Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
- Boeing First Quarter Results: Tariffs, Return flights, $10.55bn asset sale April 23, 2025
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
Visit to Bombardier for airBaltic CS300 roll-out
By Bjorn Fehrm
October 27, 2016, ©. Leeham Co: This week we have been at Bombardier (BBD) Mirabel Airport outside Montreal to observe the roll out of the airBaltic CS300 CSeries model and to later test fly the aircraft at BBD’s Wichita facility.
The preparation for the test flight and the flying experience will be described in subsequent articles.
Figure 1. airBaltic’s first CS300 rolled out for local media to see. Source: Leeham Co.
airBaltic will take delivery of the first CS300 by the end of November. This event was for Baltic media to see the aircraft and its final livery for the first time. It was fresh from the paint shop. The group also was able to see the CSeries Final Assembly Line (FAL) and to ask questions to airBaltic CEO Martin Gauss.
Airbus results depressed from continuing delivery delays
Oct. 26, 2016: Airbus Group reported that its nine months financial results continue to be depressed by delivery delays in the A320neo and A350-900 programs.
The Group reported revenues of €43bn for the period and charges that lowered profits.
Net cash fell by nearly €5bn from the same period last year. Earnings at the Commercial unit fell 59% YOY.
The press release with detailed results may be found here.
Seventeen new, derivative aircraft to see EIS through 2020
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Introduction
Delivery of the first Bombardier CS300, to AirBaltic, next week kicks off entry-into-service for 17 airplanes through 2020. Bombardier photo.
Oct. 20, 2016, © Leeham Co.: The past decade was a hive of activity as the Big Four OEMs launched new airplane programs and put the aircraft into service.
Airbus launched the A320neo, A330neo and A350 families. The A330neo is under production; the other two entered service early this year.
Boeing launched the 787 in late 2003 (outside the decade mark), rolled it out in 2007 and entered service with it in 2013. The 737 MAX was launched in 2011 and is in flight testing. The 777X was launched in 2013; components are in production.
Bombardier launched the CSeries in 2008; it entered service this year, after three years of delays.
Embraer launched the E-Jet E2 om 2013. Flight testing began this year.
New Entrants
These were supplemented by new entrants into commercial aviation: COMAC with its C919; Irkut with the MC-21; and Mitsubishi with the MRJ90. Of these, only the MRJ90 is flying. After more than two years of delays and several false starts, flight testing began in earnest this week at Moses Lake (WA) with FTA-1 (Flight Test Aircraft 1).
Development and new program launches have slowed, but the next decade is hardly going to be idle.
Summary
- Seventeen new aircraft or derivatives are scheduled to enter service through 2020.
- Five potential derivatives might see EIS through the same period.
- Three to five new or potential derivative aircraft might see EIS 2021-2025.
How Boeing is working to convert Qatar’s MAX LOI into a firm order
Boeing 737-8. Boeing photo.
Oct. 18, 2016, © Leeham Co.: It’s only a Letter of Intent, the agreement between Boeing and Qatar Airways for up to 60 737-8s.
Qatar announced the LOI two weeks ago because its CEO, the notoriously fickle Akbar Al-Baker, is royally pissed at Airbus over delays for the A320neo. Qatar was the launch customer for the airplane, ordering 50. Citing issues and delays with the Pratt & Whitney GTF engines, and other unspecified problems, Al-Baker refused to take delivery of four of the first aircraft.
He repeatedly threatened to drop the A320 order altogether, but then at the press conference announcing the LOI (along with other Boeing orders), he said he doesn’t walk from contracts.
Forget for the moment the contradiction.
Here’s how Boeing is working to convert the LOI into a firm order.
Engine industry clamoring for road back
By Bjorn Fehrm
Subscription required.
Introduction
October 13, 2016, ©. Leeham Co: The airline engine industry is like a ticking bomb. Over the years, a business practice of selling the engines under manufacturing cost and planning to recover costs and make a profit on the aftermarket developed. This goes back decades.
The practice was fostered by fierce competition over the engine contracts for aircraft which offered alternative engines. The losses of the engine sales could be made up later by selling spare parts and services at high margins.
Figure 1. Trent 7000 from Rolls-Royce. Source: Rolls-Royce.
These “jam tomorrow” practices have several implications. The engine industry is now confronted with these and wonder how it could put itself in such a bind. How to handle these and what is the way back?
Summary:
- High competition in engine sales forced ultra high discounts for the up-front engine sale.
- Aftermarket schemes was created that should recover profits over spare parts and services.
- But these maintenance practices create all sorts of problems in the used engine market.
- The engine industry now wants to return to more normal business practices. But how do they find the way back?
Airline assets and lessor assets: Bombardier and Embraer
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Part 2. Part 1 may be found here.
Introduction
Bombardier invented the regional jet. Despite some sales these days, the CRJ was eclipsed by the Embraer J-Jet. Bombardier photo.
Oct. 10, 2016, © Leeham Co.: Regional aircraft are much riskier assets for lessors than mainline aircraft.
Until recently, Bombardier and Embraer were the only two regional jet Original Equipment Manufacturers (OEMs).
Today, the Sukhoi SSJ100 and the Mitsubishi MRJ90 join BBD and EMB in this arena.
Summary
- Bombardier’s regional jets CRJ series enjoyed a good life with airlines and lessors, but fell into disfavor as fuel prices spiked.
- BBD’s CSeries was ordered by four lessors, but two of them have question marks.
- Embraer’s E-Jet found good homes with lessors, but some worry about supply-and-demand in the secondary market.
No sanctions will be levied on Airbus and Boeing in WTO dispute
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Now open to all readers.
Introduction
Sept. 26, 2016, © Leeham Co.: It’s hazardous to use the word “never,” but the US and European Union will never impose trade sanctions or tariffs on Airbus or Boeing airplanes.
No sane president would do so. (Cue Donald Trump.) It would start a devastating trade war and the collateral damage on innocents in the Airbus-Boeing illegal subsidies disputes would be severely harmed.
Summary
- US tariffs on Airbus aircraft and EU tariffs on Boeing aircraft would hurt engine makers, suppliers—innocents in the illegal subsidy disputes.
- Some key customers order from Airbus and Boeing. Tariffs on one or the other company risk alienating these customers.
- Sanctions/tariffs permitted on other companies, industries.
- Canada, Brazil never imposed sanctions in Bombard-Embraer violations.