Air France-KLM trims cargo fleet: Steve Wilhelm of The Puget Sound Business Journal reports that Air France-KLM group is sharply trimming its cargo fleet, with the company declaring the capacity continues to shift to the belly capacity of passenger airplanes. This further validates what we have been writing for some time and, in our view, further bolsters our argument that the demand for new-build, dedicated freighters continues to fall. This in turn means Airbus won’t see recovery for the A330-200F nor will Boeing see recovery in demand for the 747-8F or 777-200LRF.
ExIm Bank Countdown: September 30 is the date the US ExIm Bank runs out of money. Although there is talk of a short-term extension of a few months (conveniently taking it past the election and perhaps defusing some of the Tea Party angst over the agency), Emirates Airlines said it will still buy Boeing airplanes even if ExIm isn’t renewed.
This can’t help Boeing’s argument that ExIm should be retained.
Left unsaid in Emirates’ statement, however, is something we heard in the market: Boeing’s deal for the 150 777Xs with Emirates nearly fell apart over the ambiguity over the Bank. We’re also told Boeing agreed to backstop the Emirates deal.
Neither Boeing nor Emirates comment on financing support.
Bombardier vs Embraer: Here is an interesting thought piece on the financial returns of Bombardier vs Embraer. One obvious error in the article: Malmo Aviation didn’t cancel its order for the CS100; it just decided not to be the launch operator.
Neither do you: Flight Global writes this about the end of plans between COMAC and Bombardier to have a common cockpit between the C919 and the CSeries:
“Basically in the development of the C919, Bombardier is not involved,” says [CAAC}. “They have experience in building regional jets, but not so much in narrowbodies.”
We can’t help but think the Chinese learned what they wanted to learn and moved on.
787 safety: This is one of those stories for which we have skepticism but which is already getting enough press that we don’t feel we can ignore it. Al Jazeera America has a special Wednesday night about the safety of the Boeing 787. AJM previously did an investigation of the safety of the Boeing 737. The Seattle Times has an early review. We’ll hold our opinion until after watching the program.
Ryanair finally orders 737 MAX: Once Boeing announced the launch of the 200-seat 737-8 MAX at the Farnborough Air Show, an order from Ireland’s Ryanair was only a matter of time. It became official today: Ryanair ordered 100+100 of the new version, the 737 MAX 200.
Leeham News launches Premium plan, companion to free content; engineer joins staff
Free content.
Leeham News and Comment (LNC) today launched a Premium subscription plan as a companion to free content.
LNC has provided news and commentary since February 2008, providing industry-leading information and insightful analysis, principally focuses on Airbus, Boeing, Bombardier and Embraer but also including emerging challengers to the Big Four OEMs, the leading engine manufacturers, suppliers and airline news.
LNC has been a leading resource of news and comment throughout the commercial aviation industry and its professional followers in the aerospace supply chain, investment analysts and the media.
Since the first of this year, LNC increasingly provided more and more technically-based content. This content is valuable and supplements the industry-leading news and reporting that has been provided since 2008. We are pleased to announce the addition to our staff, Bjorn Fehrm, who focuses on technical evaluation and complements the strategic expertise of Scott Hamilton, the founder of LNC and Leeham Co. consultancy.
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16 Comments
Posted on October 14, 2014 by Scott Hamilton
Airbus, Airlines, Boeing, Bombardier, CFM, Comac, Embraer, Irkut, Mitsubishi, Pratt & Whitney, Rolls-Royce, Sukhoi
737-9, 757, 757 replacement, A321NEO, Airbus, Bjorn Fehrm, Boeing, Bombardier, CFM, Comac, Embraer, Irkut, Leeham News and Comment, Mitsubishi, Pratt & Whitney, Rolls-Royce, Sukhoi
Embraer’s big bet on its largest airplane yet
Introduction
Embraer is days away from the roll-out of its biggest airplane project yet and one that has the potential to make its biggest inroads yet into the global defense market: the KC-390.
Rendering of KC390 tanking two Embraer AMX fighters. Source: Embraer
The airplane, with a fuselage cross-section the size of the Boeing 767, challenges the Lockheed Martin C-130, a venerable aircraft that has been updated throughout the decades since it first entered service in 1956. Despite this modernization, Embraer believes the time has come for a modern design and a multi-mission capability that far surpasses that of the C-130, with higher productivity of a jet aircraft vs a four-engine turbo-prop.
