Odds and Ends: Asia’s LCCs; Fiscal Cliff Deal; Boeing v Airbus; Desert Airplanes

Asia’s LCCs: Aviation Week has this lengthy piece about Asia’s Low Cost Carriers. Update: Financial Times has this in-depth look at AirAsia vs Lion Air. (Free registration required.)

Fiscal Cliff Deal: The can was kicked down the road and Wells Fargo has this assessment on the affect on the Defense Department:

Sequestration Postponed. The bill passed does not prevent the sequestration procedure from automatically reducing defense spending by $500B over the next ten years, including $50-55B of potential reductions from FY2013. Instead, it postpones the deadline for an agreement from January 2, 2013, to March 1, 2013,–a two-month extension. At that time, the DoD will have three weeks to determine how the sequestration will be implemented, with the reductions kicking in on March 27, 2013, rather than on the same day under the original sequestration legislation. The lack of planning time for the sequestration contributed to the uncertainty of its impact, which the new legislation appears to resolve.

Boeing v Airbus: It certainly looks like Boeing sold more airplanes in 2012 than Airbus, but the annual Airbus press conference is January 17 and you never know what last minute orders John  Leahy has up his sleeve. We doubt Boeing is celebrating just yet.

Desert Airplanes: It’s an old story for those of us who follow this sort of thing but the photos are always interesting. CNN has this story, with pictures, of where airplanes go to die.

Looking ahead to 2013 in Commercial Aviation

Last year yielded a few surprises in an otherwise predictable year.

Jim Albaugh shocked the aviation world when he retired unexpectedly at age 62. He was expected to remain in his position as CEO of Boeing Commercial Airplanes until mandatory retirement at 65.

EADS CEO Tom Enders unleashed a surprise merger proposal with BAE Systems. The deal didn’t work due to German government opposition, but he ultimately accomplished a governance restructuring—a key objective of the merger—that will reduce government meddling in the future.

Those were about it. Boeing’s much-anticipated Authority to Offer the 777X didn’t happen. ATO for the 787-10 was stealthily granted. Airbus and Bombardier, to no surprise, delayed the A350 and CSeries by a few months. Boeing came roaring back to become sales leader for the first time in about a decade, on the strength of 737 MAX sales.

What’s ahead for 2013? Here’s what we see.

Overview

With the spurt of 737 MAX sales over, narrow-body sales competition between Airbus and Boeing should return to normalcy. Will twin-aisle sales become the next growth market because of the first flight of the A350 and the program launch of the 7870-10? Will ATO of the 777X evolve into a program launch as well? Will Bombardier’s first flight of the CSeries and subsequent testing validate its claims for the new technology airplane and finally spur a large number of sales of the “show me” crowd?

Here’s our OEM-by-OEM rundown.

Read more

2012’s Most Influential Person in Commercial Aviation

In 2011 John Leahy of Airbus was voted the most influential person. Who do you think is the most influential this year? We’ll hide the results until the voting is complete.

Leeham on-line poll: 61% expect no contract agreement with SPEEA, Boeing; 57% expect strike

We put two polls into the public domain this week, asking whether SPEEA and Boeing will reach an agreement next month; and if not, will SPEEA strike (a target date is Feb. 1).

The results are in: 61% expect no agreement when talks resume Jan. 9 and 57% expect SPEEA to strike. (These figures reflect results as of this writing. The data may change after this post because polling is still open.)

The percentages are a significant drop from the 96% vote that rejected the Boeing contract offer in October, but it should be noted there is no new offer on the table for SPEEA members to read and evaluate.

Additionally, this poll is of our readers and not specific to SPEEA.

Clearly the expectations are not good.

SPEEA’s executive director, Ray Goforth, is on record expecting talks to fail immediately when they resume because the gap between the union asks and the Boeing positions are so far apart. A strike vote will be solicited once talks break off.

Unlike the IAM 751, which requires a two-thirds affirmative vote for a strike, SPEEA requires only a simple majority.

“We have no specific target [for a strike vote] other than that,” Goforth tells us. ” SPEEA is a democratically run union.  Decisions are made by majority vote as supplemented by broad consultation with the membership (townhall type meetings, polls, feedback from the elected councils).
“In the run-up to the October 1st vote the Boeing management negotiating team confidently predicted that the contract would be adopted because they knew what the employees wanted better than the union,” Goforth wrote us.
“Today, we at hearing the same language from Boeing management.  Today, we are experiencing the same dismissiveness and disregard from Boeing management.
“Boeing management is still proposing across-the-board pay and benefit cuts for engineers and techs while increasing compensation for themselves and the shareholders.  We expect any such proposal to be rejected by the membership.”

2012’s Most Momentous event: were readers correct?

A year ago we asked the following question and received the results. Now that 2012 is all but over, do you agree with your own forecasts?

What is the most momentous event you predict for 2012?

Answer Percent
Boeing doesn’ t ramp of 787 as expected 28%
Airbus slips its schedule for the A350 23%
Boeing meets ramp up expectations for the 787 12%
Airbus stays on schedule with the A350 11%
US Airways makes a bid for American Airlines 10%
Bombardier has first flight of CSeries by year end 9%
American Airlines tells US Airways to sniff its own exhaust 4%
Bombardier’s first flight for CSeries slips into 2013 2%

Odds and Ends: CSeries and London City Airport; new life for BAe-146; SPEEA’s next step

It’s Christmas Eve but there is some news despite this being a slow day.

