Could an NMA be made good enough?

By Bjorn Fehrm

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Introduction

March 23, 2017, © Leeham Co.: After showing there exists an NMA (New Midrange Aircraft) gap, the next question follows: Can an aircraft be made for the segment that can carve out a big enough slice to make it a worthwhile effort?

It’s a tough question. Any new aircraft will cost at least $10bn to develop for the airframe alone. To this one shall add the engine development. There exists no suitable engine for such an aircraft. To motivate the investments, the aircraft has to bring a substantial performance improvement compared to existing aircraft. Can it?

Figure 1. The NMA takes more and more the shape of a 767 replacement (A United 767-200). Source: United

We go through the key areas that can bring improvements and check if enough progress can is made until an NMA entry into service in 2024 or 2025.

Summary:

  • Existing aircraft are either too little or too much aircraft to fill an NMA role.
  • By careful design choices, especially for the fuselage, a new aircraft can achieve the required performance.

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Major fleet decisions may not be positive for Airbus, Boeing

Pontifications is off this week.

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Introduction

March 20, 2017, © Leeham Co.: There are some major fleet decisions that will probably come down the pike this year at American, Delta and United airlines. Not all of them are going to be viewed positively by Airbus and Boeing.

There is also a serious warning sign emerging from the Middle East that could have serious, negative impacts on Airbus and Boeing.

Summary
  • American Airlines doesn’t want its Airbus A350-900s any more. Consolidation with US Airways appears to have made these surplus.
  • Delta Air Lines, which so far eschewed any orders for the Airbus A320neos and Boeing 737 MAXes, is understood to be readying a Request for Proposals to be issued this year.
  • United Airlines doesn’t want its Airbus A350-1000s any more. Picking up cheap Boeing 777-300ERs appear to have made these surplus.
  • Emirates Airlines, reacting to Brexit and Donald Trump’s travel bans, is undertaking a full business review in response to a sharp drop in bookings.

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CDB Leasing aims for 500-600 aircraft portfolio

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Introduction

March 16, 2017, © Leeham Co.: China’s evolving commercial aerospace and aviation industry has high-profile companies such as AVIC and COMAC, and its expanding supplier based, combined with joint ventures with Western companies is well known.

Less well known is the growth in the aircraft leasing business. Increasingly, Chinese lessors are showing up on the order lists of the Big Four aircraft manufacturers. Still, there remains a bit of a mystery about the lessors and dynamics within China.

LNC spoke with the newly appointed CEO of CDB Leasing during the ISTAT conference last week in San Diego.

Peter Chang has been in the Western leasing business for decades, employed in key positions with Aviation Capital Group, ILFC and Aircastle—usually with responsibility for China.

He was named CEO of CDB in December, a move that was announced during the January Dublin conferences of Airlines Economics and Airfinance Journal. More key personnel announcements were made during ISTAT.

In an exclusive interview, LNC asked Chang about the origins of CDB, other Chinese lessors, the current policy of restricting flow of Chinese cash outside the country, the Boeing 737-10 and the Bombardier CSeries.

Here is this interview.

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Boeing 737 MAX 10 analyzed

By Bjorn Fehrm

Note: Boeing’s “soft launch” of the 737-10 MAX at the ISTAT conference in San Diego a week ago met with some sharp criticism by lessors and some others. Within hours, Boeing scheduled a conference call for reporters the next day to defend and promote the airplaneLNC closely tracked the development of the MAX 10 and its competivitive position vis-a-vis the Airbus A321neo. Here is our first detailed, public analysis of the MAX 10.–Editor.

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Introduction

March 12, 2017, © Leeham Co.: Boeing has taken the wraps of the 737 MAX 10. Its overall configuration has long been known to LNC, but we now have more data and performance claims that we can analyze.

Boeing claims the MAX 10 flies farther, cheaper and with just about the same numbers of passengers as the class-leading Airbus A321neo.We now have enough data to analyze if this is true. We put the data in our performance model and here is the result.

Summary:
  • Boeing’s claims on a basic level seem OK. The seating is close to the A321neo.
  • On a higher level it starts to stutter. Our model can’t agree on the 5% better economics.
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If Boeing builds MAX 10, will customers come?

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Introduction

March 7, 2017, © Leeham Co.: If Boeing builds the 737-10, which appears increasingly likely, will customers come?

This is always the multi-billion-dollar question for any aircraft and engine manufacturer.

For Boeing, launching the 737-10 is a low-risk, and in the eyes of many, futile effort to stem the bleeding of market share between the MAX 9 and its rival, the Airbus A321neo.

  • “That’s the most absurd thing I’ve ever heard. What is he, flying downhill?” Airbus’ John Leahy reacting to claims by Boeing’s Randy Tinseth that the 737-10 has more range than the A321neo.

