Pontifications: A350 launch aid, Emirates and the A380, Bombardier and U-Turn Al

Hamilton (5)

By Scott Hamilton

March 5, 2015: A350 Launch Aid: Boeing and the US Trade Representative got in a big twist around 2006 when Airbus said it would accept more than $1bn in launch aid from Germany for the A350. At that time, the US and European Union had recently launched the international trade complaints before the World Trade Organization (WTO), but the A350 came after the complaint was filed and the WTO refused the US request to add it to the proceedings.

Germany, in a political snit, later said it would withhold part of the launch aid because Airbus hadn’t promised the number of jobs in connection with the program to Germany that politicians wanted.

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No stress on the order backlog, says Airbus at ISTAT

Airbus doesn’t see any “stress” in its aircraft order backlog, or “skyline,” says Andrew Shankland, senior vice president of leasing markets from the European manufacturer.

Shankland spoke with us at the annual meeting of the International Society of Transport Aircraft Trading, held Monday and Tuesday this week in San Diego.

Persistent concerns are expressed about an “order bubble,” including during the ISTAT conference. Shankland told us in an interview that “we don’t see any stress; we meet every two weeks” in a process Airbus calls its “watch tower” (Boeing calls its process the “war room”).

“As long as we can move things around, and we have a pretty rigorous process to be sure every plane has a home,” Airbus doesn’t see any issue with its skyline, Shankland said.

Steven Udvar-Hazy, CEO of lessor Air Lease Corp, sees Asia as a high risk region where huge orders have been placed by carriers such as AirAsia and Lion Air, both big A320 customers. AirAsia just announced deferral of 19 A320s this year and next. AirAsiaX also has large orders for the A330 and A350, recently deferring some A330s “until the time is right.” Shankland wouldn’t discuss any individual customer, and only generally noted that Airbus and Boeing have successfully “manipulated” the skyline in the past when deferrals or even cancellations occur.

Shankland isn’t involved in Airbus’ analysis of whether to proceed with the prospective A330neo, but acknowledged that the business case for the airplane “remains to be seen.”

Lessors analyze market conditions in commercial aviation at ISTAT

The final presentation at ISTAT was the popular lessors’ panel, a free-wheeling discussion of commercial aviation issues. The reporting summarizes and paraphrases the comments.

The moderator is Jeff Knittel, president of CIT Aerospace.

The lessors are:

Angus Kelly, CEO of AerCap

Mark Lapidus, CEO of Amedeo

Norman Liu, CEO of GECAS

Raymond Sisson, CEO of AWAS

Steven Udvar-Hazy, CEO of Air Lease Corp

Knittle: when we were sitting here 10-15 years ago, the six lessors sitting here would largely represent the leasing industry. Now there are 20 or so in China, more elsewhere. The market is fragmentized.

Hazy: The newcomers don’t have the relationships or experience in buying in bulk even though they are capitalized but they have a long way to go.

Lapidus (a new lessor) says people are learning pretty quickly how to do business. (Amedeo is the former Doric Leasing, which finances Airbus A380s.)

Kelly: Although the names on the door have changed, the people running them really haven’t changed. New capital is coming in because there is greater return on capital than in other areas. They want to come in because they see this attraction but they want to do so on a smaller basis. The number of true global lessors hasn’t changed all that much.

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Bombardier and Embraer square off at ISTAT

Bombardier and Embraer squared off today at the ISTAT conference in San Diego. Rod Sheridan, VP sales and asset management, appeared for BBD and John Slattery, chiefr commercial officer, appeared for EMB.

The following synopsizes and paraphrases their presentations.

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