Paris Air Show: Qatar and others

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Introduction

June 1, 2015, c. Leeham Co. It could be called the Qatar Airways Air Show.

Qatar Airways plans to have five airliners on display at the Paris Air Show in two weeks: the Airbus A319, A320, A350, A380 and the Boeing 787. The carrier hasn’t announced whether it will provide an aerial display as it has at previous air shows, but Qatar may well have more airliners there than Airbus or Boeing.

As for manufacturers other than Airbus and Boeing, we don’t expect anything of consequence from these.

Summary

  • Irkut, COMAC, Mitsubishi, Sukoi and ATR are other major aircraft producers that will be at the Paris Air Show.
  • Engine makers CFM International, GE Aviation, Rolls-Royce, Pratt & Whitney and Engine Alliance will also be there.
  • An update on Airbus expectations.

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Paris Air Show Preview: Airbus

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Introduction

May 3, 2015, c. Leeham Co. The Paris Air Show is June 15-19 for the trade/industrial portion. Beginning this week, Leeham News and Comment will provide our Airbus_logo_3D_BlueMarket Assessment and insight about what to expect. We begin this weekly exercise by looking at Airbus. Future posts will look at Boeing, Bombardier, Embraer and other major players at the PAS.

Summary

  • First, an overarching look at what to expect;
  • What to expect for Airbus at the show;
  • The future of the A380neo;
  • Outlook for the A330ceo/neo; and
  • Outlook for the A321LR.

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Can PIPs bring the A380 what Emirates Airlines wants?

By Bjorn Fehrm

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Introduction

26 April 2015, C. Leeham Co: With Emirates Airlines deciding for Rolls-Royce Trent 900 engines for its 50 new A380s and admitting that it would accept that this could be for all of them if Airbus does not proceed with an A380neo, the time has come to look at how much incremental improvements can be brought on the present A380.

Our proprietary aircraft model is particularly suited for such studies as we can change any parameter and read the result off the efficiency scale. We can also play with the aircraft’s configuration and see what effect it will have. Based on Emirates’ new configuration of A380s equipped with the Trent 900 engine, we have checked what incremental improvements are doable and what would they bring.

Summary

  • Our deep analysis of 18 Dec. 2014 showed that the present A380 is the most economical aircraft one can operate if one can fill it to normal load factors.
  • Emirates COO Tim Clark complements this fact with the statement, “It is Emirates’ most profitable aircraft” in the press conference in London last week when announcing the Trent 900 deal with Rolls-Royce.
  • Clark’s statement also covers the fact the passengers prefer A380 over other aircraft if they have a choice, it operates with higher load-factors then Emirates other aircraft.
  • The A380 is a rather special design and its characteristics make Product Improvement Packages, PIPs, possible in a number of areas. We discuss which they would be and model their effect on overall performance.
  • While the sought-after 10%-13% improvement would not be in there, incremental changes can cover up to half of that with more or less plausible business cases. Airbus is right now deciding which of these they see as worthwhile and introducing them.

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Rolls-Royce displaces Engine Alliance for Emirates A380 order

Rolls-Royce, in a major upset, won the Emirates Airlines order to power 50 Airbus A380s ordered in November 2013. The win displaces Engine Alliance, which to now has been the sole-source provider for EK’s A380s.

Two sources confirmed the RR win. RR and Airbus did not comment on the win. EK and RR have not made any announcement. EA also did not comment.

According to one source, EK determined the RR Trent 900 was determined to be up to 4% more efficient than EA. But it’s unclear if there were other factors involved. Read more

European airline industry: the restructuring patient

By Bjorn Fehrm

Introduction

April 7, 2015: There is not a month going by without a strike at some of the European airlines, big or small. The strikes are the tip of an iceberg, which is called “restructuring”; “restructuring for profitability,” “for survival” and for “having a future.”

European airlines are the most unprofitable next to African airlines, according to International Civil Aviation Organization (ICAO). The collected profits from all European airlines are less than one third of the profits in North America. The strikes are called from unions that are fighting managements as these try to change the fundamental cost structure of the airline to be able to compete, not only with Europe internal competitions from LCCs eating away on domestic traffic but now also from Gulf carriers taking away international traffic at an alarming rate. Read more

Exclusive: Emirates Airlines gets pitch for 100 Boeing 747-8s

  • Update, 3:30pm PST: For those who may not be adept at reading literally what was written, we did not say Boeing made the pitch.

Feb. 4, 2015: In a pitch designed to save the Boeing 747-8 and simultaneously kill the prospect of an Airbus A380neo, Emirates Airlines has received a pitch for 100 of the slow-selling Boeing, two sources familiar with the situation tell Leeham News and Comment (LNC). This is isn’t yet a formal proposal, as far as we know.

