Leeham News and Analysis
There's more to real news than a news release.
Sunset of the Quads, Part 5
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By Vincent Valery
Introduction
Sep. 3rd, 2020, © Leeham News: Last week, we compared the economics of the A340-300 and the 777-200ER on the Paris to San Francisco route. We now turn our attention to Airbus’ larger long-range aircraft, the A340-600.
Credit: Virgin Atlantic Airways
The 30% larger A340-600 was developed in the last year of the 1990s to compete with Boeing’s 777-300ER, then in development.
Summary
- Offering airlines a full product suite;
- A340-600 launch and development;
- Quad vs. twin-engine long-range operations;
- Disappointing commercial performance;
- A long-haul trunk route.
European Regionals Face Hostile Operating Environment
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By Kathryn B. Creedy
Third in a Series. Previous articles:
- The future of regional jets is limited by choices, Scope Clause
- US Regional Consolidation Began Before Covid
Introduction
Aug. 31, 2020, (c) Leeham News: European regionals face far greater challenges than Covid and, sadly, much of what is happening to the industry is beyond its control. The result is similar to failures seen in the U.S. Flybe’s recent loss resulted from pre-Covid problems which also led to the pre-Covid failures of such airlines as Flybmi and Cobalt.
The failures illustrate, however, the three reasons why European regionals are so fragile – low-cost competition, geography, and challenging government policy.
Flybe is just the latest of many regionals to cease operations owing to harsh conditions in Europe.
Summary
- Government Policies Hardest on Regionals
- LCC Competition Challenging
- Consumer Protections Crushing
- Turboprops Have Large Role
Sunset of the Quads, Part 4.
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By Bjorn Fehrm
Introduction
August 27, 2020, © Leeham News: After presenting Boeing’s and Airbus’ first 300 seater long-range widebodies, the 777-200ER and A340-300 in Part 3, we now fly them both on the route Paris to San Fransisco to understand their economics.
The A340-300 was first on the market, but when the 777-200ER arrived amid changed ETOPS rules, the four holer found the twin a difficult competitor. We use our airliner performance model to understand why.
Summary
- The A340-300 has about the same payload-range performance as the later introduced 777-200ER.
- Its economics is competitive with the 777-200ER, yet sales dried up when the 777-200ER became available. We explain why.
R&D spending at Boeing plunges; Airbus yet to kick in
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By Scott Hamilton
Introduction
Aug. 24, 2020, © Leeham News: Research and development spending at Boeing Commercial Airplanes declined 21% in the first half this year compared with 2019.
From 2017 through 2019, BCA’s R&D spending declined 13%.
During the first half this year, Airbus Commercial airplanes R&D spending declined 1%. From 2017-2019, R&D spending increased 31%.
Boeing’s decline in 2019 vs 2018 and the first half of 2020 vs 2019 clearly reflects the grounding of the 737 MAX.
The flat spending in 2017-2018 reflects Boeing’s corporate approach of keeping R&D spending level while returning 100% of free cash flow to shareholders.
Airbus, on the other hand, was aggressively pursuing green aviation R&D, driven by a European Union that is more dedicated to green aviation than the USA is.
Summary
- COVID-19 related R&D spending cuts may not be fully seen until the third quarter.
- Boeing suspended R&D spending on the New Midmarket Airplane in January. Coupled with MAX grounding pressure, Boeing’s spending was already depressed.
- Airbus said it was suspending all R&D except for the A321XLR after the global COVID devastation on air passenger demand.
- Airbus historically outspends Boeing in R&D.
Sunset of the Quads, Part 3
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By Vincent Valery
Introduction
Aug. 20, 2020, © Leeham News: Last week, we compared the economics of the 747-400 and the A380 on the Los Angeles to Sydney route. We now turn our attention to Airbus’ first long-range aircraft, the A340-300, on a Europe to US West Coast mission.
Summary
- A340 launch and development;
- Competing aircraft;
- Satisfactory commercial success;
- A thin long-haul route.
Sunset of the Quads, Part 2
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By Bjorn Fehrm
Introduction
August 12, 2020, © Leeham News: We deepen our look at the Queen of the Skies and it’s best selling version, the 747-400.
We go through what made it the great aircraft it was and why Qantas replaced it on its trunk routes to the US West coast.
We pick Los Angeles to Sydney as the benchmark route, a route on the range limit for the 747-400, and check how it stacks up economically versus the A380, its replacement.
Summary
- The 747-400 reigned the skies for 15 years, combining a trans-Pacific range with a good passenger and cargo capacity.