KC-390 3D view with main data. Source: Leeham Co
Summary
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38 Comments
Posted on October 13, 2014 by Bjorn Fehrm
Airbus, Boeing, Embraer, Pratt & Whitney
767, A400M, air force tanker, Airbus, Boeing, C-130, Embraer, International Aero Engines, KC-767, Lockheed Martin, Pratt & Whitney, V2500
Assessing the 100-149 Seat Sector
Introduction
Oct. 12, 2014, (c) Leeham Co.: The 100-149 seat market sector has long been criticized as irrelevant because of a string of poor-selling aircraft. Boeing officials even labeled this a Bermuda Triangle. The critics fail to recognize, however, that except for the Bombardier CSeries and the Embraer E-195 stretch based on a clean sheet design, there hasn’t been an airplane specifically designed for this sector since 1983. That was the British Aerospace BAe-146, which despite being powered initially by poor engines and having a cramped cabin, sold moderately well.
The early derivatives, the Boeing 737 Classic, and the McDonnell Douglas MD-80, did well. (The MD-80, while capable of seating up to 172 in shoe-horn configuration, was principally operated within the 130-150 seat layout.) But as fuel prices increased, derivatives began to lose their appeal because they weren’t optimized for the market. Engines then in use couldn’t keep up with the rising cost of fuel and airframes designed in the 1960s/70s/80s were no longer aerodynamically efficient as required for the changing fuel environment.
Summary
• Until the Bombardier CSeries and Embraer E-Jet, there hadn’t been an airplane specifically designed for the sector since 1983.
• Engine technology and airframe aerodynamics didn’t keep up with the demands of rising fuel prices for derivative designs.
• Airbus and Boeing are ceding the sector.
• Bombardier and Embraer will “own” the sector.
• There is a valid market for the 100-149 seat sector.
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25 Comments
Posted on October 12, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Embraer
727-100, 737 Classic, 737-200, 737-600, 737-7, 737-700, A318, A319ceo, A319neo, Airbus, B717, BAC-111, BAe-146, Boeing, Bombardier, British Aerospace, British Aircraft Corp., CS-100, CS-300, CSeries, DC-9, E-195, E-195 E2, E-Jet, E-Jet E2, Embraer, F-100, Fokker, MD-80, MD-95
New and Derivative airplanes: Some good, some not; Part 1
First of two parts.
Earlier this year, Airbus officials said they will concentrate on improving existing airplanes once the A350 enters service.
Boeing followed by saying it would not take any “moonshots” and develop new airplanes, at least for some indeterminate time.
The sentiment on the part of both companies is understandable if not disappointing for aviation purists who want to see new and innovative airplane models rather than made-over sub-types.
This is one of those cases where both schools of thought are right. (Text continues below photo.)
Later this month, we will unveil a new, updated Leeham News and Comment with a combination of paid and free content. Watch this space for more information.
New airplanes are, to state the obvious, very expensive to develop and in this increasingly technological age and demand for “smarter” airplanes that are more fuel efficient and which try to improve passenger experience while cramming as many revenue-paying passengers into the airplane as possible, becoming more and more challenging. Where it once was possible to bring an airplane to market within four years of launch, today airframers routinely look at seven years and even eight. Even derivative airplanes are now taking six or seven years to enter service from launch.
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50 Comments
Posted on October 6, 2014 by Scott Hamilton
Airbus, Boeing, Comac, CSeries, Embraer, Irkut, Mitsubishi, Sukhoi
747-8, 787, A330 Classic, A350, A380, A400M, Airbus, ARJ-21, AVIC, Boeing, Bombardier, C919, Comac, E-Jet, E-Jet E2, Embraer, Irkut, Mitsubishi, SSJ100, Sukhoi
Assessing the 70-90 seat regional jet sector
Introduction
Major orders last week for Bombardier and Mitsubishi and the release of the Airbus Global Market Forecast provide an opportunity to look at market segments that don’t get a lot of attention in the shadow of the greater focus on the A320/737 and medium-twin aisle sectors.
These over-shadowed sectors are the 70-99 seat regional jet; the 100-149 seat single-aisle market; and the Very Large Aircraft.
Due to the scope and length of each examination, we will detail these sectors in three parts.