Tim Clark, president of Emirates, said he would buy 100 A380s if Airbus re-engined and launched the neo. The neo would use the new Rolls-Royce Advance engine, according to two different sources. Neither Pratt & Whitney nor GE Aviation, which dominate the current A380 engine market share with its joint venture Engine Alliance GP7200, are interested in developing a new engine for the prospective A380neo, according to public statements by both companies. PW doesn’t offer an engine alone that could be adapted to the size required for the A380neo. GE’s GEnx engine, used on the Boeing 787, is in the thrust and size bracket but would only improve the efficiency with 4-5%, thus not worth the change effort. The smaller version of the GEnx is on the 747-8. Read more

Interview with John Leahy: A380 sales strategy going forward

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Now open to all readers (Fe. 15, 2015)

By Bjorn Fehrm

Introduction

Jan 14 2015: In our deep analysis of the Airbus A380, we concluded that there is nothing wrong with the basic economics of the giant airplane. In fact, with today’s fuel prices, the aircraft’s Direct Operating Costs (DOC) are 20% belowLeeham logo with Copyright message compact its alternatives in the market.  Yet the aircraft is experiencing its worst sales drought since its launch, despite adding a leasing alternative during 2014 and efforts by Airbus.

To understand why and what Airbus plans to do about it we arranged for an exclusive interview with Airbus Chief Operating Officer-Customers, John Leahy, at the sidelines of Airbus annual press conference.

Summary

  • Our assessment of A380’s cost of operation
  • Operating airlines experience with the A380
  • Airbus sales strategy to date and changes going forward

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Top 10 Leeham News stories of 2014

Dec. 30, 2014: This was a highly active news year. Airbus launched the A330neo and A321neoLR. Boeing firmed up more than 200 orders for the 777X. Emirates canceled 70 A350 orders, a record cancellation when no customer collapse was involved. Boeing and its principal union, the IAM 751, faced off in a bitter contract vote. And on the truly dark side, Malaysian Airlines lost MH370 and MH17.

The Top 10 stories read on Leeham News included all of the above but MH17. Others made the Top 10 list. Here it is:

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Boeing 777-300ER and its replacements; A350-1000 and 777-9X.

By Bjorn Fehrm

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Introduction

Dec. 21, 2014: Last week we did a deep analysis of A380 and its competition. It has been windy weeks for the aircraft since the Airbus Global Investor Forum and it was time to bring some needed facts on the table. These facts showed there is a clear difference between the hype being perpetuated in the media and the reality. As we cleared the situation around the A380, we also touched on the large twins that could fulfill at least parts of its missions.

Leeham logo with Copyright message compactThere has been a lot of discussion around these aircraft as well as they form the battle of titans one level down from A380, the large, long-haul market today dominated by Boeing’s 777-300ER (the A380 does not have a real competitor–the 748i is clearly smaller, in fact so much smaller that it will be engulfed by the 777-9X).

Summary

  • The 777-300ER had an exclusive run in its size until launch of the A350-1000;
  • The A350-1000 doesn’t enter service until 2017;
  • 777-9 EIS set for 2020, with hopes to advance by six months;
  • We undertake a full economic analysis which gives good cues as to the future dominance of Boeing or Airbus in this highest margin segment of the market.

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A380, a deep analysis of its competitiveness

By Bjorn Fehrm

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Introduction

Dec. 18, 2014: In our Monday article we go behind the scenes of the doubts that were spread over the A380 by Airbus last week. To complete the picture we now update our competitive analysis that we did in February this year. We then compared the A380 to Boeing’s 747-8i, the 777-300ER and the forthcoming 777-9X. We also included Airbus closest aircraft, the A350-1000.

Leeham logo with Copyright message compactA lot has happened since then. Airbus has done a lot of work on the passenger area of the A380 to offer increased passenger densities and the pictures of the emerging Boeing 777-9X and Airbus A350-1000 is now clearer.

Sales efforts of the A380 has also progressed, with meager results despite adding a leasing proposition what should make the hurdles of operating a small sub-fleet of A380s lower. To understand why, we interviewed Mark Lapidus, the CEO of Amedeo, the leasing company which specializes in financing and leasing of A380s. We wanted specifically to talk to Lapidus about the reactions of the airlines to the A380 and what problems he saw in selling an aircraft of this type.

In preparing the article we also gathered additional info from Airbus and Boeing, from the former around their work on the cabin configurations and densities, from the latter the maintenance costs for the up and coming 777-9X.

Summary

  • In our February article we established that an A380 is roughly equal on fuel per passenger transported to the benchmark in the present non-VLA long haul market, the Boeing 777-300ER. We also found that this is highly dependent on how many passengers one assumes for both aircraft in the comparison.
  • We could also see that come 2020, when the replacement of the 777-300ER would be available, the 777-9X, A380 would trail with up to 20% in fuel efficiency, once again dependent on how many seats were used in the comparison.
  • At the time we only looked at a fuel consumption comparison; we did not include crew cost, maintenance costs, landing and en route fees to generate Cash Operating Costs (COC) or capital costs to come to Direct Operating Cost (DOC). In today’s updated analysis we add these costs items.
  • Finally we have talked with Amedeos CEO Mark Lapidus, asking about his discussions with the Airline CEOs and their teams, to understand what the reactions are from the airlines and why has he not placed any A380 with customers yet.

As we did this deeper study, a more nuanced and different picture emerged from the one seen in February. The results busts a number of deeply engraved myths, one being that four engines are more expensive to fly and maintain than two.

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