A changing Airbus

By Bjorn Fehrm

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June 3, 2015, c. Leeham Co. Airbus, the commercial aircraft part of Airbus group, is in a change period which in terms of its results will be as profound as the many restructuring programs “Power 8”, “Power 8 plus” and “Future EADS” were in unifying and restructuring Airbus after the A380 problems.

The change is taking place in a very different environment. Airbus and Airbus group are no longer plagued by national infighting and severe duplication of resources, the drivers for the previous programs. Rather it is a necessary change for a company that goes from focusing on getting large new aircraft developments out the door and expand market share, to a company which needs to focus productivity and how to avoid complacency.

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Redefining the 757 replacement: Requirement for the 225/5000 Sector, Part 6.

By Bjorn Fehrm

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18 March 2015, c. Leeham Co: In Part 1 of of this series we investigated the market sector 225/5000, which is our name for the market segment beyond the capacity of single aisles A320 and 737 aircraft. Boeing calls this Middle Of the Market, MOM, and is studying which aircraft type would best cover this segment.

In Part 5 of the series we concluded that beyond 220 seats a dual aisle aircraft can be competitive as it can increase utilization due to shorter ground turn-around time. We now conclude the investigation by looking at what Airbus response can be based on a further developed A320 and how it would stack up against optimized seven abreast dual aisle alternatives from Boeing’s MOM study, one of these using Boeing’s patented elliptical fuselage, Figure 1.

MOM, NSA, NLT, A322 cross section2

Figure 1. Compared cross sections for MOM market. Source: Leeham Co.


  • The rational further stretch of Airbus A321LR is a re-winged/re-engined A322 with 30-40 more passengers, or five to seven additional rows.
  • We compare this development with optimized models from our MOM studies and the A321LR.
  • For the comparison we focus on efficiency in weight, drag and fuel for the different alternatives. How competitive will a stretched A321 be and how close in weight and drag comes an elliptical MOM model?

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Airbus Group 2014, analysis after press conference

By Bjorn Fehrm

Munich 27 Feb. 2015: The team from Airbus Group that met the press in Munich today consisted of Tom Enders, Airbus Group Chief Executive Officer, Harald Wilhelm, Airbus Group Chief Financial Officer and Marwan Lahoud, Head of Airbus Group strategy and M&A.

It was a team in good spirits that met around 150 on-site journalists from mainly Europe, with both Tom Enders and Harald Wilhelm clearly at ease with the groups improving results and giving Marwan Lahoud compliments for his restructuring work in the groups remaining problem areas.

Before we go into the areas with work in progress, lets focus on why these gentlemen felt at ease with presenting the state of Airbus Group after its first year operating under the new name. Read more

Airbus Group publishes results for 2014

By Bjorn Fehrm

Feb 27 2015: Airbus Group has released its 2014 results before a press conference in Munich later today. The group which is active in civil airliners, helicopters, defense and space posted the following results:

  • Revenue increased 5% to € 60.7 billion
  • Earnings before interest and tax increased 54% to € 4.0 billion, return on sales was 6.4%
  • Earnings per share up 61% to € 2.99 after A400M charge
  • Free cash flow of € 2.0 billion whereof € 0.9 billion from divestments
  • Dividend up to € 2.10 per share from € 0.75
  • Production rate of A320 raised to 50 per month from Q1 2017,
    UPDATE from press conference; Airbus is studying rate 60.
  • Production rate of A330 further reduced to 6 per month from Q1 2016

Airbus group has a civil aviation side which is generating record sales and deliveries, it constitutes the majority of an annual order intake of € 166.4 billion and backlog is at € 857.4 billion. Problem area is defense where the A400M delays caused a charge of € 551 million, revised delivery schedules and functionality commitments are in negotiation with customers.

Airbus helicopters is experiencing a bleak year with deliveries down from 497 to 471 units, revenues increased slightly with 4% mainly due to military deliveries, the civil side is weak in a down market. EBIT was € 417 million.

