2019 Outlook: leaving Airbus’ troubled year behind

By Bjorn Fehrm

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Introduction

December 19, 2018, © Leeham News.: Next year is a time when Airbus hopes to leave its troubled 2018 behind.

But 2018 was also when the company wanted to leave the troubles of 2017 behind it.

Not only did 2018 not improve. In a number of ways it turned worse.

Engineless A320neos at Toulouse Airport. Airbus hopes this is a thing of the past. Photo via Google images.

Turmoil in the management ranks brought back memories of the politically infested Airbus of 20 years ago. And there were other issues.

Production problems with the A320 continued. The A330neo was further delayed and the A380 order from Emirates to save the program took forever to materialize. The negotiations to fix the contracts for A400M couldn’t be brought to a close.

There were two bright lights in the year. The A350 was now out of its cabin supplier problems and delivering aircraft to plan. The other was the gift from Boeing’s suing Bombardier and its CSeries the year before. The top modern Bombardier CS100/300 became Airbus A220 on the first of July. Price tag; $1 for 50.01% of the program.

Summary
  • Changes in executives are almost over.
  • Pratt & Whitney’s engine delivery delays are caught up and CFM’s delays are diminishing.
  • Production ramp ups are peaking (for now) and deliveries should be at a record rate next year.
  • Airbus is waiting for Boeing to decide whether to launch the New Midmarket Aircraft.

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Lion Air threatens to cancel MAX order; no impact to Boeing seen

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Introduction

Dec. 17, 2018, © Leeham News: Lion Air’s co-founder is threatening to cancel an order for more than 200 Boeing 737 MAXes following what he says is Boeing’s blaming the airline for the Oct. 29 crash of Flight 610.

All 189 people aboard the three month old 737-8 died when the plane plunged into the Java Sea 11 minutes after take-off from Jakarta.

Calling a Boeing statement issued Nov. 27 a “betrayal,” co-founder Rusdi Kirana Dec. 3 threatened to cancel to big Boeing order. He amplified his remarks Dec. 11.

Summary
  • Lion Air has 229 MAXes scheduled for delivery between 2019-2026.
  • The carrier has 148 A320neos scheduled for delivery, believed intended for its leasing company.
  • Deliveries mostly overlap.
  • Another source of A320neos is apparently available.
  • Analysis of impact to Boeing

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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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