Leeham News and Analysis
There's more to real news than a news release.
HOTR: Boeing’s “historic” production advance
By the Leeham News Team
May 18, 2021, © Leeham News: Boeing’s Defense unit last week said it joined the front fuselage of the first Boeing-SAAB T-7A Red Hawk trainer with the aft section “perfectly,” in less than 30 minutes.
It was, Boeing said, an “historical moment.”
It was “a testament to the digital heritage of the U.S. Air Force’s first ‘eSeries’ aircraft and witness to the benefits of model-based engineering and 3D design,” Boeing said. “The digital splice was completed in 95% less time than traditional splices and with substantial quality improvements.”
Why is this a big deal for Boeing Commercial Airplanes?
Because the T-7A, along with the MQ-25 unmanned aerial refueler for the Navy, are Boeing’s pilot programs, if you will, for production of the next Boeing commercial airliner.
This is in part what former Boeing Co. CEOs Jim McNerney and Dennis Muilenburg and current CEO David Calhoun alluded to each time they talked about advanced production.
The SpaceJet impact on MHI’s finances
Subscription Required
By Vincent Valery
Introduction
May 17, 2021, © Leeham News: Mitsubishi Heavy Industries (MHI) officially launched the Mitsubishi Regional Jet (MRJ) program on March 28, 2008, at the end of its 2007 fiscal year. The Japanese industrial conglomerate envisioned the maiden delivery in 2013.
Fast forward 13 years, and the now-called SpaceJet development has been “paused” indefinitely. Most believe MHI effectively canceled the program. There is a possibility MHI might never bring the SpaceJet into passenger service.
LNA investigated MHI’s financial statements since 2005 and annual reports since 2007 to understand the impact of the program on the Group. This article takes a deep dive into the sequence of events, from launch to the COVID-19 pandemic, that led to the current state of affairs for the SpaceJet program.
Summary
- Becoming an OEM at the peak of the commercial aviation cycle;
- Repeatedly shifting program timelines;
- Solid MHI balance sheet funds project;
- COVID-19 pandemic tips balance after significant investments;
- A SpaceJet in limbo.
Pontifications: Book Review, “Tigers in the Sea”
By Scott Hamilton
May 17, 2021, © Leeham News: Tiger in the Sea is a new book about the 1962 ditching of a Flying Tigers Lockheed Constellation L-1049H in the stormy North Atlantic.
It was, in modern-day comparisons, the US Airways Flight 1549 of its day. But while all 155 passengers and crew on 1549 survived the ditching in Hudson River, 28 of the 76 on board died.
US Airways 1549’s captain, Chesley Sullenberger, landed in the cold but calm Hudson River. Rescuers surrounded the plane within minutes. Tigers Capt. John Murray ditched in 20 feet seas in the middle of a storm with gale-force winds. The nearest ship was 13 hours away. Those who died survived the impossible landing.
Bjorn’s Corner: The challenges of airliner development. Part 3. Certification rules overview.
By Bjorn Fehrm, Henry Tam, and Andrew Telesca.
May 14, 2021, ©. Leeham News: The certification rules for different aeronautical vehicles are specific for each airworthiness jurisdiction. It means each country has its own rules for all the categories we listed in the last article. However, with the support of the International Civil Aviation Organization (ICAO), there is harmonization in many areas, especially around airport and airline operations. For airworthiness rules, most originated from dominant jurisdictions like the US FAA, whose rules have inspired the Canadian and European rules as well as many others.
As new technologies come to market, or new safety information is learned through testing, accidents, and incidents, the major regulatory agencies of the world constantly adapt with some rules harmonizing across jurisdictions and other rules diverging in different directions. It is an ever-evolving regulatory landscape that supports some of the safest transportation in the world, but it comes at a cost for companies as what was done in the past cannot always be expected to be accepted in the future, and the more global your desired market the more rules you need to understand and the more constraints your design will need to satisfy.
Figure 1. The EASA certification rules website. Source: EASA.
2021 fleet trends: small jets get bigger, bigger jets get smaller – and the old makes way for the new
Subscription Required
By Judson Rollins
Introduction
May 13, 2021, © Leeham News: Aviation data provider Cirium said last week that just under 7,850 commercial aircraft were still in storage, down from 8,684 at the beginning of the year and a peak of 16,522 at the apex of the COVID-19 crisis last April.
Although there was an initial spike in aircraft retirements in March and April 2020, the total number has stayed in line with historical norms to date. However, order books for most types have stagnated or even gone backward since the start of the pandemic.
A few trends are becoming clear: larger single-aisles are thriving, larger twin-aisles are disappearing, and sub-100-seat orders are flatlining. Not surprisingly, older-generation aircraft are disappearing at an accelerated rate.
