Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- The future of regional jets is limited by choices, Scope Clause July 6, 2020
- Pontifications: Why I won’t be flying any time soon July 6, 2020
- Bjorn’s Corner: Do I get COVID in airline cabins? Part 9. Stay hydrated. July 3, 2020
- Restoring capacity with the A330ceo or A330neo, Part 3 July 2, 2020
- Looking ahead for 2020 and 2030 decades: COMAC July 1, 2020
What’s the gain of flying a smaller single-aisle during COVID-19 recovery?
By Bjorn Fehrm
Subscription Required
Introduction
May 28, 2020, © Leeham News: As flying recommences after country lockdowns, the fill factors for the flights will be low for an extended period.
Airlines and the OEMs are anticipating the low load factors. For instance, Delta has not deferred any Airbus A220 deliveries but is postponing deliveries of larger aircraft. How much of an advantage is a smaller aircraft when opening up the traffic again?
We compare the operational costs of the Airbus alternatives. The cost of flying the A220-300 is compared with the A320neo.
Summary:
- The A220-300 is about 25 seats smaller than the A320neo. It’s smaller airframe makes for lower fuel costs and airway/landing fees.
- There are savings on the crew side as well, as both flight and cabin crew costs less.
- Finally, modern systems, a composite wing, and a fuselage made of advanced materials promise lower maintenance costs than the A320neo.
Pontifications: There is no good news
May 18, 2020, © Leeham News: There simply is no good news in commercial aviation right now.
By Scott Hamilton
Yes, airport traffic is upticking in the USA (and elsewhere) slightly. But in the USA, it’s still less than 10% of last year’s totals.
There remains a tremendous amount of uncertainty.
- Airbus plans to lay off some 10,000 employees, according to press reports. Another production rate cut seems inevitable.
- Boeing’s CEO revised the forecast for air traffic recovery from 2-3 years to 3-5 years. Production recovery will take another 2-3 years after that, he said.
- Embraer’s biggest customer for the E195-E2, Azul Airlines, deferred deliveries from 2020-2023 to 2024. There haven’t been announcements about deferrals by US carriers for E175-E1s, but there is no reason to believe these won’t be deferred.
- Delta Air Lines says 7,000 of its 14,000 pilots will be surplus to its needs this fall.
- Spirit Aerosystems laid off about 1,700 employees due to Boeing’s production planning.
- Qatar Airways will retire 50 airplanes, defer new orders from Airbus and Boeing and cut the workforce by 20%.
The list goes on and on and on.
Shall passenger airliners run as freighters during the COVID-19 crisis?
By Bjorn Fehrm
Subscription Required
Introduction
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.
Summary:
- 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?
Why bailouts make sense under these circumstances
By Scott Hamilton
Commentary
By Scott Hamilton
March 18, 2020, © Leeham News: The Federal government is preparing a bailout, said to be more than $1 trillion, to pump into the US economy.
Airlines want $50bn. Boeing wants $60bn for the aerospace industry. It’s unclear how much is for Boeing and how much is for industry.
Opposition for the airlines and Boeing was quick to emerge. The objection: how much each spent in recent years on shareholder buybacks.
The bailout package goes across the US economy and includes direct cash grants to individuals. In keeping with LNA’s business, I focus in the column only on aviation.
US carriers not at imminent risk of bankruptcy despite potential shutdown
By Judson Rollins
March 16, 2020, © Leeham News: Throughout Sunday afternoon and evening, reports – all unconfirmed – began to emerge in the US that as early as today, the Trump administration may announce a suspension of US passenger flights domestically for 2-4 weeks. The suspension, if confirmed, could begin this week. Investors are scrambling to understand how long US airlines can survive on their current cash balances.
LNA reviewed the balance sheets of carriers worldwide in anticipation of such dramatic events. In this article, we will show that US airlines have plenty of time for demand to recover – or the US government to step in with emergency loans or grants similar to those doled out by the Air Transportation Stabilization Board from 2001 to 2003.
