Leeham News and Analysis
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Leeham News and Analysis
- Airbus sees Boeing as medium-term competitor, with Comac next June 14, 2025
- Boeing bullish on 20-year forecast, despite short-term headwinds June 14, 2025
- Embraer’s 20-year market forecast under 150 seats: fewer turboprops, jets about the same June 14, 2025
- Airbus Canada CEO: Airbus is here to stay in Canada June 14, 2025
- Little known, most unknown in Air India 171 crash June 13, 2025
Looking ahead for 2020 and 2030 decades: Embraer
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Fourth in a series.
By Bjorn Fehrm
Introduction
July 8, 2020, © Leeham News: All airliner OEMs have a disastrous 2020, but for Embraer, the year has been even worse. After spending a year and over $200m to carve out the Commercial Aviation division to merge it into Boeing, the Joint Venture Agreement (JV) was stopped by Boeing at the last moment.
The Executive Jets and Defense side were not affected, but now Embraer was organized as two companies instead of one. The company must now re-merge the organizations to save costs in a COVID-19 environment where limiting cash outflow, and lowering costs are necessary for survival. At the same time, it’s arch-rival on the world market, Airbus A220 has gone from strength to strength through basket selling with the popular A320.
How does Embraer come back from the Boeing pass up and regroup in a regional market that is no longer a fight of equals? Embraer competes with Airbus that in 2019 was 11 times larger in airliner deliveries and 29 times in airliner revenue.
Only in the below 100 seat market is it saved from the giant, who doesn’t have a model in the segment. And it seems the below 100 seat competitor, Mitsubishi, might fold its entry.
Summary
- The botched JV with Boeing came at the worst possible moment for Embraer, just when the COVID-19 pandemic stopped airliner deliveries.
- The planned JV had held back sales and deliveries, waiting for the JV to complete.
- In addition, it cost Embraer $200m, pushing it into the red for 2019.
- Embraer must now find another fix to the Airbus problem while wrestling with a worldwide COVID crisis.
Read more
The future of regional jets is limited by choices, Scope Clause
By Judson Rollins
Introduction
July 6, 2020, © Leeham News: The fallout from COVID-19 is beginning to intersect with the beginning of a wave of regional jet retirements globally. However, the market for smaller commercial jets today stretches the meaning of “regional” as most aircraft still in production have 100+ seats and can fly more than 2,500nm.
In the critical US market, both Embraer’s E175-E2 and Mitsubishi’s remaining M90 are too heavy to comply with the Scope Clause limits imposed by pilot labor agreements. These clauses restrict regional carrier flying to 76 seats and 86,000 lbs MTOW, while also capping the number of regional jets that can be flown by each carrier.
Delta Air Lines is limited to a total regional fleet of 450 aircraft, while American Airlines is capped at 75% of its single-aisle fleet and United Airlines is limited to 255 aircraft plus 90% of single-aisles in service. Earlier this year, American accelerated the retirement of some EMB-140s to maintain compliance with its limit.
Summary
- Regional jet utilization will be lower in the near term due to higher unit costs and US Scope Clause fleet limits.
- There will still be some replacement demand for regional jets over the next decade.
- Scope Clause relief is unlikely to happen in the coming round of US pilot contract negotiations.
- Lack of Scope relief will extend the life of Embraer’s E175-E1 through the 2020s.
Pontifications: Why I won’t be flying any time soon
July 6, 2020, © Leeham News: I really, really want to return to traveling by air soon. But I don’t expect to fly until next year.
By Scott Hamilton
I’m not worried about being on the airplane. As LNA’s Bjorn Fehrm detailed over a series of Friday posts, the cabin purification technology scrubs the air every few minutes.
The problem is not the airplane.
It’s the people who fly.
Here’s why.
Bjorn’s Corner: Do I get COVID in airline cabins? Part 9. Stay hydrated.
By Bjorn Fehrm
July 3, 2020, ©. Leeham News: In our Corner series about flying during the COVID-19 pandemic, we examine how cabin humidity affects the risks of getting COVID-19.
The extensive research around the seasonality of flu infections gives us tips for our behavior during flights, now and when the pandemic has left us.