Summary
- Airlines are upgauging their single-aisle orders in anticipation of lower yields and competitive battles.
- Widebody order books continue to struggle; the bigger the airplane, the worse the demand.
- Regional jet and turboprop order backlogs have stagnated.
HOTR: Airbus’ view on recovery from COVID; why Southwest stayed with MAX 7
By the Leeham News staff
May 11, 2021, © Leeham News: Domestic traffic throughout the world is returning to 2019 levels, but at different rates, according to an Airbus analysis.
Robert Lange, Head of Business Analysis and Market Forecast, said today that the fragmented cross-border travel regulations and uneven vaccinations continue to inhibit passenger traffic recovery from the COVID-19 pandemic.
NBA Single or Dual Aisle Airline preferences
Subscription Required
By Vincent Valery
Introduction
Credit: Leeham News
May 10, 2021, © Leeham News: Boeing has been studying the launch of a clean-sheet design aircraft for at least a decade. Studies included a single-aisle design but favored a twin-aisle concept before the 737 MAX launch in 2011. As time went on, the twin-aisle concept morphed into a focus on 767-sized dual-aisle with the New Midmarket Airplane (NMA).
The combination of the 737 MAX crisis, Calhoun’s arrival as CEO, and the COVID-19 pandemic led Boeing to shelve plans to launch the NMA in early 2020. However, the American OEM hasn’t stood idle despite sizable layoffs and R&D budget cuts.
LNA reported Boeing’s renewed focus on dual-aisle design and production systems and studied the tradeoffs between a single- and dual-aisle. The NMA has morphed into the concept of a New Boeing Airplane (NBA).
A critical mass of airlines needs to be willing and able to buy a new aircraft to justify a launch. Most observers agree that Boeing needs to launch a new plane to address the weakening market share in the large single-aisle market. However, there isn’t a consensus whether a single- or dual-aisle is the way to go.
LNA analyses in this article the design preferences of the airlines that could be interested in the NBA.
Summary
- Dual-aisle preferences;
- Different opinions about the required range;
- Low-cost carrier preferences;
- Lessor preferences.
Pontifications: A330-300 could be great deal ahead
May 10, 2021, © Leeham News: The COVID-19 pandemic prompted airlines to ground more than 8,000 aircraft at the peak.
By Scott Hamilton
Among widebodies, no aircraft was hit harder than the Airbus A330ceo.
Traffic within China, the US and Asia recovers with narrowbody airplanes. European short- and medium-haul traffic is not recovering as quickly due to continued boarder closings. International traffic, for the same reason, remains awful.
But in chaos some see opportunities.
Jep Thornton, managing partner of the boutique lessor Aerolease, last week said the A330-300 could be a great trading opportunity.
At April 1, there were 267 -300s and 286 A330-200s (of all types) in storage, according to data reviewed by LNA.
Bjorn’s Corner: The challenges of airliner development. Part 2. Why Certification?
By Bjorn Fehrm, Henry Tam, and Andrew Telesca.
May 7, 2021, ©. Leeham News: The major challenge with developing commercial aircraft is the certification process. You can’t just develop the aircraft based on your unique knowledge and ideas, you must do it according to a detailed rulebook written with the knowledge from thousands of accidents and incidents.
From the beginning of the design process when you’re thinking about how big your engines would need to be or whether you can carry enough passengers to have a competitive advantage the certification rules influence (and sometimes govern) your design decisions.
Beyond just scrutiny of the design of the vehicle and its components, the process by which it is designed, the production site & methods used, and the organization doing the work all go through certification processes.
Figure 1. The FAA certification rules website. Source: FAA.
China’s air travel “recovery:” volume improving, but revenue still elusive
Subscription Required
By Judson Rollins
Introduction
May 6, 2021, © Leeham News: In a media briefing this week, the International Air Transport Association (IATA) showed a deep contrast between the airline landscapes in the US and China versus the rest of the world.
The two countries together delivered 55% of the world’s domestic passenger traffic in March, with Chinese domestic capacity approaching 100% of pre-pandemic levels. China’s three largest carriers – Air China, China Eastern Airlines, and China Southern Airlines – are matching their US peers by deploying A350s and 787s on domestic routes, as most international routes to/from China remain closed.
However, first-quarter data continued to paint an ugly picture as unit revenue, or revenue per available seat-kilometer (RASK), was down at every publicly-traded carrier. Some of this was due to reduced load factors in January and February, but a key driver is the ongoing sale of “all you can fly” passes on most Chinese airlines.
Summary
- Domestic load factors have picked up, but international traffic near non-existent.
- First quarter financial reports show unit revenue fell below even last year’s abysmal levels.
- “Airpass” promotions continue, but it’s unclear how long they will go on.
- Fleet utilization during COVID: widebodies down but not out.