April 13, 2017, © Leeham Co.: President Donald Trump reversed himself and now supports the US Export-Import Bank, according to news reports. He will appoint
two people to long-standing vacancies to allow ExIm to approve deals more than $10m.
ExIm, Trump now says, is a profit center for the US Treasurer.
His sudden understanding on this revelation is like his eye-opening realization that dealing with the North Korean situation isn’t easy.
Supporters of ExIm pointed out for years that the Bank returns money to the US Treasury.
April 10, 2017, © Leeham Co.: Tim Clark of Emirates Airline said the new breed of long-haul, low cost carriers are hurting EK’s load factors and yields.
Etihad Airlines’ business strategy of taking financial stakes in LCCs hasn’t produced the positive financial results desired.
Three big airlines, EK, EY and Qatar Airways, face over-capacity now compounded by electronic carry-on restrictions by the US and UK.
The thee carriers largely compete for the same connecting traffic through hubs only 72-235 miles apart (Figure 1). This is like having hubs in Milwaukee and Chicago (81 air miles apart) and Chicago-Detroit (237 air miles) with much, much smaller domestic catchment basins.
March 24, 2017, ©. Leeham Co: After covering the maintenance market for single-aisle engines, time has come for the engines used on wide-body aircraft. The engine maintenance for a wide-body engine is a bit different to the single-aisle engine. The difference is caused by the longer flight times for the wide-bodies. This makes the flight time wear a more dominant maintenance driver than it is for the single-aisle engines.
The changes in overhaul work caused by the difference in flight profiles and the lower number of engines in the market (compared to the single aisles) will affect how the overhaul market is structured and who are the dominant players.
Pontifications is off this week.
March 20, 2017, © Leeham Co.: There are some major fleet decisions that will probably come down the pike this year at American, Delta and United airlines. Not all of them are going to be viewed positively by Airbus and Boeing.
Feb. 16, 2017, © Leeham Co.: Last week’s order by Singapore Airlines for 20 Boeing 777-9s and 19 Boeing 787-10s immediately was viewed by some as the death
knell for the Airbus A380.
The 777-9 order would start the final spiral down for the A380, some contend.
This overstates the case and misunderstands the nature of the order.
The A380 is in trouble, there no doubt about that. The 777-9 is putting pressure on the A380. There’s no doubt about this, either. But the contention the Singapore 777-9 order sends the A380 on a death spiral is wild fantasy.
An Airbus official appears today at the annual conference of the Pacific Northwest Aerospace Alliance (PNAA) in Lynnwood (WA). Undoubtedly, he will maintain the party line that the future of the A380 is solid. This, too, overstates the case. There can be a future for the airplane, but some major decisions must be made.
By Bjorn Fehrm
January 23, 2017, ©. Leeham Co: The Airbus A380 was introduced as the flagship aircraft for an airline’s fleet. Legacy carriers with a large long-haul network introduced the aircraft on the routes with the most traffic in the network. After an initial rush of inductions, only Emirates continued to buy the aircraft in larger numbers. The aircraft had become too large for the airlines which sought frequency over capacity at their hub airports.
Airbus and its leasing partner, Amedeo, are convinced the aircraft will have a second spring when airport congestion has grown in the next decade. Until then, both are seeking the market niches that will keep production at minimum one aircraft per month.
We sat with Amedeo’s CEO, Mark Lapidus, at the Air Finance Journal conference in Dublin to find out what market will require a new or used A380. Lapidus has spent the last two years in meetings with the world’s major airlines, discussing all aspects of operating an A380. He presented some surprises.
Jan. 23, 2017, © Leeham Co.: In a sister article, we will describe how Airbus A380 might change from a flagship aircraft for legacy carriers to a competitive tool for long-range LCCs.
This change of the A380’s profile is based on bringing cabin densities to the levels of other long haul aircraft. We have historically made detailed operating costs studies of the A380 versus other large long-haul aircraft.
With the possible change in the aircraft’s operating profile, we decided to update the study with the A380ceo pitted against its main competitors, Boeing’s 777-300ER and 777-9. Different from the previous study, we now compared all aircraft in a higher density, two-class seating.
Jan. 12, 2017, © Leeham Co.: There are a growing number of articles around the Emirates airline that points to recent weaknesses in the airline’s operating model. Here are just two:
We decided it was time for a deeper look at this locomotive from the Arab Emirates. Is Emirates in trouble? How solid is it?
They have just deferred Airbus A380’s for the first time. Used to be they could not get them fast enough?
By Bjorn Fehrm
January 5, 2017, ©. Leeham Co: The last two years have seen increased profits for the airline industry. Lower priced fuel gave the industry time to breath and to finally earn a reasonable Return on Invested Capital (ROIC).
Earnings as a percent of revenue for the industry has been increasing from 5% on a worldwide basis in 2014 to around 10% for 2016, Figure 1.
The US and European airlines have been topping the earnings with 18% on revenue for the third quarter of 2016. There are many signs this will not continue in 2017, especially for European airlines. Read more
Jan. 4, 2017, © Leeham Co.: The top 25 Airbus customers that are identified account for 63% for the current backlog, an analysis of the company’s order list shows.
For Boeing, its Top 25 customers account for 69% of its identified backlog.
Both companies have hundreds of Unidentified orders for which no customer is disclosed.