Leeham News and Analysis

There's more to real news than a news release.

There's more to real news than a news release.

100-149 seat market isn’t ‘Bermuda Triangle’ for the right airplanes

A new study released today by AirInsight concludes the oft-maligned 100-149 seat market is viable, and not a ‘Bermuda Triangle,’ if the right airplane is developed to compete within it.

We’re a co-author of the study, Market Analysis of the 100-149 Seat Segment.

Some aerospace consultants, analysts and observers–as well as Boeing’s Randy Tinseth, VP-Marketing–term the segment a Bermuda Triangle because of airplane “failures” in the market. But the fact is that except for Embraer’s E-Jet, the poorly-conceived British Aerospace/Avro Jets and Bombardier’s pending CSeries, there hasn’t been a clean-sheet design since the 1960s. All other aircraft have been derivatives of older designs and offerings of weak and dying manufacturers.

We need to add the Sukhoi Superjet SSJ100 to the clean-sheet design list, but this falls into the weak OEM category.

Today there are six aircraft types and 15 sub-types from five OEMs. (There were seven and 16 until Tuesday, when Boeing finally dropped the 737-600.)

AirInsight has an analysis of the future of the A319/A319neo and 737-700/737-7 Max here.

Here is a run-down.

Read more

 18 Comments

 Posted on August 10, 2012 by

 Airbus, AirInsight, Boeing, Bombardier, CSeries, Embraer, Sukhoi

     , , , , , , , , , , , , , , , ,

Post-Farnborough thoughts: why so few orders, PR overkill and more

The Farnborough Air Show is over. Here are our thoughts:

For all the pre-show buzz about expected orders, with names and quantities identified, this show was a bust.

Airbus was said to be shooting for 250-300 orders; it finished with 115 (including orders, commitments, MOUs and so on). Just two of the talked-about orders would have brought Airbus close to the 250 mark. An A380 was also anticipated. But no-go.

Boeing also failed to meet pre-show expectations that revolved around converting about 75% of the then-remaining 550 737 MAX commitments to firm orders. In the end, only Air Lease Corp did so, for 75, while GECAS and Avolon were revealed as being among those Unidentified customers who “committed” to the MAX. We fully anticipate these, and the other MAX commitments, to convert but expectations were…expectations and in this, Boeing fell short. But the company was still the undisputed star of the show. Kuwait’s ALAFCO, a lessor, became a new MAX customer and so did United Airlines. United gave not only the MAX program in general a boost but the -9 MAX in particular a major shot in the arm with an order for 100. The airline also ordered 50 737-900ERs, a boost for this slow-selling airplane as well. Virgin Australian became another new MAX customer, albeit in the week preceding the show but this is a bit of a technicality.

Bombardier announced two new commitments for the CSeries, one from an Unidentified customer and one from Air Baltic. We view the Air Baltic order as significant, for this is the first time the CSeries competed against the A319neo and the 737-7 MAX. Previous competitions were vs the A319ceo, the A319neo and perhaps the 737–700.  BBD continues to make slow progress with the CSeries, with orders and options in the 10-20 range. This pace is similar to Embraer, Airbus and Boeing at this stage of the game (i.e., 18 months before EIS, six months before first flight) for the E-Jet, 737-700 and A319.

The news that BBD is talking with AirAsia about a 160-seat CS300 (28 inch pitch with new slim line seats) was a surprise. We’ll wait with great interest whether the airline’s CEO, Tony Fernandes will be enticed away from his exclusivity with Airbus for the A320/320neo. If Airbus’ John Leahy was motivated to “kill” the CSeries before, these talks are sure to start a war–and Leahy takes no prisoners.

Embraer, a star at the Paris Air Show, only announced a handful of orders.

ATR had a reasonable show with its turbo-prop. Bombardier brought up the rear with an order for six Q400s.

Pratt & Whitney bested CFM International in those A320 deals where they compete. CFM, of course, recorded far more orders since it is the exclusive supplier on the 737NG and MAX.

Mitubishi surprised everyone with an MOU for 100 MRJs from SkyWest Airlines of the USA. But commentary that this is a “blow” to Bombardier is over-stating.

Why so few orders?

