Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Slow production ramp up, international sanctions slow C919 progress September 9, 2024
- Boeing, IAM reach tentative agreement on new contract September 8, 2024
- Bjorn’s Corner: New engine development. Part 23. Development risks. September 6, 2024
- If a strike occurs, here’s what Boeing can do September 5, 2024
- China banks on C919, but numbers say it still needs Boeing September 2, 2024
The long, slow death of Mitsubishi’s SpaceJet
By Scott Hamilton
The Mitsubishi MRJ90, rebranded the SpaceJet, was to be replaced by the M100. The M100 was Scope Clause compliant and certifiable, unlike the poorly conceived MRJ90. Credit: Leeham News.
Feb. 9, 2023, © Leeham News: Mitsubishi Heavy Industry’s (MHI) announcement this week that it finally killed the SpaceJet program is hardly new. This was apparent as far back as January 2020 when all the Canadian and American leadership at Mitsubishi Aircraft Corp (MITAC) was unceremoniously booted out. Then, in May 2020, using the COVID pandemic as an excuse, all US operations were closed; so was the recently opened Canadian engineering center; the budget was reduced by 95%; and nearly all the engineers at the home office in Nagoya, Japan, were laid off or reassigned.
MHI refused to state the obvious. Instead, officials said repeatedly that the program was “paused.” This drip, drip, drip was all about saving face. Thus, the slide in MHI’s presentation about why the program was finally being killed was more candid than expected.
Orders at risk: Year-End 2022 snapshot
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By Vincent Valery
Introduction
Feb. 6, 2023, © Leeham News: With the publication of the Airbus and Boeing announcing 2022 orders and deliveries last month, and Boeing’s published its 2022 Annual Report (10-K), we undertake our annual analysis of at-risk deals on their books.
Airbus and Boeing have outstanding orders with airlines where there is a material probability some orders won’t translate into deliveries. Most were the result of airlines encountering financial difficulties, but some were related to contractual disputes. Boeing flags such orders as subject to an ASC 606 accounting rule adjustment.
Unlike Boeing, Airbus isn’t subject to an accounting rule like the ASC 606 adjustments at a program level. Therefore, the European OEM does not break down the orders at risk of cancellation by the program. Airbus only discloses the nominal value of its total adjusted order book in its annual report.
LNA analyzed July 2020, November 2020, August 2021, February 2022, and August 2022 Airbus’ and Boeing’s order books to identify orders at risk and come up with an apples-to-apples comparison. We update this analysis with the latest order books from both OEMs. The above links explain our methodology and its differences with Boeing’s ASC 606 adjustments.
Summary
- Lingering order book cleanup for older programs;
- Improving single aisle order book quality;
- Country-level single-aisle market share
- One order materially affects OEM twin-aisle market share.
A deep dive into the single-aisle market
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By Vincent Valery
Introduction
Jan. 23, 2023, © Leeham News: Boeing’s share of outstanding single-aisle orders has fallen significantly behind Airbus. If we include the order book for single-aisle aircraft seating 100 or more passengers of Airbus, Boeing, COMAC, Embraer, and UAC, the American OEM’s market share is now 37% (Airbus has 58%, COMAC 3%, Embraer 2%, and UAC 2%).
Richard Aboulafia sees a risk that Boeing’s market share in the single-aisle market will dip below 30% without the entry into service of a new aircraft before 2035. Boeing Commercial Airplanes CEO Stan Deal said that it is viable for the American OEM’s single-aisle market share to stay around 40%.
A321neo Credit: Airbus
In the 2022 Boeing outlook, LNA also noted that there are significantly more A320ceo than 737 NG operators. A broader operator base means more opportunities to place new orders with a more diversified group of airlines. In the context of no new single-aisle family entering service in the next 10 years, convincing operators to “flip” to the competition will be the primary way to increase market share.
Exclusively looking at the nominal order books and A320ceo and 737 NG operators does not provide a comprehensive view of Airbus’ and Boeing’s relative positions in the single-aisle market, though.
In their 2022-2041 commercial market outlooks (CMO), Airbus and Boeing indicated that nearly half of all single-aisle deliveries would replace older-generation aircraft. Looking at the existing in-service fleet of older-generation aircraft provides a better picture of replacement order opportunities by the OEM.
LNA investigates in this article the existing order books of the five major OEMs and operator bases to better assess their relative competitive positions and quantify the current replacement order opportunities.
Summary
- A comprehensive single-aisle fleet snapshot;
- Breaking down the order books between replacements and growth;
- Keep track of order choices for older-generation operators;
- Remaining replacement order opportunities;
- A word about single-aisle freighters.
Pontifications: LNA’s Top 10 stories of 2022
Dec. 26, 2022, © Leeham News: This year has been a year of recovery.
By Scott Hamilton
Recovery from the COVID-19 pandemic. Recovery from shortages in the supply chain, layoffs during the pandemic and from financial losses. Boeing continues to struggle in its recovery from the 2019 grounding of the 737 MAX and 2020 suspension of deliveries of the 787.
This year saw a resumption of the big international European air shows since the pandemic—Farnborough. There was great anticipation that Boeing was working on new airplane programs in earnest for the first time in three years.
And disappointments.
Here’s a review of the Top 10 stories LNA published, by readership.
Leeham News in addition to Twitter, Facebook and Linkedin, may now be found on Post.news here and on Mastodon here.
