Leeham News and Analysis
There's more to real news than a news release.
Odds and Ends: 747-400 crash on tape; Repairing the 787 brand; Another 747 doom-and-gloom story
This is dramatic video on the National Air Cargo Boeing 747-400F crash at a US AFB in Afghanistan.
Repairing the 787 brand: We’ve noted previously the brand damage Boeing has to deal with following the 787 issues. This article reports that Boeing has taken out full page ads to repair the brand.
747 Doom and Gloom: We recently linked the post to the Puget Sound Business Journal story casting a dim picture for the future of the Boeing 747-8. The Wall Street Journal follows up with this equally doom-and-gloom piece.
Odds and Ends: Change fees; Two ex-NTSB members rap Boeing, FAA, current NTSB
About those change fees: Last week we reported from the US Airways Media Day and among the topics was that of change fees. US Airways matched United Airlines to charge $200 if you change your ticket. Here’s an article about how to deal with these fees.
Here’s another article about change fees, and how they’ve soared in recent times. If you think fees in the US are bad, look at the table and note in particular Ryanair’s fees–this carrier is notorious for charge for everything, and at steep prices, something subject to this funny video:
[youtube http://www.youtube.com/watch?v=ZAg0lUYHHFc&w=560&h=315]
Why are fees becoming so prevalent? Because this is where airlines are largely making their profits. US Airways said last week it expects to earn $600m from fees this year. This is more than its entire profit from 2012. This means airline operations lose money and profits come from the fees.
Also on US Airways: we also reported last week about some outstanding labor issues between the IAM at US Air and the TWU and American Airlines. An agreement over the weekend was reached about merging these two workforces under one union banner, according to Terry Maxon at the Dallas Morning News.
Ex-Members Rap FAA, NTSB: We bet they won’t be invited to a reunion. James Hall and John Goglia, former members of the National Transportation Safety Board, had harsh words to say about the FAA, Boeing and the NTSB over the certification of the Boeing 787 and the subsequent fix. Hall said the FAA needed to recertify the airplane, not just the battery.
Ethiopian Airlines resumed service with the 787 over the weekend, while Japan’s ANA engaged in a proving flight. This Wall Street Journal article (via Google News, so everyone should be able to read it) references additional measures required by Japan.
US Airways Execs talk to us about fleet plans, change fees and the AA livery
We had the opportunity to sit down for a one-on-two interview with Scott Kirby, President of US Airways, and Derek Kerr, EVP and CFO, during the annual media day. We covered labor, fleet planning, change fees and the new American Airlines livery.
When we talked right after the merger was announced, you indicated that all the labor problems at US Airways were solved and you had agreements with American’s labor groups. Yet I read about continuing labor issues. Bring me up to date about this.
Derek Kerr: I think what we’re talking about is we have a road to solve all the labor problems. The contracts have a methodology for the pilots and flight attendants for who we’re going to get there. The only thing we have right now is our ramp and mechanics. We don’t have a deal with our ramp and mechanics and we’re negotiating that today. That is in normal negotiations. We’re going through with a mediator. That really is the only area where we are working on from a stand-alone perspective to try and get a deal done with our group. It’s a little complicated because we are trying to work the two groups (TWU represents American Airlines, IAM represents US Airways-Editor.) From the standpoint of where we are today, we have to road to get the pilots done. We have the road to get the flight attendants done. We have the ramp and mechanics on [the American] side complete. We have a six year deal. We’re trying to get our group together with that.
American is taking about 65 A319ceos. US Airways has a large fleet. You indicated when we talked right after the merger was announced that you expected to use some of US Airways’ 319s on American routes, but at that time it was too soon to draw any conclusions about the integrated fleet plan. What is your thinking today?
Odds and Ends: $500k per plane to fix 787, says FAA; China’s Airbus order
Cost of 787 fix: It will cost nearly $500,000 per aircraft to install the battery fix in the Boeing 787, documents released by the Federal Aviation Administration indicate. The actual math is $466,666. Analysts believe the 787 grounding cost Boeing about $600m, which the CEO said yesterday was absorbed in the R&D budget. Jim McNerney also said there are no contractual obligations to compensate customers for the grounding, but something will likely be worked out.
