Restoring capacity with the A330ceo or A330neo, Part 2

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By Bjorn Fehrm

Introduction  

June 25, 2020, © Leeham News: Last week, we started looking at the Airbus A330-200 market and whether to hold on to one’s A330-200 or restoring capacity after the COVID-19 shut-down with the newer A330-800.

We looked at the history of the A330-200, the reasons it sold 642 units to date, and why the sequel, the A330-800, is not selling well.

We dig deeper into the replacement question today. In a post-pandemic world, is holding on to or even leasing an A330-200 for long-range operations the better alternative, or should we take delivery of a new A330-800?

Summary
  • The A330-200 was Airbus’ best aircraft for long and thin routes.
  • As the A330-300 and later A330-900 grew its range, the A330-200 and A330-800 market shrunk.
  • For long and thin routes, is keeping/leasing an A330-200 or taking delivery of an A330-800 the better alternative?

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How much of International passenger flights can be paid by belly cargo? Part 2.

By Bjorn Fehrm

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Introduction

June 11, 2020, © Leeham News: As international passenger traffic slowly recovers, how much of the cost of flying passengers on the international routes can be paid by the freight under the floor?

We discussed the base parameters to answer this question in last week’s article. Now we calculate the revenues from passengers traffic and Cargo and compare them with the operational costs.

 

Summary:

  • The high freight prices make it possible to resume international passenger flights without losses on routes where there is substantial freight demand.
  • As belly freight capacity comes back to the market the freight prices will decline, but by then the passenger load factors should be on the way up.

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How much of International passenger flights can be paid by belly cargo ?

By Bjorn Fehrm

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Introduction

June 4, 2020, © Leeham News: Air cargo prices are at an all-time high. The air cargo demand is down 28% compared with the same time last year, but the capacity has disappeared faster. Half of the world’s cargo was flying in the bellies of passenger aircraft, and as these were grounded, 50% of the world-wide cargo capacity went missing.

Airlines have taken the seats out of passenger jets and now fly them as belly freighters with light pandemic protective gear cargo in the cabins on special authorization from the authorities. This has alleviated the capacity crunch somewhat but demand and capacity still don’t match. As a result, cargo prices stay high.

As international passenger traffic slowly recovers, how much of the cost of flying passengers on the international routes can be paid by high priced freight in the bellies of the aircraft?

Summary:
  • While domestic passenger traffic shows the first signs of recovery, international traffic will take long to recover.
  • At the same time, cargo prices are two to three times higher than normal for international routes within Asia and between Asia and the US or Europe.
  • How much of the bills for flying international passenger traffic in the recovery period can be paid by cargo in the bellies of these jets?

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Lessor exposure to Airbus, Boeing wide-bodies

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By Scott Hamilton

May 18, 2020, © Leeham News: As airlines park or retire thousands of aircraft, lessors with wide-body airplanes are most at risk.

Single-aisle airplanes are easier to re-lease and more in demand when traffic recovers. Reconfiguration and maintenance costs, if required, are reasonable by aviation standards. Cabin reconfiguration may run up to $1m. Airframe and engine MRO costs for Airbus A320s and Boeing 737s typically are in the low millions, depending on condition.

MRO and reconfigurations costs for wide-body airplanes, on the other hand, can cost more than a new A320 or 737. GE Aviation GE90s on Boeing 777-200LRs, -300s and -300ERs are notoriously expensive. MRO for Rolls-Royce wide-body engines is costly under RR’s contract packages.

Reconfiguration costs for A330s, 777s and A380s can run up to $30m, depending on the initial operator and who the second (or third) one will be. Therefore, HiFly did not reconfigure the ex-Singapore Airlines Airbus A380 it acquired after SQ retired the airplane.

LNA analyzed the number of wide-bodies owned by lessors. There are more than 670 Airbuses and more than 600 Boeings.

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Can a passenger airliner run as a freighter with today’s tariffs? Part 4.

By Bjorn Fehrm

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Introduction

April 23, 2020, © Leeham News: We spent the last weeks checking if passenger airliners used as belly freighters make economic sense.

With the present air freight prices, it does. The high freight prices are a result of half the World’s freight capacity disappearing with the grounding of passenger jets.

Our economic analysis assumed standard densities for the belly cargo. What happens if this is no longer the case? Can more voluminous cargo fly in the passenger cabin?

Figure 1. Air Canada Boeing 777 with humanitarian supplies (face masks) transported in the cabin. Source: Air Canada.

Summary:
  • Widebody aircraft can temporarily fly as belly freighters without loading cargo in the cabin, but enabling cabin cargo will improve the business case with the present lower-density cargo.
  • For single-aisle jets the belly cargo holds are too small, a cabin cargo loading system is necessary for efficient operation.
  • Is it OK to take out the seats and load cargo in the cabin? For normal cargo no, it isn’t. We check what is required.

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Amazon, a new challenge for FedEx and UPS

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By Vincent Valery

Introduction 

Oct. 7, 2019, © Leeham News: Amazon’s moves into ACMI air service, a dramatic construction of an air freight operation and entering ground delivery services threatens FedEx and UPS.

Although UPS last week beat Amazon to the punch with approval from the Federal Aviation Administration for drone-based package deliveries, Amazon was first to advance the idea.

FedEx canceled its contracts with Amazon as the latter moved into ground delivery. FedEx revenues have fallen sharply in recent months.

Summary
  • Growing Amazon footprint in delivery business;
  • Leads to direct competition with FedEx and UPS;
  • Drone delivery development;
  • A threat to traditional delivery service business model;
  • Trade slump exposes FedEx more.

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Predictive power of cargo volumes

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By Vincent Valery

July 8, 2019, © Leeham News: It has been said that the collapse of freight volumes in the second half of 2008 preceded the sharp drop in passenger traffic. Cargo also allegedly led the passenger recovery in the second half of 2009. We will verify with IATA data whether the data backs such claim.

We will also check whether cargo volumes still have as much predictive power in the post Great Recession world. The current context of increasing trade tensions and signs of economic slowdown make this analysis relevant. We will ponder whether the next global recession is around the corner.

Credit: Cathay Pacific.

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