is the airplane that will focus on the performance of the Pratt & Whitney P1000G Pure Power engine that is so integral to the development of Bombardier’s leap into the mainline jet business.

When BBD first proposed aircraft in the 110-130 seat sector, the C110 and C130, in 2004, this was “just another airplane:” little new in the way of airframe technology and using engines then in production. Withdrawn from the market after little interest, BBD revised the airplane into the CS100 and CS300, using an aluminum lithium fuselage and PW’s new Geared Turbo Fan engine.

The GTF promises around 15%-16% fuel consumption reduction and a dramatic decrease in noise footprints. While BBD has gained knowledge of how the GTF is performing from the first three FTVs, No. 4 will be the one that will prove whether all the engineering projections for the engines are correct and whether the engine/airframe combination will meet BBD’s promises of fuel efficiency.

Bombardier also hopes that meeting these representations will get a few customers that have been in the “show me” column to become believers. Disappointed with three program delays that have moved entry-into-service back to the second half of next year, potential customers need some solid results.

The stakes couldn’t be higher for BBD. The CSeries promises quieter operations at especially noise-sensitive airports, including Billy Bishop Airport in BBD’s own backyard in Toronto. Porter Airlines has a conditional order for up to 30 CS100s for use at this downtown airport, and the promised quiet operation is key to government approval to allow commercial jet operations there. This isn’t the only noise-sensitive airport.

Bombardier promotes its CSeries as being more economical than the competing Airbus A319neo and Boeing 737-7 MAX, and our analysis concurs. Sales figures also support BBD: the CS300 has far outsold the A319neo and 737-7.

For Pratt & Whitney, this is the beginning of the end of more than 25 years of research and development of the Geared Turbo Fan, a multi-billion dollar bet to return to the commercial airline engine market it once dominated but lost to rival CFM International when the latter won exclusive rights to power what is now referred to as the Boeing 737 Classic, rights that continue through the 737 MAX.

PW’s bet to return paid off. More than 5,000 GTFs have been sold on the CSeries, the Mitsubishi MRJ and Embraer E-Jet E2, on all of which it is the exclusive power plant; and it has evenly split the market on the A320neo family, on which it competes with CFM and its LEAP engine.

The industry keenly awaits flight test results from BBD’s FTV 4.

Odds and Ends: Yields vs growth; 757RS continued; 787 wind tests; airport vs environment

Yields vs growth: AirAsiaX, the long-haul, low cost unit of AirAsia Group, faces that perpetual problem: yields vs growth. Reuters has this story about the conundrum of sacrificing profits now for a long-term growth strategy. It’s always a risky bet. AirAsiaX relies on the Airbus A330 today and has the A350 on order.

757RS, continued: Aeroturbopower has now weighed in on the Boeing 757 replacement discussion.

787 wind tests: We’ve all seen cross-wind landing videos, but where does Boeing go to test landing in high wind conditions for its new 787-9? Lubbock (TX), of all places. This local TV report explains why but unfortunately the TV station muffed showing the landing itself.

Airport vs environment: It’s an age-old story, but this one has a bit of a different twist. The New York Times reports about the conflict between the Westchester County (White Plaines) Airport in New York vs trees on an adjacent property.

Passenger Experience: As nice as it is to have lie-flat seats in Business Class (we haven’t had the pleasure of First Class), this photo from the Boeing Stratocruiser days makes even today’s upper-grade passenger experience seem like it falls short.

757 replacement not in the cards any time soon

The unexpected attention earlier this month on the prospect of a Boeing 757 replacement, possibly in the form of a 777X-style concept of composite wings and wingbox, new engines and some system upgrades, brings into focus the Boeing 737-9 and the Airbus A321neo.

  • Aspire Aviation has its analysis of the next New Small Airplane here.

Boeing quickly denied, in an unusually firm manner, that it was planning on a “757 MAX” and reiterated it doesn’t currently plan to bring another new airplane to market until the middle of the next decade. We’ve previously reported that based on our information, Boeing will wait until the 777X enters flight testing, estimated for 2018, before launching a new family of airplanes to replace the 757 and 737 MAX—with entry-into-service of the 757 replacement around 2025 and the MAX replacement about two years later.

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