Leeham News and Analysis
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Leeham News and Analysis
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Analyzing the Top Customers for Airbus and Boeing
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Introduction
Jan. 4, 2017, © Leeham Co.: The top 25 Airbus customers that are identified account for 63% for the current backlog, an analysis of the company’s order list shows.
For Boeing, its Top 25 customers account for 69% of its identified backlog.
Both companies have hundreds of Unidentified orders for which no customer is disclosed.
Summary
- “China Inc.” is Boeing’s #1 identified customer and #3 for Airbus.
- Two low cost carriers are the first and second top customer for Airbus.
- Three low cost carriers follow “China Inc.” as Boeing’s Top Customers.
- Boeing’s Top 3 wide-body customers are in the Middle East, where financial and traffic results are beginning to soften.
- Three of Airbus’ Top 5 customers are also from the Middle East. The other two are from Asia.
- Boeing has 54% of the market share among the Top wide-body customers. Airbus has a 54% market share in the narrow-body sector.
Market, other factors emerging, creating Boeing 787 concern
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Introduction
Jan. 4, 2017, © Leeham Co.: Despite a rosy picture painted by Boeing about the future of the 787 and the ability to recover more than $29bn in deferred production
Boeing photo.
and tooling costs, there are signs that cause concerns over the next 3-5 years.
Summary
- Near-term production outlook solid, weakness begins in 2020, big gap in 2021.
- Boeing doesn’t see wide-body sales recovery until next decade.
- Company foregoes increasing 787 accounting block; sales won’t support it.
- Market talks about deferring 787s.
Airbus, Boeing Top Customers mix of stable, risk and reward
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Introduction
Dec. 22, 2016, © Leeham Co.: When it comes to comparing backlogs of Airbus and Boeing, the latter likes to point to what it calls a better quality of customers.
The fact is, both companies have large orders with airlines that may be characterized as less than top quality, or which appear to have over-ordered.
Summary
- Airbus is more risk-reward oriented than Boeing.
- Airbus appears more aggressive in emerging markets.
- Airbus and Boeing share risky and quality customers.
- Many of the shared top customers are roughly balanced between Airbus and Boeing.
Boeing faces prospect of China’s political wrath thanks to Trump
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Introduction
Dec. 12, 2016, © Leeham Co.: “China Inc.,” the combined group of airlines and lessors directed or controlled by the government, is Boeing’s largest customer, an
China is Boeing largest single customer. Campaign rhetoric of Donald Trump could prompt the Chinese government to retaliate against Boeing, favoring Airbus for orders instead. Rendering via Google images.
analysis of the company’s’ backlog at Dec. 5 shows.
Boeing’s website lists “China” with 292 orders in backlog. Fifty of these appear to by Unidentified orders. LNC arrived at this figure by viewing the Chinese customers in Boeing’s identified list, which amounts to 242 orders. Some believe the number of Unidentifieds attributable to China may be higher.
The data shows just how much Boeing has at risk with the so-far unpredictable foreign trade policy espoused by President-Elect Donald J. Trump.
Summary
- Boeing’s long history of supplying airliners to China began with President Nixon’s historic trip.
- China was a reliable customer through global economic downturns.
- But China doesn’t hesitate to use Boeing (or Airbus) as a pawn in geopolitical politics.
- Airbus now at parity in China airplane sales.
- Can Jim McNerney educate Trump?
Norwegian, others have vision; US airlines don’t
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Introduction
Dec. 5, 2016, © Leeham Co. Last weeks’ approval by the US Department of Transportation of a license for Norwegian Air Shuttle to operate long-haul, low-cost service to and from the US drew immediate fire from labor unions over anticipated US job losses.
Iceland’s Loftleider Airlines, one of the first trans-Atlantic low-cost carriers. Photo via Google images.
But their view is too narrow.
It means more jobs for Boeing and its supply chain, which are also heavily unionized. It means benefits to US exports.
But overlooked is the next evolution in long haul travel that starts next year.
Summary
- Legacy airlines always object to new competition. It doesn’t matter when or from where.
- Open skies and free market is a great concept—until someone actually takes advantage of it.
- The 737 MAX and A321neo present new threats to US airlines.
- Lack of vision and foresight are the US airlines’ own worst enemy.
Resurgence for ERJ-145
Note: Nov. 24 and 25 are Thanksgiving Holidays in the US. Our next post will be Monday.
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Introduction
Nov. 23, 2016, © Leeham Co.: The 50-seat regional jet market is dead.
That’s the conventional wisdom.
Well, not quite.
Embraer ERJ-145 is finding new life with regional airlines.
Piedmont Airlines, a unit of American Airlines, is adding the 50-seat Embraer ERJ-145 to its fleet. Eleven joined so far and next year the company plans to add 24 more.
CommutAir, an operator for United Airlines, is adding the same aircraft type to its fleet. Forty of them.
Why the mini-resurgence?
Low fuel prices and cheap airplanes.
Summary
- 50-seat regional jets were considered economically obsolete with high fuel prices.
- Sustain low prices provided a boost to the Embraer ERJ-145.
- Bombardier’s CRJ-200 hasn’t seen a similar resurgence.
Airbus, Boeing deferrals may indicate slowing global economy
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Introduction
Boeing 737 flightline at Boeing Field: 737s awaiting delivery. Seattle Times photo via Google images.
Nov. 17, 2016, © Leeham Co.: The deferral by United Airlines of 65 Boeing 737-700s announced Tuesday caused some observers to conclude this has a negative impact on the manufacturer, but this may well overlook a larger issue.
UAL is the latest “quality” airline to announce deferrals to reschedule capital expenditures or because of not needing the aircraft now.
Softening yields, particularly among US airlines, indicate over-capacity despite load factors of 85% or more, say industry observers.
While the backlogs of Boeing and Airbus remain solid today, do the actions of several major airlines indicate the leading edge of a global economy that’s beginning to soften?
Deferrals grow as airlines fight to keep bottom line
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Introduction
Jan. 09, 2017, © Leeham Co.: Airlines have deferred or are thinking about deferring more than 400 airplanes in the near term, a review of decisions and deliberations that have been made during the last 12 months.
LNC tracked announcements last year of deferrals and statements by airlines that they are thinking about doing so.
We began identifying macro-level issues last week in our posts about emerging concerns for the 787 and LNC’s Outlook for 2017.
Reasons vary widely for the deferrals, these reports indicated. Low oil prices. Slowing economies. Declining financial results. Worries about two of the three top Middle Eastern carriers. A capital squeeze in China. Pressure on long-haul carriers from the emerging sector of low cost, long-haul airlines. Preserving capital expenditures to keep the bottom line in the black.
Today we detail the deferrals we tracked.
Summary
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Posted on January 9, 2017 by Scott Hamilton
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