Summary
• Embraer and Mitsubishi will dominate the 70-99 seat sector;
• Embraer and Bombardier will dominate the 100-149 seat sector;
• Airbus and Boeing have largely withdrawn from the 100-149 seat sector;
• Airbus clings to unrealistic 20-year forecast in the VLA sector, but Boeing is a non-player today and in the future.
Part 1: 70-99 Seat Sector
This is a shrinking market for the regional jet as increasing fuel prices make it more and more difficult for regional jets to be economical. Nonetheless, there are several established and new entrant players in the market:
• Bombardier, with the CRJ-700, CRJ-900 and CRJ-1000
• Embraer, with the in-production E-170/175 and E-190/195
• COMAC/AVIC, with the ARJ-21 70 and 90-seat models
• Mitsubishi, with the MRJ-70 and MRJ-90
• Suhkoi, with the SSJ-100
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7 Comments
Posted on October 5, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, Comac, CSeries, Embraer, Mitsubishi, Sukhoi
737, 747-8, A320, A380, Airbus, ARJ-21, AVIC, Boeing, Bombardier, Comac, CRJ, CSeries, E-170, E-175, E-190, E-195, E-Jet, Embraer, Mitsubishi, MRJ, MRJ-70, MRJ-90, Regional Jets, SSJ-100, Sukhoi, Very Large Aircraft
The airline industry is changing and acting like real businesses to return value for shareholders
“Our industry is changing and acting like real businesses to return value for shareholders.”
It’s a remarkable statement when you think about it. But this is how Jim Compton, vice chairman of United Airlines, led off at the World Routes conference this week in Chicago.
The US airline industry for years seemed to be operated more for market share than for profit. At least this is how many chief executive officers often characterized things until after 9/11, when US carriers wrenched through the aftermath of that horrible day. Even so, CEOs often complained there was too much capacity to allow for profitable operations. It wasn’t until after the global financial collapse of 2008 that US airlines began to consolidate, reduce flights and take capacity out of the system. Profits began to return.
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5 Comments
Posted on September 22, 2014 by Scott Hamilton
Airlines, Embraer
Airline Passenger Experience, airlines, E-175, Embraer, Jim Compton, United Airlines
Embraer and Bombardier: the tale of different companies, histories and fortunes
Last month we did a situational analysis of Boeing and Airbus and we promised to do the same for Embraer and Bombardier. Our follow-up article took longer than planned, as we wanted to include the rather significant changes that have transpired at Bombardier in recent weeks. Material for the analysis is the first half 2014 financial and operational results of the aircraft manufacturers but also information we got when we sat down with the Marketing managers of the two companies at Farnborough, Embraer’s Claudio Carmelier and Bombardier’s Philippe Poutissou. Unfortunately, the latter is no longer in his job, having been replaced in a series of management and corporate restructurings at Bombardier.
Status first half 2014
The situation in the two companies could not be more different. Embraer is financially healthy with well-selling aircraft programs, both on the commercial aircraft side (E-jet) and the business aircraft side (Phenom, Legacy). Embraer is well positioned for the future with a well-received update to its E-jet program (E-jet E2 ) . Bombardier on the other hand, has problems. Its financial situation is strained with too many new aircraft programs eating up cash (CSeries, Learjet 85, Global 7000/8000) and their currently active programs have in some cases seen their zenith in the market (CRJ, Challenger 600 and, arguably, the Q400). Read more
25 Comments
Posted on September 15, 2014 by Bjorn Fehrm
Bombardier, CSeries, Embraer, Pratt & Whitney
Bombardier, Comac, CRJ, CSeries, E-Jet, E-Jet E2, Embraer, GE, GTF, Pratt & Whitney, Q400
Odds and Ends: Air France/KLM trims cargo fleet; ExIm Bank countdown; BBD v EMB; More
Air France-KLM trims cargo fleet: Steve Wilhelm of The Puget Sound Business Journal reports that Air France-KLM group is sharply trimming its cargo fleet, with the company declaring the capacity continues to shift to the belly capacity of passenger airplanes. This further validates what we have been writing for some time and, in our view, further bolsters our argument that the demand for new-build, dedicated freighters continues to fall. This in turn means Airbus won’t see recovery for the A330-200F nor will Boeing see recovery in demand for the 747-8F or 777-200LRF.
