May 15, 2017, © Leeham Co.: Welcome back, Commercial Aviation Report.
Today Leeham Co. is re-launching the publication that became the foundation of an international publishing and conference company and which ultimately led to the creation of Leeham Co. and Leeham News and Comment.
Commercial Aviation Report, or CAR for short, was launched Oct. 1, 1989, by Scott Hamilton, Chris Kjelgaard and Bernard Tilbury. The bi-weekly newsletter evolved into a magazine and later the creation of a monthly, Commercial Aviation Value Report.
It’s conference unit, Commercial Aviation Events, became one of the top aviation conference organizers. CAE created the first commercial aviation conference in Eastern Europe, after the fall of the Iron Curtain; and the first commercial aviation conference in China.
May 1, 2017, © Leeham Co.: Boeing’s complaint against Bombardier’s CSeries transaction with Delta Air Lines, and a request for millions of dollars in antidumping and penalties might be coming at a bad time.
“Boeing requests that the Department initiate an antidumping investigation and impose antidumping duties on Aircraft from Canada in an amount sufficient to offset unfair pricing above.”
If Boeing is successful in its request of the US government and International Trade Commission to impose duties before the first CS100 is delivered to Delta next year, the cost of the airplane will balloon from the $19.6m Boeing calculates (and which BBD denies) to at least $33m.
It’s unclear from the complaint who would pay this penalty—Bombardier, maintaining the price to Delta, or would Delta have to pay the reset price?
Regardless, this kerfuffle can’t be welcome news to Delta, which already has a ruffled relationship with Boeing due to its opposition to the ExIm Bank and orders for Airbus aircraft.
April 24, 2017, © Leeham Co.: Boeing faces growing challenges this year as airplane sales slow, production of the 777 Classic declines, its new Global Services unit prepares to formally launch and a decision whether to authorize a sales offering for the New Midrange Airplane looms.
We’ve spent a lot of time covering slowing sales and declining 777 production. Tomorrow, we’ll have a special report on the ambitious Global Services strategy.
We’ve also spent a lot of time on the Boeing NMA. LNC’s Bjorn Fehrm last week presented number three in a paywall series on the NMA, looking at it from a technical viewpoint. We’ll take a look at it from a strategic point of view today.
Feb. 9, 2017, © Leeham Co.: Russia’s Irkut designed a mainline jet to compete with the Airbus A320 and Boeing 737 families that, from a passenger experience
viewpoint, is the best in class.
The MC-21 has a wider fuselage than the A320 (which is wider than the 737). Seats and the aisle are the widest in the class. The overhead bin space is plentiful.
But the airplane is hampered by its environment: Russia itself.
Jan. 09, 2017, © Leeham Co.: Airlines have deferred or are thinking about deferring more than 400 airplanes in the near term, a review of decisions and deliberations that have been made during the last 12 months.
LNC tracked announcements last year of deferrals and statements by airlines that they are thinking about doing so.
Reasons vary widely for the deferrals, these reports indicated. Low oil prices. Slowing economies. Declining financial results. Worries about two of the three top Middle Eastern carriers. A capital squeeze in China. Pressure on long-haul carriers from the emerging sector of low cost, long-haul airlines. Preserving capital expenditures to keep the bottom line in the black.
Today we detail the deferrals we tracked.
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.
Jan. 3, 2017, © Leeham Co.: The New Year is here and it doesn’t look like a good one for commercial aerospace, if measured against previous outstanding years.
There are some troubling signs ahead, piling on to a slowdown in orders from last year that didn’t even reach a 1:1 book:bill.
This year looks to be worse than last. Airbus and Boeing will give their 2017 guidance on the earnings calls this month and next. Bombardier and Embraer earnings calls are a ways off, when each will provide its guidance.
But LNC believes the Big Two in particular will be hard pressed to hit a 1:1 book:bill this year and may even struggle to match 2016 sales.
Boeing’s year-end order tally comes Thursday. Airbus’ comes on Jan. 11.
Dec. 15, 2016, © Leeham Co.: The story about a Boeing official who asserted that the Airbus widebody strategy is a “mess” proved to be LNC’s most read story of 2016.
Our second most-read story is why the 787-8 is no longer favored by Boeing.
We list our Top 10 posts each year as we head for a wrap. LNC plans to finish 2016 on Dec. 23, returning Jan. 3, unless there is major, breaking news.
Here are the Top 10 LNC posts in 2016:
Dec. 5, 2016, © Leeham Co. Last weeks’ approval by the US Department of Transportation of a license for Norwegian Air Shuttle to operate long-haul, low-cost service to and from the US drew immediate fire from labor unions over anticipated US job losses.
But their view is too narrow.
It means more jobs for Boeing and its supply chain, which are also heavily unionized. It means benefits to US exports.
But overlooked is the next evolution in long haul travel that starts next year.
Aug. 22, 2016, © Leeham Co.: Boeing’s deferred production and tooling costs for the 787 program continue to be a focus-item by some
aerospace analysts, media and observers: will the company be able to recover these costs, or will it inevitably have to take a write down.
Some Wall Street aerospace analysts believe Boeing can’t recover all the costs.
For example, Ron Epstein of Bank of America Merrill Lynch concluded Boeing will only recover about $14bn of the $29bn in deferred production costs.
Rob Spingarn of Credit Suisse pegs the recovery number at about $22bn.
These figures are before Boeing took a $1bn pre-tax “reallocation” to research and development for costs related to two more of the first six test airplanes last month in advance of the July 27 earnings call.
Boeing officials are confident they will recover the costs. LNC spoke with Wall Street analysts and Boeing to paint a picture of how Boeing expects to accomplish this.