Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
Boeing faces 737 production gap: analysis
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Introduction
Sept. 2, 2015, (c) Leeham Co. Boeing faces a production gap for the 737, based on an analysis of the delivery streams of the 737NG and the 737 MAX.
There’s a production gap for the Boeing 737 more than 100 airplanes, according to a Leeham Co. analysis. Boeing photo.
While focus of Boeing production gaps has been on the 777 Classic and, to a lesser extent, the 747-8, few have analyzed the production gap for the 737 line. Boeing announced rate increased from 42/mo to 47/mo in 2017, the year the MAX enters service, and again to 52/mo the following year. The company is studying taking rates even higher, to 60/mo, by 2020. Boeing cites a large backlog and continued demand for the 737 for boosting production rates.
But Market Intelligence indicates emerging concerns about the gap.
Summary
- We see a gap of perhaps 100-200 737s in 2017 and 2018, even as the 737 MAX is “feathered” into production of the 737NG.
- Beyond 2018, the apparent gap depends largely on the delivery stream of Unidentified MAX customers accounting for nearly 600 orders identified by the Ascend data base. Boeing lists just over 1,000 Unidentified 737 orders through July (August figures aren’t out yet), sharply higher than the Ascend data base.
- The current low fuel price environment is a concern.
Pontifications: ExIm reform
By Scott Hamilton
July 6, 2015, © Leeham Co. The US ExIm Bank authorization expired last week. As readers know, I’m a strong advocate of renewal of the authorization. Boeing, and other companies, hope reauthorization can be achieved this month.
I won’t restate the reasons I think ExIm should be reauthorized, nor my utter disdain for the right-wing Republicans and Tea Party types who don’t get that the Bank helps Boeing sell airplanes and sustain or create jobs. I’ve written about this many times, and the competitive disadvantage Boeing will have vs Airbus, whose European Credit Agencies will take full advantage of this.
But there are some points on the “other side” to revisit.
ExIm Bank expires, Boeing, hundreds more hope for a Lazarus
July 1, 2015, c. Leeham Co. The ExIm Bank is dead.
At least for now.
Click on image to enlarge.
Boeing, and hundreds of smaller companies, hope for a Lazarus miracle. Though nobody expects a revival of the Bank in four days, as in the Bible, they think resurrection is possible this month.
“There is a strong majority in the House and the Senate to reauthorize ExIm,” Tim Neale, Boeing’s Washington (DC) spokesman, told us Monday. “The problem is getting a Bill to the floor.” The Bill has been bottled up in committees, where Republicans/Tea Party members are chairmen and opposed to renewing the Bank.
Pontifications: Passenger experience and the WOW factor
By Scott Hamilton
June 29, 2015, © Leeham Co. Back on June 1, I wrote in this column I had yet to experience traveling on the Airbus A380, which entered service in 2007. The A380 doesn’t serve Seattle, where I live, and I really didn’t have a desire to add hours and a connection to my travels just to fly the A380 if I could go non-stop. Note that this is precisely the argument advanced by Boeing, but this is a coincidence. I have yet to fly on the Boeing 787, either, and it does fly into Seattle from Asia.
A reader Tweeted to me his incredulity that in all these years I hadn’t flown the A380. I replied, All in good time. I knew when I wrote that I would be returning from the Paris Air Show on an A380 via Los Angeles. The time had come for me to experience the airplane. (Interestingly, Dominic Gates of The Seattle Times, unbeknownst to either of us, wrote he’s doing the same thing via New York on Air France. I would be flying Air France. Friends warned me that the passenger experience on Air France, however, was hardly what the A380 is all about.
They weren’t kidding.
I had been on the test A380 during static displays before, but never in a passenger-configured model. At the PAS, Qatar Airways had its own little air show, displaying more airliners than any OEM: the A319, A320, A350 and A380 plus the 787. The A350 and A380 were open to the press. As with anyone in the industry, I had long-heard of how the Middle Eastern airlines went over the top on outfitting their cabins, but I wasn’t remotely prepared for the Qatar A380. Walking on board, into the first class section, was a jaw-dropping “wow” moment.
Embraer gains 125 orders at half-year
John Slattery, chief commercial officer, Embraer Commercial Aircraft. Photo via Google images.
June 17, 2015, Paris Air Show, c. Leeham Co. With focus, as always, on Airbus and Boeing, and an airplane that neither exists nor is about to any time in the near-term (the Middle of the Market aircraft), little attention was paid to Embraer, currently the third of the Big Four commercial aircraft companies.
Embraer finished the Air Show (which essentially ends June 18 for the industrial sector), with 50 orders for the E1 and E2 E-Jets.