Only positive area in Defense and Space is space which contributed to a stable EBIT at € 920 million.

More from the press conference in a couple of hours.

Odds and Ends: Turkish tests A380; Boeing’s cash out; A400M milestone before Airbus Group results

18 Feb 2015: Turkish Airlines is contemplating testing A380 operations according to Blomberg by wet leasing two A380 from Malaysian Airlines. Turkish did the same when they tested the Boeing 777 before ordering it, then by wet leasing 777 from Jet Airways.

The deal would be good for both Turkish Airlines which could test the A380 to see if there is sufficient demand on their densest routes and for Malaysian Airlines as recent disasters has meant they no longer need the capacity of their six A380.

Probable destinations for Turkish would be London Heathrow and JFK. The two aircraft would be operated by Malaysian Airlines pilots and Malaysian would also furnish half the cabin crew during the first six months, the other half coming from Turkish. After the initial period there would be a dry lease phase where Turkish would continue with own crews. A third backup aircraft should be part of the deal.

Boeings CEO, Jim McNerney, has told investors at a Barclay’s investor conference that Boeing can use of to 80% of its free cash flow to pay back to investors without endangering planned R&D projects reports Reuters. Partly this comes from being able to keep the 777 production rates at around the current 100 aircraft per year in the bridge to the 777X. To entice airlines to continue buying the present 777, Boeing is working on improvements to the aircraft that will increase the efficiency by 2 %,  half of which will be coming from improved GE90 engines and half from airframe changes.

McNerney further said the higher than expected deferred 787 productions costs were due to investments in production methods and the labor costs not coming down as expected. He also commented on the work on a new aircraft for the market between the present 737 and 787, “the 757 market” where he said the only thing which is clear is that the airlines want a slightly larger aircraft and we don’t see the market needing a solution in the near to mid term.

Airbus Groups results will be announced in a press conference from Munich Friday next week and their Military aircraft division is working on the outstanding improvements they owe A440M customers. Timely before the press conference they have now demonstrated the A400M working as a combined logistical transporter and tanker. In a series of rendezvous over four flights they transferred a total of 27 tonnes of fuel to two Spanish Air Force F18.

A400M refuels F18

A400M filling up two F18 with fuel. Source: Airbus.

From the press release: “With a basic fuel capacity of 50.8 tonnes which can be increased by the use of extra cargo hold tanks, the A400M is the most capable tactical tanker in the market. The standard A400M aircraft has full provisions for air-to-air refuelling (AAR) operations already installed and only requires the rapid installation of the optional air-to-air refuelling kit to become a tanker.”

Our article shows that this is but one of the capabilities that should have been in delivered aircraft by now, Airbus is expected to announce further provisions for A400M development at the event.

Airbus A400M; how good and how late?

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By Bjorn Fehrm


01 Feb 2015: Six years ago Tom Enders, then-CEO for Airbus (when the parent was named EADS), threatened to stop the A400M project. He then played hardball to get eight European states to understand they had to pay 5bn Euro more or get no plane. Airbus existence could be threatened by a project that its management when the program was launch (CEO Jean Pierson) did not want but that the politicians convinced Pierson’s successor, Noel Forgeard, to do.


Airbus A400M Atlas landing at Farnborough Airshow. Source: Wikipedia.

Now Tom Enders is CEO of Airbus Group and has to apologize to the same governments that he struck a deal with then to finish the project if Airbus got the money and a consent to three years of delays. Now Airbus can no longer fulfill the terms and the airplane is still falling short of performance specifications. Deliveries have been delayed further and promised capabilities will be delivered later than said. Like then, heads are rolling at Airbus and tighter control is being applied.


  • The A400M rests between the Lockheed Martin C-130 and the Boeing C-17.
  • European countries need an airlifter for military and humanitarian missions.
  • Dirt airstrip capability is needed.
  • The program will take longer to complete and this time Airbus has to pay.

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Boeing 777-300ER and its replacements; A350-1000 and 777-9X.

