Pivotal year for A380

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Introduction

June 12, 2017, © Leeham Co.: This is a pivotal year for the Airbus A380.

Sales have dried up. Singapore Airlines is retiring five early versions of the airplane and there is no new home for them—these may headed for the scrap heap.

The Middle Eastern carriers, which are the largest users for the airplane, are in turmoil.

The backlog remains weak. Aside from Emirates Airline, which as noted is in turmoil, the other orders are with carriers that are unlikely to take delivery.

Summary
  • The A380’s future rests with Emirates Airline.
  • Any Performance Improvement Package is dependent upon Emirates placing a new order.
  • Boeing’s new 20-year forecast eliminates the passenger 747-8 from the Very Large Aircraft sector. Airbus continues to forecast a need for 1,400 VLAs.
  • Airbus to decide this year whether to reduce production rate below 1/mo in 2019.

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Etihad Airways: where to now?

By Bjorn Fehrm

May 24, 2017, ©. Leeham Co: Etihad Airways appointed a new interim group CEO and CFO on 8th of May. The strategy of James Hogan, Etihad CEO since 2006, to grow the airline through partner alliances, coupled with minority investments, has hit trouble.

The latecomer to the Gulf carrier’s growth party is now set for a strategy review by an incoming CEO.We describe the background to the problems and go through the options for Etihad’s future. Read more

Pontifications: Emirates profits drop 83%, MC-21 and more news last week

By Scott Hamilton

May 15, 2017, © Leeham Co.: It was a busy news week last week.

  • Emirates Airline headlined its 29th consecutive year of profits, but downplayed an 83% decline.
  • The Irkut MC-21 moved to the tarmac, an indication first flight may be coming shortly.
  • Multiple media reports indicate that electronics flight ban from the Middle East may be extended in part to all of Europe.
  • Boeing suspended test flights on the 737 MAX after CFM discovered some quality issues in some LEAP 1B engines.

Let’s look at these events.

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Trump reverses self on ExIm Bank

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

Donald Trump suddenly discovered the US ExIm Bank was a “profit center” for the US Treasury. Photo via Google images.

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.

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Middle Eastern airline turmoil hits Boeing

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Introduction

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.

Figure 1. Click on image for a crisp view.

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.

Summary
  • Declining financial results for Emirates, Etihad.
  • Deferring airplanes: 787s, 777X
  • Long-haul LLC, Trump travel ban, poor investments hurt the airlines.

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Bjorn’s Corner: Aircraft engine maintenance, Part 4

 

By Bjorn Fehrm

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.

Figure 1. Principal picture of a tri-shaft turbofan for the wide-body market. Source: GasTurb.

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Major fleet decisions may not be positive for Airbus, Boeing

Pontifications is off this week.

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Introduction

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.

There is also a serious warning sign emerging from the Middle East that could have serious, negative impacts on Airbus and Boeing.

Summary
  • American Airlines doesn’t want its Airbus A350-900s any more. Consolidation with US Airways appears to have made these surplus.
  • Delta Air Lines, which so far eschewed any orders for the Airbus A320neos and Boeing 737 MAXes, is understood to be readying a Request for Proposals to be issued this year.
  • United Airlines doesn’t want its Airbus A350-1000s any more. Picking up cheap Boeing 777-300ERs appear to have made these surplus.
  • Emirates Airlines, reacting to Brexit and Donald Trump’s travel bans, is undertaking a full business review in response to a sharp drop in bookings.

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Singapore 777-9 order pressures, but does not kill A380

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

Boeing 777-9.

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.

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A380, from flagship to LCC mass transport

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.

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A380 cost analysis

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Introduction

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.

Summary:
  • The A380neo is pushed out in time for now. Airbus has instead started a cabin density program.
  • We update the study of A380 versus its main competitors to see if the cabin changes goes far enough.
  • In the last study, the A380 had lower seat mile cost than 777-300ER but was beaten by the 777-9.
  • We check if a denser cabin makes the A380 competitive with the 777-9

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