Odds and Ends: CSeries; Mitsubishi MRJ; Air France; Saving airlines

CSeries: Bombardier provided a short update from program head Rob Dewar in advance of its 2014 earnings call Thursday. The flutter test has been completed, CS300 is moving toward joining the flight test fleet and the fleet has completed 900 hours of the 2,400 required toward certification.

  • BBD today revealed the identify of the customer for 24 CRJ-900s, announced Dec. 30: it’s American Airlines.
  • Luxair plans to order some Q400s to replace its Embraer E145 jets.

MRJ90: The Mitsubishi MRJ is Japan’s first commercial airliner since the YS-11 turboprop in the last century. It’s a bold project intended to break into a highly competitive market sector. Air&Space magazine of the Smithsonian Institute profiles the MRJ.

Air France: Aviation Week has a dark opinion of the future of Air France. It’s worth a read.

Saving airlines: While Aviation Week has a dim view on the future of Air France, The Wall Street Journal has a piece about how private equity saved airlines. (Subscription may be required).

 

Regional operations with the Turboprop, prop-jet or Jet

By Bjorn Fehrm

Subscription required

Introduction

08 Feb 2015: Passenger traffic is growing the world over on a regional, domestic and international level. For domestic and international airlines the choice of mainline transport aircraft is clear today: there are only two vendors, Boeing and Airbus, and they produce similar products.

For regional transportation there is more choice. First of all, one can chose typeleehamlogo copyright 2015 small 210_87 pixels of aircraft, turboprop or jet. Within jet, there are several OEMs that are active. The choice in turboprop is more restricted. In practice, the choice stands between the classical turboprop with ATR and a faster type from Bombardier, the Q400 “Prop-Jet” as it is called, as its speed lands between the classical turboprop and regional jet.

The question is, what are the real differences between them in terms of design, passenger comfort and economics and what is the right choice for a market segment? We will take a deeper look into this by analyzing the ATR72 as the classical turboprop, the Bombardier Q400 as the Prop-Jet and CRJ700 as the regional jet.

Summary:

  • The ATR72-600, Bombardier Q400 and CRJ700 are all about the same size, around 70-80 seats single class or 60-70 seats dual class.
  • They offer different comfort levels, and it is not all about speed.
  • In developing the economics in two steps we seek the crossover points between the different types.

Read more

Single-aisle values, lease rates stable; smaller mainline jets struggle

Special to Leeham News and Comment

By Gueric Dechavanne
Collateral Verifications

Feb. 8, 2015: Apart from a few unfortunate events, the industry has been moving along quite nicely so far in 2015. Used single-aisle aircraft values and lease rates have remained somewhat stable for the most part whilst new aircraft continue to be in demand which means a competitive landscape for those looking to invest in the types. On the in-production front, Airbus A319s, A330-200s, and Boeing 737-700s continue to struggle to find homes as many operators look to their larger siblings for lift. Airbus A320s, 321s, 330-300s, A350-900, Boeing 737-800s, 777-300ERs, and 787s continue to be the aircraft of choice, which in turn has stabilized and even strengthened values and lease rates for most. We are starting to see some softening in 777 values, which we believe is due to the competitive nature of some of the Boeing campaigns to fill the order book until the 777X enters service.

Read more

Odds and Ends: KC-390 first flight; A400M; AirAsia 8501; Bombardier credibility

KC-390 first flight: Embraer’s largest airplane ever built, the KC-390 tanker/transport, made its first flight today.

We profiled the airplane last October following our visit to Brazil.

The airplane fulfills needs for Brazil’s vast geography to supply its population and to serve as a military platform. It also gives EMB valuable experience in developing large aircraft. The cross-section is about the size of a Boeing 767. It’s slightly larger than a Lockheed Martin C-130 but smaller than the Airbus A400M.

Speaking of A400M: Tom Enders, CEO of Airbus Group, had some comments about this problem child at Airbus in his annual press conference dinner in Paris. Aviation Week reports.

