Boeing 777-9 or Airbus A350-1000 for the Gulf carriers?

By Bjorn Fehrm

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Introduction

May 17, 2018, © Leeham News: The recent agreement between the US and the Gulf carriers limits the expansion of the carriers on the US market. As the premier long-range destination area from the Gulf is the US market, this will influence the lift needed by the three.

All three carriers, Emirates, Qatar Airways (Qatar) and Etihad, have decided on the 777-9 as the mainstay for their long-haul needs. With the change, the question arises, will Qatar increase the buy of the A350-1000 instead of taking the 777-9 and will any of the others reconsider?

To understand what’s involved we compare the capacity and the costs of the 777-9 and A350-1000. How large is the difference? Is the A350 the better choice if the extreme long-haul capacity needs decline?

 Summary:
  • The maximum range and per seat costs of the 777-9 and A350-1000 are close when compared apples to apples.
  • The advantage for the 777-9 at full aircraft disappears quickly as load factors decline.
  • If the needed capacity of the long-haul US routes declines, the 777-9 can be too much aircraft for the Gulf carriers.
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Wide-body production rates show mix of strength, weakness

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Introduction

May 14, 2018, © Leeham News: Wide-body production rates by Airbus and Boeing are expected to go up modestly during the next three year, with a jump in 2022—if Boeing 777X production rates head for 7/mo in late 2022, as the company projects.

The supply chain was asked last year by Boeing for a Rate Readiness Assessment that suggests a rate of 5/mo in late 2021 and rate 7/mo a year later.

Airbus is expected to boost production of the A350 to 13/mo as early as late next year. Meanwhile, the A330 production rate is coming down due to soft demand.

These rates omit impacts of the US withdrawing from the Iran Nuclear Deal, in which some 100 Airbus orders, mostly wide-body, and some three-score wide-body Boeing orders disappear with the action.

Summary
  • Production rate hikes driven by A350, 767, 787.
  • A380, A330, 747, 777 remain weak.
  • Is entire twin-aisle market continuing a down-gauging?

Scott Hamilton will discuss production rates at the Southeast Aerospace & Defence Conference next month in Mobile (AL). Click here for more information.

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FAA AD may severely limit ETOPS of some RR-powered 787s: sources

British Airways Boeing 787 without engines on the Boeing Paine Field line. Photo taken April 12 by Jennifer Schuld.

April 14, 2018, © Leeham News: An airworthiness directive from the US Federal Aviation Administration is expected as early as Tuesday that could severely restrict flight operations some of Rolls-Royce-powered Boeing 787s.

The AD is expected to require inspections and a reduction in the ETOPS long-range operation to 140 minutes from the nearest airport from 330 minutes, sources say. Inspections have to be made by May 20, according to preliminary information. If inspections fail, ETOPS may be reduced to 60, two airlines tell LNC. A third source didn’t have the numbers but said the AD is expected to be “onerous.”

Until the AD is issued and published, the numbers and conditions could change, one source tells LNC on background.

EASA, the European safety agency, issued its AD yesterday, with an April 20 effective date.

About 25% of the 787s are powered by Rolls-Royce engines, but not all engines are affected.

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2018 an important year for wide-bodied airplanes

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Introduction

Feb. 5, 2018, © Leeham Co.: This will be an important year for wide-body sales in commercial aviation.

It would be overstating to say 2018 will be a pivotal year for wide-body airplanes, but there should be some important developments.

Summary
  • Boeing may—or may not—launch the twin-aisle New Midrange Aircraft this year.
  • Sales of the 777X remain stalled.
  • Sales of the A330neo remain stalled.
  • Airbus must decide whether to boost the production rate of the A350.

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Used A330-200s could be interim solution to NMA

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Introduction

Dec. 11, 2017, © Leeham Co.: Boeing is considering restarting the 767-300ER passenger line as an interim aircraft to the New Midmarket Airplane.

Airbus is pushing the A330-800 or, alternative, new A330-200s are its solution to the upper end of the Middle of the Market sector.

There is another alternative, however: used A330-200s. There is an emerging supply of these as one airline plans a down-sizing and initial 10- to 12-year leases expire in the near future.

Etihad is planning to dispose of its Airbus A330-200s. These would make a good, potential pick-up by an airline seeking an interim solution while awaiting the New Midrange Aircraft. Photo via Google images.

Summary
  • NMA EIS target remains 2025, Boeing says, as opposed to 2027, according to market sources.
  • Regardless, timeline, production ramp-up indicates near-term need for newer airplanes.
  • Business case for NMA still hasn’t closed; program launch still uncertain, but activities continue.
  • Boeing 767 production ramp up studies underway, effective as soon as early 2020.