Depending on who’s counting and how the numbers are calculated, the A321 sales outpace the MAX 9 by a factor of four or five to one. LNC calculated last year that the ratio is more likely 3:1, identical to the market share split between the predecessor airplanes, the 737-900ER and the A321ceo.

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Boeing Services expansion wise, necessary move

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Introduction

March 6, 2017, © Leeham Co.: Boeing CEO Dennis Muilenburg wants the company to participate in the aftermarket aircraft services business and set a goal of $50bn in revenue in the coming years.

He looks at Boeing’s current business, the former Boeing Commercial Aviation Services (CAS), and sees a single-digit market share in a worldwide trillion-dollar market potential. Muilenburg understandably wants a greater share of this.

But LNC believes there is an additional driver: the intensely competitive commercial airliner business faces even greater competition in the coming years. Prices are under pressure today. China is developing its own aerospace industry, which will eat into sales by Boeing (and Airbus) in the home market. Russia has ambitions to renew its home-market airliner industry.

Boeing’s new Global Services unit is a hedge against the prospect of falling profits at Boeing Commercial Airplanes as these factors converge.

Summary
  • Airbus, Boeing single-aisle prices under pressure.
  • A330/350 keeps 787 pricing down.
  • Boeing’s NMA business case may depend on after-delivery services contracts.

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Long-haul cost differences

By Bjorn Fehrm

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Introduction

March 2, 2017, © Leeham Co.: The single-aisle, long-haul operations are on the increase. The new re-engined Airbus A320neo and Boeing 737 MAX generations are good for destinations of up to 3,000 nm, after taking into account reserves, winds and alternates planning. The Airbus A321LR is good for up to 3,500nm sectors.

Last week, we showed the Bombardier CS300 is joining the crop of single-aisles capable of 3,000nm city pairs, the distance between London and New York.

We also wrote the cost level of the single-aisle aircraft is competitive with the next step up dual-aisle, the Boeing 787 and Airbus A330neo.

But how do the different cost areas pan out? Is fuel cheaper or more expensive for the dual-aisle? What about the single-aisle crew costs? For clarity, we engage our cost model.

Summary
  • The total costs are similar per seat mile for single and dual aisle, but the parts are not.
  • The fuel costs per seat are surprisingly similar; the differences are to find in other places.

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Assessing ATR future

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Introductions

Feb. 27, 2017, © Leeham Co.: ATR today holds an almost monopolistic position in the large turbo-prop market with 87% of the backlog at YE2016. Bombardier, once the dominant turbo-prop manufacturer, has a mere 13%.

China and Russia are not included above.

ATR had a backlog of 212 aircraft vs Bombardier’s 31. In addition, ATR had options for more than 400 aircraft and LOIs for about 70 more. BBD had options for just 12 Q400s at the end of last year.

Summary
  • Low fuel prices favor regional jet, high fuel prices turbo-props.
  • No new, clean-sheet design to replace Q400 or ATR in foreseeable future.
  • Indian, Indonesia talk turbo-props but outcome unlikely.
  • China’s MA-60 feeds home market, but airplane has reliability issues.

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CSeries trans-Atlantic capability

By Bjorn Fehrm

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Introduction

February 23, 2017, © Leeham Co.: We previously described how new generation engines make the Boeing 737 MAX 8 a trans-Atlantic aircraft. The MAX 8 is smaller than the Airbus A321LR, but not the smallest single-aisle with trans-Atlantic capability. This distinction goes to the Bombardier CSeries.

We wrote about the CS100 capability to cross the Atlantic from London City Airport last year. After the article, we received new and improved data from Bombardier. The CS100 can now fly directly to US East Coast on the difficult westward leg with a business cabin of 42 seats. The updated article is here.

When we look at the improved capabilities of the CS300 (announced at Farnborough Air show last summer), this aircraft can also cross the Atlantic with a full cabin of 130 passengers.

Bombardier arranged so we could discuss this deeper with the VP CSeries program, Rob Dewar.

Summary:
  • We use our aircraft performance model to compare the CS300’s suitability for long-haul to the Airbus and Boeing competition.
  • The aircraft have similar range and seat mile costs. The smaller aircraft have lower trip costs.
  • With Rob Dewar, we explored the potential for additional capability for the CS300.

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Assessing the SSJ100 future

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Introduction

Feb. 20, 2017, © Leeham Co.: Sukhoi is Russia’s attempt at reentering the commercial airliner business. The SSJ100 regional jet is, by most accounts, an attractive

SSJ100 in CityJet colors. CityJet is one of two Western operators for the Russian-made airplane. Photo: Superjet International.

and efficient aircraft.

But it’s hampered by erratic production and questionable product support (largely due to the overhang of the Putin politics).

The aircraft was grounded briefly in December when a fatigue issue was found in the tail section during a routine inspection.

Summary
  • Nearly 100 SSJ100s are in service.
  • Two key Western customers.
  • Small customers base.
  • Captive Russian customers.

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