AirAsia 8501: Reuters reported last week two unidentified sources said the captain was out of his seat cutting power to two computers, working a flaw, when AirAsia flight 8501 went out of control and crashed into the Java Sea. Now there’s a report disputing this.

Bombardier credibility: Ahead of the Feb. 12 year end 2014 earnings call, Bloomberg News has a story that focuses on Bombardier’s credibility issues with investors. CEO Pierre Beaudoin has his work cut out for him on the call to reassure investors.

Airbus/Boeing production rates forecast through 2020

Subscription Required.

Introduction

Feb. 3, 2015: Boeing out-delivered Airbus in 2014, for the second year in a row, as the 787 program improved in delivery rates and before the A350 made its first delivery in December.

Topping Airbus in deliveries allowed Boeing to claim it is the world’s leading leehamlogo copyright 2015 small 210_87 pixelscommercial airplane manufacturer. By the delivery metric, Boeing is. By orders, Airbus came in first again, maintaining a decade-long lead.

The A350 ramps up its production this year even as the A330ceo rate begins to come down at the end of the year and further next year. Boeing vows to maintain the current production rate of the 777 Classic at 100/yr. The 747-8 rate is declining. And both companies are ramping up rates of the single-aisle airplanes.

The production wars continue.

Summary

  • Airbus is forecast to out-produce Boeing by 2018.
  • Boeing’s ramp-up of the 737 line will drive the delivery stream.
  • The 737 rate may hit 63/mo by 2020.
  • Airbus will likely match.

Read more

Odds and Ends: AirAsia 8501; SkyMark Airlines bankruptcy; One year for MH370; Billy Bishop Airport; PNAA conference

Jan. 29, 2015: AirAsia 8501: The first report by the Indonesian government has been issued, per international rules, but the public portion is pretty uninformative if press reports are to be believed. At the same time, leaks indicate that the pilots may have turned off a key set of computers shortly before the airplane went out of control. There’s no apparent information yet why they might have done this. Were they responding to a malfunction, real or perceived? Was there some other reason? Is the leak on this even accurate?

Previous reports and statements from the government ruled out terrorism, bombs, and even the weather. We understand as well that there has not been a safety-of-flight issue. This leaves pilot actions and contributing factors as the likely focus. What series of events combined to lead to the accident remains to be determined. Read more

Odds and Ends: BBD sale; MC-21 forecast; “A322”

Bombardier Sale: Financially pressed Bombardier sold its military training unit to Canadian supplier CAE for C$19.8m. It’s not a big cash infusion into BBD, but at this point every little bit helps.

Last week, before today’s CAE announcement, UBS issued an update on its BBD coverage, in which it wrote in part:

We continue to see BBD’s equity as over-valued, even after sell-off, given significant off-balance-sheet liabilities on top of also significant on-balance-sheet debt, pension deficit, and supplier/government advances. In all, we estimate BBD’s net debt to be greater than 8x EBITDA, problematic given our forecast for another three years of free cash outflows and big upcoming debt maturity in 2016.

MC-21 forecast: Irkut thinks it will sell 1,000 MC-21s over 20 years, according to this article.

“A322” seen by pilot: A US Airways pilot sees Airbus building an “A322,” a true Boeing 757 replacement and long-range airplane, according to his special contribution to Aviation Week. A small stretch and a new wing, with other improvements, would truly give a long range, single aisle airplane with even more capability than the 757, he writes.

 

First analysis of Mitsubishi Regional Jet, MRJ

Subscription required

By Bjorn Fehrm

Introduction

25 Jan 2015: Japan has not produced a commercial aircraft since 1973, when the last YS-11 twin engined turboprop rolled off the assembly line. The YS-11 was developed by a consortium of Japanese “heavies,” where two are also active in the creation of leehamlogo copyright 2015 small 210_87 pixelsthe MRJ, Mitsubishi Heavy Industries and Fuji Heavy Industries. This time Mitsubishi Heavy Industries is very much in command as they own 64% of the company set up to develop, assemble and market the aircraft, Mitsubishi Aircraft Corporation, Fuji Heavy Industries are working as design consultants this time.