LOT will resume flying the 787 June 5, it was reported today.
China’s Airbus Order: It appears China is satisfied with the European Union’s about face on carbon taxes. Readers may recall China opposed the EU’s attempt to levy taxes on foreign airlines over carbon emissions. China vowed not to buy any Airbus aircraft–particularly the A330–in retaliation. Several other countries opposed the tax, though these didn’t go so far as to boycott Airbus. Today an $8bn order for Airbuses, including the A330, was announced by China.
Reader confidence rising about Boeing battery fix for 787
Reader confidence has risen over the battery fixes designed by Boeing and approved by the Federal Aviation Administration for the 787 in our unscientific poll.
In the third of three polls we’ve conducted–one before details of a fix were revealed but after they were broadly outlined in the media; one right after the Tokyo press conference; and the latest after the FAA approved the design–a majority of the minority now say they are ready to fly the 787 once it is modified. The two previous polls revealed a majority of the minority were not ready to fly the airplane for up to two years.
It’s clear Boeing and the customers still have some confidence-building to do–but it appears progress is being made.
Odds and Ends: Boeing kills fish plan; Consultant still spooked by 787 fix; new 787 poll
Boeing kills fish plan: The Spokane Review has this story about Boeing killing a plan to further protect fish in the Puget Sound area. We knew of this effort in December. The proposed rules would require huge water detention ponds at Renton and Everett to retain stormwater runoff to prevent pollution in Lake Washington and Puget Sound waters. The dimensions were so large there was inadequate land available at Renton. At that time the size of the Everett hadn’t been computed.
If the new rules went into effect, we were told Boeing would have likely begun moving work out of Washington, costing jobs.
The Washington Department of Ecology, which was behind the move, is proving more and more schizoid in its approach to the environment. On the one hand, it proposes highly onerous rules such as this and causes headaches to the suburb in which we live over critical areas rules. On the other, it’s poised to approve a permit to another suburb that will allow direct injection of contaminated stormwater runoff into a drinking water aquifer.
This falls into the category of “what are you thinking?”
Spooked about 787 fix: Richard Aboulafia, consultant with The Teal Group who has done work for Boeing in the past (about five years ago), remains spooked about the fix, according to this article. Are our readers? We’ve done two previous polls, one before the Boeing fix was outlined, one immediately after. Now that the FAA approved the fix, we’d like to ask the following again.
Odds and Ends: Boeing earnings call; US Airways Media; 787 update Day
There’s a lot of news happening today and tomorrow.
NTSB Hearing: The NTSB hearing on the Japan Air Lines Boeing 787 battery fire is today and tomorrow. This can be followed live (and later archived) here.
Boeing Earnings Call: This is Wednesday, April 24. This can be followed here. Expect a fair amount of discussion about the impact of the 787 battery issues on earnings. Ordinarily we’d have our usual live running coverage but instead we will be at the…
US Airways Media Day: This airline has an annual media day and it was scheduled for today a long time ago. We’ve been a regular at this, and due to the pending American Airlines merger, apparently there is going to be big press demand: they had to move the venue from headquarters to a hotel location in Scottsdale. We’ll have several updates throughout the day.
787 Update: LOT Polish Airlines expects to return its two 787s to service in June; Ethiopian this month; the Japanese airlines could return the airplane to service this month but ANA plans up to 200 test flights first, so this will slip to May and perhaps June. It’s unclear when Japan Air Lines plans a return-to-service (RTS). Qatar Airways wants to RTS this month. United Air Lines appears planning next month.
NTSB hearing on JAL 787 battery incident today, tomorrow: live, 9am Eastern Time
You can follow the NTSB hearing on the Japan Air Lines battery fire on the web here. It starts at 9am Eastern Time. Mobile phone access is also available.