Pivotal year for A380

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Introduction

June 12, 2017, © Leeham Co.: This is a pivotal year for the Airbus A380.

Sales have dried up. Singapore Airlines is retiring five early versions of the airplane and there is no new home for them—these may headed for the scrap heap.

The Middle Eastern carriers, which are the largest users for the airplane, are in turmoil.

The backlog remains weak. Aside from Emirates Airline, which as noted is in turmoil, the other orders are with carriers that are unlikely to take delivery.

Summary
  • The A380’s future rests with Emirates Airline.
  • Any Performance Improvement Package is dependent upon Emirates placing a new order.
  • Boeing’s new 20-year forecast eliminates the passenger 747-8 from the Very Large Aircraft sector. Airbus continues to forecast a need for 1,400 VLAs.
  • Airbus to decide this year whether to reduce production rate below 1/mo in 2019.

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Qatar Airways: Caught in a political crisis

By Bjorn Fehrm 

June 07, 2017, ©. Leeham Co: We wrote about Qatar Airways last week, the flag carrier of Qatar. One week later, the airline finds itself caught in a political crossfire.

The background to the crisis is complicated. At the root is a longtime feud in the area. To aid in understanding what is happening, we reference some background information and look at possible consequences for Qatar Airways.

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Qatar Airways: Becoming a global powerhouse

By Bjorn Fehrm

May 30, 2017, ©. Leeham Co: Qatar Airways is the flag carrier of Qatar, a country of 0.3m Qatari citizens and 2.3m expatriates. Its total population of 2.6m makes it one of the world’s smallest countries. Yet its influence is outsize, due to housing the world’s third largest Gas and Oil reserves.

Qatar Airways as a consequence has not lacked financing for its expansion.

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Etihad Airways: where to now?

By Bjorn Fehrm

May 24, 2017, ©. Leeham Co: Etihad Airways appointed a new interim group CEO and CFO on 8th of May. The strategy of James Hogan, Etihad CEO since 2006, to grow the airline through partner alliances, coupled with minority investments, has hit trouble.

The latecomer to the Gulf carrier’s growth party is now set for a strategy review by an incoming CEO.We describe the background to the problems and go through the options for Etihad’s future. Read more

Middle Eastern airline turmoil hits Boeing

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Introduction

April 10, 2017, © Leeham Co.:  Tim Clark of Emirates Airline said the new breed of long-haul, low cost carriers are hurting EK’s load factors and yields.

Etihad Airlines’ business strategy of taking financial stakes in LCCs hasn’t produced the positive financial results desired.

Three big airlines, EK, EY and Qatar Airways, face over-capacity now compounded by electronic carry-on restrictions by the US and UK.

Figure 1. Click on image for a crisp view.

The thee carriers largely compete for the same connecting traffic through hubs only 72-235 miles apart (Figure 1). This is like having hubs in Milwaukee and Chicago (81 air miles apart) and Chicago-Detroit (237 air miles) with much, much smaller domestic catchment basins.

Summary
  • Declining financial results for Emirates, Etihad.
  • Deferring airplanes: 787s, 777X
  • Long-haul LLC, Trump travel ban, poor investments hurt the airlines.

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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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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
  • Deferrals of single aisle aircraft are less worrying than for wide-body aircraft
  • For wide-bodies, it depends on the program. For the Airbus A380, deferrals turns the program back into the red. For the A350, deferrals can help with delivery commitments.
  • For the Boeing 777, deferrals spells trouble, especially for the present generation.
  • The 787 is more resilient but the slow sales make the program sensitive longer term.

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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.

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Comparing A350s, 787s and A380s

Editor’s note: We don’t typically do “trip reports;” this isn’t the scope of LNC. But occasionally one crosses our desk that we find of interest. One of our readers, William Bain, provided the following to us and we thought it interesting to share.

By William Bain

Singapore Airlines Airbus A350 business class. Photo by William Bain.

I flew Singapore Airlines’ Airbus A350 service from Singapore to Amsterdam.  The outbound flight was operated by 9V SMD and the inbound flight by 9V SME.  I was seated in the premium economy cabin.

By way of starting, I think people spend too much time say this or that model is better, as such, than that model.  There’s been a fair bit of that in relation to the A350 and Boeing 787.  But in my view much, if not most, of the comfort factor is down to the configuration used by specific airlines.  For example, I was underwhelmed by the Qatar Airways 787 but very much liked the ANA 787.

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Emirates feels low-cost, long-haul competition

Note: Nov. 24 and 25 are Thanksgiving Holidays in the US. Our next post will be Monday.

By Bjorn Fehrm

23 November 2016, ©. Leeham Co: Emirates Airline president Tim Clark says the carrier “has to change its approach to long-haul pricing to combat increasing competition” after presenting a half year 2016 profit which plunged 64% on 9 November.

The reason is that traditional mainline carriers are entering the low-cost, long-haul market in addition to the established LCC entrants: Norwegian Air Shuttle, AirAsiaX and Wow Air.

emirates-a380

Figure 1. Emirates long-haul A380. Source: Emirates.

Emirates will add new low-cost fares to keep its growing fleet of Airbus A380 and Boeing 777 filled. Clark states this is necessary and that the airline will not back down on its plans for additional aircraft. It will be a period “of fierce competition as more and more international network carriers are entering low-cost, long-haul,” declares the COO.

What has changed? Isn’t Emirates the Kings of competitive long-haul travel? Read more