Pontifications: Winter is coming

By Vincent Valery

Sept. 28, 2020, © Leeham News: The end of September marks the time when airlines in the Northern Hemisphere assess their summer season financial performance. Depending on the outcome, they adjust their capacity and evaluate their cash needs to see through the lower demand winter months.

This summer was significantly different from what airlines envisioned earlier this year. They had to re-arrange schedules on short notice to capitalize on the uptick in passenger demand after the lifting of some travel restrictions put in place during Spring.

With a resurgent COVID-19 spread in some countries and the re-establishment of movement restrictions, airlines need to, once again, adjust their plans for winter months.

Read more

Pontifications: Boeing SC makes its case for 787 production consolidation—and it favors Everett

By Scott Hamilton

Sept. 14, 2020, © Leeham News:  Boeing’s South Carolina 787 final assembly plant has made its case whether to consolidate production in one location, or not.

The conclusion favors retaining dual assembly lines, retaining one in Everett.

This click-bait lead doesn’t mean Boeing SC management favors retaining dual assembly lines. Far from it.

Read more

Pontifications: Boeing in Washington: Here We Go Again

By Bryan Corliss

Sept. 7, 2020, © Leeham News: Stop me if you’ve heard this one: the pundits are saying Boeing is going to leave Puget Sound, leaving behind the hollow husk of a company doomed to wither and die on the vine.

Bryan Corliss

Just like they did in 2003, in 2009, in 2013 and 2016.

Seattle-area political economist and author T.M. Sell, in fact, traces the company’s first threat to leave clear back to the 1920s, when company executives got into a fight with the Seattle City Council over building new roads to connect downtown with the airport we now call Boeing Field. 

Boeing said it would pack up and move to southern California, if Seattle didn’t cooperate. 

“Like rain in winter, this is a regular feature of the Puget Sound emotional landscape,” Sell opined back in 2009.

Read more

Pontifications: WA State frets about Boeing brain drain, but it’s already happening

By Scott Hamilton

Aug. 31, 2020, © Leeham News: Elected officials and others in Washington State worry about the “brain drain” as Boeing considers whether to consolidate 787 production from Everett to Charleston.

These people are asleep at the switch and have been for some time. The brain drain is already just around the corner.

Nearly half of the membership of SPEEA, the engineers and technicians union at Boeing, are 50 years or older right now.

Almost two thirds of these are within 55-64 years old. In other words, ready for retirement right now or soon to be.

Read more

Pontifications: Did Boeing telegraph its decision in February consolidating 787 production?

Aug. 24, 2020, © Leeham News: Did Boeing telegraph plans to consolidate its 787 production in Charleston last February?

By Scott Hamilton

That’s when Boeing announced it asked the Washington Legislature to cancel tax breaks granted in 2003 to locate what was then the only 787 production line, in Washington.

Given subsequent events in which Boeing in July said it will consider consolidating two lines into one, one must wonder if the decision is already made. There’s near unanimous conclusions by outsiders that Everett’s days producing the 787 are numbered.

When Boeing said it asked the Legislature to cancel the tax breaks, officials said it was doing so to comply with a long-ago decision by the World Trade Organization that the breaks were illegal.

The WTO has yet to agree. It’s their call, not Boeing’s whether compliance was achieved.

But what is unequivocally true is that if Boeing moved 787 production out of Washington, those 2003 tax breaks would disappear. Gary Locke, who was governor in 2003 when the Legislature approved them, told me in 2008 this was the case.

Read more

Pontifications: A330neo future bleak from COVID impact

Aug. 17, 2020, © Leeham News: At least half the Airbus A330-900 skyline is with airlines that are in administration, technically insolvent or with a politically sanctioned carrier.

By Scott Hamilton

These could be characterized as in Red Alert.

The COVID-19 crisis places the remaining orders in Yellow Alert.

Airbus, as of its July website tally, has 226 A330-900s in backlog. One hundred fourteen of these, or 50.44%, are in Red Alert.

Read more

Pontifications: No, it’s not time to fly

Aug. 10, 2020, © Leeham News: Frontier Airlines’ CEO Barry Biffle says “it’s time to fly,” reports The Points Guy.

By Scott Hamilton

Well, good luck with that.

Air fares are ridiculously cheap. Some airlines in the US continue to block middle seats and now require passengers to wear masks throughout the flight. Extra efforts are made to clean the airplanes. (Southwest Airlines, in a truly bizarre move, ceased cleaning seat belts and arm rests between flights—two things passengers are guaranteed to touch.)

Travel count in in the US is now up to about 800,000 passengers a day. This compares with nearly 3m a day pre-COVID.

I wrote July 6 why I won’t be flying any time soon. I wasn’t concerned about the airplane experience (except for those passengers who refused to wear masks). I was concerned about the experience getting to, from and at the airports and at hotels.

Now, there’s another reason why it’s not time to fly.

Read more

Pontifications: The light bulb goes on

 

By Scott Hamilton

July 27, 2020, © Leeham News: Airlines across the world are pledging aircraft, slots, airport facilities and real estate to raise money.

Some US airlines recently pledged frequent flyer programs to raise billions of dollars in debt to help carry them through the COVID-19 crisis.

Airfinance Journal last week had a podcast with United Airlines and Goldman Sachs to discuss UAL’s doing this and the larger picture.

The rush to pledge virtually everything to raise money is déjà vu all over again.

I’ve been in this business since 1979. I’ve been through the 1991 Persian Gulf War, SARS, downturns, 9/11 and the Great Recession. The impact to the airline and aerospace industry from the virus crisis is by far the worst.

Read more

Pontifications: Turbulence is not just something in the air

By Scott Hamilton

July 20, 2020, © Leeham News: The timing is coincidental. If you think the airline industry is in a wind shear now, don’t be fooled.

The industry has been in perpetual turbulence for 50 years.

At least that’s the theme of an airline executive’s new book, Turbulence.

David Banmiller began his career as a ticket agent, when hand-writing the coupons at the airport as common practice.

He retired three years ago after a career that saw him in executive positions at AirCal, American Airlines and other carriers.

He became a bankruptcy reorganization specialist as well.

Careers

Banmiller weaved through American, TWA, AirCal, the second Pan Am, Aloha and Air Jamaica. He was CEO of AirCal when it was sold to American, where he became an executive under legendary CEO Bob Crandall. Banmiller went on to become CEO of Aloha, Pan Am and Air Jamaica. He took the first two through bankruptcy reorganization and restructured Air Jamaica outside of the courts. He also served as CEO of Sun Country Airlines.

Throughout his careers, Banmiller experienced many of the downturns of the airline industry: oil price wars, 9/11, the SARS pandemic and now, from his retirement, COVID-19.

Read more

Pontifications: 2Q earnings reports begin this month

By Scott Hamilton

July 13, 2020, © Leeham News: Earnings season calls for the second quarter begin this month.

For our readers, Airbus and Boeing are the big ones.

Boeing’s earnings call is July 29. Airbus follows the next day.

A few early analyst previews were issued last week for Boeing.

Read more