HOTR: United likely can cancel A350 order with little penalty
By the Leeham News Team
Dec. 5, 2022, © Leeham News: United Airlines appears on the cusp of ordering as many as 100 Boeing 787s, multiple news outlets report. Airbus hopes to sell more A350s to United to supplement the 45 already on order.
But these 45 A350-900s are an order that has been viewed as iffy since United merged with Continental Airlines. Although ostensibly United was the surviving carrier, in reality, Continental was the survivor. The latter’s management displaced United’s old management. The livery retained was Continental’s.
The A350 order was placed by the old United management. The new executives added to the United order, but Continental had been an exclusive buyer of Boeing aircraft and executives were predisposed toward Boeing. UAL now has 120 Airbus A321XLRs on order. But this came after Boeing couldn’t decide whether to launch the New Midmarket Airplane after years of dithering. With a large fleet of Boeing 757s aging and in need of eventual replacement, United could no longer wait for Boeing to make a decision.
United already has a large fleet of 787s. Adding the A350s will provide an extra range that the 787s don’t have. But how many routes need the extra range to justify another fleet type?
LNA believes that United can cancel the orders for 45 A350s at little cost. The deposits may easily be applied to orders for more A321s, but cancellation penalties are believed to be de minimis. Based on 2018 list prices—the last ones published by Airbus—United could get about 110 more A321s in exchange for the A350s. (The number is probably a little less since the XLRs are more expensive than the A321neo “standard;” the list price makes no distinction between the sub-types.)
LNA expects United to cancel the A350s sooner than later and add to the A321 order.
HOTR: Amazon to add A330 P2F to Prime Air fleet
Oct. 21, 2022, © Leeham News: Amazon’s Prime Air will add 10 Airbus A330-300 freighters to its fleet from 2023. The aircraft will be converted by EFW, in which Airbus is a partner, and leased from Altavair of Issaquah (WA).
Source: Airbus.
These are the first A330 freighters that will be operated under the Prime Air brand. Hawaiian Airlines, an A330 operator, will operate the planes. Prime Air largely contracts out flight operations. Atlas Air flies Boeing 767-300ERFs and Sun Country fly Boeing 737Fs for Prime Air.
EFW now has orders for more than 100 A330 conversions, nearly all for the -300 model.
Engine Development. Part 9. Gearbox or not?
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By Bjorn Fehrm
Introduction
October 13, 2022, © Leeham News: In our series, we look at the development of the latest single-aisle engines. Should these be geared? What do you gain and risk with a geared design? Is this a new development, or has it been around for a long time?
We examine the development of single-aisle engines since 2000, their fuel efficiency, and operational reliability.
Summary
- A geared design fixes some fundamental problems in a two-shaft turbofan.
- CFM proves you could just as well further develop what you have.
HOTR: Boeing resumes 787 deliveries after long hiatus
By the Leeham News Team
Aug. 10, 2022, © Leeham News: Deliveries of the Boeing 787 are slated to resume today after a pause of nearly two years. American Airlines is set to receive a 787-8. The Federal Aviation Administration announced Monday that it approved Boeing’s plans to fix a production flaw that resulted in a paper-thin gap where certain sections of the fuselage are mated.
Rework of up to 120 787s in inventory has been underway for some time, both in Charleston (SC), where the airplane is assembled and in Everett (WA), where the former Line 1 Final Assembly Line was located. Plane spotters occasionally noted 787s being flown into Everett from stored locations.
Some estimates indicate that the 120 airplanes were sold for an average of $129m each. (The split between the 787-8, 787-9 and 787-10 is not detailed.) This places the inventory value at an estimated $15.5bn. But don’t assume this is the amount of cash that will be coming to Boeing as inventory is cleared into 2024. About 40% of the sales price is typically paid via deposits and progress payments by the time of delivery. This means that Boeing may look for an estimated $9bn in cash.
However, customer compensation for the delivery delays could reduce this some. Boeing prefers to compensate customers via discounts on future airplanes or via services and parts. How much—or how little—cash compensation is provided is known only to Boeing.
During the fourth quarter last year, Boeing took a forward loss on the 787 program of $3.46bn.
Embraer 2nd Quarter 2022: Mixed results as EVE is spun off
By Bjorn Fehrm
August 4, 2022, ©. Leeham News: Embraer presented its 2Q2022 results today. The airframer booked lower revenue and net profit as deliveries of the E195-E2 tanked, but margins were up in all divisions except Defence and Security due to strict cost control.
Revenue and net profit were down by 10% compared with 2Q2021, whereas margin and cash flow improved due to cost containment and the spin-off of the EVE VTOL activity. Sales were positive, with backlog growing 0.5bn from 1Q2022 to $17,8bn. The company confirmed the 2022 guidance.
ATR, Embraer, JADC release 20-year turboprop demand forecasts
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By Scott Hamilton
July 25, 2022, © Leeham News: ATR and Embraer released at the Farnborough Air Show their forecasts for the next 20 years for turboprops.
ATR is the only remaining manufacturer of turboprops in the 40-80 seat category outside of China and Russia. Embraer, which got its start in commercial aviation with the 19-seat Bandeirante, exited the turboprop business after the EMB-120 Brasilia. Now, following decades of exclusively supplying regional jets to the world’s commercial aviation market, wants to resume producing turboprops. It’s proposed a two-member family with 70 and 90 seats. EMB claims it has interest from airlines for 250 turboprops, but the program launch remains elusive.