Propelled by MAX 10, Boeing thumps Airbus at Paris Air Show

June 22, 2017, © Leeham Co.: The Boeing 737 MAX 10 received a rousing endorsement from lessors and airlines last week at the Paris Air Show.

There were 361 orders and commitments announced, blowing through Boeing’s own forecast Monday of 240 orders. Never mind that 214 are conversions from other MAX orders, a fact Airbus COO Customers John Leahy used to downplay the program launch: the performance is a dramatic contrast to the poor reception Boeing received only three months earlier, at the ISTAT conference in San Diego, when a soft launch was rolled out by Boeing.

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Interest seen in Boeing’s “797,” says lessor

May 16, 2017, © Leeham Co.: Air Lease Corp., one of the world’s leading lessors, sees

John Plueger, CEO of Air Lease Corp.

a “quite a bit” of interest from its customers in the prospective Boeing Middle of the Market aircraft, says its CEO, John Plueger.

Speaking at the Airfinance Journal conference in New York today, Plueger acknowledged with some push from moderator Mark Streeter of JP Morgan that pricing needs to be in today’s dollars in the $70m-$75m range.

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ISTAT Asia 2017: The fight for the lead

By Bjorn Fehrm

May 11, 2017, ©. Leeham Co: Airbus and Boeing had their customary presentation match at the second day of the ISTAT (International Society of Transport Aircraft Trading) conference in Hong Kong. Each OEM stuck to a theme throughout their presentations.

Boeing’s was “market leader.” As the one that delivered the most aircraft during 2016, Boeing had the right to the claim. Airbus countered with “value protection leader.” The neo success saves airlines from having to change aircraft families. Read more

Hong Kong, the future aircraft leasing gateway to China

By Bjorn Fehrm

May 11, 2017, ©. Leeham Co: We are attending the ISTAT (the International Society of Transport Aircraft Trading) conference in Hong Kong this week. The conference was opened by the Chief Executive for the Hong Kong region of China, Mr. C. Y. Leung. He gave an interesting perspective of the future of Hong Kong in the aviation finance market.

Hong Kong is the number four finance center in the world. But the present tax rules prohibits aircraft leasing companies to establish Hong Kong as their hub for China and Asia.

The companies cannot deduct the costs of the aircraft ownership from their lease revenue, for non-Hong Kong operators. This will now change. Read more

A330 easier to re-lease than 777

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.

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CDB Leasing aims for 500-600 aircraft portfolio

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Introduction

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.

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Norwegian’s risky fleet expansion

By Bjorn Fehrm

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Introduction

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?

Summary:
  • Presently, Norwegian absorbs 50% of incoming single aisle aircraft for own needs (Boeing 737-800 and later MAX 8).
  • The other 50% (deliveries of Airbus A320neo) are leased to external operators.
  • The financing need for incoming aircraft, be it for own or other’s use, is $15bn over the coming years.
  • With a balance sheet of of only twice that size and 10% own equity, the going can get rough if the market weakens.

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Market, other factors emerging, creating Boeing 787 concern

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Introduction

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

Boeing photo.

and tooling costs, there are signs that cause concerns over the next 3-5 years.

Summary
  • Near-term production outlook solid, weakness begins in 2020, big gap in 2021.
  • Boeing doesn’t see wide-body sales recovery until next decade.
  • Company foregoes increasing 787 accounting block; sales won’t support it.
  • Market talks about deferring 787s.

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The fuel effect; or old is beautiful

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.

A340-600

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.”

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ISTAT Europe 2015 in Prague: LCCs and Turkish airways take over Europe

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.

  • The airlines are fine for 2015 as the fuel price is low but what about 2016? China is braking to a halt and Asia is getting infected? Will the infection spread? Will the airlines return to bad results?
  • What about the European airline industry? Can the low costs units of IAG, Lufthansa and Air France-KLM compete with the up-and-coming LCCs? Who is king of long haul travel out of Europe?
  • What about the order glut? When Asia slows, will the order bubble break?

 

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