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History undermines Boeing claim of C Series impact: analysis

Analysis

Dec. 22, 2017, © Leeham Co.: Boeing blames a subsidized, price-dumped Bombardier C Series for the poor sales of the smallest member of the 737 family, the -700 and the 7 MAX, but history doesn’t support the claim.

The US Department of Commerce clearly ignored sales evidence that the 737-700 has been “done” for many years and the 737-7 MAX was an unattractive design

Boeing 737-7 MAX. Rendering via Google images.

that hasn’t been fixed with a redesign; airlines simply don’t want the airplane. Commerce levied tariffs amounting to 292% on C Series imported into the United States in the future.

The US International Trade Commission is currently awaiting post-hearing briefs from Dec. 18 testimony from Boeing, Bombardier, Delta Air Lines and other parties to determine whether Boeing suffered “harm” by the C Series deal with Delta and a near-miss with United Airlines.

If the ITC concludes Boeing suffered harm, the DOC tariffs stand. If not, the DOC action is moot. The loser at ITC is expected to appeal.

79 Comments

Posted on December 22, 2017 by Scott Hamilton

Airbus, Airlines, Alaska Airlines, American Airlines, Boeing, Bombardier, CSeries, Delta Air Lines, Leeham News and Comment, Lessors, Southwest Airlines, United Airlines

737-7, 737-700, 737-8, 737-800, AerCap, Air Lease Corp., Airbus, airlines, Alaska Airlines, American Airlines, Aviation Capital Group, Boeing, Bombardier, C Series, CS100, CS300, Deltas Air Lines, ILFC, Ilyushin Finance Corp., Macquarie Airfinance, Uniterd Airlines, WestJet

Assessing the Dubai Air Show

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Introduction

Nov. 20, 2017, © Leeham Co.: The Dubai Air Show was a clear win for Boeing, despite the last minute 430 airplane commitment from the Indigo Partners group.

The “MENA” region, for Middle East and North Africa, has been the staple of the Dubai Air Show.

There have been occasional smatterings of peripheral regions tossed in, but commitments from US companies (except lessors doing business worldwide) have not been a regular feature.

Summary

Boeing swept the MENA orders and commitments.
Emirates order for 40 787-10s begin delivery from 2022 and may be tied to adjustments in 777X delivery rate.
The lack of the widely expected A380 order from Emirates was a huge embarrassment to Airbus.
Bombardier, better known for its lack of orders at air shows, landed a good one at Dubai.

Potential credit crisis in China would hurt aviation industry

~~Subscription Required~~ Now open to all readers (11/27/17).

Introduction

Sept. 4, 2017, © Leeham Co.: China, now the world’s second largest economy, appears to be feeling the strains of its long, explosive growth.

The economy is slowing, there are concerns about capital outflow and increased debt by key companies.

HNA Group is one of China’s largest companies and a global investor. Indeed, it’s one of the largest in the world.

Its place in commercial aviation is known among those who are integral parts of the industry, but the depth of its reach may not be well understood.

Due to recent transactions, HNA now is owner of one of the largest aircraft leasing portfolios in the world, with nearly 600 aircraft. Another 253 airplanes are on order.

This includes the acquisition this year of CIT Aerospace, which added more than 300 aircraft to the Avolon portfolio.

Avolon was acquired by HNA in 2015.

However, HNA’s growth means debt, and according to several media reports, the Chinese government is now scrutinizing HNA under a general government “crackdown” on capital leaving the country.

Summary

Widespread investment in airlines and a few in lessors.
China’s cracking down on money leaving the country.
Leverage also concerns the government.

1 Comment

Posted on September 4, 2017 by Scott Hamilton

Airbus, Airlines, Boeing, Leasing, Lessors

777 Classic, 777X, Airbus, Avolon, Boeing, China, CIT Aerospace, Hainan Airlines, HNA Group, Iran Air

Pontifications: DAE acquires AWAS, moves up in lessor status

By Scott Hamilton

Aug. 21, 2017, © Leeham Co.: Commercial aviation in the Middle East may be having its severe challenges right now, but over the weekend a major step forward took place.

