Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing’s 737 North Line and the Everett factory: in transition now June 9, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 25. June 6, 2025
- New RISE powerplant benefits from decades of GE research and development June 5, 2025
- Engine makers emphasizing durability, reliability June 4, 2025
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
Assessing the airline financial recovery around the globe
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By Vincent Valery
Introduction
May 23, 2022, © Leeham News: A significant number of airlines started reporting their fiscal 2021 earnings. Most saw an improved financial performance, but still a far cry from the pre-Covid days.
The differences in financial performance depend on geography and airline business model. Some carriers saw a meaningful recovery, while others had a financial performance not very different from 2020. A few airlines also saw better profitability than before the Covid-19 pandemic.
LNA analyzes airlines’ earnings globally and compares them with their pre-Covid results.
Summary
- The Americas leading the revenue recovery, with a notable exception;
- Europe lagging behind the Americas;
- Asian carriers stuck in low gear;
- The peculiarity of cargo airlines.
Impact of Russian Airspace Closure on the World’s longest flight
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By Bjorn Fehrm
Introduction
May 19, 2022, © Leeham News: Last week, we looked at what the closure of Russian airspace would mean for a mid-European cargo airline. A cargo plane has a shorter range, and the difference in flight distance meant that the cost of transporting cargo from Far-East to West Europe increased considerably as cargo payload was reduced.
We now check what the Russian airspace closure means for the World’s longest flight, Singapore Airlines flight SQ23/SQ24 between New York and Singapore.
Summary
- The flight from New York to Singapore has changed the routing after the 24th of February. It now avoids Russian and Ukrainian airspace.
- It results in a longer flight but the cost increase shall not pose a profitability problem on this premium route.
Start-up nears airport Aircraft Towing System tests
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By Scott Hamilton
May 16, 2022, © Leeham News: A start-up company is 60-90 days away from landing a contract with a US airport to install a prototype system that will pull airplanes around the field, eliminating taxiing with engines or tugs.
The ATS airport channel system. Source: ATS.
ATS Worldwide (for Aircraft Towing System) proposes a network of trench-like guides equipped with a flexible tow mechanism that captures the nose gear to tow airplanes from the regional jet to the Airbus A380. It’s all done with automation. No new equipment, other than a nose camera, is added to the airplane. This eliminates added weight and complexity, or the need for a Supplemental Type Certificate, proposed by Wheel Tug. No external tug, like Taxibot, takes the airplane to the end of the runway. This eliminates airfield conflicts, ATS said during the Aviation Week MRO Americas conference last month in Dallas.
But constructing a network of towing trenches from the gate, across the ramp, to the taxiways and the runways, presents its own challenges. Constructing the network won’t be inexpensive. Funding sources must be identified. The Federal Aviation Administration and other regulators must be convinced that the system will be safe. Regulatory standards must be prepared.
And the elephant in the room will be the reaction from unions whose ground handlers, wing walkers, etc., face losing jobs or fewer jobs.
The big advantages: eliminating the need for hundreds of tugs at an airport. Reduction in fuel required to taxi airplanes, major cost savings for the airlines. A reduction in emissions, a growing goal, especially in Europe and the USA. Finally, there can be lower headcounts by the airlines and airports, another cost savings.
Implementation, if all goes well, is years away. But a prototype system for proof-of-concept is expected to be activated at the Ardmore (OK) airport in 60-90 days. At least three major hub airports are reviewing proposals for initial demonstration projects as well, ATS says.
Impact of Russian Airspace Closure for mid-European freight airlines
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By Bjorn Fehrm
Introduction
May 12, 2022, © Leeham News: Last week, we looked at what the closure of Russian airspace would mean for a mid-European airline that flies to Asia destinations like Japan, Korea, or Mainland China.
Air France now flies the routes from East Asia south of Russian airspace instead of over Siberia. The route is longer which increases the operating costs, but with the examples Boeing 777-300ER, there are no restrictions on passenger load factors, and most times, the cargo space can be loaded to the volume limit.
For a freight airline flying similar routes, the added distance impacts payload, as freighters have about 2,000nm less range than their passenger siblings. We check the operating cost and payload impact for mid-European freighter airlines flying from Far-East freighter hubs to West Europe.
Summary
- A freighter airline takes a heavier hit from Russian airspace closure.
- As the extra distance eats into the possible payload, the operating cost per tonne for hubs like Shanghai, Seoul, and Taipei increases more than for the airline’s passenger service.
Mind the gap between announced and actual production rates
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By Vincent Valery
Introduction
May 9, 2022, © Leeham News: As passenger traffic is recovering from the COVID-19 pandemic, especially in the Americas and Western Europe, many airlines are eager to take delivery of more fuel-efficient aircraft. Higher oil prices and ambitious plans to reduce carbon emissions are driving new-generation aircraft demand, notably for the Airbus A320neo and Boeing 737 MAX families.
A combination of supply chain disruptions and challenges associated with increased production means that Airbus and Boeing aren’t ramping-up A320neo and 737 MAX production as much as they would like. Boeing fell short last year on its 737 MAX production targets. The American company is also dealing with multiple delays in the resumption of Dreamliner deliveries.
In recent years there have been significant gaps between announced and actual production rates. The gaps have a material impact on projected OEM revenues, cashflows, and incomes.