Because the global economy still pretty much sucks. The backlogs are up to seven years out. Customers don’t want to pay escalation costs this far out. No need to hurry.

PR Overkill

A few years ago Boeing roundly criticized Airbus for announcing MOUs, LOIs and “commitments” while Boeing confined its announcements to firm orders. This changed at the Paris Air Show when Boeing announced commitments for 20 747-8Is from an unidentified customer. (It was the Hong Kong Airline Group.) Since then, all the airframe OEMs are busting their backs to throw every number they can out at an air show.

We roundly criticize this practice, whether it comes from Airbus, Boeing, Bombardier, Embraer or anyone else. An order isn’t an order until it is. The Hong Kong 748 “commitment” is still pending, and this was one of those anticipated to be firmed up at Farnborough. Instead, it became one of those no-gos. The same goes for other “commitments” from other OEMs. That’s why we have been so harsh on the practice. A commitment isn’t really worth the paper it’s written on. A commitment isn’t booked as an order on the tally sheet. This PR charade should be dropped. Of course, it won’t be.

The absence of product news (other than some detail of the 737 MAX and formalizing the A330-300 HGW), the failure to meet even low expectations in terms of orders and the crappy weather combined to make for a dull show from a news standpoint.

It was nice to see Boeing return to the aerial displays with the Qatar 787. Boeing certainly has a point: aerial displays haven’t sold an airplane (probably since Tex Johnston did the barrel role with the Dash 80). But it’s always been cool to see the A380, A340-600 or even the Lockheed Constellation do some aerobatics. We hope Boeing continues the practice.

 42 Comments

 Posted on July 12, 2012 by

 Airbus, Boeing, Bombardier, Embraer

     , , , , , , , , , , , ,

Future materials: aluminum lithium, standard metals or composities

The Farnborough Air Show isn’t just about orders, though these get all the sex and headlines.

While we weren’t at the show, we had a telephone interview with a company called Constellium, previously known as Alcan. Constellium spoke at the February conference of the Pacific Northwest Aerospace Alliance, with which we are involved. We were particularly interested in talking with Constellium because it is a major supplier of Aluminum-Lithium, an alternative material to standard aluminum and a competing material to composites.

Constellium’s Al-Li combines other processes, including a design for recycling, and is named AirWare. Airbus, Boeing and Bombardier are among their key customers, and it is Constellium that is providing the materials for the CSeries. It’s also a supplier on the Airbus A350 (internal components, not the fuselage).

As Airbus and Boeing looked at the A320neo and 737 MAX, and as Boeing is looking at the 777X, we asked them about the prospect of using Al-Li. This is lighter than standard aluminum, more durable, less susceptible to corrosion and enabled 12 years between major maintenance overhauls compared with the 6-8 years now.

But Al-Li is more difficult to work with than standard aluminum. Boeing’s Mike Bair told us in an interview that Boeing considered Al-Li back in the 1990s when designing the 777 but it was too difficult and costly to manufacture. Since then, he praised the producers for strides. There are mixed reports what material will be used for the 777X fuselage: standard metal or Al-Li. The Seattle Times reported the airplane will have Al-Li. We’ve been told it won’t. But with the airplane still months and perhaps a year from launch, there is plenty of time to decide.

Airbus, in an interview at the Paris Air Show last year, said it was evaluating Al-Li for the A320neo. The A320ceo is heavier than the competing Boeing 737 and the re-engine adds about 4,000 lbs. Using Al-Li would mitigate some of this weight. We haven’t heard if Airbus might go ahead with Al-Li, but we’re leaning toward concluding that it won’t.

Boeing told us it will not switch to Al-Li for the MAX because the manufacturing process is just enough different that it would add complexity and cost to the current tooling and procedures.

Al-Li vs composites is a competition that will likely be fierce when it comes time for Airbus and Boeing to design the next clean-sheet airplanes, presumed to be the New Small Airplane, or replacement for the current 737/A320 class. (Boeing may have a new clean-sheet for the 757 class; it has a New Airplane Study underway for this, but the market may be too narrow when one considers the 737-9 MAX and A321neo will do 95% of what a 757 can do.)

