By Judson Rollins, Bjorn Fehrm & Scott Hamilton
Sept. 21, 2020, © Leeham News: Commercial aviation is facing a lost decade due to COVID.
Yes, most forecasts target 2024-2025 as returning to 2019 passenger traffic and aircraft production levels.
However, LNA in July published its own analysis indicating full recovery may not occur until 2028. Breathless headlines notwithstanding, it will take years for vaccines to be widely available and considered safe by enough of the world’s population. Growing concern about vaccine production and distribution capacity through 2024 underscores this view. Even Southwest Airlines CEO Gary Kelly said earlier this month that business travel might not fully return for a decade.
Indeed, the 2020s may well be a lost decade for aircraft manufacturers and their supply chains.
Fifth in a series.
By Bjorn Fehrm
July 15, 2020, © Leeham News: UAC stands for United Aircraft Corporation, and is the name of the group owning the Russian aircraft industry.
After the fall of the Soviet Union, the multitude of individual companies and design bureaus could no longer survive on their own. The Russian state, therefore, gathered them all in UAC to introduce necessary consolidation and reform.
While UAC has done much with the support of the Ministries of Industry and Defense, the changing political situation for Russia has made it harder for the Civilian aircraft side to achieve sales outside captive Russian markets for its jets.
Fourth in a series.
By Bjorn Fehrm
July 8, 2020, © Leeham News: All airliner OEMs have a disastrous 2020, but for Embraer, the year has been even worse. After spending a year and over $200m to carve out the Commercial Aviation division to merge it into Boeing, the Joint Venture Agreement (JV) was stopped by Boeing at the last moment.
The Executive Jets and Defense side were not affected, but now Embraer was organized as two companies instead of one. The company must now re-merge the organizations to save costs in a COVID-19 environment where limiting cash outflow, and lowering costs are necessary for survival. At the same time, it’s arch-rival on the world market, Airbus A220 has gone from strength to strength through basket selling with the popular A320.
How does Embraer come back from the Boeing pass up and regroup in a regional market that is no longer a fight of equals? Embraer competes with Airbus that in 2019 was 11 times larger in airliner deliveries and 29 times in airliner revenue.
Only in the below 100 seat market is it saved from the giant, who doesn’t have a model in the segment. And it seems the below 100 seat competitor, Mitsubishi, might fold its entry.
July 6, 2020, © Leeham News: The fallout from COVID-19 is beginning to intersect with the beginning of a wave of regional jet retirements globally. However, the market for smaller commercial jets today stretches the meaning of “regional” as most aircraft still in production have 100+ seats and can fly more than 2,500nm.
In the critical US market, both Embraer’s E175-E2 and Mitsubishi’s remaining M90 are too heavy to comply with the Scope Clause limits imposed by pilot labor agreements. These clauses restrict regional carrier flying to 76 seats and 86,000 lbs MTOW, while also capping the number of regional jets that can be flown by each carrier.
Delta Air Lines is limited to a total regional fleet of 450 aircraft, while American Airlines is capped at 75% of its single-aisle fleet and United Airlines is limited to 255 aircraft plus 90% of single-aisles in service. Earlier this year, American accelerated the retirement of some EMB-140s to maintain compliance with its limit.
Third in a series.
By Bjorn Fehrm
July 1, 2020, © Leeham News: COMAC stands for Commercial Aircraft Corporation of China, Ltd. It was spun off from the equally state-owned military and civil aeronautical giant AVIC in 2008. COMAC’s charter is designing, producing, and supporting civil airliners for China and, ultimately, world markets.
It presently runs three airliner programs, the 90 seat ARJ21, the 160 seat COMAC 919, and the Chinese part of the Joint Venture 280 seat CR929 widebody. Russia is the Joint venture partner for the CR929.
By Bjorn Fehrm
June 10, 2020, ©. Leeham News: France presented a 15 billion Euro support plan for the French aeronautical industry yesterday, to help the industry overcome the effects of the COVID-19 pandemic.
The plan has three focus areas:
April 6, 2020, © Leeham News: It’s going to be quite a while before there is a clear understanding how coronavirus will change commercial aviation.
LNA already touched on impacts to Airbus, Boeing and Embraer. None of it is good. For Boeing, burdened with the additional stress of the 737 MAX, is in the worst position. Even when the MAX is recertified, there won’t be many—or any—customers in a position to take delivery of the airplane.
Bearing in mind that what’s true today will change in a day, or even an hour, let’s take a rundown of where things seem to stand now.
By Judson Rollins
Earlier this week, LNA examined the potential for a shakeout among European carriers as the coronavirus outbreak spreads to the continent.
Five European countries now rank among the ten hardest hit – travel demand is plummeting nearly as rapidly as after the September 11 attacks in the US.
On Thursday, UK-based Flybe went into bankruptcy after long-time financial struggles. The airline had 54 De Havilland Canada Dash-8-400s and nine Embraer E175-E1s in its fleet, more than half of which were leased from Nordic Aviation Capital and HEH Aviation Management.
LNA reviewed aircraft ownership data to understand top manufacturer and lessor exposure to European carriers, particularly those with known profitability issues and high debt loads.
In last week’s analysis, LNA examined which airlines in greater China and the rest of Asia may be in imminent risk of financial distress due to the growing coronavirus outbreak. We found that airlines from Malaysia to Japan have significant exposure to the Chinese market. Several have shaky balance sheets and were already losing money prior to the outbreak, most notably AirAsia, AirAsiaX, Thai Airways, Nok Air, Malaysia Airlines, and Asiana.
The coronavirus outbreak has now spread to Europe and the Middle East, but we are continuing our focus on Asia as it’s been most greatly affected so far. Additional analysis focusing on Europe will follow, with particular attention to the potential for further airline consolidation on the continent.
LNA reviewed ownership and operating data on aircraft to understand top manufacturer and lessor exposure to greater China, which includes Hong Kong and Macau, and the rest of East Asia.
By the Leeham News team.
Jan. 2, 2020, © Leeham News: This will be a pivotal year for Boeing.
It will be a year of challenges for Airbus.
Embraer Commercial Aviation should disappear.
Mitsubishi Heavy Industries faces final decisions for the SpaceJet.
Overhanging international trade is the US presidential election.
These are just some of the headlines to look for in 2020.
Leeham News and Analysis provides its annual outlook as the new year, and the new decade, begins.