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American hopeful Trump Administration will take on Mid-East 3 airlines

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Introduction

Oct. 2, 2017, © Leeham Co., Grapevine (TX): American Airlines officials dodged commenting about the specifics of the Boeing-Bombardier trade dispute when asked about it at the investors/media day last week in this Dallas suburb.

Instead, the general counsel, Steve Johnson, offered up only a general statement supporting the Trump Administration’s hard line on trade.

The reason for this generality is obvious: American, along with Delta Air Lines and United Airlines, is engaged in its own trade war and needs support from the Administration.

AA, DL and UA are battling Big Three airlines from the Middle East over being subsidized and abusing Open Skies treaties. The US carriers want Trump to knock down the ME3, Emirates Airlines, Qatar Airways and Etihad Airways.

Oddly, no question was asked of the American officials about the current state of the battle during the day.

LNC asked American CEO Doug Parker about the issue following the event, however.

Summary
  • Recent meeting with US was encouraging.
  • No commitment yet from Trump Administration.
  • Market conditions don’t matter to ME3, American says

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VLA sector dead, Boeing claims, but Large Wide Body also struggles

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Introduction

Sept. 26, 2017, © Leeham Co.: Boeing declared the Very Large Aircraft sector dead in its most recent Current Market Outlook, removing the category entirely when the 2017 CMO was revealed at the Paris Air Show.

Airbus A350-1000. Sales are slow–is the 350-450 seat sector the next VLA? Airbus photo.

But the Large Wide Body (LWB) category appears to be on life support.

The LWB is 350-seats and above. This includes the Boeing 777-300ER, which is already on its way out, the 777-8, the 777-9 and the Airbus A350-1000.

The Medium Wide Body (MWB) category centers around 300 seats. This includes the A330-900, A350-900, 777-200LR and 787-10.

The Small Wide Body (SWB) includes the 787-8, 787-9, A330-200 and A330-800 in the 220-275 seat sector, twin-aisle aircraft. This does not include the 220-240 seat high density Airbus A321neo and Boeing 737-10 single-aisle aircraft.

Boeing’s CMO defines the twin-aisle markets differently: Small wide-body:  <300 seats,  Large wide-body:  >300 seats.

Summary
  • Airlines prefer smaller wide bodies.
  • Downsizing trend begun with 787 continues.
  • Smaller outsells larger in seven of last 10 years.
  • Two of the three years involved extraordinary events.

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Assessing the 25 YOA aircraft factor

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Introduction

Click on image to enlarge.

Sept. 21, 2017 © Leeham Co.: Airbus and Boeing look ahead to 2021 and the next several years when wide-body aircraft begin turning 25 years old to spur orders for this sector.

Boeing specifically points to this period as one reason for the announcement last week that it will boost production of the 787 to 14/mo beginning in 2019.

Summary
  • There already are 1.4 times more wide-body airplanes scheduled for delivery in 2021-2025 than there are aircraft turning 25 years old.
  • The next surge in aging aircraft comes ~2030.
  • Middle of the Market aircraft isn’t factored in.

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Worries increase over Middle Eastern airlines

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Introduction

Aug. 28, 2017, © Leeham Co.: Market sources are increasingly pointing to weakness in the Middle East airline sphere as a threat to existing Airbus and Boeing

Emirates Airline holds the future of the Airbus A380 in its hand, so-to-speak. Source: Emirates.

orders.

Emirates Airline, Etihad Airways and Qatar Airways are the Top 3 of Boeing’s Top 10 wide-body customers.

These three also represent 73% of Boeing’s 777X order backlog.

Qatar and Etihad are the Nos. 2 and 3 wide-body customers at Airbus (after AirAsiaX); Emirates has slipped to No. 8.

The financial trouble at Etihad, exacerbated by its poor investments in the now-bankrupt Alitalia Airlines and AirBerlin, have been well documented.

Emirates’ profits have fallen dramatically and is facing over-capacity. Qatar Airways is now isolated by intra-geopolitical events.

Summary
  • Emirates and Etihad already deferred Boeing orders.
  • Lessors beginning to express concerns.
  • Customer concentration for 777X worries some.
  • A380 future rests largely with Emirates.

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Air Berlin files for bankruptcy

By Bjorn Fehrm

August 16, 2017, ©. Leeham Co: Air Berlin, Germany’s second largest airline, with 85 destinations, 8,000 employees and 72 aircraft, filed for bankruptcy yesterday.

We wrote about Air Berlin’s problems in October last year and we’ve covered its part owner, partner and moneylender, Etihad Airways, in articles this year.

It was the latter that no longer believed in Air Berlin’s turnaround plan and stopped the money flow.

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