By Bjorn Fehrm

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Dec. 21, 2014: Last week we did a deep analysis of A380 and its competition. It has been windy weeks for the aircraft since the Airbus Global Investor Forum and it was time to bring some needed facts on the table. These facts showed there is a clear difference between the hype being perpetuated in the media and the reality. As we cleared the situation around the A380, we also touched on the large twins that could fulfill at least parts of its missions.

Leeham logo with Copyright message compactThere has been a lot of discussion around these aircraft as well as they form the battle of titans one level down from A380, the large, long-haul market today dominated by Boeing’s 777-300ER (the A380 does not have a real competitor–the 748i is clearly smaller, in fact so much smaller that it will be engulfed by the 777-9X).


  • The 777-300ER had an exclusive run in its size until launch of the A350-1000;
  • The A350-1000 doesn’t enter service until 2017;
  • 777-9 EIS set for 2020, with hopes to advance by six months;
  • We undertake a full economic analysis which gives good cues as to the future dominance of Boeing or Airbus in this highest margin segment of the market.

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Final A330neo analysis; cabin improvements gives the A330neo gains over today’s A330

When we did our analysis of the A330neo after the Farnborough launch we limited our checks to trip fuel efficiency as we did not have enough clarity of the cabin improvements that Airbus announced. After a meeting in Toulouse last week with Airbus cabin experts we know have the missing information.

Airbus gives the A330 cabin an interesting update for the A330neo. It comprises A330 ideas (improved crew rests), A350 ideas (improved lighting and IFE) and finally ideas tried out on the A320 (SpaceFlex and SmartLav lavatories). Combined they give the A330neo cabin a better passenger experience and improved utilization of cabin space. Read more

Half time 2014 for Boeing and Airbus

The major OEM’s have published their half time 2014 results and we can make an analysis of their half year results together with orders / deliveries and the state of their product lines. We compare Boeing and Airbus on the high end and in a follow up article Embraer and Bombardier on the low end. To make orders and deliveries comparable we include the month of July as the OEMs collected business to be announced at Farnborough mid July.

Boeing had a strong first half 2014. Boeing Commercial Airplanes (BCA) business is now past the initial problems on the 787 program and delivered 48 units January to June 2014 (8 per month) which is the same numbers as for the 777 program. The 737 is now at rate 40 per month with a first half total of 239 deliveries. The 747-8 is at rate 1 with only 6 deliveries and the 767 has stopped as a commercial program with only 1 delivery during the first half year. The commercial deliveries of 342 aircraft drove a 4% increase in company overall revenue and a 5% increase in earnings compared to first half 2013 (both non-GAAP i.e. the core business performance), this despite a Defense, Space and Security side which was down 5% on revenue and down 15% on earnings.

777-9X, 787-9 and 777-300ER in ANA colours

777-9X, 787-9 and 777-300ER in ANA colors

The troubled unit is Boeing Military Aircraft (BMA) which is struggling with its 767 tanker program (KC46A charged BMA with $187 million and BCA with $238 million due to increased development costs) and it is also fighting to not have its major military airplane program, the F18, stop 3 years from now from lack of orders. The military aircraft order drought contrasts with BCA where first half orders was 783 aircraft, mainly 737 but also 777X, where Emirates and Qatar confirmed their orders for 200 777X. Read more

Airbus Group, first half results 2014

Airbus Group (before EADS) reported 1H 2014 results yesterday against the backdrop of an eye-catching cancellation (Skymark A380). Overall it was a report which showed solid progress in making the former EADS a homogenous, modern industrial group managed by market realities and not involved government’s politics.

Much has been achieved since the same occasion last year when then EADS announced the name change to Airbus Group and the merging of its Defense and Space side into one tighter knit division. These changes reflected market realities; civil aerospace is growing year over year whereas Defense budgets are shrinking. The yesterday announced group numbers shows gains in revenue and profitability (+6% each when EBIT is cleaned from sale of ex. Paris HQ) underlining solid progress in the undertaken structural changes. Read more