Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Pontifications: Lockheed confident as C-130J faces Airbus A400M and Embraer C-390 June 6, 2023
- Boeing still hopes for 737-7 certification this year, 737-10 next year and an Amended Type Certificate for the 777X June 5, 2023
- Bjorn’s Corner: New aircraft technologies. Part 15. Airframe for lower Induced drag June 2, 2023
- Boeing’s Calhoun: Be patient for a new airplane June 1, 2023
- Embraer gears for growth June 1, 2023
A Boeing 787 freighter, which model and how good? Part 2
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By Bjorn Fehrm
Introduction
March 24, 2022, © Leeham News: Last week, we discussed the creation of a Boeing 787 freighter. It shall replace the Boeing 767-300F, which is running into emission rule problems in 2027.
After looking at what 787 variant makes for the best freighter, we now compare the economics of the 787, 767-300F, and A330-200F freighters.
Figure 1. The 767-300F freighter (top) and its possible replacements: 787-8F (middle) and 787-9F (bottom). Source: Leeham Co.
Summary
- When a Boeing 787 freighter arrives at the decade’s end, its economics will change the freighter market’s dynamics.
Airbus brings BelugaST to outsized cargo market
By Bjorn Fehrm
January 25, 2022, ©. Leeham News: Airbus has decided to bring the original Beluga fleet, BelugaST (A300 based), on the market for outsized freight transport, as the newer BelugaXL (A330 based) caters for Airbus internal needs.
It has a larger cross-section than the AN-124, a tad longer freight compartment, and loads outsized but less heavy cargo. When all BelugaXLs are delivered, the ST will be spun off to a dedicated external freight company, Airbus Beluga Transport.
Figure 1. The cargo space of the BelugaST compared with the AN-124. Source: Airbus and Leeham Co.
Air freight growth: one-hit wonder or long-term trend?
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By Judson Rollins
Introduction
January 13, 2022, © Leeham News: COVID-19 has upended the freight world, with air delivery now becoming relatively economical versus the high premium they previously commanded over sea freight. While air freight yields on most trade lanes are 2-3x their pre-pandemic levels, sea freight yields are 8-10x their 2019 levels in lanes like Asia to North America and Asia to Europe.
Sea freight schedule reliability has fallen sharply over the past 18 months driven by a spectrum of port, labor, and container availability issues. Shippers are increasingly frustrated by the large and growing number of “blank sailings,” the industry’s term for canceled departures.
To offer customers backup options – and increase their value capture – ocean freight carriers are starting to buy their own aircraft. Maersk announced its purchase of two Boeing 777Fs in November, while CMA CGM Group said in December that it would order four Airbus A350Fs to complement its existing fleet of five Airbus A330Fs.
As the COVID crisis extends into its third year, will air freight demand prove sustainable at today’s levels? To what extent will capacity increase to match?
Summary
- Sea freight capacity will remain tight for the foreseeable future.
- New-build freighter availability is limited at present.
- Today’s air freight demand spike is unlikely to last beyond mid-decade.
One A380 departure or two 777-200ER alternatively 787-9? Part 2.
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By Bjorn Fehrm
Introduction
December 9, 2021, © Leeham News: Last week, we checked the economics for an airline that dispatches one A380 instead of two smaller widebodies on a trunk route with heavy traffic.
Our example was modeled after British Airways, which uses the A380 on its highest volume Heathrow departures. We modeled flights where we only considered the passenger payload and looked at operating costs. Now, we add cargo to the mix and look at the generated on the flights.
Summary
- The A380 was surprisingly competitive against the compared aircraft when we looked at passenger traffic.
- As expected, when cargo is added, the A380 competitiveness declines. It’s now a matter of what a slot more costs on the departure and destinations airports.
One A380 departure or two 777-200ER alternatively 787-9?
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By Bjorn Fehrm
Introduction
December 2, 2021, © Leeham News: With the last Airbus A380 rolling of the production line in days, we started looking at why the A380 didn’t sell last week. Now we check its economics for an airline that can fill it. We fly one A380 versus two departures of smaller aircraft on a typical trunk route.
Our analysis takes British Airways as an example and whether it shall use an A380 on Heathrow to LAX at peak traffic or rather two departures with its Boeing 777-200ER or 787-9.
Summary
- When you can fill the A380, it’s surprisingly competitive even against a more modern aircraft like the 787-9.
- This is when we focus on passengers and cost.
- We change the analysis angle next week when we add cargo and look at margins rather than cost.
Airbus details A350F specifications
By Scott Hamilton and Bjorn Fehrm
November 11, 2021, © Leeham News: Airbus has given more information about what led to their new freighter, the A350F, and its data. Scott Hamilton talked to Airbus Chief Commercial Officer Christian Scherer at the IATA AGM on Oct. 3-5 in Boston, and Bjorn Fehrm spoke to Head of Freighter marketing, Crawford Hamilton, about the technical details. (The two Hamiltons are not related.)
