March 9, 2015: The top four players now are acting differently than previous eras, focusing on profits and return on capital instead of market share, says Mark Eliasen, vice president of finance and treasurer of Alaska Airlines.
Alaska returned 18% on its margin, the highest in the US industry, with low costs relative to its competitors. The company has grown at a rate of 7% year over year for several years. “We’re really happy with a single fleet.” The Boeing 737-focus allowed dramatic gains in lowering costs.
Of the five investment grade airlines, Eliasen notes that four of them are single-fleet carriers.
Nico Buchholz, EVP of Fleet Management of Lufthansa Airlines, said European carriers don’t have capacity discipline and the network carriers have to reinvent themselves. Lufthansa Group includes low cost carriers that are growing while Lufthansa itself strives to be the No. 1 choice for its traditional market.
Eurowings, a Lufthansa company, provides low cost service to short haul routes and soon is expanding to long haul. Eurowings prompted other LH airlines, including Austrian, Lufthansa and Swiss, to lower costs because if they didn’t, growth would happen at Eurowings.
Buchholz predicts consolidation in Europe and says Lufthansa Group and IAG (the British Airways group) will be two of the survivors. “But I wouldn’t go beyond that” in predictions, at least not before the crowd of 1,800 at the ISTAT conference where the remarks were made.
Pontifications: Jumping on the MOM bandwagon
By Scott Hamilton
March 15, 2015: There was little “real” news coming out of ISTAT this year, which is probably why the topics of the “757 replacement” and the 200-250 seat, 4,500 mile twin-aisle airplane prospect drew so much attention.
Sitting there in the audience, I could not help but have a feeling of “been there, done that.” Leeham News and Comment has been closely examining these two topics since we exclusively revealed October 21 last year that Airbus was showing the long-range A321 concept to airlines. We dubbed the concept the A321neoLR. Airbus formally launched the program in January and shortened the name to the A321LR.
Between our reveal and the launch, LNC’s economic guru, aerodynamic engineer Bjorn Fehrm, took a very close analysis of the A321LR vs the Boeing 757 and the Boeing 737-9. He analyzed the prospect of a long-range Boeing 737-8. He also looked at the prospect of re-starting the 757 in the form of a re-engined 757 Max.
We concluded: Read more
34 Comments
Posted on March 15, 2015 by Scott Hamilton
Airbus, Boeing, ISTAT, Leeham News and Comment
225/5000 Sector, 737 MAX, 737 MAX 10, 737 replacement, 737-8, 737-8ERX, 737-9, 757, 757 MAX, 757 replacement, 757-200W, 787, 787 Lite, 7X7, 8X8, A321LR, A321neoLR, Air Lease Corp., Airbus, Boeing, Boeing 7X7, Boeing 8X8, ISTAT, Jim McNerney, Middle of Market airplane, MOM, Randy Tinseth, Steve Udvar-Hazy
Pontifications: From the sidelines of the ISTAT conference, Notes #2
March 13, 2015: More Notes from the sidelines at the ISTAT conference this week in Phoenix.
By Scott Hamilton
Boeing 777 production rates and advancing schedule
Randy Tinseth, Boeing VP-Marketing, predictably stuck to Boeing messaging Monday at the ISTAT conference when I asked him about the change in tone I described in my post Monday morning about the 777 Classic production rate to the entry-into-service of the 777X.
Waving a copy of my post in the Q&A session of Tinseth’s market update and saying I had transcripts of every Boeing earnings call and investors presentation in which the “bridge” question was posed since the 777X program was launched, I cited Boeing CFO Greg Smith’s response to orders in the March 5 JP Morgan investors’ day and asked Tinseth about it.
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57 Comments
Posted on March 13, 2015 by Scott Hamilton
Airbus, Boeing, Bombardier, Embraer, ISTAT, Mitsubishi
777 Classic, 777X, 787, Boeing, Bombardier, CRJ, CSeries, E-Jet E2, EJet, Embraer, ISTAT, Japan Air Lines, John Slattery, Mitsubishi, MRJ90, Randy Tinseth, Ross Mitchell
ISTAT: Industry stability as good as this CEO has ever seen it
Despite the constant fears of an impending order bubble, the CEO of one of the world’s largest leasing companies says the airline industry’s stability is as good as he’s ever seen it in his career.
Jeff Knittel, president of CIT Transportation, to which CIT Aerospace reports, told a press briefing Tuesday at the ISTAT conference that US network carriers are stronger than they have ever been, low cost carriers (LCCs) are maturing and ultra low cost carriers (ULCCs) are changing the dynamics of business. Read more
2 Comments
Posted on March 11, 2015 by Scott Hamilton
Airbus, Boeing, ISTAT
Airbus, Boeing, CIT Aerospace, Damon D'Agostino, Jeff Knittel
ISTAT: Lessors look at consolidation, market stability
The closing panel at ISTAT is the popular lessors panel, an unscripted conversation and Q&A among the industry leaders. Lessors typically do not favor higher production rates at Airbus and Boeing.and pay close attention to market instability or stability.