Dubai Aerospace Enterprises over the weekend completed its acquisition of lessor AWAS. The combined companies will do business under the name DAE Capital.

It’s a milestone for both companies.

1 Comment

Posted on August 21, 2017 by Scott Hamilton

Airbus, ATR, Boeing, Lessors, Pontifications

Airbus, ATR, AWAS, Boeing, DAE, DAE Capital, Dubair Aerospace Enterprises, GECAS

Air Berlin files for bankruptcy

By Bjorn Fehrm

August 16, 2017, ©. Leeham Co: Air Berlin, Germany’s second largest airline, with 85 destinations, 8,000 employees and 72 aircraft, filed for bankruptcy yesterday.

We wrote about Air Berlin’s problems in October last year and we’ve covered its part owner, partner and moneylender, Etihad Airways, in articles this year.

It was the latter that no longer believed in Air Berlin’s turnaround plan and stopped the money flow.

25 Comments

Posted on August 16, 2017 by Bjorn Fehrm

Airbus, Airlines, Boeing, Etihad Airways, Germanwings, Leasing, Lessors

737NG, A320, A330, Air Berlin, Airbus, Etihad

Pontifications: Avolon sees strong sales for Boeing 737-10

By Scott Hamilton

Aug. 14, 2017, © Leeham Co.: Avolon, one of the world’s largest aircraft lessors following the acquisition of the CIT Aerospace portfolio, believes Boeing will see 2,000 of the 737-10—doubling the internal figure Boeing used to launch the program.

In a new white paper, which Avolon periodically issues, the lessor “projects that the MAX 10 will account for approximately 20% of all 737 MAX family deliveries, which would equate to around 2,000 aircraft. This compares to the A321neo, which is forecast to account for 40% of the A320neo family, with over 4,000 deliveries,” writes Steve Mason, Avolon’s SVP of Strategy.

Mason joined Avolon from CIT acquisition, where he held a similar position and likewise issued periodic white papers.

“The value proposition of the MAX 9 has been impacted by the launch of the MAX 10. It is unclear what role remains for the aircraft, but it is likely to have a limited future,” Mason writes.

19 Comments

Posted on August 14, 2017 by Scott Hamilton

Airbus, Boeing, Leasing, Lessors, Pontifications, United Airlines

737-10, 737-7, 737-8, 737-8-200, 737-9, A319neo, A320NEO, A321NEO, Airbus, Avolon, Boeing, CIT Aerospace, Steve Mason

Key lessors see strong wide-body market despite worries

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Introduction

Aug. 7, 2017, © Leeham Co.: Amid talk that Middle Eastern airlines, which are the largest group of users for wide-body aircraft, may defer Airbus and Boeing airplanes, there are conflicting signs that the bleak view of the sector isn’t as weak as perceived.

Just last week, two big lessors—Air Lease Corp and AerCap–of widebody airplanes said they are confident in the sector.

Few orders have been received for the Boeing 777-8 ultra-long range airplane. Sales for its larger sibling, the 777-9, have stalled. Along with the Airbus A380 and Boeing 747-8, demand is seen as limited.

AerCap ordered 30 Boeing 787s at the Paris Air Show. ALC has a significant order of Airbus A330neos.

And, the chairman of Emirates Airline said in an interview with the region’s The National newspaper that despite the current challenges at the carrier, it expects to announce an order before the end of the year for either the 787 or the Airbus A350—and possibly the Airbus A380.

Quantities on the former weren’t discussed. Airbus is pitching 20 A380s, according to accounts.

Still, there are a large number of Boeing 777s and Airbus A330s coming off lease in the next few years that could slow orders if these aircraft are offered on the secondary market with low enough lease rates.

Summary

Air Lease Corp.’s wide-body aircraft are placed. A330neo orders late due to engine delays.
AerCap sees strong wide-body market, reaffirmed with 787-9 order.
More than 100 A330ceos and 777 Classics potentially entering secondary market soon.

