By Judson Rollins, Bjorn Fehrm & Scott Hamilton
Sept. 21, 2020, © Leeham News: Commercial aviation is facing a lost decade due to COVID.
Yes, most forecasts target 2024-2025 as returning to 2019 passenger traffic and aircraft production levels.
However, LNA in July published its own analysis indicating full recovery may not occur until 2028. Breathless headlines notwithstanding, it will take years for vaccines to be widely available and considered safe by enough of the world’s population. Growing concern about vaccine production and distribution capacity through 2024 underscores this view. Even Southwest Airlines CEO Gary Kelly said earlier this month that business travel might not fully return for a decade.
Indeed, the 2020s may well be a lost decade for aircraft manufacturers and their supply chains.
By Kathryn B. Creedy
Third in a Series. Previous articles:
Aug. 31, 2020, (c) Leeham News: European regionals face far greater challenges than Covid and, sadly, much of what is happening to the industry is beyond its control. The result is similar to failures seen in the U.S. Flybe’s recent loss resulted from pre-Covid problems which also led to the pre-Covid failures of such airlines as Flybmi and Cobalt.
The failures illustrate, however, the three reasons why European regionals are so fragile – low-cost competition, geography, and challenging government policy.
Now open to all Readers.
Aug. 10, 2020, © Leeham News: With Boeing likely to consolidate 787 production in Charleston (SC), reflecting a rate of 6/mo, the future of assembly in Puget Sound rears its head again.
LNA outlined Aug. 3 why Everett is the ideal location to assemble the Next Boeing Airplane (NBA).
Boeing’s product line also requires a new airplane in the 100-150 seat sector. Airbus’ A220-100/300 and, nominally, the A320neo (but not the A319neo) fill this sector. (The A320neo was originally designed as a 150-seat airplane. It now is commonly configured in the 150-180 seat size.)
Airbus has a design for an A220-500, which could replace the A320.
Boeing needs an efficient competitor to the current A220 plus a replacement for the 737-7 and, eventually, the -8.
And it probably won’t be assembled at the Boeing 737 plant in Renton.
Second in a Series on the Future of Regionals
By Kathryn B. Creedy
Aug. 6, 2020, (c) Leeham News: Many might assume the recent loss of three regionals – Compass, Trans States and ExpressJet – is Covid related.
What is actually happening is the long-anticipated consolidation of the regional airline industry coupled with fleet restructuring and the most recent fallout of the pilot shortage crisis that began in 2013.
Reducing the number of regional partners also streamlines the inherent inefficiencies of the regional/major model.
By Bjorn Fehrm
August 5, 2020, ©. Leeham News: Embraer presented its 2Q2020 results today. The revenue virtually halved for 1H2020 to $1.17bn (2.2bn 1H2019) and shrank 61% for the second quarter to $537m ($1,379m 2Q2019), after delivering only four E-Jets during the quarter (26).
Total losses were -$342m ($27m), whereof -$202 was non-operational charges. The COVID crisis hits commercial aircraft deliveries, but Embraer had no cancellation of E-Jet orders in the quarter.
The Executive jet segment is holding up comparatively well, as is Defense and Security.
Seventh and final in a series.
By Judson Rollins
Jet manufacturers typically introduce a new airplane every 15 years or so.
Commercial turboprops have not innovated to nearly the same extent as jets, with rival manufacturers ATR and De Havilland Canada (and predecessor Bombardier) having produced nearly 95% of the world’s in-service fleet. Although order volume has slowed in recent years, more than 300 aircraft are still on order.
Both manufacturers sell aircraft based on 30+ year old designs. However, the market’s size is probably capped because of turboprops’ relatively low cruise altitude and speed, making them limited alternatives to regional jets beyond roughly 500nm. This limits the return on investment from a clean-sheet design, either from aerodynamic improvements or the use of carbon composites.
Emerging threats lie on the horizon as China’s Xian MA700 nears its first flight and Embraer deliberates re-entering the market with a new design. Given sufficient market acceptance, either would constitute a significant threat not only to ATR and DHC, but potentially also the smaller end of the regional jet market.
Sixth in a Series
By Scott Hamilton
July 23, 2020, © Leeham News: The Mitsubishi Aircraft (MITAC) SpaceJet program is in limbo.
MITAC parent Mitsubishi Heavy Industries (MHI) suspended development of the M100 SpaceJet in the wake of the COVID-19 crisis. Customers are suppliers are in the dark about this program’s future.
MHI continues to complete certification of the M90 SpaceJet, which is simply the rebranded MRJ90. But, as LNA previously wrote, the M90 is at an economic disadvantage to the competing Embraer E-Jets.
The planned entry-into-service for the M90 is next year. However, certification process by the Japanese regulator is slow. The impact by COVID on the certification process and EIS remains to be seen.
By the Leeham News Staff
July 10, 2020, (c) 2020, Leeham News: A few months ago, Qantas announced that it intended to sell three Jetstar-operated Boeing 787-8s that would become surplus once the airline received its first A321-LRs. In the aftermath of the COVID-19 outbreak, Avianca rejected one 787-8 lease and Royal Air Maroc intends to sell four of them.
Four 787-8 operators (Aeromexico, Avianca, Latam Airlines, and Thai Airways) with a total of 38 aircraft in service filed for Chapter 11 or are in administration. This represents around 11% of the 374 787-8s delivered so far.
After years of high 787-8 production rates, Boeing is reluctant to sell the type. It has less production commonality than the 787-9 and 787-10 have between them and sales margins are lower. As a result, airlines do not place many new orders for the variant because they think other aircraft are more attractive investments.
Fourth in a series.
By Bjorn Fehrm
July 8, 2020, © Leeham News: All airliner OEMs have a disastrous 2020, but for Embraer, the year has been even worse. After spending a year and over $200m to carve out the Commercial Aviation division to merge it into Boeing, the Joint Venture Agreement (JV) was stopped by Boeing at the last moment.
The Executive Jets and Defense side were not affected, but now Embraer was organized as two companies instead of one. The company must now re-merge the organizations to save costs in a COVID-19 environment where limiting cash outflow, and lowering costs are necessary for survival. At the same time, it’s arch-rival on the world market, Airbus A220 has gone from strength to strength through basket selling with the popular A320.
How does Embraer come back from the Boeing pass up and regroup in a regional market that is no longer a fight of equals? Embraer competes with Airbus that in 2019 was 11 times larger in airliner deliveries and 29 times in airliner revenue.
Only in the below 100 seat market is it saved from the giant, who doesn’t have a model in the segment. And it seems the below 100 seat competitor, Mitsubishi, might fold its entry.
July 6, 2020, © Leeham News: The fallout from COVID-19 is beginning to intersect with the beginning of a wave of regional jet retirements globally. However, the market for smaller commercial jets today stretches the meaning of “regional” as most aircraft still in production have 100+ seats and can fly more than 2,500nm.
In the critical US market, both Embraer’s E175-E2 and Mitsubishi’s remaining M90 are too heavy to comply with the Scope Clause limits imposed by pilot labor agreements. These clauses restrict regional carrier flying to 76 seats and 86,000 lbs MTOW, while also capping the number of regional jets that can be flown by each carrier.
Delta Air Lines is limited to a total regional fleet of 450 aircraft, while American Airlines is capped at 75% of its single-aisle fleet and United Airlines is limited to 255 aircraft plus 90% of single-aisles in service. Earlier this year, American accelerated the retirement of some EMB-140s to maintain compliance with its limit.