Leeham News and Analysis
There's more to real news than a news release.
Odds and Ends: MH370 Update: Australians think hypoxia most likely, others still point to pilot misdeeds; and more
MH370: Australian investigators, having reevaluated evidence of missing Malaysian Airlines MH370, conclude that crew hypoxia may be the most likely reason the flight disappeared. But even within the Australian government, this is not a unanimous conclusion, and it’s certainly not within the international community. The captain of the flight is the chief suspect, according to other reports.
Boeing cost cuts: Ray Conner, CEO of Boeing Commercial Aircraft, explained Boeing’s cost-cutting approach in Washington State and with suppliers and plead for understanding, reports the Seattle Times. Conner also termed the potential loss of ExIm Bank funding as a “huge blow,” should Republicans in Congress succeed in killing the program. Closing ExIm would give Airbus a major advantage, he said.
Airbus funding: Airbus and a company in the Middle East have created an Islamic funding structure to help finance Airbus aircraft in the region. With the Middle Eastern carriers becoming more and more important in global aviation, expanding this area as a funding source naturally follows. Islamic financing is not new, but it’s been a narrowly-based source of funding.
Asiana crash finding implicates Boeing somewhat, but our view is this is a pilot issue, plain and simple
The National Transportation Safety Board (NTSB) yesterday lay the Probable Cause of the crash of the Asiana Airlines Boeing 777 last year at San Francisco as pilot error, but in the process implicated a “complex” auto-throttle system as a contributing factor.
Not surprisingly, Boeing disagreed (“respectfully” so), nothing that 55m flights in the 777 had occurred without incident.
While we are not at all surprised at Boeing’s position (we would have been surprised had it been otherwise), we side with Boeing on this one.
We will grant that perhaps the auto-throttle system might be tweaked to make a safe airplane and safe system even better, incorporating an aural warning when necessary. And perhaps the training procedures could be made better and more clear. But in the end, it remains the responsibility of the cockpit crew to monitor instruments and speak up when things aren’t as they should be.
In this case, the flight was also under visual flight rules (VFR). So, the pilots should have been:
- Looking out the window to visualize the approach;
- Monitoring the airspeed and altitude instruments, among others; and
- Speaking up. Most importantly, the third pilot did see something was wrong but didn’t say anything. Culturally, it is common in Asia for subordinates to defer to the Captain. But it’s lousy Cockpit Resource Management.
If the pilots had been doing their job, the plane almost certainly would not have crashed. The auto-throttle may have led the pilots to a false sense of security, but in the end they didn’t fly the airplane.
That’s was caused the crash.
Southwest Air’s expansion to resume next year, says CEO
Southwest Airlines plans to complete the integration of AirTran by the end of this year, positioning the carrier to resume expansion into new markets, says CEO Gary Kelly.
In an interview last week at WN’s Dallas headquarters, Kelly said the last of AirTran’s Boeing 717s will exit service by year end, leaving Southwest with a fleet of 690 Boeing 737-300s, -700s and -800s. There were 56 737-700s, 52 -800s, 30 -7 MAX and 170 -8 MAX on order at December 31 with more than 220 options for all types.
Challenge 777X tax breaks, “correct” US ExIm Bank Boeing funding, says Airbus CEO
Challenge Boeing 777X tax breaks and adjust the US ExIm Bank rules.
This is the view of Airbus CEO Fabrice Bregier.
We had the opportunity for what amounted to a one-on-one, on-the-record discussion with Bregier during the Airbus Innovation Days media briefings two weeks in Toulouse. We sat at Bregier’s dinner table, which although filled with media, was in a noisy setting, allowing us to have some elbow-to-elbow conversation on a variety of topics that couldn’t be heard in the din.
Next new, clean sheet airplane around 2030, says Airbus
Airbus currently is planning for the next new, clean sheet airplane around 2030 and now are focusing on incremental improvements to the existing product lines, officials said at the Innovations Days annual media briefing last week in Toulouse.
Fabrice Bregier, CEO of the Airbus commercial aircraft unit, said that “innovation is on a case3-by-case basis,” with a successor to the A320 family requiring an engine “with great benefit.” He did not define this, but previously Airbus indicated a successor needs a combined 30% airframe/engine improvement to make an entirely new airplane design worthwhile.
Airbus Innovation Days, Part 5: wide body twin development
Kiran Rao, executive vice president, strategy and marketing.
Rao discussed the wide-body strategy for Airbus at Innovation Days on Wednesday. The following paraphrasing synopsizes his remarks.
- More than 3,500 wide bodies have been sold by Airbus, starting with the A300B2, the first wide0body twin.
- 1,200 wide-bodies are in backlog. A330: 250-300 seats; A350: 280-370 seats; A380 more than 500 seats (two-class, long range layout).
- Airbus officials, including Rao, continued to promote the company’s 18-inch seat campaign, comparing the A-Series against the Boeing 777/787 17-inch 10 abreast and nine abreast respectively.