Composites, selected for the 787 and A350 XWB fuselages and wings, offer advantages over standard metal fuselages that have been well documented and need not be repeated here. But Airbus and Boeing question the efficiency and benefits of down-scaling composites to 737/A320 category airplanes. Boeing apparently became convinced: Jim Albaugh, former CEO of Boeing Commercial Airplanes, said the New Small Airplane would have been composite, but the ability to produce it at a rate of 60 per month remained a challenge. Boeing went with the MAX instead.

Vistagy, a composite manufacturer near Boston, told us nearly two years ago, that the down-scaling challenges were met and that production rates were the issue. Autoclaves are very costly and so is the manufacturing process. There is actually less industrial waste than traditional aluminum manufacturing, but the materials are generally more hazardous—though there have been strides on this score.

This is the background that intrigued us when we had the opportunity to speak with Constellium’s Simon Laddychuk, VP of Manufacturing Global Aerospace and Director of Technology. Read more

 14 Comments

 Posted on July 10, 2012 by

 Airbus, Boeing, Bombardier, Comac, Embraer, Irkut

     , , , , , , , , , , ,

Farnborough, Day 1: Orders, Price Calculator and other stuff

McNerney rejects “price war.” A quote from a Financial Times story (see below).

He rejected suggestions that a price war had broken out between Airbus and Boeing over the A320 Neo and 737 Max but confirmed the US manufacturer would woo some airline customers of its European rival.

Courtesy of Aspire Aviation, here is a summary of orders through Day 1:

Airbus

Date

Customer

Quantity

Model

Remarks

9th July

Arkia Israel Airlines

4

A321neo

Agreement

Boeing

Date

Customer

Quantity

Model

Remarks

9th July

Air Lease Corp (ALC)

60

737 MAX 8

Reconfirmation rights for 25 more

9th July

Air Lease Corp (ALC)

15

737 MAX 9

Pratt & Whitney

Date

Customer

Quantity

Model

Remarks

9th July

IndiGo

300

PW1100G-JM

9th July

CIT

60

PW1100G-JM

9th July

Cebu Pacific

60

PW1100G-JM

For 30 firm A321neos

9th July

Norwegian Air Shuttle (NAS)

100

PW1100G-JM

MoU

CFM

Date

Customer

Quantity

Model

Remarks

9th July

Air Lease Corp (ALC)

150

CFM Leap-1B

Embraer

Date

Customer

Quantity

Model

Remarks

9th July

Hebei Airlines

5

E-190s

Booked in Q2 backlog

Reuters put together a handy-dandy thing to calculate airplane prices easily. These are list prices, of course.

Some stories of note:

Boeing lands the first blow

High-fliers at the show

United to announce big MAX order July 12

A330 “surgery”

AirInsight is posting daily news and videos.

The Financial Times of London has a piece with Boeing’s Jim McNerney. (Free but limited registration required.) Here’s a relevant quote.

Boeing announced the 737 Max in August last year and Mr McNerney said that “in retrospect” the US manufacturer should have made its decision to proceed with a revamped version of its narrow-body workhorse, rather than a brand new aircraft, “six to nine months” earlier.

 8 Comments

 Posted on July 9, 2012 by

 Airbus, Boeing, Bombardier, CFM, Embraer, Pratt & Whitney

     , , , , , , , ,

Odds and Ends: Airbus-Mobile, con’t; final Farnborough update

Airbus in Mobile: We doubt Boeing is really Sleepless in Seattle but this piece is pretty amusing.

Take that, Part 1: Boeing continues to whine about WTO.

Take that, Part 2: So’s your Old Man.

Here are a few final thoughts in advance of the Farnborough Air Show:

