Leeham News and Analysis
There's more to real news than a news release.
Paris Air Show Preview
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Introduction
May 22, 2017, © Leeham Co. The Paris Air Show begins June 17, and few in the industry expect much in the way of orders this year.
The order cycle is on the downward side of the bell curve. Sustaining the 2,000, 3,000 or nearly 4,000 gross orders announced 2011-2013 simply couldn’t be achieved. The “order bubble” had to break, and it did. Last year, Airbus and Boeing reported some 1,400 orders between them.
Airbus guides that it will tough to achieve a 1:1 book:bill this year. Boeing is running about 1:1 book:bill so far but it also guides conservatively. Still, LNC thinks Boeing might surprise this year–and some of this could be at the Paris Air Show.
Leeham Co.’s new publication, Commercial Aviation Report, provides a Focus Report on the Air Show. This encompasses the expectations for Airbus, Boeing, Bombardier, Embraer, COMAC, Irkut, Mitsubishi, CFM, GE Aviation, Pratt & Whitney and Rolls-Royce into one easy-to-read package.
The pre-airshow press briefings by the OEMs begin next week. We don’t expect any earth-shattering news from these and we wanted to get our views out ahead of these briefings.
Summary
- Boeing wants to launch the 737-10 MAX at the Paris Air Show. This could spur a group of orders that would give Boeing a rare win in the headlines vs Airbus on the latter’s home ground.
- Mitsubishi plans to have its MRJ90 at the Air Show. One airplane entered the paint shop for ANA colors–this might be the one making the appearance.
- Embraer expects to have its KC-390 there. Will the E195-E2 also make an appearance?
Pontifications: Emirates profits drop 83%, MC-21 and more news last week
By Scott Hamilton
May 15, 2017, © Leeham Co.: It was a busy news week last week.
- Emirates Airline headlined its 29th consecutive year of profits, but downplayed an 83% decline.
- The Irkut MC-21 moved to the tarmac, an indication first flight may be coming shortly.
- Multiple media reports indicate that electronics flight ban from the Middle East may be extended in part to all of Europe.
- Boeing suspended test flights on the 737 MAX after CFM discovered some quality issues in some LEAP 1B engines.
Let’s look at these events.
UPS order tops off 747-8 line through 2020
UPS Boeing 747-8F. Source: Boeing.
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Introduction
Oct. 31, 2016, © Leeham Co.: Last week’s order for 14 Boeing 747-8Fs and 14 options by UPS assures continuation of the program through 2020.
If options are exercised, and if previously announced deals with other customers finally are consummated, the program should continue at least well into the 2020 decade.
Summary
- UPS (but not Boeing) revealed the delivery timeline for the order.
- The mysterious Volga-Dnepr/AirBridgeCargo that was announced at the Paris and Farnborough air shows for up to 20 747-8Fs still hasn’t been firmed up. Only four are listed on the Boeing website this year.
- Iran Air will order four 747-8s under the reported terms of the agreement with Boeing. The US government blessed the deal recently.
- The first of three 747-8s for the presidential fleet is now scheduled for delivery in October 2017, it’s believed.
What’s happened to the VLA sector?
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Introduction
Aug. 15, 2016, © Leeham Co.: Boeing says it may discontinue the 747 program.
Airbus put the A380neo on indefinite hold. Qantas Airways says it doesn’t want its last eight orders. The OEM will reduce the production to 12/yr in 2018.
There haven’t been any Boeing 777X sales since June 2015. There are only six identified customers and there has been a new, identified customer added since July
Boeing is considering a larger 777-10, which will carry 50 more passengers than the 777-9. But is there a market? Boeing photo via Google images.
2014, when ANA ordered the X.
Sales have dried up for the 365 passenger Boeing 777-300ER and only a smattering of orders have come in for its competitor, the Airbus A350-1000.
What’s happened to the Very Large Aircraft sector? What’s happened to the large, medium twin aircraft sector?
Summary
- The VLA market pioneered by Boeing and pursued by Airbus is virtually nonexistent.
- Yet there are those in Boeing who want to launch a 450-passenger 777-10 into a dubious market demand.
- 777 Classic sales dried up, but A350-1000 isn’t doing great, either. Are these too big, too?
Pontifications: Boeing softens 747-8F recovery
By Scott Hamilton
July 25, 2016, © Leeham Co.: Boeing July 21 announced it is taking an after tax charge of more than $800m against the 747-8 program. It also canceled plans to increase production of the 747-8F from the current 0.5/mo to 1/mo in 2019 on the long-held belief demand for the 8F would recover as 747-400Fs age.
