Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- China bans Boeing, US parts imports in tariff war April 15, 2025
- Boeing welcomes COMAC competition as Asia-Pacific demand soars April 15, 2025
- How good is the C929? April 14, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 17. April 11, 2025
- Uncertainty plagues airline, aerospace, lessor industries over tariffs April 10, 2025
Pontifications: From the aviation perspective, there’s something in China to watch
March 21, 2022, © Leeham News: Eyes are focused on Ukraine and the Russian War. In our corner of the world, commercial aviation, the stakeholders follow the fallout from the war: sanctions placed on Russia which affect overflights, supply chains, oil to Europe (fuel), and Russia’s confiscation of about $10bn worth of airliners from Western lessors and lenders.
By Scott Hamilton
But there is another drama playing out on the other side of the world, too. This one involves China and one of its commercial aviation companies, AVIC.
AVIC is a major aerospace company in China. It also has a variety of none-aerospace companies. It’s one of these that caught our eye last week.
The Wall Street Journal on March 14 reported that AVIC subsidiaries involved in solar energy filed for bankruptcy to avoid an $85m judgment after allegedly absconding with intellectual property from two US companies. The firm had to settle for 30 cents on the dollar.
It’s another example of China companies simply ignoring international IP laws.
2022 Forecast: C919 EIS unlikely before 2023-24
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By Scott Hamilton
Introduction
Jan. 17, 2022, © Leeham News: COMAC, the Chinese aerospace company developing the C919, suffered yet another setback last year.
It hoped to deliver the first aircraft, designed to compete with the Airbus A320 and Boeing 737-800/8, to China Eastern Airlines by year end. Not only didn’t this delivery take place, but the program is also only about 15% through the certification flight testing.
COMAC C919. Source: China Factor.
At this rate, certification, and delivery this year is questionable. LNA’s forecast for EIS is in 2023 or 2024.
COMAC’s other airplane, the regional jet ARJ21, landed its first order outside China (other than from lessor GECAS years ago).
Summary
- C919 is overweight, shortening range, and adversely affecting fuel economy.
- Commercial success of the C919 won’t be possible.
- ARJ21 lands first foreign operator, but it’s not an arm’s length deal.
With high cargo prices, will airlines fly larger aircraft in their widebody fleets?
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By Bjorn Fehrm
Introduction
October 14, 2021, © Leeham News: Over the last weeks, we’ve seen that the present cargo crunch and high yields will influence what aircraft variants airlines purchase. Models that are too large passenger-wise for years to come will be paid for by a longer belly that can take more cargo.
This trend will remain as long as cargo prices are high. Will the high cargo yields also affect what aircraft to keep stored and which to fly of an existing fleet? We apply the analysis to an airline with a fleet of Boeing 777s.
Summary
- The increased yields for air cargo changes the fleet planning for the widebody fleet. The most suitable passenger models stay in the desert, and the longer siblings fly despite lower load factors.
C919 EIS target year end; production rate forecast is aggressive
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By Scott Hamilton
Introduction
Sept. 13, 2021, © Leeham News: The first COMAC C919 is supposed to be delivered to China Eastern Airlines before the end of the year.
If so, it will be the milestone of the program launched in 2008, 13 years ago, becoming one of the longest launch-to-EIS in aviation history. COMAC’s ARJ 21 took one year longer. This regional airliner program was launched in 2002. Entry-into-service was in 2016.
The C919 is China’s direct challenge to the Airbus A320 and the Boeing 737. Similar in appears to the A320, for which there is an assembly line in Tianjin, the C919 is powered by the CFM LEAP 1C and a domestically-produced engine. But the C919 only has an advertised range of 2,200-3,000nm. The A320 and 737-8 have ranges of 3,500 and 3,550nm, respectively.
COMAC forecasts producing 150 C919s a year by the middle of this decade. Achieving this rate in this period should be a major challenge. Based on normal learning curves, a more realistic ramp up to 150 a year will take until early 2031.
Summary
- China forecasts a production rate of 150/yr by the middle of the decade.
- History suggests a much lower rate by then.
- LNA’s production rate forecast is detailed through 2030.
Pontifications: The reshaped commercial aviation sector
By Scott Hamilton
July 12, 2021, © Leeham News: With Washington State and the US open for business following nearly 18 months of COVID-pandemic shut-down, there is a lot of optimism in commercial aviation.
In the US, airline passenger traffic headcounts are matching or exceeding pre-pandemic TSA screening numbers. Airlines are placing orders with Airbus, Boeing and even Embraer in slowly increasing frequency.
The supply chain to these three OEMs looks forward to a return to previous production rates.
It’s great to see and even feel this optimism. But the recovery will nevertheless be a slow if steady incline.