  1. It will still be Boeing’s show, with MAX orders or MOUs or Commitments or Love Letters amounting to the hundreds. Look for Air Lease Corp, GECAS, Aeromexico, perhaps some Chinese companies and others to announce.
  2. Airbus’ John Leahy has been tamping down expectations all year but Mr. Showman doesn’t like to be left standing on the sidelines. While you’re watching Boeing’s left hand, don’t be surprised if Leahy pulls a rabbit out of the hat with Airbus’ right hand and ends the show with several hundred orders of his own.
  3. Yes, we predict the Airbus-Boeing sniping will continue. And the sun will rise in the East and set in the West.
  4. Embraer isn’t even holding a press briefing. So we don’t expect much out of them this year.
  5. Bombardier may or may not have CSeries orders to announce. The market doesn’t expect (m)any, concluding that the countdown to first flight is what will begin bringing in orders.
  6. No new program announcements from Boeing (ie, nothing new on 787-10 or 777X). No announcement from Airbus, either, on A350 program developments or the prospect of a long-range, upgraded A330-300 (we think this could come at FAS but just as likely could be later in the year).
  7. No 90-seat turbo-prop from anyone.
  8. This is now Ray Conner’s coming out party as the new (and unexpected) CEO of Boeing Commercial Airplanes. Based on our limited contact with Conner, he’s not as affable as the departed Jim Albaugh. It will be interesting to see how aggressively engaging he is with Boeing’s nemesis, Leahy.

 15 Comments

 Posted on July 4, 2012 by

 Airbus, ATR, Boeing, Bombardier, CSeries, Embraer

     , , , , , , , , , , ,

Farnborough Air Show preview

Overview

This is really expected to be a boring show from the perspective of orders. Airbus has been downplaying expectations following last year’s Paris Air Show blow-out of more than 1,200 A320neo orders. How can you match that? The answer is, Airbus can’t.

Boeing will certainly firm up hundreds of 737 MAX commitments, so this will be Boeing’s show. And there is the buzz that Boeing is partnering with Lockheed Martin and NASA (oh, another government subsidy?) to produce a 2,500 mph SST, with details supposed to come at the Air Show. Then there is the leak that the 787 will fly there, the first time in 28 years Boeing has an aerial flying display.

We’ve talked with several journalists and industry personnel who are skipping the Air Show this year. So are we, and we’ve been at the Farnborough and Paris air shows since 2008. We just don’t expect enough news this year that we can’t get from the press releases.

So here are our expectations for the show:

Read more

 16 Comments

 Posted on June 26, 2012 by

 Airbus, ATR, Boeing, Bombardier, CFM, CSeries, Embraer, Pratt & Whitney, Rolls-Royce

     , , , , , , , , ,

Odds and Ends: China trojans; China is the biggest threat; EADS ponders own bank

China trojans: we’re not talking about condoms, either. This item from Defense Tech is pretty alarming. And while this piece is also pretty alarming, though it isn’t about China. Or maybe it is. The chips are made by the same company, sourcing them in China.

China is the biggest threat: So says Jim Albaugh, CEO of Boeing Commercial Airplanes. Aviation Week has this article about an Albaugh appearance in the UK.

EADS ponders its own bank: This would give it access to low-cost funds and protect against the Euro, officials say. Here’s an article. Our first thought: since the WTO ruled Airbus launch aid was illegally structured because of below market rates (but did not rule the aid itself illegal), this returns EADS/Airbus to the low-cost funding access. Clever. Wonder what Boeing thinks about this?

 25 Comments

 Posted on June 1, 2012 by

 Airbus, Boeing, Bombardier, Comac, CSeries, EADS, Embraer

     , , , , , , , , , ,

ISTAT Part 3: Lessors Panel: GECAS, ILFC, AWAS, Air Lease Corp

The final panel at the ISTAT meeting is the much-anticipated lessors’ panel consisting of:

Jeff Knittle, president of CIT Aerospace, moderator;

Henri Courpron, Chairman of ILFC;

Ray Sisson, CEO of AWAS;

Norman Liu, CEO of GECAS; and

Steve Udvar-Hazy, CEO of Air Lease Corp.

Paraphrasing:

HC: All hell broke loose in Europe and upended aviation. Looking at consolidation in Europe. America now had a lot of stability and discipline, and we’ll see that happen in Europe. More fuel efficient aircraft will be required in Europe. I see a lot of opportunity and challenges to come in Europe.
NL: Asia has been by far our most active market, with 70% of our airplanes going there. You have to look at different parts of Asia–you can’t generalize. LCCs in Japan. Always something going on in China. SE Asia, good organic growth. Philippines and Indonesia very interesting. South Asia has had travails.
SUH: North America is going through an interesting time. Canada is a duopoly situation with new Asian and Middle Eastern carriers entering the market. The US is very mature having gone through a lot of trial and tribulation, more disciplined [than before]. After 9/11 there was a slow-down in US carriers taking new airplanes. We have a bow wave of a requirement for new fleeting.
RS: Latin America is under-appreciated. We see rapid growth there. By 2015 may be 17%, 20% of our fleet. There is a remarkable amount of demand and opportunities for lessors.

