Top 10 Stories in 2015

  • HOLIDAY SCHEDULE: Unless there is major, breaking news, Leeham News and Comment is taking the Christmas-New Year’s holidays off. We resume our normal publishing scheduled Jan. 4, 2016.
  • So what do we have? Mitsubishi holding an MRJ briefing on Christmas Eve, Tokyo time. There’s no webcast or dial-in number but we’ll look for the stories coming out of this briefing and post something just for the record.

Here are the Top 10 stories on Leeham News and Comment for 2015:

Read more

Boeing stock sell-off on 777-200ER deal over-blown

  • Stock sell off on Boeing 777-200ER purchase price overblown.
  • Wells Fargo stock downgrade the next day spurs larger sell-off.
  • Credit Suisse takes a deep dive into Boeing cash flow.
  • Accelerating PDPs, purchase payments continues to support cash flow.
  • HOLIDAY SCHEDULE: Unless there is major, breaking news, Leeham News and Comment is taking the Christmas-New Year’s holidays off. We resume our normal publishing scheduled Jan. 4, 2016.

Dec. 22, 2105, © Leeham Co.: The sell-off in Boeing stock last week tied to the Delta Air Lines purchase (Letter of Intent) of a 777-200ER for $7.7m was overblown.

The stock was off 2.6% Thursday after Delta CEO Richard Anderson Tweeted an LOI had just been signed to buy a 777-200ER. This sell-off, and an earlier one when Anderson said the -200ER could be acquired for $10m, prompted hand-wringing over 777 values and the potential impact on new 777 Classic sales needed to build the bridge to the production of the 777X.

Read more

Bjorn’s Corner: Production rates

By Bjorn Fehrm

By Bjorn Fehrm

20 November 2015, ©. Leeham Co: Emirates Airline CEO, Tim Clark, is quoted as having said “it takes them forever to get this thing up.” He was talking about the Airbus A350 production rate and his reasons for delaying Emirates’ decision on what to buy for the airlines medium range needs. Clark said Emirates wants more aircraft in operational use before they can evaluate the operational characteristics of the A350.

Emirates want to see at least 20 aircraft in operation and right now it is about seven to nine that fly every day. Actual deliveries stand at 10 with one month to go before the first anniversary when deliveries started (the first A350-900 was delivered to Qatar Airways on the 22 December 2014).

Looking at how many aircraft that are actually flying, one can agree with him. It seems actual production rate is more like one per month rather than the three to four a month that Airbus talked about at the first delivery ceremony.

So why is this? Is the production of A350 therefore in serious trouble? What is taking them so long? Has Emirates pointed to a weak part of the A350 program?

Read more

Emirates’ 615 seat A380, is it more economical?

By Bjorn Fehrm

Subscription required.

Introduction

Nov. 11, 2015, ©. Leeham Co: Emirates Airline showed off its newly delivered two class A380 at this week’s Dubai Air Show. With a record 615 seats, this is the densest A380 that has been delivered by Airbus.

EK 615 seat A380Emirates have reached this record seat number by replacing the first class cabin (and showers) with economy seats. Part of the business area has gone as well. What remains on the Premium side are 58 of the well known lie-flat seats and the ubiquitous Emirates bar.

The aircraft is aimed at high density destinations which are reached within a 12 hours limit, therefore the aircraft has no crew rest facilities.

The question is, what improvements in seat-mile costs does this configuration bring and how does it stack up against a similarly configured Boeing 777-300ER or 777-9?

Will there be a change in the economical pecking order compared to the more classical long range configurations that we looked at December last year?

We used our proprietary performance model to find out.

Summary:

  • To be fair to all aircraft, we equipped them with similar high density two class cabins.
  • We also kept the ratio of business-to-economy seats the same for all cabins.
  • The result is high capacity workhorses that are used for flying passengers and cargo at sector lengths of up to 12 hours. Consequently, none of the aircraft have crew rest facilities.
  • We then looked at fuel efficiency, Cash Operating Costs and Direct Operating Costs for these long-haulers now given a mostly mid-haul work scope.

Read more

Emirates’ mid-range choice

By Bjorn Fehrm

Nov. 10 2015, ©. Leeham Co: The Dubai Air Show is on its second day and there are no mega orders. The one that should have been, the mid-range requirement for Emirates Airline, has been postponed, not only to “next year” but for “another year.”

