This is the second of two Parts looking at the wide-body market
April 25, 2017, © Leeham Co.: When lessors face re-leasing wide-body airplanes as lease terms expire, they face a far narrower market than for single-aisle airplanes.
While there may be a thousand operators which can be targets for Airbus A320s and Boeing 737s, there may be only a hundred operators interested in the most popular wide-body aircraft. When you get to the Very Large Aircraft sector, the potential market declines to the figurative, and perhaps literal, handful.
March 16, 2017, © Leeham Co.: China’s evolving commercial aerospace and aviation industry has high-profile companies such as AVIC and COMAC, and its expanding supplier based, combined with joint ventures with Western companies is well known.
Less well known is the growth in the aircraft leasing business. Increasingly, Chinese lessors are showing up on the order lists of the Big Four aircraft manufacturers. Still, there remains a bit of a mystery about the lessors and dynamics within China.
LNC spoke with the newly appointed CEO of CDB Leasing during the ISTAT conference last week in San Diego.
Peter Chang has been in the Western leasing business for decades, employed in key positions with Aviation Capital Group, ILFC and Aircastle—usually with responsibility for China.
He was named CEO of CDB in December, a move that was announced during the January Dublin conferences of Airlines Economics and Airfinance Journal. More key personnel announcements were made during ISTAT.
In an exclusive interview, LNC asked Chang about the origins of CDB, other Chinese lessors, the current policy of restricting flow of Chinese cash outside the country, the Boeing 737-10 and the Bombardier CSeries.
Here is this interview.
By Bjorn Fehrm
February 15, 2017, © Leeham Co.: In our review of Norwegian Air Shuttle last week (Norwegian from now on), we pointed out the company’s relatively weak balance sheet. It’s considerably weaker than its direct competitors.
At the same time, Norwegians’ fleet expansion is the most aggressive outside of boom markets like India or Indonesia.
Norwegian ordered 200 narrow body aircraft in 2012. It ordered 100 Boeing 737 MAX 8s in January and 100 Airbus A320neos in June. This compares to a narrow body fleet of 70 at the time and a fleet of 100 today (mainly 737-800s). In addition, Norwegian has 30 Boeing 787 long haul aircraft on order on top of the 12 it operates today.
How much risk do these 230 incoming aircraft pose to Norwegian?
Jan. 4, 2017, © Leeham Co.: Despite a rosy picture painted by Boeing about the future of the 787 and the ability to recover more than $29bn in deferred production
and tooling costs, there are signs that cause concerns over the next 3-5 years.
By Bjorn Fehrm
19 January 2016, ©. Leeham Co: When Willie Walsh, the CEO of IAG, said that the Airbus A340-600 “is a fantastic aircraft at fuel below $60 a barrel but perhaps not at $120,” he put operational words to something the Growth Frontiers 2016 conference in Dublin had been grappling with since it opened on Monday morning.
What is going to happen now? Crude is falling below $30 a barrel and Jet fuel is below $1 a gallon. This must have an effect on how people decide, whatever the lessors and aircraft OEMs say.
And it had to be a senior airline CEO that broke the mantra that everyone was repeating: “We don’t see fuel prices having any effect on fleet planning for airlines.”
By Bjorn Fehrm
06 October 2015, ©. Leeham Co: The global airline industry is on a steady course as a whole, but there are dramatic changes within Europe as low cost carriers, plus Turkish Airlines, redraw the competitive landscape.
China’s current economic softness raises concerns, with an independent analysis concluding that economic growth here is 2%-3% instead of the announced rate of 7%-8%.
Still, the mixed messages given at the annual ISTAT meeting in Europe this week didn’t put a damper on the mood of 1,200 delegates here in Prague.
By Bjorn Fehrm
Oct. 05 2015, ©. Leeham Co: In the final part of our series about comparing and evaluating economic and operational performance of airliners, we will combine the different Cash Operating Costs (COC) with the capital and insurance costs to form the Direct Operating Costs (DOC).
We will also look at typical values for the different costs that make up the DOC for a single aisle Boeing 737 or Airbus A320 aircraft and a typical dual aisle Boeing 787 or Airbus A330neo aircraft.
May 12, 2015, c. Leeham Co: As you would have guessed we are talking Asian civil airliners, where planning in the region for the fast growing older generations is inadequate. This was the subject of several sessions during day two of the ISTAT Asia (International Society of Transport Aircraft Trading) conference in Singapore.
The problem is new, as up to now a newly established airline fleet in Asia has not had any numbers of older aircraft. But the expansion over the last 20 years is now producing the first transition waves of aircraft and the planning around the problems this generates is inadequate.
The result will be surprising write-downs of airline assets as aircraft being replaced cannot be transitioned out at booked residual values. The scale of the problem was highlighted by a survey of the 500 gathered ISTAT industry experts. The question posed to them was “There are 4700 aircraft coming up for replacement until 2033, has Asian airlines planned adequately for this?”:
May 11, 2015, c. Leeham Co: We are participating this week in the ISTAT Asia conference in Singapore where IATA and different panels gave an interesting update on the Asian airline market. This is the fifth year that an ISTAT (International Society of Transport Aircraft Trading) conference is held in Asia and participation has virtually doubled from last year to 500 delegates.
IATA’s Conrad Clifford opened the event with the following overview about the Asian market for airline passenger travel:
By Bjorn Fehrm
March 31, 2015: We have received an update for Avolon’s “Aircraft retirement and storage trends” whitepaper from September 2012. In the age of changing fuel prices it makes for interesting reading as the author, Avolon’s Head of Strategy Dick Forsberg, includes the effects of fuel price changes in his analysis.
The analysis uses data from Ascends database up until 31 Dec 2014 to make its conclusions:
– Retirement age for jets remain stable with 60% of mainline aircraft still active after 25 years.
– Regional jets retire earlier, the 60% active age is 20 years.
– Behind early retirements of certain aircraft is first of type versions which have limitations in airframe or engines.
– Old aircraft and those who are stored more than two years don’t make it back from the desert.
– With continued low fuel prices deferred retirements would increase but still constitute less than 10% of new aircraft production. Read more