May 22, 2017, © Leeham Co. The Paris Air Show begins June 17, and few in the industry expect much in the way of orders this year.
The order cycle is on the downward side of the bell curve. Sustaining the 2,000, 3,000 or nearly 4,000 gross orders announced 2011-2013 simply couldn’t be achieved. The “order bubble” had to break, and it did. Last year, Airbus and Boeing reported some 1,400 orders between them.
Airbus guides that it will tough to achieve a 1:1 book:bill this year. Boeing is running about 1:1 book:bill so far but it also guides conservatively. Still, LNC thinks Boeing might surprise this year–and some of this could be at the Paris Air Show.
Leeham Co.’s new publication, Commercial Aviation Report, provides a Focus Report on the Air Show. This encompasses the expectations for Airbus, Boeing, Bombardier, Embraer, COMAC, Irkut, Mitsubishi, CFM, GE Aviation, Pratt & Whitney and Rolls-Royce into one easy-to-read package.
The pre-airshow press briefings by the OEMs begin next week. We don’t expect any earth-shattering news from these and we wanted to get our views out ahead of these briefings.
By Bjorn Fehrm
May 11, 2017, ©. Leeham Co: We are attending the ISTAT (the International Society of Transport Aircraft Trading) conference in Hong Kong this week. The conference was opened by the Chief Executive for the Hong Kong region of China, Mr. C. Y. Leung. He gave an interesting perspective of the future of Hong Kong in the aviation finance market.
The companies cannot deduct the costs of the aircraft ownership from their lease revenue, for non-Hong Kong operators. This will now change. Read more
April 14, 2017, ©. Leeham Co: We’ve been talking engines on Fridays since October 2016. The Corners covered several areas, from technologies to operations.
And we could go on and dig deeper. But we will move on.
Before we go, we sum up what we have learned in the 24 Corners around airliner Turbofans.
March 16, 2017, © Leeham Co.: China’s evolving commercial aerospace and aviation industry has high-profile companies such as AVIC and COMAC, and its expanding supplier based, combined with joint ventures with Western companies is well known.
Less well known is the growth in the aircraft leasing business. Increasingly, Chinese lessors are showing up on the order lists of the Big Four aircraft manufacturers. Still, there remains a bit of a mystery about the lessors and dynamics within China.
LNC spoke with the newly appointed CEO of CDB Leasing during the ISTAT conference last week in San Diego.
Peter Chang has been in the Western leasing business for decades, employed in key positions with Aviation Capital Group, ILFC and Aircastle—usually with responsibility for China.
He was named CEO of CDB in December, a move that was announced during the January Dublin conferences of Airlines Economics and Airfinance Journal. More key personnel announcements were made during ISTAT.
In an exclusive interview, LNC asked Chang about the origins of CDB, other Chinese lessors, the current policy of restricting flow of Chinese cash outside the country, the Boeing 737-10 and the Bombardier CSeries.
Here is this interview.
March 7, 2017, © Leeham Co.: If Boeing builds the 737-10, which appears increasingly likely, will customers come?
This is always the multi-billion-dollar question for any aircraft and engine manufacturer.
For Boeing, launching the 737-10 is a low-risk, and in the eyes of many, futile effort to stem the bleeding of market share between the MAX 9 and its rival, the Airbus A321neo.
Depending on who’s counting and how the numbers are calculated, the A321 sales outpace the MAX 9 by a factor of four or five to one. LNC calculated last year that the ratio is more likely 3:1, identical to the market share split between the predecessor airplanes, the 737-900ER and the A321ceo.
March 6, 2017, © Leeham Co.: Boeing CEO Dennis Muilenburg wants the company to participate in the aftermarket aircraft services business and set a goal of $50bn in revenue in the coming years.
He looks at Boeing’s current business, the former Boeing Commercial Aviation Services (CAS), and sees a single-digit market share in a worldwide trillion-dollar market potential. Muilenburg understandably wants a greater share of this.
But LNC believes there is an additional driver: the intensely competitive commercial airliner business faces even greater competition in the coming years. Prices are under pressure today. China is developing its own aerospace industry, which will eat into sales by Boeing (and Airbus) in the home market. Russia has ambitions to renew its home-market airliner industry.
Boeing’s new Global Services unit is a hedge against the prospect of falling profits at Boeing Commercial Airplanes as these factors converge.
March 6, 2017, © Leeham Co.: Boeing rolls out its 737-9 MAX tomorrow.
Last week, I received a call from one of the network/cable news organizations asking, What’s special about this airplane?
The answer is: Nothing.
Feb. 20, 2017, © Leeham Co.: Sukhoi is Russia’s attempt at reentering the commercial airliner business. The SSJ100 regional jet is, by most accounts, an attractive
and efficient aircraft.
But it’s hampered by erratic production and questionable product support (largely due to the overhang of the Putin politics).
The aircraft was grounded briefly in December when a fatigue issue was found in the tail section during a routine inspection.
Feb. 9, 2017, © Leeham Co.: Russia’s Irkut designed a mainline jet to compete with the Airbus A320 and Boeing 737 families that, from a passenger experience
viewpoint, is the best in class.
The MC-21 has a wider fuselage than the A320 (which is wider than the 737). Seats and the aisle are the widest in the class. The overhead bin space is plentiful.
But the airplane is hampered by its environment: Russia itself.
Feb. 6, 2017, © Leeham Co.: Boeing officials must be downing antacids by the bushel about now.
President Donald Trump has the Mexican president pissed off. Trump’s spokesman says the immigration ban (or pause, or suspense, depending on the day it’s described) may be expanded to other “terrorist” nations.
Trump threatens a 45% tariff on Chinese imports and a 25% tariff on Mexican imports.
Why do Boeing officials probably have upset stomachs and flaming heartburn?
Because Boeing has more than 1,200 orders from countries that are in Trump’s crosshairs.
Nearly 770 of them are 737s. More than 300 are 777s. Nearly 170 of them are 787s.
And these are just the identified customers. There’s no telling how many of the 1,101 737s, 16 777s and 76 787s (at Dec. 31) were ordered by Trump’s target and potential target countries.