Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 5. Turbofan design problems April 26, 2024
- Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders” April 25, 2024
- A350-1000 or 777-9? Part 3 April 25, 2024
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
Pontifications: Airlines, OEMs step up in virus crisis
By Scott Hamilton
April 13, 2020, © Leeham News: There are plenty of stories and photos floating around the Internet about airlines flying empty or nearly so.
Schedules have been pared back up to 95% across the globe.
Spot-check Flightradar24 at any given moment and there are a lot air freighters flying.
But the passenger airlines are also flying some airliners dedicated to cargo. Some are flying cargo in the below-deck holds only. Others installed plastic protection over the passenger seats and loaded box after box after box of protective masks for shipment. Still others removed the passenger seats entirely and loaded the main deck with lighter-weight cargo.
This article summarizes many airlines that stepped up to fly supplies throughout the world.
Is COVID-19 a Force Majeure event?
Editor’s Note: Airbus, Boeing and Embraer and other OEMs face requests for deferrals and perhaps cancellations of orders as a result of COVID-19. In addition, Boeing now faces cancellation requests for the 737 MAX grounding, now in its 13th month. While Boeing’s contracts generally allow Boeing or the customer to cancel the order after the 12th month, the COVID crisis raises a new element: canceling by Force Majeure and something called the Doctrine of Frustration.
The following analysis appeared March 12, 2020, on the website of the law firm Shearman & Sterling law firm. The authors are listed at the end of this article. It is reprinted here with permission.
Following the rapid spread of the novel coronavirus (“COVID-19”) that was first reported in Wuhan, China at the end of 2019, the World Health Organization declared COVID-19 to be a pandemic on March 11, 2020.
In this note, we consider how force majeure provisions in commercial contracts and the related common law doctrine of frustration may be engaged in the context of the COVID-19 outbreak. While this analysis focuses primarily on the position under English law, we have included a PRC law perspective because of the significant impact COVID-19 has had on business in China. We also suggest steps that parties may take to safeguard their positions in view of the evolving situation.
Congressional delegation urges Boeing to take federal funding
April 7, 2020, (c) Leeham News: The Democratic members of the Washington State Congressional delegation urged Boeing CEO David Calhoun to take federal emergency 
funding to protect employee wages.
The Republican members did not sign the letter.
Calhoun previously said if an equity stake is required, Boeing would reject it and seek funding through other unspecified options.
The letter is below.
Pontifications: Assessing the impact of COVID-19: today’s take
By Scott Hamilton
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.
Boeing has $15bn in liquidity and can survive in short term; credit markets need to reopen
By Scott Hamilton
Boeing CEO David Calhoun. Source: CNBC.
March 24, 2020, © Leeham News: Boeing CEO David Calhoun said the company has $15bn in liquidity and can survive in the short term, but federal aid is needed as long as the credit markets aren’t open.
The US Defense Department is working to accelerate payments to Boeing, which has a large defense business. Revenue at Boeing Global Services is down as airlines across the globe shut down or sharply reduced operations.
Calhoun made his remark on CNBC’s Squawk Box today.
Boeing suspends production of wide-bodies
March 23, 2020, (c) Leeham News: Boeing today announced it will suspend production of its wide-bodies for 14 days, beginning Wednesday. 
Production slowdown begins today.
The move is in response to the COVID-19 crisis. Boeing is the last of the Big Three aircraft manufacturers to do so. Airbus last week suspended production in France and Germany, restarting slowly today. Embraer suspended production last week.
Airbus expands virus precautions across production lines, company
By Scott Hamilton
Guillaume Faury
March 23, 2022, (c) Leeham News: Airbus is working to make its production lines safe, but will have lower rates than before the coronavirus pandemic caused lockdowns in France and Spain, the CEO said today.
Airbus temporarily shut production lines in these two countries last Monday. Production resume at a low, unspecified rate. He said initially production “efficiency” may be very low.
Guillaume Faury, the CEO, however, pointed to China as perhaps an example to follow with its other lines.
The Tianjin line was shut down for several weeks as the COVID-19 virus spread across China. It recently resumed and is back near the pre-shut down level of 6/mo. Faury said 99% of the employees are back at work.
Chinese airlines are back to 30% of pre-grounding levels.
Pontifications: Getting around as airline service tanks
By Scott Hamilton
March 23, 2020, © Leeham News: There were times last week when the number of private airplanes in the air seemed to outnumber the airliners.
Periodic checks on FlightRadar24 of the skies around Seattle showed a dearth of commercial flights. By Friday, the US carriers already sharply pulled down operations. International flights were largely canceled.
Most cutbacks are likely.
With passenger traffic all but dried up—some flights had load factors of 20%-30% and others only one or two passengers—how might people get around while minimizing exposure to the coronavirus?
The private, general aviation airplanes are one choice.
Using corporate jets is another. But this option isn’t inexpensive, even when consolidating passengers.
Airbus boosts liquidity to €30bn with new credit line; suspends dividend
By Scott Hamilton
March 22, 2020, (c) Leeham News (Seattle Time): Airbus today announced a new €15bn credit facility to boost liquidity during the COVID-19 virus crisis.
In an early morning release March 23, Toulouse time, Airbus said it is suspending its dividend and its 2020 guidance.
“Our first priority is protecting people while supporting efforts globally to curb the spread of the coronavirus.” said Airbus Chief Executive Officer Guillaume Faury.
“We are also safeguarding our business to protect the future of Airbus and to ensure we can return to efficient operations once the situation recovers. We have withdrawn our 2020 guidance due to the volatility of the situation. At the same time, we are committed to securing the liquidity of the Company at all times through a prudent balance sheet policy.”