Here’s why China needs Boeing as much as Boeing needs China
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Now open to all readers.
July 7, 2021, © Leeham News: China’s government policy of operating commercial aircraft that generally are no more than 12-15 years old means the carriers face a replacement bubble that the home market can’t possibly meet.
According to data reviewed by LNA, there are just 303 COMAC C919s on order. Delivery is supposed to begin this year with one airplane. Currently, the peak year for deliveries is 2027 with 55 aircraft scheduled.
There are about 1,116 Boeing 737 NGs built between 2008-2018 operated and stored by Chinese carriers. China has just 296 737 MAXes on order—a deficit of 820 aircraft needed for replacement of these aging airplanes. (Boeing’s website shows just 104 outstanding orders, but Chinese-owned lessors aren’t included in this tally.)
China distorts progress in Boeing 737 MAX return to service
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By Scott Hamilton
Introduction
June 28, 2021, © Leeham News: There are now 265 Boeing 737 MAXes in airline service, according to data reviewed by LNA.
There are 263 MAXes in storage that appear to be previously delivered airplanes. This number is artificially inflated by the 95 MAXes that are grounded in China. China’s regulator hasn’t recertified the MAX, a move widely considered political due to the long-running trade war between the US and China initiated by the Trump Administration.
When the MAX was grounded in March 2019, there were 387 in service. The math indicates 147 MAXes were delivered from inventory or new production since the airplane was recertified by the Federal Aviation Administration in November 2020 and other regulators shortly afterward.
There were 400 MAXes in inventory at the end of the first quarter, down from 425 at the end of the year. Boeing resumed production in the single digits. Boeing does not reveal its rate, but it is believed to be about 10-14/mo going to 16/mo in the third quarter.
In contrast, there are 106 A320neos and 38 A321neos in storage as of last Friday.
China’s air travel “recovery:” volume improving, but revenue still elusive
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By Judson Rollins
Introduction
May 6, 2021, © Leeham News: In a media briefing this week, the International Air Transport Association (IATA) showed a deep contrast between the airline landscapes in the US and China versus the rest of the world.
The two countries together delivered 55% of the world’s domestic passenger traffic in March, with Chinese domestic capacity approaching 100% of pre-pandemic levels. China’s three largest carriers – Air China, China Eastern Airlines, and China Southern Airlines – are matching their US peers by deploying A350s and 787s on domestic routes, as most international routes to/from China remain closed.
However, first-quarter data continued to paint an ugly picture as unit revenue, or revenue per available seat-kilometer (RASK), was down at every publicly-traded carrier. Some of this was due to reduced load factors in January and February, but a key driver is the ongoing sale of “all you can fly” passes on most Chinese airlines.
Summary
- Domestic load factors have picked up, but international traffic near non-existent.
- First quarter financial reports show unit revenue fell below even last year’s abysmal levels.
- “Airpass” promotions continue, but it’s unclear how long they will go on.
- Fleet utilization during COVID: widebodies down but not out.
HOTR: Annual Reports give hint to MAX return in China
By the Leeham News Team
May 4, 2021, © Leeham News: Annual reports from some Chinese airlines give an indication when Boeing can expect to resume deliveries of the 737 MAX there.
China Southern’s report issued this week indicates 48 MAXes will be delivered next year. Another 44 are shown to be delivered the following year. This compares with five A320 series this year and none next year. Only 15 A320s were delivered in 2020.
Five 787s and one 777s are scheduled for delivery to China Southern this year. Four A350s are scheduled for delivery this year and next.
Boeing cites US-China relations as business watch item in 1Q earnings
April 28, 2021, © Leeham News: Boeing’s first quarter financial results were slightly worse than estimates by Wall Street analysis.
“Boeing reported first-quarter revenue of $15.2bn, primarily driven by lower 787 deliveries and commercial services volume, partially offset by higher 737 deliveries and higher KC-46A Tanker revenue,” the company states in its announcement. “GAAP loss per share of ($0.92) and core loss per share (non-GAAP) of ($1.53) reflect year-over-year KC-46A Tanker improvement, higher 737 deliveries, and lower commercial airplanes period costs, partially offset by lower tax benefits and higher interest expense. Boeing recorded operating cash flow of ($3.4)bn.”
Boeing recorded a charge of $318m for the VC-25B (Air Force One) program. Impacts from COVID-19 and a vendor that Boeing sued (and which counter-sued) are cited as reasons.
Productions rates remain unchanged.
The press release is here.
But buried in the slide presentation for the earnings call at 10:30 EDT is a one line reference that US-China relations are a business environment watch item. Credit Suisse notes this is the first time Boeing has so referenced China in earnings calls.
First reactions to the financial reports and China are below.