Pontifications: Writing had been on the wall for years for Q400 sale; CRJ is next

By Scott Hamilton

Nov. 12, 2018, © Leeham News: The writing had really been on the wall for the past few years, regardless what the corporate line was: Bombardier was one day going to sell the Q400 program or shut it down.

Better to sell it and get at least some money out of it, no matter how small.

Bombardier agreed to sell the program to British Columbia-based Viking Air for a mere $300m–$250m, net of fees.

Ditto the CRJ program. It’s on life support. It’s a design dating to the 1980s, the passenger experience has long been eclipsed by the Embraer E-Jet and it will be also by Mitsubishi’s MRJ when this jet finally comes on line in 2020. Read more

Bombardier squeezed by ATR, Embraer, Mitsubishi

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Introduction

Oct. 22, 2018, © Leeham News: Bombardier has a firm backlog of 67 Q400 turboprops. ATR has a backlog of 256 through Oct. 20, according to the Airfinance Journal Fleet Tracker.

This is an 80% market share for ATR.

Bombardier has 83 CRJ jets of all models in backlog. Embraer has 442 orders for all E-Jet models. Mitsubishi has 213 firm orders for its MRJ70/90.

This is just an 11% market share for the CRJ.

These figures illustrate why the market doubts Bombardier’s long-term future in commercial aerospace.

Summary
  • The Q400 and CRJ are aging aircraft designs.
  • Minor enhancements don’t address the underlying issues.
  • New competition is squeezing BBD.

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With a month to elections, Embraer bolsters backlog

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Introduction

Sept. 10, 2018, © Leeham News: With the Brazilian elections less than a month away, the outcome of the presidential race will determine whether the proposed joint venture between Embraer and Boeing will be approved.

Embraer is Brazil’s most visible and prestigious international company. The government has a “golden share,” giving it veto power over certain transactions, including the Boeing deal. Boeing will own 80% of the new JV that will be for EMB’s commercial business only. Embraer will own 20%.

The incumbent government says it will approve the joint venture; the opposition party says it will veto the deal.

Summary

Including orders, options and LOIs:

  • Production slots are oversold through 2023.
  • The skyline quality has some challenges.
  • Only three dozen firm orders were announced at Farnborough; the balance has to be firmed up.

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Pontifications: Supply chain melt down to get worse, says manufacturer

By Scott Hamilton

Sept. 3, 2018, © Leeham News: There is more evidence the aerospace supply chain is in meltdown—and it’s going to get worse, a manufacturer tells LNC.

The OEM requested anonymity to speak frankly.

As aerospace analysts gather this week in Seattle for their annual investors day at Boeing, based on the research notes I see, there’s little indication they recognize the magnitude of the evolving problems with the supply chain.

Although the focus recently has been on Boeing and analysts will visit Boeing Wednesday, the issues affect all the OEMs.

I wrote about this 30 days ago. Since then, another Boeing supplier last month acknowledged late deliveries of key parts, reports the Puget Sound Business Journal.

This was followed by a Bloomberg report that Lufthansa Airlines continues to have shortages from Pratt & Whitney for the GTF engines powering the A320neo.

Since then, I’ve had my own additional conversations with the supply chain. The production ramp ups that already have been announced and those being contemplated are in peril and all manufacturers are being affected.

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Pontifications: Supply chain meltdown

By Scott Hamilton

Aug. 6, 2018 © Leeham News: It happened to Airbus. It sort of happened to Boeing. It was bound to happen in a much bigger way to Boeing, and it has.

Some 40 737s are now sitting around the Renton assembly plant in a major supply-chain meltdown.

This follows the highly publicized, two-year long supplier meltdown at Airbus as Pratt & Whitney and CFM fell down on engine deliveries and technical problems for their GTF and LEAP-1A engines, respectively.

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Rising fuel prices hit earnings, but there’s a silver lining for OEMs

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Introduction

July 30, 2018, © Leeham Co.: Fuel prices are spiking and it’s already causing airlines to adjust growth and fleet plans.

But rising fuel prices could mean orders for slow-selling aircraft might pick up. Still, there are mixed signals on this front.

Summary
  • American and Southwest airlines are curbing growth and American is deferring airplanes due to rising fuel prices.
  • Alaska Airlines reported fuel prices were up 10 consecutive quarters, adding $850m to expenses.
  • Fuel prices were just under $80bbl on the US spot market last Thursday.
  • The inflection point between keeping current generation planes and ordering new ones with more efficient engines is fast approaching.
  • This could be a boost to the slow-selling Airbus A330neo and accelerate demand for the Embraer EJet-E2 and the Airbus A220 (nee Bombardier C Series).

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Airbus posts strong earnings; ‘hell of a ride’ ahead, says CEO

By Dan Catchpole

July 26, 2018, © Leeham News: Airbus posted strong earnings for the year’s second quarter, thanks to better profitability on its A350 and A320 programs. Investors rewarded the news by pushing Airbus share prices to a 52-week high Thursday morning.

However, Airbus lowered its earnings for the full year due to its takeover of Bombardier’s troubled C Series program, since renamed the A220. Airbus plans to deliver 18 of the single-aisle jetliners this year.

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Farnborough: E190-E2 “quietest single aisle airplane in production,” boasts CEO

July 15, 2018, © Leeham News, Farnborough: Embraer today revealed that the E190-E2 achieved better fuel burn than its target of 16%.

Flight tests showed fuel burn was 17.3% better than the E1, said Rodrigo de Souza, VP Marketing in a press briefing in advance of the official show opening tomorrow.

Wideroe Airlines, the launch operator of the E190-E2, now has three in service. De Souza said initial analysis of the operations show fuel burn is even better than the flight test results, but he declined to be specific until more operations are completed with more airplanes in a few months.

Embraer claims fuel burn is 10% better than the Airbus A220.

Wideroe’s small fleet has completed 800 flight hours at an average of seven hours a day. In eight out of 11 weeks, the fleet had 100% dispatch reliability, he said.

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Pontifications: Final Farnborough forecast

Special Sunday edition of Pontifications.

By Scott Hamilton

July 15, 2018, © Leeham News: The Farnborough Air Show officially starts tomorrow, when airframers begin their public relations presentations and orders are announced.

As this is written on July 13, I’m doing a final update of what to expect from the show. It’s always risky making predictions. If they are overly optimistic or pessimistic, the predictor can look foolish.

But here goes.

LNC took its first forecast look June 25.

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JetBlue orders 60 A220-300s in surprise timing

July 10, 2018, (c) Leeham News: JetBlue announced an order today for 60 Airbus A220-300s, nee Bombardier CS300s. The airline took options on 60 more.

The timing is a surprise–JetBlue previously said it would not be ready to order until toward the end of the year.

The order is a blow to Embraer, which has 60 E-190s in service with JBLU. The airline had orders for 20 more, but delivery had been deferred several times. Industry insiders told LNC the order could be canceled with little or no penalty.

The order is a blow to Embraer for the flip and for the loss of a potential E2 order. The E195-E2 seats slightly fewer passengers and has less range than the A220-300.

JetBlue has a large fleet of Airbus A320ceos, a few A321ceos and a large order book for neos.

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