The A350F is the most capable new-build freighter Airbus has designed, posing the most serious threat to Boeing’s dominance of jet freighters since the dawn of the jet age. Some expect Boeing to respond next week with a program launch of the 777XF, but LNA understands this won’t be the case.
“The market has asked us to produce it,” said Scherer of the A350F. “So we launched the program based on our own belief of the strength of the business case.”
“The A350F beats the competing production freighter (Boeing’s 777F, our note) on payload, volume, and economics,” says Crawford Hamilton. “We have taken extra care to make the door larger and the floor extra sturdy to ease loading planning and execution. The A350F will be the freight forwarder’s preferred machine.”
The Airbus new freighter, the A350F. Source: Airbus.
Single aisle or Widebody over the Atlantic at low load factors, Part 3?
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By Bjorn Fehrm
Introduction
November 11, 2021, © Leeham News: Last week, we compared the economics of an Airbus A321XLR and A330-200 on our thin route over the Atlantic. The XLR improves the capabilities of the A321 quite a bit, not only on range but also on load-carrying ability.
The more efficient use of the space below the floor leaves room for cargo once the passenger bags are loaded. The margin race between the A321XLR and the A330-200 depended on the cargo pricing in the end. Now we finish the series with a more challenging setup for the twin-aisle.
We assume we use an A330-900, a nominal 300 seater on the Dublin to Newark route with only 130 passengers per departure. The load factor is then at 43%. Can the twin-aisle still earn the margin of an A321XLR on this route by virtue of its cargo capacity?
Summary
- The margin generation of the A321XLR versus the A330-200 was close. It boiled down to cargo pricing.
- The A330-900 adds costs but also more cargo room. Will it cover the extra costs?
Single aisle or Widebody over the Atlantic on thin routes? Part 2
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By Bjorn Fehrm
Introduction
November 4, 2021, © Leeham News: Last week, we compared the economics of an Airbus A321LR and A330-200 on a thin route over the Atlantic. We found the Widebody could compensate for its higher operating costs as long as the route has a sizable cargo stream and that this is paid at today’s elevated air freight prices. The A321LR has extra center tanks that take away all cargo space and thus has negligible cargo revenue.
Now we repeat the analysis with the more capable A321XLR. It stores four ACTs worth of extra fuel in the space of two. This leaves room for cargo. Will it be enough to restore the supremacy in margin generation over the twin-aisle?
Rendering of the A321XLR. Source: Airbus.
Summary
- The check last week surprised with how close a mid-age A330-200 can come in margin generation to an A321LR on a thin route, thanks to its higher cargo revenue.
- The A321XLR, with its more efficient tank setup, rebalances the fight in favor of the single-aisle.
Single-aisle or Widebody over the Atlantic on thin routes?
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By Bjorn Fehrm
Introduction
October 28, 2021, © Leeham News: The headline seems like a no-brainer. On long thin routes over the Atlantic, we have learned a Boeing 757, or its replacement, the Airbus A321LR, is the right aircraft (as long as it’s within its range).
This was the situation in a pre-pandemic market where freight yields were half of today. The single-aisle has lower operating costs than the widebodies, and if the passenger stream and range fits, it was the transport to have on the route.
With the high cargo prices, does this change? We check for several Atlantic routes.
Summary
- The increased yields for air cargo challenge the mantra; a single aisle is preferred for trans-Atlantic service as long as the passenger number and range fits.
- Going forward it will be all about the cargo prices and the number of passengers to transport.
Air freight demand explosion: a long-term trend?
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By Judson Rollins
Introduction
October 18, 2021, © Leeham News: Much ink has been spilled over the surge in demand that has washed over every corner of the cargo world: air, sea, road, and rail.
Amazon Air’s first parcels being unloaded at Amazon.com’s new Cincinnati (US) sort hub. Source: Amazon.com.
Before the COVID-19 crisis, air transport was reserved primarily for items with high value and/or time sensitivity, such as laptop computers or express documents. And growing competition in the cargo market meant that average yield (revenue per ton-mile) was declining by more than 2% per year, according to past editions of Boeing’s World Air Cargo Forecast.
But now the cost of sea transport has exploded, shifting a significant chunk of cargo from ocean freighters to their airborne equivalents. This is driving some retailers to use air transport. Home Depot, an American home-improvement retailer, is resorting to air freight to bring in smaller, higher-value items like power tools that it needs to keep on the shelves at all times.
Even before COVID-19, a growing share of air freight has come from e-commerce — thereby shifting the volume-to-weight considerations relative to “traditional” freight.
Will these trends continue even beyond the COVID crisis? And what impact will it have on the market for factory-built freighters and passenger-to-freighter (P2F) conversions?
Summary
- Soaring sea freight yields mean small shipments are now more economic by air than sea.
- Volumetric capacity matters more than max gross weight.
- New freighter options will compete with a glut of conversion feedstock.
- Air freight yields will eventually revert to historical trendlines in most regions.