ISTAT Europe 2015 in Prague: LCCs and Turkish airways take over Europe

By Bjorn Fehrm

06 October 2015, ©. Leeham Co: The global airline industry is on a steady course as a whole, but there are dramatic changes within Europe as low cost carriers, plus Turkish Airlines, redraw the competitive landscape.

China’s current economic softness raises concerns, with an independent analysis concluding that economic growth here is 2%-3% instead of the announced rate of 7%-8%.

Still, the mixed messages given at the annual ISTAT meeting in Europe this week didn’t put a damper on the mood of 1,200 delegates here in Prague.

  • The airlines are fine for 2015 as the fuel price is low but what about 2016? China is braking to a halt and Asia is getting infected? Will the infection spread? Will the airlines return to bad results?
  • What about the European airline industry? Can the low costs units of IAG, Lufthansa and Air France-KLM compete with the up-and-coming LCCs? Who is king of long haul travel out of Europe?
  • What about the order glut? When Asia slows, will the order bubble break?

 

Read more

Airbus gearing toward 63 A320s per month; Boeing sure to follow

By Scott Hamiltn

By Scott Hamilton

Oct. 5, 2015, © Leeham Co. Airbus appears to be closing in on a decision to boost the production rate of the A320 family to 63/mo by the end of the decade, a new report from Bernstein Research Group says.

Boeing is sure to follow with rate boosts for the 737, Bernstein writes in an Oct. 1 note.

Leeham Co. has been predicting these moves all year, and in LNC’s interview with Airbus Group CEO Tom Enders last month at the opening of the A320 Final Assembly Line (FAL) in Mobile (AL), Enders indicated the decision to boost rates would be made by the end of the year.

Read more

Assessing the China market

Subscription required.

Introduction

Sept. 30, 2015, (c) Leeham Co.: The Boeing deals announced last week with China put the country into the spotlight about its commercial aviation ambitions.

For many, the various deals announced by Boeing raise alarm bells. For most, that fire horse already left the fire station. The smoke has been billowing out of China (or maybe that’s smog) for a long, long time.

Summary

  • Boeing announces 300 orders and commitments for China, though the company was vague about the details. We try to dissect what’s real and what’s smoke.
  • Additional deals announced by Boeing are driven by China’s pay-to-play approach to business.
  • Other OEMs, suppliers also have to pay-to-play.
  • China’s deals with Airbus and Boeing are only two elements of a national goal for commercial aerospace.
  • IP theft and technology transfer big concerns.

Read more

Pontifications: Boeing moves in China only the beginning

By Scott Hamiltn

By Scott Hamilton

Sept. 28, 2015, (c) Leeham Co.:The move by Boeing to establish a 737 Completion Center in China is only one step in a series of moves to increase its footprint there.

Boeing also said it will join with China’s National Development Reform Commission to develop:

  •  Industrial cooperation;
  • A “world-class” aviation transportation system through deliveries to China of Boeing airplanes and services;
  • Technologies to reduce aviation’s environmental impact and enhance sustainability;
  • Leadership and training for the next generation of leaders in China’s aviation industry;
  • Continued cooperation to support the safety, efficiency and capacity of China’s air transport system
  • Further cooperation in biofuels.

“Boeing and Aviation Industry Corp. of China (AVIC) will broaden their long-term collaboration to support Boeing’s commercial airplane programs,” the company announced last week in connection with the visit to Seattle by the president of China. “In a framework agreement, the companies said they intend to further advance AVIC’s manufacturing capabilities by adding major component and assembly work packages; strengthening leadership; and developing AVIC’s broad aviation infrastructure and business practices, including supply chain management.”

I believe this is only the beginning of a new push of Boeing’s expansion outside Washington State, elsewhere in the US and overseas.

Separately, last week it was also announced that a key supplier is done expanding in Washington State. Future expansion will be elsewhere.

Read more

Boeing announces big China order–but how big is it, really?

Sept. 24, 2015, (c) Leeham Co. Boeing yesterday announced a deal pegged at $38bn for 300 jets for China, timing the announcement with the State visit to Seattle of Chinese President Xi Jinping.

Orders and Commitments for Boeing Commercial Airplanes

Boeing and China Aviation Supplies Holding Company (CASC) have signed a General Terms Agreement related to the purchase of 300 airplanes. The package has a value of approximately $38 billion at list prices.