LNA analyzes aircraft production rates on all the Airbus and Boeing programs since 2010 to assess whether the gaps were as significant in the past. LNA also evaluates the programs that were the closest and furthest away from announced production plans.
Summary
- A metric to measure production line consistency;
- Relatively consistent Single-Aisle rates;
- More volatile twin-aisle rates;
- A more consistent OEM.
Spirit AeroSystems seeks bigger role in aftermarket
By Scott Hamilton
May 5, 2022, © Leeham News: Spirit AeroSystems has had a tough couple of years. It’s not only had COVID to contend with, but its customer that provides more revenue than any other—Boeing—had a major impact on Spirit’s revenues and profits.
Boeing’s 737 MAX crisis, suspension of deliveries for the 787 and extended delays in the 777X programs all hurt Spirit. The Tier 1 supplier makes the fuselages for the 737s. It makes the nose sections for the 787 and 777. Spirit’s 737 production rate is now 31/mo. Deliveries for the 787 are expected to resume in the second half. Boeing said it will gradually increase production from the current rate of about 0.5 per month to 5/mo (though the timeline remains murky). Production of the 777X is suspended through 2023 while that for the 777-200LRF probably will hover around 2/mo for the indefinite future.
In its 1Q22 earnings release on May 4, Spirit appears on its way toward solid recovery. The company beat street expectations on strong Airbus deliveries, for which it’s also a supplier. Spirit’s own operational improvements and below-the-line improvements contributed to the better than expected results. And free cash flow was stronger than expected. The earnings detail is here.
Impact of Russian Airspace Closure on mid-European airlines
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By Bjorn Fehrm
Introduction
May 5, 2022, © Leeham News: Last week, we looked at what the closure of Russian airspace would mean for North European airlines that fly to Asia destinations like Japan, Korea, or Mainland China.
Our example was Finnair’s route from Helsinki to Tokyo and what it would mean for it cost-wise to fly over the North pole and then down to Tokyo instead of over Russia.
We now continue the analysis with what the air space closure means for a West European airline like Air France. We check the cost increase to fly from Paris to Seoul in South Korea when you can’t use Russian and Ukrainian air space.
Air France 777-300ER. Source: Wikipedia.
Summary
- The costs for Air France from Russia’s airspace closure are more manageable than for Finnair.
- Longer-term, it will mean changes to the route structure for affected airlines.
Lessor 2021 Earnings
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By Vincent Valery
Introduction
Credit: AerCap
May 3, 2022, © Leeham News: Most passenger airlines incurred severe losses in 2020. However, last year, LNA showed that most lessors had a far less challenging 2020 than their customers. Many lessors managed to turn a profit in 2020.
As a future LNA article will show, the financial fortunes of most passenger airlines significantly improved in 2021 compared with 2020. We will now analyze how the largest lessors that publish their accounts performed in 2021.
Summary
- Changes in the lessor landscape;
- Contrasting financial fortunes;
- The aftermath of the Ukraine war.
Dr. Peters order for 777-300ER P2F pits Kansas Mod against IAI, Mammoth
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By Scott Hamilton
May 2, 2022, © Leeham News: Kansas Modification Center’s launch customer order for its Boeing 777-300ER freighter conversion pits the start-up against the established IAI Bedek and another start-up, Mammoth Freighters.
Christian Mailly (left) of Dr. Peters Group, a lessor, and Jim Gibbs, CEO of Kansas Modification Center. Source: Leeham News.
A fourth 777 P2F program, by the supplemental carrier Eastern Airlines, doesn’t involve a full freighter conversion with a cargo door.
Kansas Mod, or KMC, is paired with the National Institute for Aviation Research (NIAR), which is the aerospace research arm of Wichita State University in Kansas. NIAR is paired with WERX, a WSU program that trains engineers. Together, this is known as NIAR WERX. This cumbersome combination will be referred to as KMC.
Jim Gibbs, the CEO of Kansas Modification Center, announced a firm order for three 777-300ER conversions and options for seven more last week at the Aviation Week MRO Americas exhibition in Dallas. Backbone Freighter Leasing, an affiliation of Dr. Peters Group, a European lessor, placed the order. The 10 aircraft were operated by Emirates Airline. Dr. Peters Group is best known as a lessor of Airbus A380s.
Christian Mailly of the Peters group said KMC said Backbone considered the IAI and Mammoth programs but developed a trust with KMC that gives confidence that the conversions can be delivered on time. The firm orders are scheduled for delivery in 2024-2025; options are slotted in for delivery in 2025, 2026, and 2027.
- IAI Bedek launched in 2019, now has 22 orders and at least 15 options
- Mammoth has two orders, three options
- Kansas Mod has three orders, seven options
Impact of Russian Airspace Closure on Finnair
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By Bjorn Fehrm
Introduction
April 28, 2022, © Leeham News: Last week, we started an article series that looks at the impact of the closure of the Russian airspace for Western airlines.
We start with analyzing how Finnair’s cost base changes as it routes Helsinki to Tokyo has to fly over the north pole and then down to Tokyo instead of over Russia. How will this affect the airline’s costs and the payload carrying capacity of the aircraft?
Summary
- The costs for Finnair on the route increase significantly.
- Part of this increase is increased fuel prices, affecting all airlines. Others are tied to avoiding Russian airspace.