What is the reason? Are we seeing a widebody oversupply fueled by used Boeing 777s/Airbus A330s being available in the market “for very low prices,” as suggested by Delta Air Lines CEO Richard Anderson? Are these the first signs of a damping of an order bonanza which has been going on for five years? Will things be more quiet (or should we say normal) going forward?

We don’t think so. Emirates just want to make the right choice and the equation has got more complicated as it has been working the problem. And it is in no hurry.

Read more

Pontifications: A380neo? Try A380TXWB. Dubai Air Show and other Odds and Ends

A380 Trent XWB

Click on image to enlarge. Airbus photo.

Nov. 9, 2015, (c) Leeham Co. Airbus last week launched its A380 flying test bed with the A350-1000’s Rolls-Royce Trent XWB 97,000 lb engine placed in the number two position.

The first thing that came to mind when I saw the photo was that if Airbus put three more engines on it, you’d have the A380neo. Or maybe call it the A380TXWB. Done and dusted, as they say in England.

Read more

Pointifications: Wide-body orders; Bombardier’s $1bn

By Scott Hamiltn

By Scott Hamilton

Nov. 2, 2015, © Leeham Co. Boeing gets an order for up to 26 787-10s.

Airbus firms up options to an order for 30 A330s, added to 45 previously announced by the same customer.

Boeing announces an order for nine 787-9s.

For all the talk of a wide-body surplus, this is shaping up to be a good year for wide-body orders.

Through September, Airbus recorded 90 firm wide-body orders, all but three for the A330 family. Boeing recorded 152 during the same period (these are net figures). Not included are any of the orders listed above, which have yet to be recorded as firm contracts.

Based on the YTD-September figures and those above, Airbus has a 42% share of orders this year; Boeing has 58%.

Read more

Delta Air sees 777 surplus developing

Subscription required.

Oct. 14, 2015, © Leeham Co.: Delta Air Lines sees a major surplus of young Boeing 777s developing in the near term as key operators plan to let the aircraft go from leases or retirements. The looming surplus makes it more likely that increased pressure on Boeing’s efforts to sell new 777s, and to sell them at reasonable margins, will become increasingly difficult.

Goldman Sachs, the investment bank, sees Delta’s comments as further evidence supporting the likelihood there will be a sharp production rate reduction as early as 2017, perhaps down to six/mo.

Separately, Bernstein Research’s aerospace analyst Doug Harned, also see 777 rates coming down to the equivalent of 6.5/mo in 2017, six in 2018 and five in 2019. The first 777X isn’t scheduled for delivery until 2020, when Harned predicts only five deliveries of the X.

Read more

Qantas robbed of longest flight by Emirates and then Singapore airlines

By Bjorn Fehrm

Oct. 14 2015, ©. Leeham Co: The planned “Flight 21” of Singapore Airlines between Singapore and New York would rob Qantas Airways of the title of flying the longest direct flight in the world come 2018.

Qantas operates today’s longest flight, the one between Sydney (SYD) and Dallas- Ft. Worth (TX) (DFW), using its Airbus A380. Emirates plans to take that crown next year with a Dubai (DXB) to Panama City (PTY) flight, Figure 1. It’s fractionally longer than the Qantas flight when comparing great circle distances (the 2015 and 2016 label).

Qantas CEO Allen Joyce just announced that the airline plans to take that title back when the Boeing 787-9 arrives in 2017. This aircraft enables direct service to London Heathrow (LHR) with flights from Perth (PER) in Western Australia, a flight of 7830nm or 18 hours, labeled 2017 in Figure 1.

Longest flights 2015-2018

Figure 1. Worlds longest flights 2015 to 2018. Source: Great Circle Mapper.

Read more

Pontifications: Airbus flies past Boeing in order race

By Scott Hamiltn

By Scott Hamilton

Sept. 7, 2015, © Leeham Co.: Airbus flew past Boeing in the annual orders race when the August numbers were reported last week by both companies.

With the order for 250 A320s finally firmed up by India’s Indigo Airlines (it was announced last year), and an order for 45 A330ceos announced by China, the outcome was clear.

Through August, Airbus now has a 66% market share of single-aisle orders. Boeing has a 60% share of wide-body orders, thanks to a boost from FedEx for 50 767-300ERFs. (Boeing reported 48 767 orders net of cancellations.)

But if you remove the FedEx orders and just look at passenger airplanes, Airbus edges out Boeing in the year-to-date wide-body market share.

Read more