Airbus cut production rates by a third

By Scott Hamilton

Production of the A320 and A220 in Mobile is paused. Airbus hasn’t decided what to do about A220 rates, yet.

April 8, 2020, © Leeham News: Airbus today said it will cut production of the A320, A330, and A350 lines due to COVID-19.

The new rates are:

  • A320 to rate 40 per month (from 60-63);
  • A330 to rate 2 per month (from 3.5)
  • A350 to rate 6 per month (from 10)

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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.

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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.

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Shall passenger airliners run as freighters during the COVID-19 crisis?

By Bjorn Fehrm

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April 6, 2020, © Leeham News: With the COVID-19 pandemic, the passenger traffic has ground to a halt in many countries. The airliners are parked and their crews sit idle.

At the same time, the air freight market booms. From a decline in demand in the first months of the year, there isn’t enough freighter capacity right now. The freight that traveled in the bellies of the passenger jets had to find new ways and as this was almost half the world’s air cargo, the dedicated freighters can’t absorb the volumes.

Is it time to fly passenger airliners as substitute freighters? Some airlines are doing this on a spot basis. Apart from injecting capacity for needed medical supply freight, does it make economic sense? We run a series of articles on the subject.

Figure 1. Delta flies an A350-900 as a belly freighter between Shanghai and Chicago three times a week from March 30. Source: Delta.

  • Freight prices soar as capacity collapses when airlines ground passenger jets.
  • For the airlines, the cost equation changes with an abundance of free capacity at remaining fixed costs.
  • Does it make economic sense to run passenger airliners as freighters in this situation?

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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.

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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.

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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.

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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.

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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.”

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