The lessors also talk about consolidations among the lessors.
The panelists:
A paraphrased synopsis is below.
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Posted on March 10, 2015 by Scott Hamilton
ISTAT
AerCap, Air Lease Corp., AirCastle, CIT Aerospace, GECAS, ILFC, Jeff Knittel, Lium Steven Udvar-Hazy, Peter Barrett, Ron Wainshal, SMBC Aviation Capital
ISTAT: Economist Adam Pilarski on oil prices
Adam Pilarski, the economist from Avitas who years ago predicted oil prices would hit $40/bbl to the near-total disbelief by delegates attending the ISTAT convention where he made his prediction, proved nearly right. Prices dipped into the mid-$40s two-three years ahead of his forecast and for somewhat different reasons.
At this year’s ISTAT conference, Pilarski said that to predict oil prices, you need to look at two basic facts: the industry is not competitive and we are not running out of oil.
Here is a paraphrase synopsis of his comments.
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5 Comments
Posted on March 10, 2015 by Scott Hamilton
ISTAT
Adam Pilarski, Avitas, ISTAT
ISTAT: Bombardier vs Embraer: unsurprisingly, differing views
March 9, 2015: Ross Mitchell, vice president of business development, Bombardier, and John Slattery, chief commercial officer for Embraer, squared off today at the ISTAT conference. Below is a paraphrased summary of their panel discussion.
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4 Comments
Posted on March 9, 2015 by Scott Hamilton
Airbus, Boeing, Bombardier, Embraer, ISTAT
Bombardier, CSeries, E-Jet, E-Jet E2, Embraer, ISTAT, John Slattery, KC-390, Q400, Ross Mitchell
ISTAT: Randy Tinseth: pax traffic going from 3bn today to 7bn by 2033
Randy Tinseth, VP Marketing of Boeing, presented today to the ISTAT conference. Here is a synopsized summary of his comments.
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63 Comments
Posted on March 9, 2015 by Scott Hamilton
Boeing, ISTAT
737-9, 747-8F, 757, 757 replacement, 777F, A321, A321LR, Boeing, ISTAT, Randy Tinseth
ISTAT: John Leahy: No bubble for at least the next five years
Marhc 9, 2015: John Leahy, chief operating officer,customer of Airbus, presented at ISTAT. The following is a running paraphrased summary.
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14 Comments
Posted on March 9, 2015 by Scott Hamilton
Airbus, Boeing, Bombardier, ISTAT
757, A321, A321LR, A380, A380neo, Airbus, Boeing, Bombardier, ISTAT, John Leahy
ISTAT: Airlines look at the market and explain differences between the past and today
March 9, 2015: The top four players now are acting differently than previous eras, focusing on profits and return on capital instead of market share, says Mark Eliasen, vice president of finance and treasurer of Alaska Airlines.
Alaska returned 18% on its margin, the highest in the US industry, with low costs relative to its competitors. The company has grown at a rate of 7% year over year for several years. “We’re really happy with a single fleet.” The Boeing 737-focus allowed dramatic gains in lowering costs.
Of the five investment grade airlines, Eliasen notes that four of them are single-fleet carriers.
Nico Buchholz, EVP of Fleet Management of Lufthansa Airlines, said European carriers don’t have capacity discipline and the network carriers have to reinvent themselves. Lufthansa Group includes low cost carriers that are growing while Lufthansa itself strives to be the No. 1 choice for its traditional market.
Eurowings, a Lufthansa company, provides low cost service to short haul routes and soon is expanding to long haul. Eurowings prompted other LH airlines, including Austrian, Lufthansa and Swiss, to lower costs because if they didn’t, growth would happen at Eurowings.
Buchholz predicts consolidation in Europe and says Lufthansa Group and IAG (the British Airways group) will be two of the survivors. “But I wouldn’t go beyond that” in predictions, at least not before the crowd of 1,800 at the ISTAT conference where the remarks were made.
1 Comment
Posted on March 9, 2015 by Scott Hamilton
ISTAT
Alaska Airlines, Austrian Airlines, Eurowings, Lufthansa Airlines, Mark Eliasen, Nico Buchholz, Swiss Airlines
ISTAT: Warning signs for airline industry
March 9, 2015: There are warning signs the global airline industry needs to heed, says John Luth, CEO of the US consultancy Seabury Group.
The economic recovery isn’t uniform across the globe, Luth said in the keynote address to ISTAT, the International Society for Transport Aircraft Traders at its 2015 conference in Phoenix.
Luth said North American airlines had to “fix” themselves before consolidation into four major carriers that now control 71% of the market. In Europe and Asia, the top four carriers control far less traffic. In Europe, low cost carriers now control 40% of the market while in Asia LCCs control 19%, a sharp rise over a few years ago.
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Posted on March 9, 2015 by Scott Hamilton
ISTAT
Air France-KLM, ISTAT, John Luth, Seabury Group
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