- Boeing has to go 10 abreast with the 777 “because the economics don’t work at nine abreast.” Boeing had to go with nine abreast on the 787 rather than eight abreast because the “economics don’t work” compared with the A330 otherwise.
- Economics is the “most important criteria” and the “Airbus aircraft come out ahead.”
- Rao claims the A330 has lower maintenance costs, lower airport, lower navigation and lower capital costs. The A330 has simpler systems so costs less to maintain, particularly on the engines. The A330-300 is slightly lighter than the 787-9.
- For the first time we’ve heard, an Airbus official referred to the “A330ceo.”
- Each seat for a long-haul operator is worth $2m per year, so an A350-900 vs a 787-9 with 35 more seats can generate $70m more revenue per year.
- The A350-1000 has a 15% COC per trip and a 5% COC per seat advantage, Rao says. Assumptions: 4,000nm, $3/gal, 2 class configuration, 369 seats for A350, 405 seats for 777-9.
- 777-9X is inefficient without the stretch and a longer wing. It has inferior comfort, Rao says.
Airbus Innovation Days, Part 2: No order bubble and a lot more
Airbus lifted the embargo on John Leahy’s presentation, allowing immediate publication.
There is no aircraft order bubble, says John Leahy, COO-Customers of Airbus. Emerging markets and passenger traffic doubling every 15 years, bolstered by GDP growth, means orders will hold up, he said, leading off the Airbus Innovation Days Tuesday.
Highlights of Leahy’s address:
- There are 42 mega cities accounting for 99% of the long-haul traffic. Aircraft size is moving up and in 15 years, Leahy says RPKs will double, requiring aircraft like the A380.
- Leahy predicted the A320neo will maintain a greater market share than the Boeing 737 MAX of about 60%-40%.
- He claims the A320neo is 1.6 tons lighter than the 737 MAX.
- Leahy said the A320neo and A321neo now seat 189 and 240 seats respectively (in maximum capacity configuration). The former matches the 737 MAX and the latter has 25 more seats than the 737-9.
- He predicts China will become a competitor in 25 years.
- The competitor to the 787-10 is the A350-900 at 331 pax vs 315 pax with more range and cargo capability or derating the A359 gives a lighter aircraft at the same range.
- The 35 more seats of the 777X means the larger airplane than the A350-1000 is 35t heavier than the latter aircraft.
- The A380 hasn’t been fully optimized by many airlines; it could easily take 50 more seats.
- The A330neo is an interesting idea; we have to look at the money we have to spend and cannibalizing our A350 program. It will be the same size as the 787-9, which will have 1,000 mi more range. We could cover 92% of the routes with a wider seat and much lower capital cost. We have to look at the resources. It may not happen by Farnborough.
- No A350 slots are available until 2019-2020. Effectively sold out through 2019 though could move some positions around.
- In a walking press “scrum,” we asked Leahy, “if there is a potential market for 1,100-1,200 A330neos, why wouldn’t you do the airplane?” Leahy replied that the answer may be self-evident but once more noted that cost and resources will be important considerations. Talks with the engine makers, Rolls-Royce and GE, continue to determine the potential cost split between Airbus and them.
Airbus Innovation Days, Part 1: Leahy speaks about Emirates A350 order cancellation
We’re at the Airbus Innovation Days Wednesday-Thursday, with most of the information embargoed until Thursday evening. However, the following was not embargoed.
John Leahy, COO-Customers of Airbus, called the Emirates Airlines cancellation “not good news commercially,” but noted that there have been fewer cancellations of the A350 than the Boeing 787 program.
He noted that the deliveries were scheduled from 2019, so there is time to place new orders.
Leahy declined to comment on any connection between last year’s EK order for the A380 and this cancellation. He noted that EK is ordering more A380s and has been urging Airbus to re-engine the airplane, which Airbus is studying.
Emirates cancels A350 order, could be boost for slow-selling 777 Classic
Airbus announced Wednesday morning French time that Emirates Airlines canceled its firm order for 70 A350 XWBs.
In a statement, Airbus said:
Airbus confirms that Emirates Airline has decided to cancel its order of 70 A350 XWB aircraft. The decision follows on-going discussions with the airline in light of their fleet requirement review, as demonstrated by their order of 50 additional A380 at the last Dubai Airshow and their continuous interest in the program
Airbus and Emirates Airline benefit from a long-standing relationship and the airline recently reiterated its confidence in Airbus products particularly by praising the A380 and the benefits the aircraft brings to their operations.
The order of 50 A350-900 and 20 A350-1000 was originally placed by Emirates Airline in 2007 with first delivery slots scheduled from 2019.
This cancellation could open a hole in Emirates’ fleet plan. The so-called middle market for wide body twins is the heart of the market. This cancellation could open an opportunity for Boeing to step in with the slow-selling 777-300ER, which has a major production gap beginning in 2017. Rather than introduce a new fleet type, Emirates could opt to stay with the 777-300ER for commonality, or perhaps its huge order for 150 Boeing 777-8/9s may supply fleet needs.
Airbus has more than 800 orders, options and LOIs for the A350 even after cancellation.