Aircraft orders and commitments include:

(240) airplanes for Chinese airlines, including (190) 737s and 50 widebody aircraft

(60) 737s for leasing companies ICBC and CDB Leasing

“Boeing airplanes have played an important role in supporting the development of China’s aviation transportation for the past 40 years,” said Li Hai, president of China Aviation Supplies Holding Company. “These additional airplanes will further help connect the people in China and around the world.”

“China is a critical international market for commercial airplanes,” said Conner. “We thank our Chinese customers for selecting fuel-efficient Boeing airplanes to meet their fleet growth and expansion.”

But the information above is remarkably vague on detail. Questions immediately arose on Wall Street over just how big this deal truly is.

Read more

Chinese 737 Completion Center makes tactical, strategic sense

Sept. 22, 2015, © Leeham Co. The expected announcement by Boeing and Chinese President Xi during

President Xi of China. Photo via Google images.

his state visit to Seattle this week that Boeing will develop a Completion Center for the 737 in China is a significant event that may one day lead to an assembly line there.

Boeing’s touch labor union, the IAM 751, was predictably critical. In a post on the 751 website last week, the union said, “In a previous meeting with Renton’s 737 leadership we saw a brief presentation outlining Boeing’s perceived market conditions regarding sales of single aisle aircraft and the company’s desire to collaborate with China. We have asked the Company for details of what is intended with “collaboration” and have not received ANY information on “collaboration” or confirming or disputing the media reports. While we don’t know specifics of any such proposal, ANY shift of aerospace jobs from our bargaining unit or Washington State causes grave concern.”

Read more

Embraer CEO interview: oil prices, Brazil’s economy, China

Paulo Cesar, president and CEO of Embraer’s commercial aviation unit. Photo via Google images.

Subscription required

Introduction

Part 3

Sept. 14, 2015, © Leeham Co. It’s only been three months since the Paris Air Show and there have been some significant developments in the world that have impact on commercial aviation:

  • Oil prices dropped from about $62/bbl to a low of $38 in mid-August and it’s climbed back to about $46 this week;
  • China devalued the Yuan;
  • The Brazilian economy has deteriorated and so has the domestic political situation; and
  • Some LCC airlines in Asia are feeling the strain of growth and weakening currencies.

We talked with Paulo Cesar, president and CEO of Embraer at the Paris Air Show on some of these topics. We caught up with him Sept. 2 in Seattle, revisiting these topics and talking about more.

Read more

Mid-Year pause: warning signs for Airbus and Boeing?

Subscription required.

Introduction

July 9, 2015, © Leeham Co. At the half way point of 2015, there are a number of signs emerging that require some interpretation. Some are signs of caution. Others are Go Slow.

Summary

  • China’s economy is taking a sudden dip. The cargo market is taking a dive.
  • Aircraft orders are off substantially YOY for the first half. Has the order bubble finally popped?
  • Bombardier didn’t get any CSeries orders at the Paris Air Show. Is the program in trouble (still)?
  • Boeing still leads Airbus in wide-body orders; will Airbus fall short by year-end?

Read more

Airbus, Boeing YTD orders assessed (Update)

Airbus Boeing Jan-Jun bar chart

Figure 1. Click on image to enlarge.

Update, July 8: In our original post, we omitted 44 Boeing 737NGs from the YTD firm orders. The charts and text have been updated to reflect this information.

July 7, 2015, © Leeham Co. Airbus pulled ahead of Boeing in firm orders through June, and both companies have a number of commitments that were announced at the Paris Air Show that aren’t included in the year-to-date tally.

Airbus leads with single-aisle orders and Boeing leads with widebody orders, but at the half-way point of the year, the contest is far from over. The leads could shift or increase, depending on how the balance of the year goes.

Read more

Bjorn’s Corner: Paris Air Show review

 

By Bjorn Fehrm

By Bjorn Fehrm

June 18, 2015, c Leeham Co: With the industrial part of Paris Air Show over (the public portion continues through the weekend), one can start to summarize impressions. I have over the years participated in around 10 Paris Air Shows or Farnborough International Air Shows. This was one of the first where one could see that people were stopping and looking up to observe the aircraft which were quiet.

Read more