- Once Boeing introduced the 777-300ER and Airbus the A380, the 747-400’s ruling of the skies was over. It trailed in both capacity and efficiency.
- It continued in operation until today with many airlines, still a useful aircraft for long and dense routes as long as the fuel prices stayed low.
A lingering shakeup in European skies
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By Vincent Valery
Introduction
Aug. 11, 2020, © Leeham News: There is a shake-up still to come for European airlines.
LNA wrote in early March about the financial vulnerability of several European airlines as the COVID-19 outbreak was intensifying. The article was released before European countries closed their borders, and the US banned inbound travel for non-residents from the old continent.
Fast forward five months, and the airline industry is in its gravest crisis since World War II. After bouncing from the lows in April and May, a passenger traffic recovery remains elusive. Some European countries are re-implementing travel restrictions as new (for now localized) outbreaks emerge.
Despite the unprecedented slump in passenger traffic, Flybe is the only sizable European carrier to have ceased operations since the beginning of the COVID-19 outbreak. Several smaller carriers declared bankruptcies or ceased operations.
LNA analyzes why some carriers went under while others did not, and assesses how various market segments might recover.
Summary
- Numerous airlines too interconnected to fail;
- The worst-case comes true for European regional airlines;
- Some unlikely (relative) winners and losers;
- A treacherous road to recovery.
US Regional Consolidation Began Before Covid
Second in a Series on the Future of Regionals
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Introduction
By Kathryn B. Creedy
Aug. 6, 2020, (c) Leeham News: Many might assume the recent loss of three regionals – Compass, Trans States and ExpressJet – is Covid related.
What is actually happening is the long-anticipated consolidation of the regional airline industry coupled with fleet restructuring and the most recent fallout of the pilot shortage crisis that began in 2013.
Reducing the number of regional partners also streamlines the inherent inefficiencies of the regional/major model.
Summary
- Regional airline industry is volatile.
- Mainline-regional model broken for many years.
- Rising costs eliminate some advantages.
Sunset of the Quads, Part 1
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By Vincent Valery
Introduction
July 30, 2020, © Leeham News: British Airways announced two weeks ago that it would immediately retire its entire Boeing 747 fleet. Several other operators announced accelerated retirements of their Queen of the Skies fleets. There are now fewer than 100 747s left in passenger service.
While less publicized, airlines have also been accelerating the retirement of their Airbus A340 fleets. Lufthansa put its 10 remaining A340-600s into long-term storage.
So far, Air France is the only airline to have permanently retired its A380 fleet, initially scheduled for 2022. However, Emirates and China Southern are the only airlines currently operating the Superjumbo in passenger service. All but a handful of A380s are in storage, with some airlines not intending to bring them back into service for several years.
Credit: Qantas
The slump in passenger traffic caused by the COVID-19 outbreak accelerates the sunset process of the markets operated by quad-engined aircraft. What did the quads bring that was desirable and what changed? Are quad engine aircraft gone for all times?
We look into these questions in this article series, and we start with the Queen of the Skies, and we focus its best selling variant, the 747-400.
Summary
- Shrinking quad-engine jet fleet;
- Flying an A340 or 747 will be rare;
- Uncertain future for A380;
- 747-400 commercial success;
- An ultra-long-range route.
Looking ahead for 2020 and 2030 decades: ATR & De Havilland Canada
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Seventh and final in a series.
By Judson Rollins
Introduction
Jet manufacturers typically introduce a new airplane every 15 years or so.
Commercial turboprops have not innovated to nearly the same extent as jets, with rival manufacturers ATR and De Havilland Canada (and predecessor Bombardier) having produced nearly 95% of the world’s in-service fleet. Although order volume has slowed in recent years, more than 300 aircraft are still on order.
Both manufacturers sell aircraft based on 30+ year old designs. However, the market’s size is probably capped because of turboprops’ relatively low cruise altitude and speed, making them limited alternatives to regional jets beyond roughly 500nm. This limits the return on investment from a clean-sheet design, either from aerodynamic improvements or the use of carbon composites.
Emerging threats lie on the horizon as China’s Xian MA700 nears its first flight and Embraer deliberates re-entering the market with a new design. Given sufficient market acceptance, either would constitute a significant threat not only to ATR and DHC, but potentially also the smaller end of the regional jet market.
Summary
- ATR has a commanding share of the market; access to Airbus resources adds to ATR’s ability to win future business.
- DHC’s dwindling order book and high production costs limit its ability to compete.
- Old designs leave the turboprop space ripe for disruption; Embraer may re-enter the market with a clean-sheet design.