Leeham News and Comment Archives - Page 2 of 6

7M7 is key to Boeing’s future

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Introduction

An enthusiast’s concept of the Boeing 797. Image via Google.

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.

Summary

There is a demand for the NMA that is commercially viable.
Middle of the Market sector is larger than typically defined.
7M7 is key to Boeing’s future.

6 Comments

Posted on April 24, 2017 by Scott Hamilton

Airbus, Airlines, Boeing, Leeham News and Comment, Middle of the Market, MOM, Premium

737-10, 737-9, 747-8, 787, 787-8, 787-9, 7M7, A321LR, A321NEO, A330-200, A330-800, A380, A400M, Airbus, Boeing

Assessing the MC-21 future

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Introduction

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

Irkut MC-21 at roll-out. Photo via Google images.

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.

Summary

EIS planned for next year, but first flight hasn’t happened yet.
Few orders, small customer base.
Russia itself presents an overhang to the MC-21 program.

Deferrals grow as airlines fight to keep bottom line

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Introduction

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.

We began identifying macro-level issues last week in our posts about emerging concerns for the 787 and LNC’s Outlook for 2017.

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.

Summary

Deferrals of single aisle aircraft are less worrying than for wide-body aircraft
For wide-bodies, it depends on the program. For the Airbus A380, deferrals turns the program back into the red. For the A350, deferrals can help with delivery commitments.
For the Boeing 777, deferrals spells trouble, especially for the present generation.
The 787 is more resilient but the slow sales make the program sensitive longer term.

1 Comment

Posted on January 9, 2017 by Scott Hamilton

Airbus, Airlines, Boeing, Bombardier, Delta Air Lines, Leeham News and Comment, Pratt & Whitney, Premium, Qatar Airways, Rolls-Royce

777 Classic, 787, A380, Airbus, airlines, Boeing, Bombardier, Emirates Airlines, Goldman Sachs, Qatar Airways

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.

2 Comments

Posted on January 4, 2017 by Scott Hamilton

Airbus, Airlines, Boeing, Etihad Airways, ExIm Bank, Leasing, Leeham News and Comment, Lessors, Premium

787, 787-10, 787-8, 787-9, A330ceo, A330neo, A350, Airbus, Boeing, China, Donald Trump, Etihad Airlines, ExIm Bank

2017: the year ahead

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Introduction

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.

Summary

Wide-body sales remain weak.
Narrow-body backlogs and low oil prices continue to inhibit sales.
China, Middle East concerns emerging.
United Aircraft MC-21 and COMAC C919 begin flight testing.
Airbus A330neo, Boeing 787-10, Embraer E195-E2 and Mitsubishi Aircraft MRJ-70 roll-out and begin flight testing.
Airbus A321neo and Boeing 737 MAX 8 EIS.

1 Comment

Posted on January 3, 2017 by Scott Hamilton

Airbus, ATR, Boeing, Bombardier, CFM, Comac, CSeries, E-Jet, Embraer, Etihad Airways, Farnborough Air Show, GE Aviation, Irkut, Leeham News and Comment, Middle of the Market, Mitsubishi, Pratt & Whitney, Premium, Rolls-Royce, Sukhoi

Airbus, Boeing, Bombardier, CFM, Comac, Embraer, GE Aviation, Irkut, Mitsubishi, Pratt & Whitney, Rolls-Royce, Sukhoi

Norwegian, others have vision; US airlines don’t

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Introduction

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.

Iceland’s Loftleider Airlines, one of the first trans-Atlantic low-cost carriers. Photo via Google images.

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.

Summary

Legacy airlines always object to new competition. It doesn’t matter when or from where.
Open skies and free market is a great concept—until someone actually takes advantage of it.
The 737 MAX and A321neo present new threats to US airlines.
Lack of vision and foresight are the US airlines’ own worst enemy.

Pontifications: Getting there from here on Boeing’s deferred production costs

By Scott Hamilton

Aug. 22, 2016, © Leeham Co.: Boeing’s deferred production and tooling costs for the 787 program continue to be a focus-item by some

Boeing 787-9. Photo: Boeing.

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.

53 Comments

Posted on August 22, 2016 by Scott Hamilton

Boeing, Leeham News and Comment

787, 787-10, 787-8, 787-9, Bank of America Merrill Lynch, Boeing, Credit Suisse, Dennis Muilenburg, Greg Smith, Rob Spingarn, Ron Epstein

Air Lease sounds caution note for Airbus, Boeing

Aug. 10, 2016, © Leeham Co.: Executives of one of the world’s most influential leasing companies said Friday they doubt Boeing will increase production of the 787 from 12 to 14/mo.

Air Lease Corp. made the predictions on its 2Q2016 earnings call Friday.

ALC also predicted Boeing will further lower the production rate of the 777 Classic from the announced 5.5/mo in 2018. ALC did not specify a rate, but some aerospace analysts believe a rate of 4/mo is coming.

They also believe neither Boeing nor Airbus will increase production rates of the 737 to 57/mo or A320s to 60/mo. Boeing announced previously that it is considering increasing the 737 rate from the announced 52/mo, effective 2018, to 57/mo. Airbus previously announced it will increase the production rate of the A320 to 60/mo and is considering a rate of 63/mo.

Airbus is bringing the rate up from 44/mo to 60 by 2018.

22 Comments

Posted on August 10, 2016 by Scott Hamilton

Airbus, Boeing, Leeham News and Comment

737, 777 Classic, 787, A320, Air Lease Corp., Airbus, Boeing, John Plueger

Dearth of wide-body order hang over Airbus, Boeing

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Introduction

Week 1: Virtually no new orders for wide-bodies were announced at the Farnborough Air Show.

Airbus, responding to a leak to the Paris newspaper La Tribune, confirmed it will reduce production for the A380 from 20/yr in 2017 to 12/yr in 2018—returning the program to a loss.

Boeing firmed up an MOU announced at the Paris Air Show with Volga Dnepr for 20 747-8Fs, but wouldn’t say how many are firm orders and how many are options.

Week 2: Boeing took nearly $1.7bn in after-tax write downs for the 787 and 747-8 programs.

American Airlines rescheduled all of its Airbus A350 XWB orders for two years to preserve cash.

And, while not directly tied to wide-bodies per se, Delta Air Lines announced it will reduce its trans-Atlantic services for a variety of reasons. Most of these services are performed with wide-body aircraft.

Summary

Boeing has just 34 wide-body orders through July 19.
Airbus has 56 wide-body orders through June 30.
Farnborough orders not yet included.
A “bubble burst” or just part of a normal cycle?

Leeham News and Analysis

There's more to real news than a news release.

Leeham News and Analysis

7M7 is key to Boeing’s future

Introduction

Summary

Assessing the MC-21 future

Introduction

Summary

Read more

Deferrals grow as airlines fight to keep bottom line

Introduction

Summary

Market, other factors emerging, creating Boeing 787 concern

Introduction

Summary

2017: the year ahead

Introduction

Summary

Top 10 Leeham News stories of 2016

Norwegian, others have vision; US airlines don’t

Introduction

Summary

Pontifications: Getting there from here on Boeing’s deferred production costs

Air Lease sounds caution note for Airbus, Boeing

Dearth of wide-body order hang over Airbus, Boeing

Summary

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