Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- RTX Q1 2025 Earnings: GTF Talk Takes A Back Seat To Tariffs April 22, 2025
- Tariffs Tumult Takes Over GE Aerospace Q1 2025 Earnings Call April 22, 2025
- Boeing reports mixed results of latest employee survey, but middle management and officers remain key obstacles April 22, 2025
- Hopes for 1Q financial progress turns into bumpy ride for Boeing April 21, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
Farnborough Air Show, July 15: VLA program analysis: A380, B747-8I, 777-9, [and the wishful thought of an A350-1100]
Fabrice Bregier, CEO of Airbus Commercial, threw cold water on the prospects of an A380neo and an A350-1100, the latter to compete with the Boeing 777-9.
Bregier’s position on the A350-1100 leaves Boeing with a monopoly at the 400-seat marker. Boeing doesn’t view the 777-9, which nominally seats 407 passengers, as part of the Very Large Aircraft sector which begins at 400 seats. Rather, Boeing lumps the -9 into the medium-twin aisle sector (300-400 seats).
While Airbus continues to struggle with sales for the A380, Boeing doesn’t much talk about the 747-8I anymore, focusing primarily on the future potential of the 747-8F. Boeing bravely talks about the prospect of four or five customer sales for the 747-8I this year, including a strong wishful-thinking of an order from Emirates Airlines (president Tim Clark says he’s not interested).
American easing away from continuous hubbing, returning to peak banking
American Airlines will ease away from the continuous hubbing that smooths operations at key airports, increases aircraft utilization and cuts costs as it returns to the peak-and-valley hub-and-spoke system adopted decades ago under former CEO Robert Crandall.
Although this will mean higher costs and big gaps in airport activity, the increased revenue potential–called the power of the hub under Crandall–will offset the increased costs, says Derek Kerr, CFO of American.
We were at American’s Leadership Council meeting for 1,500 employees yesterday. The meeting itself was off the record but we talked with Kerr afterwards on the record.
Kerr, CFO at US Airways prior to the merger between AA and US, said that the continuous hub can’t connect as many passengers as the traditional hub, leaving revenue on the table. Continuous hubbing allowed a 45 minute ground time, which is too short–an hour is needed to maximize connections.
Re-hubbing will occur this year at Chicago, Miami and Dallas.
Southwest Airlines was a pioneer in continuous hubbing, though it wasn’t called this until perhaps a decade ago. Southwest essentially rolls the airplanes up, deplanes, enplanes and departs. At its origin, long before carry on bags, bag fees, security issues and other factors arose, Southwest “turned” its planes in as little as 10 minutes. Today turns are 30 minutes or longer, in part as planes get larger and carry-on bags slow the enplaning process. Still, Southwest eschews the term hubbing and indeed its connection percentage is far lower than American and other traditional airlines.
The de-hubbing is just one step the US Airways management team is taking to remake American following its emergence from bankruptcy last year and the merger in December.