Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing reports mixed results of latest employee survey, but middle management and officers remain key obstacles April 22, 2025
- Hopes for 1Q financial progress turns into bumpy ride for Boeing April 21, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
- Natilus: Composite BWB, entry-into-service by 2029, 570 on order April 17, 2025
- China bans Boeing, US parts imports in tariff war April 15, 2025
Emirates feels low-cost, long-haul competition
Note: Nov. 24 and 25 are Thanksgiving Holidays in the US. Our next post will be Monday.
By Bjorn Fehrm
23 November 2016, ©. Leeham Co: Emirates Airline president Tim Clark says the carrier “has to change its approach to long-haul pricing to combat increasing competition” after presenting a half year 2016 profit which plunged 64% on 9 November.
The reason is that traditional mainline carriers are entering the low-cost, long-haul market in addition to the established LCC entrants: Norwegian Air Shuttle, AirAsiaX and Wow Air.
Figure 1. Emirates long-haul A380. Source: Emirates.
Emirates will add new low-cost fares to keep its growing fleet of Airbus A380 and Boeing 777 filled. Clark states this is necessary and that the airline will not back down on its plans for additional aircraft. It will be a period “of fierce competition as more and more international network carriers are entering low-cost, long-haul,” declares the COO.
What has changed? Isn’t Emirates the Kings of competitive long-haul travel? Read more
Pontifications: A380 “oh-woe-is-me” valid, if premature
By Scott Hamilton
Sept. 19, 2016, © Leeham Co. The real (very boring) headline should be: “Aircraft lease reaches end.”
This was the wry comment by Alasdair Whyte of Aircraft Investor last week, reporting on media coverage of Singapore Airlines’ decision to return its first Airbus A380 at the end of its lease term.
The “oh-woe-is-me” series of media stories ignored that Singapore routinely flips its fleet about every 10-12 years. SQ also has five A380s on order that, wonder of wonders, arrive as the earliest models become of age.
It is particularly distressing that one trade publication that should know better jumped on the woe-is-me bandwagon.
Pontifications: Odds and Ends to end the summer
By Scott Hamilton
Sept. 5, 2016, © Leeham Co.: August was unusually slow, so today is sort of an Odds and Ends clean-up of the summer.
There was the Southwest Airlines engine incident and the reports that ANA’s Boeing 787s have engine issues, but I wrote about these last week.
Today, the Odds and Ends include more on the Mitsubishi MRJ; Airbus deliveries; sales campaigns and other stuff.
ExIm remains blocked by one US Senator
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Introduction
Aug. 18, 2016, © Leeham Co. The US Congress reauthorized the ExIm Bank after a long effort to kill the institution. But the Bank remains out of business for transactions for more than $10m. This means Boeing can’t use the Bank for export financing for purchasers of its 7-Series airplanes.
Why?
Because the Bank doesn’t have a quorum for its Board of Directors.
Why?
Because one US Senator is blocking appointments that would put the Bank back in business.
Who is this Senator?
US Sen. Richard Shelby (R-AL) is the lone senator blocking the US ExIm Bank from approving credit support for more than $10m. Boeing was a large beneficiary of ExIm support. Shelby is a supporter of the Airbus A320 plant in Mobile (AL). Photo via Google images.
Richard Shelby of Alabama. Shelby once supported ExIm Bank. Now he doesn’t.
According to news reports, Shelby became a convert to the extreme right’s view that ExIm is a form of corporate welfare and Boeing is its primary recipient. Boeing doesn’t need this support, Bank opponents say.
LNC believes there might be another reason.
Alabama is where Boeing rival Airbus opened an A320 assembly plant last year.
Summary
- Airbus had an advantage over Boeing with ExIm Bank shut down—until Airbus ran into its own export financing issues.
- Boeing has a defense unit in Huntsville (AL).
- Emerging Boeing rival Bombardier retains export credit financing support.
What’s happened to the VLA sector?
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Introduction
Aug. 15, 2016, © Leeham Co.: Boeing says it may discontinue the 747 program.
Airbus put the A380neo on indefinite hold. Qantas Airways says it doesn’t want its last eight orders. The OEM will reduce the production to 12/yr in 2018.
There haven’t been any Boeing 777X sales since June 2015. There are only six identified customers and there has been a new, identified customer added since July
Boeing is considering a larger 777-10, which will carry 50 more passengers than the 777-9. But is there a market? Boeing photo via Google images.
2014, when ANA ordered the X.
Sales have dried up for the 365 passenger Boeing 777-300ER and only a smattering of orders have come in for its competitor, the Airbus A350-1000.
