Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- FAA administrator flies MAX in next step to recertification September 30, 2020
- HOTR: Rolls 787 engine orders tank last 5 year September 29, 2020
- Pontifications: Winter is coming September 28, 2020
- The engine manufacturers worst hit by the pandemic September 28, 2020
- Hydrogen, electric and hybrid alternatives not here yet September 25, 2020
“We’re sick and tired of new technologies:” Avolon CEO
Subscription Required
Introduction
By Scott Hamilton
March 16, 2020, © Leeham News: “I can tell you from our perspective, we’re kind of sick and tired of new, new technology. It’s not proven to be the home run.”
This blunt assessment comes from the chief executive officer of the big aircraft lessor, Avolon.
Domhnal Slattery
Domhnal Slattery, the CEO, was giving his critique of whether Boeing should launch a new airplane once the 737 MAX crisis is over.
Boeing was on a path to decide whether to launch the New Midmarket Airplane when the MAX was grounded one year ago this month.
Airbus was waiting for Boeing to move before deciding how to respond.
Summary
- Airbus and Boeing should “stick to their knitting.”
- Focus on incremental improvements for now.
- 2030s to 2050s will be the next big advance in technologies.
Airlines seek rent relief as coronavirus impacts widen
By Scott Hamilton
March 11, 2020, © Leeham News: Some airlines already are asking for rent relief as a result of widespread groundings of aircraft because of the coronavirus.
BOC Aviation, Avolon and Air Lease Corp are just three lessors acknowledging they’ve already been asked for relief. They spoke on the sidelines of an aviation industry conference in Austin last week.
Asian airline troubles could affect up to 20% of Airbus, Boeing backlogs
By Judson Rollins
Subscription Required
In last week’s analysis, LNA examined which airlines in greater China and the rest of Asia may be in imminent risk of financial distress due to the growing coronavirus outbreak. We found that airlines from Malaysia to Japan have significant exposure to the Chinese market. Several have shaky balance sheets and were already losing money prior to the outbreak, most notably AirAsia, AirAsiaX, Thai Airways, Nok Air, Malaysia Airlines, and Asiana.
The coronavirus outbreak has now spread to Europe and the Middle East, but we are continuing our focus on Asia as it’s been most greatly affected so far. Additional analysis focusing on Europe will follow, with particular attention to the potential for further airline consolidation on the continent.
LNA reviewed ownership and operating data on aircraft to understand top manufacturer and lessor exposure to greater China, which includes Hong Kong and Macau, and the rest of East Asia.
Summary
- Airbus has greater exposure to China and the rest of East Asia, especially in widebodies;
- Boeing’s 787, 777X difficulties will be exacerbated by Asian airline troubles;
- COMAC’s sales book is almost exclusively in China, but government support is likely;
- ATR has material exposure to Southeast Asia; other regional aircraft OEMs are largely unaffected.
Leasing industry sees a role in airline sustainability work
By Bjorn Fehrm
January 22, 2020, ©. Leeham News, Dublin: The yearly Air Finance Journal conference finished its second day with a Q&A with the top executives of the Leasing industry.
The Leasing companies buy 40% of all new airliners from the likes of Airbus and Boeing, to later rent them to the airlines on a monthly basis.
With 40% of all new aircraft delivered to these companies, their view on where we are in the cycle and what are the main challenges facing air transport is important.
The main topics during the three-day conference are the state of the airlines, the ease or difficulty to finance the purchase of $50bn of aircraft per year and the growing issue of air transport and the environment.
Pontifications: Good A220 endorsement, but Airbus still has cleaning up to do
By Scott Hamilton
Aug. 5, 2019, © Leeham News: Airbus last week won a big, validating commitment from Air France-KLM Group for 60 orders and more options for the A220-300.
The contract won’t be firm until later this year, but the AF Memorandum of Understanding (when converted) brings the A220 order book to 611. There are some other commitments that haven’t yet been converted to orders.
Through mid-July, there were 86 A220s in service. There were 465 Letters of Intent, MOUs and Options before the Air France deal was announced.
But of those firm orders, 110 of them aren’t so firm. In fact, some of them really shouldn’t even be on the books.
Lessors, airlines seek 1 year lease extensions in MAX groundings
June 26, 2019, © Leeham News: Airlines and lessors are making plans to extend leases by up to one year as the Boeing 737 MAX grounding drags on with no end in sight and carriers scramble to cover their routes, LNA is told.
Shortly after the MAX was grounded, on March 13, airlines began extending leases on airplanes that were to be replaced by the MAX up to six months.
This was until the September-October timeframe.
Now, with estimates that the Federal Aviation Administration may not be ready to lift its grounding order until then—and other regulators may come later—airlines see a need for another lease extension.
Lessors are not interested in another six month extension, however, LNA is told.
Paris Air Show, Day 4: Closing orders, commitments
June 20, 2019, © Airfinance Journal: By day four of the Paris Air Show, most of the OEMs had already wrapped up their deal-making, but there was still time for Airbus to 
tempt another two airlines and another lessor towards the A321XLR and the A220-300 products.
Airbus and CFM are the manufacturers that will leave Paris the happiest, although ATR was keen to make its case, citing 75 “new orders” at the show. However, in line with the odd phrasing employed by most marketing departments this week, it was difficult to discern what those “orders” meant. ATR said they included “35 firm orders from NAC disclosed on June 18”, but its press release about that deal described only a “letter of intent for 35 firm ATR -600s, with options for a further 35 and purchase rights for another 35.”
Airbus launches long-expected A321XLR with ALC order; lessor also orders A220-300
By Judson Rollins
June 17, 2019, © Leeham News, Paris: Airbus launched its much-awaited A321XLR today with an initial order of 27 airplanes from lessor Air Lease Corp. ALC also ordered another 23 A321neos, which can optionally be taken as A321LRs. This brings ALC’s total Airbus order count to 387, making it Airbus’s third largest lessor.
Airbus also announced that ALC has ordered 50 A220-300s to be delivered between 2021 and 2026. ALC is the largest lessor to date to order the former C-Series aircraft. ALC executive chairman Steven Udvar-Hazy said, “We believe this aircraft will be a wonderful replacement for aging A319s, 737s, Fokker 100, BAe-146s, and other smaller jet aircraft.”
The order is structured as a letter of intent. ALC chief executive John Plueger said the LoI covers “all commercial business points” but that it will be converted to a firm order once certain terms are firmed on the A220 portion of the order.
Airbus Chief Commercial Officer Christian Scherer declined to discuss catalog pricing for the A321XLR.
2019 Outlook: COMAC’s slow but steady progress
Subscription Required
Introduction
Jan. 4, 2019, © Leeham News: This is not the year where China’s COMAC will have break-out progress for the C919, its challenge to the Airbus A320 and Boeing 737.
Flight testing is slow and entry into service (EIS) is now targeted for 2021—a slip of five years from the original schedule.
The C919 launch-to-EIS is approaching the eight years record of the ARJ21.
But these delays don’t mean COMAC isn’t making progress.
Summary
- Boeing’s JV with COMAC for a 737 completion center opened last month.
- Despite delays, the C919 progresses.
- Progress continues on the JV with Russia for the CR929.
KKR invests $1bn in small lessor
Jan. 3, 2019, © Leeham News: The US private equity fund KKR agreed to invest $1bn in boutique lessor Altavair, a deal that includes taking a 50% stake in the company.
KKR may supplement the investment with additional commitments, the companies said.