In an email to LNC, a Boeing Commercial Airplanes spokesman wrote, “We have consistently said that while there is a cargo market recovery – it is not as robust as we had expected. Our new long term forecast projects cargo traffic to grow at 4.2% per year over the next two decades. But in the short term, the cargo market continues to struggle.
“The 747-8 is closely tied to the cargo market. There is an opportunity starting around 2019 when many 747-400 Freighters will be retired. Some of that replacement could go to the 747-8F, some to 777F, but some of those airplanes won’t be replaced at all. The decision we announced reduces future risk for the program and the company– and allows us to see how that replacement cycle plays out.”
With that, years of forecasts of a solid recovery for the 747-8F that ran counter to many outside Boeing was softened considerably.
Antonov betting on Western technology
By Bjorn Fehrm
July 14, 2016, ©. Leeham Co, Farnborough Air Show: The company Antonov is world renowned for its rugged transport aircraft. The recent An-124 Ruslan and An-225 Mriya super-heavy transporters are the world’s largest transport aircraft. Both fly daily for the Antonov companies own airline, transporting outsize cargo for companies like Boeing, Airbus, GE, Rolls-Royce and others.
The worlds largest aircraft, the heavy air-lifter An-225 Mriya. Source: Antonov.
The air freighter company is what keeps Antonov afloat, for it has been hit hard by the fall of the Soviet Union and Ukraine’s decision to split with the Russian Federation and orient itself to the West. Read more
IATA, Lufthansa cargo reports are discouraging
July 6, 2016, © Leeham Co.: Going into the Farnborough Air Show (#FIA16 on Twitter) next week, ominous signs continue to emerge about the health of the air cargo
Photo via Google images.
industry.
The International Air Transport Assn. (IATA) Wednesday said yields and traffic remain under pressure. Freight tonne kilometers fell 0.9% year-over-year, IATA reported.
“Yields remained pressured as freight capacity measured in available freight tonne kilometers (AFTKs) increased by 4.9% year-on-year,” IATA said. “reight demand decreased or flat lined in May across all regions with the exception of Europe and the Middle East. These regions recorded growth in air cargo volumes of 4.5% and 3.2%, respectively, in May, compared to the same period last year.”
Lufthansa Cargo saw yields in a “landside” drop, according to a Bloomberg report.
Pontifications: Time to calm down from last week’s news cycle
By Scott Hamilton
June 27, 2016, © Leeham Co.: Last week turned out to be one of the busiest in aviation in quite some time.
- Details of the Iran Air Boeing “order” emerged. Everyone overlooks that this is really a “Memorandum of Agreement,” which is subject to who-knows-how-many contingencies.
- Frothing occurred over news that Volga Dnepr (Air Bridge Cargo) may firm up 10 orders for the 747-8F, an MOU announced at the Paris Air Show last year, at this year’s Farnborough Air Show. This, along with the Iran Air “deal,” was viewed as savior for the 777 Classic and 747-8 lines. Not so fast.
- Southwest Airlines announced it’s deferring 67 Boeing 737 MAX deliveries until well into the next decade. This prompted some to claim this is a harbinger of bad things to come for Boeing.
- Brexit was viewed as a disaster for the global economy, Airbus, Boeing, Europe’s airlines and all mankind.
As you can see from my sarcasm, I disagree with each of these. Here’s why.
Analyzing Air Bridge Cargo plans for Boeing 747-8F
Dec. 15, 2015, (c) Leeham Co.: A plan by Russia’s Air Bridge Cargo to acquire another 18 Boeing 747-8Fs does little to solve Boeing’s production gap and program viability, an analysis by LNC shows.
Bloomberg News published a story yesterday saying the fate of the 747 program rests with Air Bridge Cargo, which announced an MOU for 20 747-8Fs at last summer’s Paris Air Show.
But as LNC reported shortly after the MOU was announced–once we had the opportunity to look behind the hype–it was clear that the news was hardly anything to count on.
This remains the case despite Bloomberg’s story.
CSeries dilemma: a saga of missed opportunities, bad decisions, stiff competition
By Scott Hamilton
Oct. 12, 2015, © Leeham Co.: The news agencies, stock markets and aerospace analysts last week went wild when Reuters reported there were talks going on between Bombardier and Airbus whereby the latter would take a majority stake in the CSeries program.
Within hours, both companies said talks had ended. As could be expected, the stock went into another tailspin.
Then United Airlines said it wants pilots to approve a contract, and is dangling a 100-seat airplane order for mainline operations as an incentive. The CS100 fits into this category, as does the Embraer E195 E2.
It is worth recapturing reasons BBD finds itself in its current predicament.