CSeries and London City Airport: The downtown airport is a highly challenging one. Aircraft have a challenging approach. The runway is short. British Airways operates the Airbus A318 to New York with a refueling stop westbound. Bombardier says its CSeries can do the trip non-stop. This article provides some detail.

New Life for BAe-146: This airplane didn’t have much to recommend it. In its original 3×3 configuration, it was a cramped airplane. It had four engines. The original engines were unreliable. But here’s a new life for them.

SPEEA’s next step: The Boeing engineers’ union takes another step to prepare for a strike, beginning Feb. 1.

Ed Colodny on US Airways mergers: He headed Allegheny Airlines and US Air for years, guiding the carrier through four mergers–including Piedmont Airlines, which critics widely considered that he screwed up, and PSA, which US did screw up. The Street gets his thoughts on the potential American Airlines merger.

GEnx PIPs slip a bit: The Performance Improvement Package program for the GEnx engine that powers the Boeing 787 and 747-8 has slipped a bit, according to this article.

Boeing’s Charleston land buy is bad news for Washington State

Update, Dec. 21: A story on this topic:

Charleston Post-Courier: a much longer, in-depth piece than its original report linked below.

Original Post:

Boeing has agreed to buy a lot more land in Charleston (SC) to expand its plant there over time.

Charleston 1

Charleston 2

Illustrations via Charleston Post-Courier.

We believe Boeing is preparing to eventually locate new airplane programs in Charleston rather than Washington State. This would be the successor to the 737 MAX, potentially the 777X and we would not be at all surprised to see the 787-10 assembled in Charleston.

The contentious SPEEA negotiations aren’t going to help matters. We also believe Washington’s strict environmental laws are a factor, which seem on a track to get stricter with the move to clean up Puget Sound to save the fish.

Our estimated timeline is over the next 10-20 years (sooner if the 787-10 is placed in Charleston).

This is entirely our assessment–we can’t say we know anything about this. But the old adage is that if it looks like a duck and walks like a duck, then it’s a duck. And this sure quacks to us.

Odds and Ends: CSeries picks up; Air Canada’s Rouge; A380 v 747-8; Allegiant Air

CSeries picks up: Bombardier is ending the year with some upbeat news for the CSeries. First was an LOI for up to 30 CS100s from an unidentified customer. Next the wings arrived to be assembled onto FTV1 (Flight Test Vehicle 1). Then today it converted the MOU for 10+10 CSeries from AirBaltic to a firm order. BBD now has more than 350 orders and commitments for the aircraft. Update: Aviation Week has this item comparing early CSeries orders and E-Jet orders. CSeries stacks up pretty well.

Air Canada’s Rouge: Aspire Aviation has this column on the future of Rouge and the creation of WestJet’s Encore airline, and the impact on Canada’s aviation.

A380 v 747-8: AirInsight has this analysis comparing the Airbus A380 and Boeing 747-8. We discussed portions of this earlier, when the ad wars broke out between Airbus and Boeing, but this is more expansive.

Allegiant Air Acquires A320s: Allegiant Air is on a shopping spree again, this time acquiring nine Airbus A320s from Iberia Airlines.

American to decide on merger Jan. 9, Bloomberg says

American Airlines’ Board of Directors will meet on Jan. 9 to decide whether to merge with US Airways, according to this report by Bloomberg News.

The outcome, of course, has ramifications beyond those employees of both airlines. These include, in no particular order:

  • A shift in the oneworld and Star Alliances. US Airways is part of the Star Alliance, though its route system is hardly a key part. Since US says it will adopt the AA name, look for US to move into the oneworld alliance. An AA-US merger strengthens AA’s East Coast reach, but other than this we’ve not seen a great deal of routes that US brings to AA. On the other hand, AA brings a lot more to US.
  • Airports will see revisions to facilities as both airlines consolidate.
  • Some cities will see reductions in service as duplications are eliminated.
  • If the US management is the one that emerges in charge (as we hope), then this will be a major plus for the future of the new American Airlines. If AA’s management is the survivor, we’re much less sanguine about AA’s future.
  • Airbus and Boeing should both benefit. Before bankruptcy, American placed orders for hundreds of current generation A320s and 737NGs as well as the re-engined models. US has a large order for A320ceos and A330s, but no A320neos. American’s fleet replacement need is so large that it probably needs both single-aisle OEMs. We could see some adjustment in the orders, which never were firmed up, and taking into account the US outstanding orders. But we’d be surprised if the new AA were to cancel entirely American’s Airbus or Boeing orders.
  • Nor do we see US canceling its A350 orders in favor of AA’s outstanding 777 order. US is one of the remaining A350-800 customers and this might be upgraded to the A350-900. But we think there was a fair chance of this happening anyway.

Odds and Ends: Top 10 stories in 2012; A400M; C919 “orders”

Top 10 Stories in 2012: Here’s a piece we did for CNN International on the Top 10 stories, David Letterman style, for 2012.

Airbus A400M: Airbus claims it’s ready to go. First deliveries slated for next summer.

C919–orders, no deposits: How firm are the 380 “orders” for the COMAC C919? Good question. According to a Chinese media report via this Western news story, there are no deposits for the “orders.”

Washington State’s Signal to Boeing: Gov. Christine Gregoire, in her final budget (see leaves office next month), put $25m in for aerospace training and STEM education. The Puget Sound Business Journal explains the significance of this.

Update (already): Seems Mobile (AL) is put out we didn’t include the Airbus announcement of a production plant there in our Top 10. Over at CNN, a reader commented that the Delta Air Lines purchase of an oil refinery was worthy. Feel free to add your comments about what should have (or should not have) been included in this list.