Leeham News and Analysis

There's more to real news than a news release.

There's more to real news than a news release.

Odds and Ends: BBD’s Sheridan to Nordic; United and 777s

BBD’s Sheridan: Rod Sheridan, who retired last year after 20 years at Bombardier, has been named vice chairman of Nordic Aviation Capital, the world’s largest lessor of turboprop aircraft. Nordic owns more ATR turboprops and has more on backlog than any other company.

Sheridan was vice president of sales and asset management at Bombardier. His retirement last year was considered by many in the industry to be a major loss to BBD’s ailing aerospace division, coming as it did on the heels of major personnel changes as BBD restructured the unit. Turmoil continued with the departure last month of Ray Jones, the head of sales, within weeks of Sheridan’s departure.

Sheridan was responsible for Bombardier’s commercial entry into Russia. He was key to opening the CSeries market to lessors.

United and 777-300ERs: United Airlines is set to place an order for 10+10 Boeing 777-300ERs, reports Bloomberg. An announcement could come as early as this week. These would be UAL’s first -300ERs. Legacy United was launch customer of the 777-200 and legacy Continental Airlines ordered the -200ER. Only American Airlines in the US operates the -300ER and this became reality only in recent years.

The UAL order will be an important step in Boeing bridging the production gap for its 777 line until entry-into-service of the 777X in 2020. But it will come at a cost. Two market sources familiar with the deal say United will get the airplanes for around $130m, a sharp discount to the normal discounted price of around $150m.

 51 Comments

 Posted on January 20, 2015 by

 Airlines, American Airlines, Bombardier, CSeries

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Bombardier misses guidance in preview of 2014 results, stock plunges 22% in early trading

Jan. 15, 2015: Bombardier, struggling with poor aerospace sales across its business jet and commercial lines, missed previous guidance on cash flow and other metrics, three Wall Street investment banks reported today.

BBD’s stock traded off 22% in early trading.

Immediate reaction from the banks’ aerospace analysts: Read more

 15 Comments

 Posted on January 15, 2015 by

 Bombardier, CSeries

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Assessing turmoil at Bombardier: it doesn’t stop at CSeries

  • The Wall Street Journal takes a look at Bombardier.(Subscription required.)
  • ““We did not fully expect and prepare” for the competitive response, said a Bombardier executive. Its studies concluded re-engining the A320 and 737 made no economic sense and was unlikely to happen,” The WSJ writes.

This is an incredibly naive assessment by BBD. We co-wrote in a study in 2009 that concluded Airbus and Boeing had no choice but to reengine their A320 and 737 families, about 18 months before Airbus launched the A320neo and two years before Boeing launched the 737 MAX. The WSJ piece is a good look at the program and competitive situation. We take a critical look at the turmoil below.

Subscription Required

Introduction

Jan. 9, 2015: The sudden departure of the sales chief at Bombardier Aerospace, the second time in 13 months, underscores the continuing turmoil at the multimodal transportation company and the drag its commercial aerospace unit has been and continues to be.

Summary

  • Key sales people departed in 2014.
  • CSeries sales still anemic.
  • Q400 down to 10% market share.
  • CRJ struggling.
  • Falling oil prices gives reasons to put off committing to CSeries.
  • Airbus viewed CSeries as a threat.

Read more

 1 Comment

 Posted on January 9, 2015 by

 Airbus, Boeing, Bombardier, CSeries, Embraer, Premium

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Sales chief Ray Jones leaves Bombardier, delivering another blow to commercial program

Ray Jones, who replaced Chet Fuller in December 2013 as head of Bombardier commercial airplane programs, quit.

BBD said Jones and the company mutually agreed to his departure, was was labeled for “personal reasons.” BBD would not elaborate.

Sales will report directly to Aerospace president Mike Arcamone while Jones’ replacement is found.

Philippe Poutissou, VP marketing, left last year as Jones shuffled his team. Rod Sheridan, another VP, also left last year, retiring. Both have been long-time staples of Bombardier Aerospace.

Market intelligence tells us that customers viewed their departures negatively and see a lack of continuity, hurting relationships and sales.

CSeries sales have stalled, the Q400 backlog is down to 10% of the turboprop market share and the aging CRJ is just hanging on by a flap.

 35 Comments

 Posted on January 8, 2015 by

 Bombardier, CSeries

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Odds and Ends: Wrapping up 2014 in the news

Dec. 31, 2014, just under the wire: 2014 is over and there was some news unrelated to the loss of AirAsia flight 8501:

Bombardier: The company received a firm order for 24 CRJ900s from an unidentified customer (we believe it is a US regional airline). The National Post of Canada also has this look at how 2015 will be a “pivotal” year for the CSeries. BBD also announced an order from mega-lessor GECAS for five Q400s and options for 10 more.

ARJ-21 certified: The Chinese government certified the COMAC ARJ-21, the 70 seat regional jet that looks like the old Douglas DC-9-10. The airplane is now supposed to go into service in April or May, only eight years late.

Boeing declares victory: The year was really over yet but Boeing declared victory over Airbus in this Dec. 29 story in The Seattle Times. Yes, Boeing will deliver more airplanes than Airbus in 2014, but will it truly end with more orders? Airbus won’t reveal its full 2014 performance until its annual press conference Jan. 13, and it’s famous for announcing a whole bunch of orders to pull the proverbial rabbit out of the hat. So we’ll wait and see then who truly has the bragging rights for the full year.

Airbus and Boeing: For all of our extremely partisan Airbus and Boeing readers, choke on this one: Airbus and Boeing have teamed up to bid on a defense contract, reports Aviation Week.

