Leeham News and Analysis
There's more to real news than a news release.
Boeing aims for half of 100-150 seat sector with 737-7
Jan. 24, 2018, © Leeham Co.: Dublin, Ireland: Boeing sees the 100-150 market sector as 10%-15% of the 20-year single-aisle market demand, or about 3,000-4,500 aircraft.
This compares with the 6,000-7,200 forecast by Bombardier.
Other companies fall within the 4,000 range.
Boeing doesn’t specifically segment the sector in its Current Market Outlook the 20-year forecast for regional, mainline, twin-aisle and cargo aircraft. However, Robert Michael, senior manager of product marketing for Boeing, disclosed the figure at the 20th Annual Airfinance Journal Conference Monday.
Michael said he expects the 737-7 MAX to capture about half the demand.
Airbus, Boeing list price hikes will have little affect
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Introduction
Jan. 22, 2018, © Leeham Co.: Airbus and Boeing hiked their list prices on their airliners last week by about 2% and 4% respectively.
There is little impact for either company in the near term. Single-aisle lines for both companies are sold out until the early 2020 decade, so any price hikes today will be reflected for sales will deliveries after the current backlog clears.
The wide-body lines could have better near-in returns; the backlogs aren’t as far out as single-aisle and near-term opportunities exist.
Summary
- Initial deposits might see an uptick in cash flow.
- Will price hikes translate into higher revenue or larger discounts?
- Production rate hikes would create revenue opportunities.
Airbus raises list prices about 2%; more profits or bigger discounts?
Jan. 17, 2018, © Leeham Co.: Airbus announced a list price hike Monday of just under 2%.
The popular A321neo goes to $129.5m from $127m. The A350-900 goes to $317.4m from $311.2m, for example.
Such price hikes are common. Boeing hasn’t announced whether it will raise the list prices this year, but in the past, it’s typically done so.
Airbus continues to list the A318 and A350-800 in its price list. There hasn’t been a commercial sale of the A318 in years and Airbus skipped creating a neo version of this double-shrink airplane.
Ostensibly, Airbus continues to offer the aircraft as an Airbus Corporate Jet (ACJ), but sales of this are few and far between.
Airbus also continues to list the A330-800 despite having only one customer with a small order for the airplane.
Pontifications: Embraer twice became focus of US trade commission complaints
By Scott Hamilton
Jan. 20, 2018, © Leeham Co.: The US aircraft manufacturer claims the foreign company is unfairly subsidized, undercutting pricing in US sales and threatening its future. A trade complaint is filed.
A prominent politician lines up on behalf of its constituent industries, claiming unfair competition. He calls for a trade investigation.
No, it’s not Boeing vs. Airbus.
It’s not even Boeing vs. Bombardier.
The complaints were against Embraer, twice.
Once in 1982 and again in 2010. In both cases, the US International Trade Commission was involved.
The rhetoric is remarkably consistent with the Boeing-Bombardier trade case.
In both Embraer cases, the ITC dismissed the complaints.
Its decision in the Bombardier case will take a preliminary vote next week, absent a schedule change, and a final decision will be issued Feb. 9.
737-7 MAX future appears to be niche, BBJ and military
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Introduction
Jan. 11, 2018, © Leeham Co.: The decision last week by Southwest Airlines to defer for four years delivery of 23 of 30 Boeing 737-7 MAXes does not bode well for this sub-type.
Concurrently, Southwest exercised options for 40 of the larger 737-8.
One of only four identified customers for the 7 MAX, with the largest order of 30, LNC considers it highly likely that a good portion of the 23 remaining orders will be
Boeing 737-7.
converted to the 8 MAX.
With only 63 identified 7 MAX orders, the aircraft risks becoming a narrowly purchased niche aircraft.
Summary
- Despite Boeing claiming in a trade complaint the 737-7 has a good future if Bombardier’s C Series is subject to 292% in tariffs, the airplane seems destined to be no more than a niche airplane with airlines.
- The largest customer for the 7 MAX is up-gauging.
- The 7 MAX future appears to be with business jets and military transports.
Canada files WTO complaint vs US over Boeing C Series trade complaint
Jan. 10, 2018, © Leeham Co.: Canada upped the ante in the Boeing-Bombardier C Series trade complaint today by filing one of its own against the US with the World Trade Organization.
This filing comes on the eve of the US International Trade Commission (ITC) staff report, due Friday, on whether Boeing was “harmed” by Bombardier’s near-miss in
selling the CS100 to United Airlines and an order in 2016 by Delta Air Lines for 75+50 CS100s, with an option to covert some of the orders to the larger CS300.
- Canada’s complaint with the WTO is here: WTO Canada Filing 011018.
The US Commerce Department concluded Canada, the province of Quebec and the United Kingdom illegally subsidized the C Series program. Commerce also concluded BBD “dumped” the C Series in the US with the Delta order and attempted to do so with the United competition.
Commerce levied tariffs of about 292% for any C Series imported from Canada.
The Canadian complaint with the WTO challenges the DOC’s action and the pending decision, due next month, by the ITC. The move was expected, but generally thought would occur after the ITC ruled. ITC is expected to support Commerce’s conclusions.
Boeing says record 2017 deliveries will continue
By Bjorn Fehrm
January 09, 2018, ©. Leeham Co: Boeing announced record airliner deliveries for 2017 of 763 jets today, leading the industry for the 6th year running. Net orders of 912 aircraft gave a Book-to-Bill of 1.2. Airbus, which announces next week, is expected to have delivered 700 jets but to top Boeing for orders.
Randy Tinseth, Vice President Marketing for Boeing, expects the positive trend to continue. “The market was strong 2017 and we see no change for 2018. Our customers transported record passenger numbers, at record load factors and with record profits. We don’t see airliner demand weakening” said Tinseth in a call with media.
Boeing’s special needs in the next decade may be solved by Embraer
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Introduction
Jan. 8, 2018, © Leeham Co.: Key factors may play into the prospective business venture, however it’s defined, between Boeing and Embraer that have gotten little
notice.
Boeing’s need for engineering talent from Embraer has been touched on by many media, including LNC. But a detailed analysis hasn’t been forthcoming, that we’ve seen.
Not discussed yet is the fact that new airplane programs at Boeing and Embraer wind down in 2021-22, leaving both companies in danger of facing the next decade without new products at a time when competition will be emerging.
The lack of new airplane programs endangers the engineering talent pool. For Boeing, this is already going to be critical as more than 5,500 engineers and technicians reach age 65 in the next 10 years.
Boeing’s New Midmarket Airplane, if launched, will address part of the company’s new product requirement after 2020. On the other hand, Embraer has no new product, although officials have discussed potentially launching a turboprop program.
Summary
- Boeing’s 787 and 737 programs wind down this year and in 2020.
- Embraer’s EJet-E2 program winds down in 2021.
- Boeing faces talent drain as engineers and technicians age.
- Boeing NMA needs engineers and Embraer can supply them.
Pontifications: 2018 is a year of Transformations
By Scott Hamilton
Jan. 8, 2018, © Leeham Co.: This is going to be a year of transformations.
This might be viewed with puzzlement by some. After all, only minor-modification models will be entering service this year: the Airbus A350-1000, the Boeing 737-9, the Airbus A319neo and the Boeing 787-10. The first flight of the 737-7 should occur.
Flight testing continues for the Mitsubishi MRJ90, the COMAC C919 and Irkut MC-21.
The proposed deal between Airbus and Bombardier should receive government approvals this year. Talks between Boeing and Embraer may or may not result in a combination of some kind.
The Big Deal, however, resides in Everett (WA).