MRJ engine run

Figure 1. Mitsubishi MRJ90 starting its Pratt & Whitney GTF engines for the first time. Source: Mitsubishi.

The first MRJ prototype has run its engines 10 days ago and is preparing for first flight later in the spring. It is therefore time to take a closer look at the first model, MRJ90, and compare it to its direct competitor, Embraer 175 E2.

Summary:

  • The MRJ90 and E-Jet 175 E2 are the same size, around 90 seats single class or 80 seats dual class;
  • Both aim for scope clause acceptance at 76 seats despite being to heavy; and
  • They are different in their fuselage packaging but surprisingly similar in their capabilities.

Read more

Odds and Ends: BBD’s Sheridan to Nordic; United and 777s

BBD’s Sheridan: Rod Sheridan, who retired last year after 20 years at Bombardier, has been named vice chairman of Nordic Aviation Capital, the world’s largest lessor of turboprop aircraft. Nordic owns more ATR turboprops and has more on backlog than any other company.

Sheridan was vice president of sales and asset management at Bombardier. His retirement last year was considered by many in the industry to be a major loss to BBD’s ailing aerospace division, coming as it did on the heels of major personnel changes as BBD restructured the unit. Turmoil continued with the departure last month of Ray Jones, the head of sales, within weeks of Sheridan’s departure.

Sheridan was responsible for Bombardier’s commercial entry into Russia. He was key to opening the CSeries market to lessors.

United and 777-300ERs: United Airlines is set to place an order for 10+10 Boeing 777-300ERs, reports Bloomberg. An announcement could come as early as this week. These would be UAL’s first -300ERs. Legacy United was launch customer of the 777-200 and legacy Continental Airlines ordered the -200ER. Only American Airlines in the US operates the -300ER and this became reality only in recent years.

The UAL order will be an important step in Boeing bridging the production gap for its 777 line until entry-into-service of the 777X in 2020. But it will come at a cost. Two market sources familiar with the deal say United will get the airplanes for around $130m, a sharp discount to the normal discounted price of around $150m.

Odds and Ends: BBD management; AirAsia 8501; MH370 update; Holy cow

BBD management: Bombardier’s management gets a scathing review following last week’s announcement that it will “pause” the LearJet 85 program and it will miss free cash flow guidance. This follows the unexpected resignation of Ray Jones, the head of sales, and a 10-year veteran of the company. Aviation Week has a separate article refuting the “poor business climate” excuse BBD gave for business jets.

Our own conversations paint a picture of a management structure that has inhibited CSeries sales from the start.

AirAsia 8501: Preliminary analysis of the AirAsia flight 8501 Cockpit Voice Recorder indicates no sign of terrorism or pilot suicide, according to several press reports. More likely is a high altitude stall or aircraft upset, the reports say.

In our conversations with a former NTSB crash investigator, he believes the flight spiraled down, hit the water and broke up upon impact.

MH370 Update: Flight Global has a good piece updating the search for Malaysia Airlines flight MH370.

Holy cow: Readers know we follow the Seattle Seahawks closely. Sunday’s game against the Green Bay Packers was a heart-stopper. Seattle trailed for 57 minutes of the 60 minute game and then exploded to come from a 19-7 deficit to win 28-22 in Overtime. What a thriller. Now the Seahawks will meet the New England Patriots in Arizona February 1 for the Super Bowl. The Pats crushed the Indianapolis Colts Sunday.

We’re negotiating our bet with an exec at Pratt & Whitney this week….

Unfortunately, Boeing won’t be repeating its 747-8F-painted Seahawks airplane this year, according to the USA Today. What a shame.