Pontifications: Context is everything

By Scott Hamilton

“I would simply but strongly encourage the OEMs to carefully review their production rate aspirations closely and realistically.”

Hazy, often (but erroneously) called the “Godfather of leasing,” is a voice to be reckoned with. He is enormously influential with Airbus, Boeing, lessors and the industry. He’s been a launch customer of several aircraft new aircraft models and, if he’s not the Godfather of leasing (this title really belongs to the late George Batchelor), Hazy raised aircraft leasing to a fine art.

So, when the quote appeared on Twitter, I sat up in my chair.

Was Hazy suggesting Airbus and Boeing will be producing too many airplanes, creating a supply-demand imbalance?

40 Comments

Posted on August 7, 2017 by Scott Hamilton

Airbus, Boeing, CFM, Lessors, Pontifications, Pratt & Whitney

737 MAX, A320NEO, A330neo, A350, Air Lease Corp., Airbus, Boeing, CFM, Lessors, Pratt & Whitney, Rolls-Royce, Steven Udvar-Hazy

Business case for NMA remains uncertain

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Introduction

July 17, 2017, © Leeham Co.: We’re half way through 2017. Boeing reported orders through July 11, a week ago. Airbus won’t update its July orders until the end of the month.

Through July 11, Boeing reported 116 net wide-body orders: 15 for the 767, 33 for the 777 and 75 for the 787. Net cancellations of -7 for the 747 are included in the net 116 figure.

The 15 767s were not commercial models, however, but 767-2C tankers for the USAF.

Over at Airbus, none of China’s 40 commitments announced July 5 for 40 A350s are in the June summary, and won’t be in the Orders tally until the commitments turn into firm orders. Through June, airbus had net 26 widebody orders: three A330-200s and 29 A350-900. There were cancellations of four A330-800s and two A380s.

If the 40 China A350s were included, this would bring Airbus to 66 widebody orders, still well short of Boeing’s YTD figure.

Summary

Airbus product gap widens as A330-200/800 stalls.
Boeing 787 strength comes from 787-9; 787-8 remains minor player.
Middle of the Market business case still unproved.

1 Comment

Posted on July 17, 2017 by Scott Hamilton

air force tanker, Airbus, Airlines, Boeing, China, GE Aviation, Lessors, Middle of the Market, MOM, Paris Air Show, Pratt & Whitney, Premium, Rolls-Royce

757, 767, 787-8, 787-9, 797, 797-6, 797-7, A321LR, A321NEO, A330-200, A330-800, Airbus, Boeing, Middle of the Market, MOM, NMA, Paris Air Show

MAX 8 conversions to MAX 10 outweigh MAX 9

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Introduction

July 3, 2017, © Leeham Co.: There were conversions of 214 orders from other 737 MAX programs in favor of the 361 orders and commitments announced at the Paris Air Show for the launch of the 737 MAX 10.

Aside from the easily identifiable 100 MAX 9 orders from United Airlines, the other conversions weren’t readily apparent.

An analysis by LNC indicates that about half of the conversions came from the MAX 8.

Summary

The MAX 10 orders and commitments surpass the MAX 9 after PAS, becoming the second most in-demand of the MAX family.
LNC estimates that about 300 orders remain for the MAX 9, higher if Lion Air’s MAX order is allocated on a pro-rata basis.
A lot of MAX 8/9 series orders are TBD, with no immediate selection by the customer.

Leeham News and Analysis

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

Leeham News and Analysis

History undermines Boeing claim of C Series impact: analysis

Assessing the Dubai Air Show

Introduction

Summary

Potential credit crisis in China would hurt aviation industry

Introduction

Summary

Pontifications: DAE acquires AWAS, moves up in lessor status

Air Berlin files for bankruptcy

Pontifications: Avolon sees strong sales for Boeing 737-10

Key lessors see strong wide-body market despite worries

Introduction

Summary

Pontifications: Context is everything

Business case for NMA remains uncertain

Introduction

Summary

MAX 8 conversions to MAX 10 outweigh MAX 9

Introduction

Summary

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