This airplane line-up at Chicago O’Hare Airport could be a thing of the past very soon. Source: Pinterest.
Air Canada inaugurates A220-300 service today
Jan. 16, 2020, © Leeham News: Air Canada inaugurates Airbus A220-300 service today, becoming the second North American carrier to operate the A220. Delta Air Lines was the first, with the A220-100 last year.
Air Canada A220-300. Photo by Scott Hamilton.
It is the first North American airline to operate the -300 model. The new service begins on the Montreal-Calgary route.
Airline and Airbus officials paid homage to Bombardier at a celebration yesterday in an Air Canada hanger down the block from Bombardier’s world headquarters on the edges of Montreal Dorval Airport.
Bombardier designed the aircraft, originally called C Series, in a bet-the-company challenge to Airbus and Boeing.
Can the DHC 8-400 compete with the CRJ550 for the 50 seat Scope Clause market? Part 2.
By Bjorn Fehrm
Subscription Required
Introduction
November 21, 2019, © Leeham News: Last week we started our analysis of the De Havilland Canada’s DHC 8-400 as a replacement for US Scope Clause 50 seat jets like the Bombardier CRJ200 or the Embraer ERJ-145.
We compared a newly produced and adapted DHC 8-400 with United’s CRJ-700 conversion to CRJ550, a 50-seater version of the larger jet. After looking at the airplane dimensions and cabin spaces last week we now go deeper into the configuration of the aircraft and their economics.
Summary:
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- The DHC 8-400 is offered as a 50 seater and 65 seater variant to fit the US Scope Clause market.
- The Turboprop has a cost advantage over the jet at the cost of a 20% longer trip time.
Can the DHC 8-400 compete with a CRJ550 for the 50 seat Scope Clause market?
By Bjorn Fehrm
Subscription Required
Introduction
November 14, 2019, © Leeham News: The US mainline airlines have large fleets of 50-seater regional jets that are getting old. The present Scope Clause limits on the number of aircraft with seating over 50 seats stop the mainlines from replacing these aircraft with larger aircraft. So there is a real need for an efficient 50 seater regional aircraft for the US market.
As there are no 50 seater jets in production, United is converting its 70 seater CRJ700s to 50 seaters to fill the gap and calls them the CRJ550. This is where de Havilland Canada sees a change for an adapted DHC 8-400 turboprop. It’s more efficient than a CRJ550 while offering the same comfort, says de Havilland. We check if this is correct and what chances a DHC 8-“550” have in this market.
Summary:
- The US Scope Clauses allow the three mainlines to have more 1,000 50 seater jets, yet no new ones are available to replace the more than 600 in the market.
- The in-production DHC 8-400 would be an alternative when looking at cabin size and dimensions.
IAG’s super MAX deal likely means super discounts, services
June 20, 2019, © Leeham News: Boeing gets a Letter of Intent for 200 737 MAXes from International Airlines Group (British Airways, et al), announced Tuesday at the Paris Air Show.
Today, Airbus complained the deal came as a surprise—there hadn’t been a tender, Airbus had no chance to bid.
Christian Scherer, meet John Leahy.
Scherer is Leahy’s successor, and like Scherer, Leahy was blindsided in 1996 when American Airlines signed a 20-year exclusive procurement deal with Boeing.
Then, Delta and Continental airlines did the same.
Leahy complained bitterly that he didn’t know of American’s deal and had had no chance to bid.
Paris Air Show, Day 2: Orders and commitments
June 18, 2019, © Airfinance Journal: Boeing received a much-needed vote of confidence in its grounded 737 Max aircraft with a commitment for 200 of the type from IAG.
Nonetheless, the US manufacturer failed to register a firm order from the second day in a row.
Airbus, in contrast, continued to build momentum for its new A321XLR with orders and commitments from IAG and Cebu Pacific.
CFM also had a good day, registering big orders from lessors and AirAsia for its LEAP engine.