Real-time tracking: It’s possible and it’s being done. See this Washington Post article.

 12 Comments

 Posted on December 31, 2014 by

 AirAsia, Airbus, Boeing, Bombardier, Comac, CSeries

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Looking ahead in 2015 in commercial aviation

Here’s a visualization of events to look for in commercial aviation in 2015.

2015 events 3

Click to enlarge for crisp view.

 

 20 Comments

 Posted on December 26, 2014 by

 Airbus, Boeing, Bombardier, CFM, China, Comac, CSeries, Embraer, GE Aviation, Mitsubishi, Paris Air Show, Pratt & Whitney, Rolls-Royce

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Boom times leads to looming cash flow shortfall across OEMs

Subscription Required.

Introduction

Dec. 16, 2014: There have been record aircraft orders year after year, swelling the backlogs of Airbus and Boeing to seven years on some product lines, Bombardier’s CSeries is sold out through 2016, Embraer has a good backlog and the engine makers are swamped with new development programs.

So it is with some irony that several Original Equipment Manufacturers (OEMs) are warning of cash flow squeezes in the coming years.

Summary

  • With so many development programs in the works, the prospect of new airplane and engine programs are being trimmed.
  • Most airframe and engine OEMs under pressure.
  • The full impact of the pending cash flow squeeze hasn’t been appreciated by the markets yet.

Read more

 5 Comments

 Posted on December 16, 2014 by

 Airbus, Boeing, Bombardier, CFM, CSeries, Embraer, GE Aviation, Irkut, Mitsubishi, MTU, Premium, Rolls-Royce

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New UTC CEO throws cold water on PW GTF growth

The new chief executive officer of United Technologies Corp., Gregory Hayes, threw cold water on hopes and dreams of Pratt & Whitney, a subsidiary, that the successful small- and medium-sized Geared Turbo Fan will grow into the wide-body market.

Aviation Week just published an article in which all three engine OEMs were reported to be looking at a 40,000 lb engine that would be needed to power a replacement in the category of the Boeing 757 and small 767. Hayes did not specifically rule out a 40,000 lb engine, leaving PW’s potential to compete for this business unclear.

Hayes has been CEO for two weeks. He was previously CFO. He made his remarks in a UTC investors event last night. The Hartford Courant has this report.

Hayes’ remarks were in response to a question from an analyst about research and development expenses. Here is his reply, from a transcript of the event:

Read more

 44 Comments

 Posted on December 12, 2014 by

 Boeing, Bombardier, CFM, Comac, CSeries, Embraer, Irkut, Mitsubishi, Pratt & Whitney, Rolls-Royce

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MTU investors day: views of its engine programs, future airplane timelines; separately, Embraer COO interview

GTF Milestones Nov 2014

Figure 1. Technical milestones have been passed on PW GTF programs for the applications on Bombardier, Airbus, Mitsubishi and Irkut airplanes and are approaching for Embraer. Source: MTU Investors Day. Click to enlarge.

Nov. 30, 2014: MTU Investors Day: MTU is a major participant in engine development and supplies, participating on the GEnx, GTF and GEnx program. It’s also a member of the joint venture in International Aero Engines and it’s a major player in the aftermarket Maintenance, Repair and Overhaul (MRO) sector, providing a serious competitive alternative to the aftermarket contracts offered by the engine OEMs. Its held an investors day conference Nov. 25. Highlights included:

  • Milestones have been passed on the Pratt & Whitney Geared Turbo Fanengine for the Bombardier CSeries, Airbus A320neo family, the Mitsubishi MRJ and Irkut MC-21; and are on schedule for the Embraer E-Jet E2.
  • The success of the GTF is requiring huge production commitments.
  • The large number of airplane/engine programs require a major ramp-up of production during the next few years.
  • The major investment in new engines is largely over for now, leading to the expectation of long-term revenue from MRO.

Read more

 26 Comments

 Posted on November 30, 2014 by

 Airbus, Boeing, Bombardier, CSeries, Embraer, GE Aviation, International Aero Engines, Irkut, Mitsubishi, MTU, Pratt & Whitney

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Odds and Ends: Storm Warnings; Boeing photos now available to everyone; CSeries; Movin’ on up

Nov. 26, 2014:Storm Warnings: We’ve made references in recent posts about airlines on our “Storm Warning Flag” list.

Top 10 TA 2013

Our 2013 Top Customers and Storm Warning Flag list for wide-body airplanes. The Red are Middle Eastern airlines, blue from Asia and black from the US and Europe. Only one airline for wide-body orders was on our Storm Warning Flag list: AirAsiaX. Expansion and ordering we considered too rapid landed the carrier on the list. Sources: Airbus, Boeing. Click to enlarge.

In 2013, we compiled the Top  Customers for Single-Aisle and Twin-Aisle Airplanes for Airbus and Boeing. Here’s our 2013 Storm Warning Flag list. The name comes from the flag, which signals Storm Warnings. This list was compiled before the 777X orders announced at Dubai were firmed up, so the yellow boxes show what the Top 10 Boeing rankings would be had they been. We considered the quantity of orders, the current operations, financial status and other factors in placing a carrier on our Storm Warning Flag list. The Wide-body list also illustrates the growing importance of the Middle Eastern airlines (consider that this was a year ago). The wide-body list is pretty stable.

Read more

 18 Comments

 Posted on November 25, 2014 by

 Airbus, Airlines, Boeing, Bombardier, CSeries

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