Figure 1. The air conditioning system of an airliner. Source: Leeham Co.
Restoring capacity with the A330ceo or A330neo, Part 3
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By Vincent Valery
Introduction
July 2nd, 2020, © Leeham News: In the previous section, we saw that low lease rates on Airbus A330-200s could hurt demand for the newer and more fuel-efficient A330-800. Sell-lease back transactions can counterweight this at times as this gives the airline a cash injection during these difficult times.
We will now turn our attention to the other variants of the A330 family, the -300 and -900.
Summary
- From barely trans-Atlantic;
- To fully-fledged long-haul aircraft;
- Mixed A330-900neo commercial success;
- A330neo succeeding on one aspect;
- A330-900 versability.
Looking ahead for 2020 and 2030 decades: COMAC
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Third in a series.
By Bjorn Fehrm
Introduction
July 1, 2020, © Leeham News: COMAC stands for Commercial Aircraft Corporation of China, Ltd. It was spun off from the equally state-owned military and civil aeronautical giant AVIC in 2008. COMAC’s charter is designing, producing, and supporting civil airliners for China and, ultimately, world markets.
It presently runs three airliner programs, the 90 seat ARJ21, the 160 seat COMAC 919, and the Chinese part of the Joint Venture 280 seat CR929 widebody. Russia is the Joint venture partner for the CR929.
Summary
- COMAC’s strength is a large captive home market and unwavering support from its owner, the state.
- Its weakness is lack of experience in designing, certifying, producing, and supporting airliners.
- It will learn in all these areas when delivering to its captive market, China’s state airlines.
- When ready and with a next generation of aircraft, it will become a force to reckon with on the world market.
Airbus cuts 15,000 positions in its “COVID-19 adaptation plan”
June 30, 2020, © Leeham News: Airbus held a press call with its CEO Guillaume Faury today, where he elaborated on Airbus announced “COVID-19 adaptation plan”. 
Over the next 12 months, Airbus needs to reduce its airliner business workforce with 15,000 positions worldwide. Other parts of the company like Helicopters and Defence and Space are not affected by this plan.
Redundancies are not ruled out, but Airbus will work with its social partners to limit these by using available social measures such as voluntary departures, early retirement, and long term partial unemployment schemes offered by governments.
HOTR: Aircraft lease rates, values continue to plunge in virus environment
By the Leeham News Staff
June 30, 2020, © Leeham News: Fifteen year old aircraft values and leases plunged compared with six month ago, according to the latest analysis 
by Ishka.
Ishka is an aircraft appraisal and consultancy.
The aircraft are assumed off lease and immediately available. Mid-life maintenance status is also assumed. Rates and values will continue to decline, Ishka believes. Aircraft on-lease have higher values and lease rates.
How much life is left in the Boeing 737 MAX after recertification?
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By Scott Hamilton
Introduction
June 29, 2020, © Leeham News: As Boeing narrows in on recertification of the 737 MAX, one of the questions that is unanswered, but forward-reaching is, how much life is left in the airplane?
In this context, the question is not about “useful life.” This is the length of time an airplane can economically be in service before passenger carriers retire the aircraft. Then there is the potential as a cargo conversion airplane. The useful life may equal or exceed the useful life as a passenger airplane.
How much life is left in the MAX in this context means how long will it be before Boeing pursues a replacement design—and how long will MAX remain in production?
Summary
- 737NG program launched in November 1993. EIS: December 1997. Production ended late 2019.
- 737 MAX program launch, July 2011. EIS: May 2017. Boeing contract with Spirit Aerosystems for fuselages extends to 2033.
- A321XLR, MAX grounding killed NMA.
Pontifications: Recertification flights for Boeing 737 MAX appear close
By Scott Hamilton
June 29, 2020, © Leeham News: Boeing may be set to begin recertification flights of the 737 MAX as early as today, The Seattle Times reported last week.
Testing will take three days, if all goes well. But Boeing still has a lot of work to do to fully satisfy regulators.
According to The Times, Transport Canada and Europe’s EASA require additional modifications to enhance safety on the MAX. The additional changes may not be required for certification but must be done within a year, the paper reports. The MAX 10 must have the changes before it is certified.