John Slattery, the chief commercial officer, said the company is ending the first half of the year with 125 
firm orders for the two platforms. EMB now has 70 customers, headed for its target of 100 by 2017, and an important new customer joined the ranks, albeit through a used airplane transaction. Delta Air Lines will purchase 20 E-190s once a new pilot contract is ratified. The airplanes will be flown by Delta pilots for the mainline carrier, not one of its regional partners.
Pontifications: National policy, national security
By Scott Hamilton
June 15, 2015, c. Leeham Co. The battle between the the Big Three US carriers, American Airlines, Delta Air Lines and United Airlines, vs the Big Three Middle Eastern carriers, Emirates Airline, Etihad Airways and Qatar Airways, was a big over-hang at the 71st International Air Transportation Assn. Annual General Assembly last week.
The US3 charge that the ME3 have received around $42bn in subsidies and claim continued government support put them at a disadvantage. Loads of information has been reported, with claims and counter-claims going back and forth. But the IATA conference attendees, including members of the media, were looking for sparks to fly between Doug Parker, CEO of American Airlines, who was on a couple of panels and who was voted president of IATA for the next year, Tim Clark, president of Emirates and Akbar Al-Baker, CEO of Qatar.
IATA: Lufthansa welcomes US carriers to Mid-East dispute
Carsten Spohr, CEO of Lufthansa Group
June 7, 2015: The chief executive officer of Lutfhansa Airlines said he welcomes the Big Three US airliners to the dispute over whether the Big Three Middle Eastern carriers are unfairly competing against legacy airlines.
Carsten Spohr, CEO of Lufthansa Group, told a press conference on the opening day of the IATA Annual General Meeting that LH has long been complaining about Emirates Airline, Qatar Airways and Etihad Airways and their aggressive expansion, first in Europe and now the US.
American Airlines, Delta Air Lines and United Airlines are challenging open skies and subsidies to the ME3.
Bjorn’s Corner: Airbus Innovation days, activities and program updates.
By Bjorn Fehrm
Introduction
28 May 2015, C. Leeham Co: I am in Toulouse today attending Airbus Innovation days for Leeham News. It has been a good day’s briefings and I have presented what was perhaps the biggest change since we last met Airbus in the article “Airbus A350-1000 getting real”.
Apart from this program, there were more standard updates on Airbus other activities and programs. Here follows a rundown on these updates in a more paraphrased form.
United Airlines revises fleet plan
April 23, 2015: United Airlines announced its 1Q2015 earnings today (which will eventually be posted with commentary on SkyWriterAviation.aero). What caught our eye in the press release was the following. United will:
- Complete the removal of more than 130 50-seat aircraft from its schedule by the end of 2015. UAL will remove additional 50-seat aircraft in 2016 and beyond as aircraft come off lease.
- Exchange 10 787 orders with Boeing for 10 777-300ERs for delivery beginning in 2016. The new 777-300ER aircraft will provide attractive upgauge and range opportunities to the company at competitive economics.
- Extend the life of 11 additional 767-300ER aircraft. The company now plans to extend the life of all 21 767-300ER through investments in winglets, reliability improvements and interior modifications, which will improve financial performance and make the aircraft more customer pleasing.
- Reconfigure and transition 10 777-200 aircraft currently used in international markets into the domestic network, and position a number of its trans-Atlantic 757-200 fleet into the domestic and Latin markets, with the extension of the 767-300ER aircraft.
- Acquire additional used narrowbody aircraft. The company is in final negotiations regarding the lease of 10 to 20 used narrowbody aircraft for delivery over the next few years. In addition, the company plans to continue to seek other opportunities to acquire used aircraft to meet its needs as market conditions allow.
Pontifications: Alaska Air vs Sea-Tac Airport
By Scott Hamilton
Alaska Air vs Sea-Tac Airport: As if Alaska Airlines doesn’t have enough to do fending off Delta Air Lines, the Port of Seattle, owner of the Sea-Tac International Airport, wants to build a new International Arrival Facility (IAF) for more than $600m.
There certainly is a need. The current IAF is in the South Satellite Terminal. It’s old and it’s small. With Delta making Seattle its West Coast hub, and additional service added by a number of airlines (including, from Delta’s view, that dastardly Emirates Airline), it’s clear a new IAF is needed.
But therein lies the rub. The IAF, by definition, will be used by international flights–not by domestic flights. Yet under the Port’s financing proposal, all carriers at Sea-Tac will have to pay for the thing. Alaska, which operates more than 50% of the flights at Sea-Tac, has no international routes from Seattle save Canada. Alaska officials are understandably unhappy with the proposed funding source. Not only would Alaska be paying for a facility it won’t use, it would be subsidizing Delta’s operations.