 15 Comments

 Posted on March 20, 2012 by

 Airbus, ATR, Boeing, Bombardier, CFM, CSeries, Embraer, Pratt & Whitney

     , , , , , , , , , , ,

ISTAT Part 2: BBD, EMB, Sukhoi, ATR

Chet Fuller, SVP Commercial, Bombardier

Luiz Chiessi, Director of Marketing Strategy of Embraer

Mark Neeley, VP-Marketing, ATR

John Buckley, VP Business Development, Sukhoi Superjet International

Fuller

  • CSeries weight validated and will be on spec at EIS.
  • Aluminum Lithium is better on fatigue than normal aluminum, much better on corrosion. Combine with composites, D check goes to 15 years. C check improved by 15%.
  • 787 first airplane with All-digital architecture, CSeries is second.
  • Last all-new narrowbody was A320 family.
  • Only aircraft with a 12:1 by-pass ratio; A320neo is 10:1, not sure what ratio Boeing will wind up with on MAX.
  • CSeries has better trip costs than E190, with seat costs of A3320neo. There is no magic here, there is just physics.
  • BBD has on order: 66 CS100, 72 CS300; 124 options, 10 purchase rights, 45 LOIs.

Chiessi

  • Mid-long-haul flights for 70-90 seats increasing in US and elsewhere.
  • 48% of EJet deployment is right-sizing by airlines. 26% for new market development.
  • Will maintain leadership in 70-120 seat segment, not enter into arena of Airbus and Boeing.

Buckley

  • SuperJet International responsible for world product support of Sukhoi for SSJ100.
  • Delivered seven aircraft, another in two weeks.
  • Expect to deliver 23 this year, 42 next year, 60 in 2014, 75-80 total current capacity but can be increased.
  • SSJ100 is only regional aircraft with 2×3, 5 in wider than MD80.
  • 10% less fuel consumption than direct competitor.

Neeley

  • ATR top turbo prop pick in Airfinance Journal investors poll.
  • We’re still making a 50-seat product. We have a family of airplanes.
  • Says ATR 72 has same fuel burn per passengers as A320.
  • One third of all passengers fly under 300 miles.

 26 Comments

 Posted on March 19, 2012 by

 ATR, Bombardier, Embraer

     , , , , , ,

Republic’s Bryan Bedford emulates U-Turn Al

The CEO of Republic Airways Holdings seems to be vying to be America’s version of U-Turn Al, Akbar Al-Baker, the CEO of Qatar Airways.

Bedford appears to be engaged in a campaign to raise questions about the Bombardier CSeries, for which he has orders and options for 80 CS300s, much the same way U-Turn Al alternatively praises then complains about the Airbus A350, Boeing 747-8F (ordered by Cargolux, in which Qatar owns a third) and the Boeing 787. U-Turn Al has also alternative praised, condemned then praised the Airbus A320neo, Bombardier CSeries and the Pratt & Whitney GTF.

Keeping up with U-Turn Al’s about-faces has been a dizzying prospect.

Bedford praised the CSeries when ordering it but has become increasingly skeptical of the program once he ordered the A319neo (with CFM LEAP engines) in what was a financial bailout of his ailing company being dragged down by Frontier Airlines. The Airbus order raised questions whether Bedford would cancel the CSeries since the A319neo competes with the CS300. Bedford initially said the order would stand. More recently, he appears to be doing everything to cast a shadow over the program.

Read more

 10 Comments

 Posted on March 15, 2012 by

 Airbus, Boeing, Bombardier, CFM, CSeries, Embraer, Pratt & Whitney

     , , , , , , , , , , , , , , , , , , , , , ,

Email Subscription

Click to subscribe to this blog and receive notifications of new posts by email.

Join 5,327 other subscribers
Archives

Copyright © 2025 · All Rights Reserved · Leeham News and Analysis

Sitemap · RSS Feed · Log in