What’s happened to the Very Large Aircraft sector? What’s happened to the large, medium twin aircraft sector?
Summary
- The VLA market pioneered by Boeing and pursued by Airbus is virtually nonexistent.
- Yet there are those in Boeing who want to launch a 450-passenger 777-10 into a dubious market demand.
- 777 Classic sales dried up, but A350-1000 isn’t doing great, either. Are these too big, too?
Boeing 787: Stable Rate, Hike Rate or Cut Rate
Aug. 2, 2016, © Leeham Co.: Boeing officials increasingly downplay the prospect of the 787 production rate increasing to 14/mo by the end of the decade from the current 12/mo, reflecting uncertainty over the strength of the wide-body market in the near-to-medium term.
Dennis Muilenburg, CEO of The Boeing Co., said during the company’s 2Q2016 earnings call July 27 that “we haven’t pinned down a specific decision point [on ramping up to 14/mo] yet because we’re going to keep a close eye on the market. The signals from our customers, we’ve got time to do our due diligence here.
Figure 1. Boeing 787 Orders and Deliveries. Click on image to enlarge.
“Our principle here is to keep wide body supply and demand in balance. And we’re confident in the 787 program across that span of scenarios, and we’re going to continue to work campaigns to fill out to the 14 a month rate step-up, and we’ll evaluate timelines and decisions around that. But you can be very confident that whatever we decide, we’re going to keep supply and demand in balance. We’re going to do it efficiently and productively, and all of this again is enveloped by our expectation of a year-over-year cash growth business.”
Boeing noted that the program is sold out in 2018 and has some slots available in 2019. At rate 12, the likelihood of these slots being filled may be challenging. Although the number itself isn’t great—27, according to Ascend—finding enough customers for delivery in 2019 could be challenging in the current soft environment, and with competition from a much lower priced Airbus A330, whether a CEO or NEO. The challenge becomes greater the farther out in the future.
If Boeing went to rate 14, this is another 24 airplanes per year that have to be sold. (Figure 1.)
Bjorn’s Corner: The Middle East Air Traffic Management
By Bjorn Fehrm
June 17 2016, ©. Leeham Co: Having covered the Air Traffic Management challenges that are present in the North American and European airspaces, we will now put the light on another air traffic hot spot, the Middle East.
Figure 1 show that air traffic is more intense over the US and Europe airspaces but that there are main crossroads to Asia and Africa that take their route over the Middle East, and the area has hot spots.
Figure 1. Air traffic’s main routes in the world. Middle East is an area with hot spots. Source: Rockwell Collins
As we have seen, the technical solutions are well on their way to enable the implementation of a modern and efficient Air Traffic Management. Both the US and European air space modernization is hinging on how well the human factors change process can be accomplished (in the US budgets are also a hindrance).
If we add political factors to the jam, we have a good description of the situation in the Middle East. Read more
Slowing economies begin to impact Airbus, Boeing
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Introduction
LatAm Airbus A350. LatAm may defer some A350s and/or Boeing 787s. Photo: Flickr via Google images.
June 13, 2016, © Leeham Co.: Signs are becoming more frequent that airlines are facing slowing economies around the globe, with impacts on existing orders in the backlog.
Last week JetBlue said it is trimming growth on rising fuel costs and softening revenue. LatAm also said last week that it plans to trim some Airbus A350 and Boeing 787 orders amid slumping traffic in Brazil. Delta Air Lines previously said it will defer four A350s and trimming growth due to slowing economy.
Summary
- Wide-body sales slowing this year.
- 787 Surplus developed.
- A330neo sales stall.
- A350-2000 on hold.
- 777 Classic sales stall.
- Cargo demand still anemic, says IATA.
Sales slowing for larger, Airbus, Boeing twin-aisle jets
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Introduction
Boeing 777. Photo via Google images.
March 28, 2016, © Leeham Co.: A downturn in the order cycle, low fuel prices and backlogs extending to 2020 and beyond combine to reduce the likelihood of much in the way of wide-body orders this year, say commercial aviation officials.
A preference for smaller twin-aisle jets could also hurt sales of larger twin-aisle airplanes, according to observers.
These factors spell challenges for Airbus and Boeing for the A350-1000, the 777-300ER and the 777X.
Summary
- “Nobody’s talking about the A350-1000 or the 777X,” says the president of a leading lessor.
- Preference indicated for the smaller Boeing 787-9 over the larger 777-300ER for new routes.
- Low fuel prices reduce the need for new technology jets.