ExIm Bank Countdown: September 30 is the date the US ExIm Bank runs out of money. Although there is talk of a short-term extension of a few months (conveniently taking it past the election and perhaps defusing some of the Tea Party angst over the agency), Emirates Airlines said it will still buy Boeing airplanes even if ExIm isn’t renewed.
This can’t help Boeing’s argument that ExIm should be retained.
Left unsaid in Emirates’ statement, however, is something we heard in the market: Boeing’s deal for the 150 777Xs with Emirates nearly fell apart over the ambiguity over the Bank. We’re also told Boeing agreed to backstop the Emirates deal.
Neither Boeing nor Emirates comment on financing support.
Bombardier vs Embraer: Here is an interesting thought piece on the financial returns of Bombardier vs Embraer. One obvious error in the article: Malmo Aviation didn’t cancel its order for the CS100; it just decided not to be the launch operator.
Neither do you: Flight Global writes this about the end of plans between COMAC and Bombardier to have a common cockpit between the C919 and the CSeries:
“Basically in the development of the C919, Bombardier is not involved,” says [CAAC}. “They have experience in building regional jets, but not so much in narrowbodies.”
We can’t help but think the Chinese learned what they wanted to learn and moved on.
787 safety: This is one of those stories for which we have skepticism but which is already getting enough press that we don’t feel we can ignore it. Al Jazeera America has a special Wednesday night about the safety of the Boeing 787. AJM previously did an investigation of the safety of the Boeing 737. The Seattle Times has an early review. We’ll hold our opinion until after watching the program.
Ryanair finally orders 737 MAX: Once Boeing announced the launch of the 200-seat 737-8 MAX at the Farnborough Air Show, an order from Ireland’s Ryanair was only a matter of time. It became official today: Ryanair ordered 100+100 of the new version, the 737 MAX 200.
30 Comments
Posted on September 8, 2014 by Scott Hamilton
Airbus, Airlines, Boeing, Bombardier, Comac, CSeries, Embraer
737 MAX 200, 747-8F, 777-200LRF, 777X, 787, A330-200F, Air France-KLM, Airbus, airlines, Al Jazeera, Boeing, Bombardier, C919, Comac, CS100, CSeries, Embraer, Emirates Airlines, ExIm Bank, Malmo Aviation, Ryanair
Airlines, not passengers, at fault for recline wars
A third incident of “recline wars” has been reported, this time on a Delta Air Lines flight in which a dispute broke out between a passenger who reclined his seat and the passenger behind him who didn’t like it.
The New York Times has an article on the entire issue.
While the focus and debate has, so far, centered around who has rights–the passenger to recline or the passenger claiming reclining violates his space–the real issue, and blame, ought to rest with the airlines squeezing down legroom to a seat pitch of 28 inches (in the case of Spirit Airlines and Allegiant Air) to an increasingly common 30 inches on legacy carriers.
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12 Comments
Posted on September 2, 2014 by Scott Hamilton
Airbus, Airlines, Boeing, Bombardier, CSeries, Embraer
737-8, A320, A321, Airbus, Allegiant Air, Boeing, Bombardier, Cebu Pacific, CS300, Delta Air Lines, E-195 E2, Embraer, Ryanair, Spirit Airlines
Focus on Bombardier after more executive changes
This report has been updated since it was issued to our E-subscribers last Monday to reflect our new estimate of the return to airborne status for the flight test program.
Bombardier two weeks ago made more executive changes to the CSeries program, replacing the vice president of marketing and other officials. The company said additional changes might be forthcoming—a clear signal that something more is afoot.
Bombardier has been stuck on 203 firm orders for the CSeries for the better part of this year, although the number of orders and commitments has swelled to 513 with a much better than expected Farnborough Air Show. Still, MOUs and LOIs aren’t firm orders with deposits and progress payments, and poor sales of the CRJ, Q400 and business jet divisions combine with the R&D costs of the CSeries to put a huge financial squeeze on the company. Layoffs and cost cutting, along with the management changes, add to the perception that BBD is a company in trouble.
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11 Comments
Posted on August 31, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, Embraer, Pratt & Whitney
737 MAX, 737-7, 787, A319, A320, A320NEO, A350, Airbus, Boeing, Bombardier, CRJ, CS100, CS300, CS300 ECS, E-Jet, Embraer, Q400
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