Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 25. June 6, 2025
- New RISE powerplant benefits from decades of GE research and development June 5, 2025
- Engine makers emphasizing durability, reliability June 4, 2025
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
- Digital twin is a key to JetZero’s hopes for Blended Wing Body entry June 2, 2025
Can a passenger airliner run as a freighter with today’s tariffs? Part 3.
By Bjorn Fehrm
Subscription Required
Introduction
April 16, 2020, © Leeham News: In last week’s article we saw the present high air freight prices can support a belly-cargo operation with a passenger airliner when flying the hot routes from Asia to North American and Europe.
But the aircraft shall fly the return route as well, with as much belly cargo as possible. And last week’s freight prices are volatile. We dig deeper this week and look at the total equation with return flights, different levels of load factors, and price variations.
At what level is an operational belly freighter better than a grounded passenger jet?
Figure 1. American Airlines is increasing its belly cargo operation step by step since the launch on March 20. Source: American Airlines.
Summary:
- Last week we saw the belly cargo operation with passenger aircraft make sense in today’s market if we fly the prime routes, Asia to North America or Europe.
- When one includes the return trips the case is less clear cut. But it’s still sensible as long as aircraft and crews are sitting idle and can’t be used for other purposes.
Restarting credit markets
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By Vincent Valery
Introduction
April 13, 2020, © Leeham News: Companies across the globe moved quickly to draw down credit facilities or arrange new debt to get through the economic disasters brought on by COVID-19, the coronavirus.
The quick moves were not going to be enough as credit markets closed. Governments began stepping in with grants, loans and loan guarantees to companies. Small businesses continue to struggle and individuals thrown out of work wait for payments and extended benefits.
Credit markets remain tight.
The Federal Reserve announced unprecedented measures to support credit markets, including in riskier asset classes. We will analyze those measures and assess their impact.
Summary
- The goals of unprecedented monetary stimulus;
- First measures for healthier companies;
- Expanded to riskier ones;
- Implications for the commercial aviation ecosystem.
Pontifications: Airlines, OEMs step up in virus crisis
By Scott Hamilton
April 13, 2020, © Leeham News: There are plenty of stories and photos floating around the Internet about airlines flying empty or nearly so.
Schedules have been pared back up to 95% across the globe.
Spot-check Flightradar24 at any given moment and there are a lot air freighters flying.
But the passenger airlines are also flying some airliners dedicated to cargo. Some are flying cargo in the below-deck holds only. Others installed plastic protection over the passenger seats and loaded box after box after box of protective masks for shipment. Still others removed the passenger seats entirely and loaded the main deck with lighter-weight cargo.
This article summarizes many airlines that stepped up to fly supplies throughout the world.
Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 17. High hanging fruit.
April 10, 2020, ©. Leeham News: We have since December 13, discussed why e in ePlane should not stand for electric and covered a lot of areas explaining why electric aircraft or hybrids are not the best way to environmentally friendly air transport.
We now recap what we learned and then wrap the series.
Figure 1. The Gartner hype cycle. Source: Wikipedia.
Is COVID-19 a Force Majeure event?
Editor’s Note: Airbus, Boeing and Embraer and other OEMs face requests for deferrals and perhaps cancellations of orders as a result of COVID-19. In addition, Boeing now faces cancellation requests for the 737 MAX grounding, now in its 13th month. While Boeing’s contracts generally allow Boeing or the customer to cancel the order after the 12th month, the COVID crisis raises a new element: canceling by Force Majeure and something called the Doctrine of Frustration.
The following analysis appeared March 12, 2020, on the website of the law firm Shearman & Sterling law firm. The authors are listed at the end of this article. It is reprinted here with permission.
Following the rapid spread of the novel coronavirus (“COVID-19”) that was first reported in Wuhan, China at the end of 2019, the World Health Organization declared COVID-19 to be a pandemic on March 11, 2020.
In this note, we consider how force majeure provisions in commercial contracts and the related common law doctrine of frustration may be engaged in the context of the COVID-19 outbreak. While this analysis focuses primarily on the position under English law, we have included a PRC law perspective because of the significant impact COVID-19 has had on business in China. We also suggest steps that parties may take to safeguard their positions in view of the evolving situation.
Can a passenger airliner run as a freighter with today’s tariffs? Part 2.
By Bjorn Fehrm
Subscription Required
Introduction
April 9, 2020, © Leeham News: Monday, we started looking at using a passenger airliner as a freighter, now that passenger aircraft are grounded in many countries because of COVID-19 lockdowns.
We examined the main cargo routes and how much of the freight capacity that went missing when airliners didn’t bring along belly cargo when flying their schedules. We also looked at the volatile freight prices, on the up since the lower airliner hold capacity went missing.
Now we see if flying passenger aircraft as freighters makes sense outside emergency medical supply flights. Can you fly the plane as is, or do you need to take out seats or add seat freight bags to make it worthwhile?
Summary:
- The air freight prices have increased further since last week and fuel prices are at an all-time low.
- With the present fuel and freight prices, it makes sense to fly passenger airliners as belly freighters.
Airbus cut production rates by a third
By Scott Hamilton
Production of the A320 and A220 in Mobile is paused. Airbus hasn’t decided what to do about A220 rates, yet.
April 8, 2020, © Leeham News: Airbus today said it will cut production of the A320, A330, and A350 lines due to COVID-19.
The new rates are:
- A320 to rate 40 per month (from 60-63);
- A330 to rate 2 per month (from 3.5)
- A350 to rate 6 per month (from 10)
Congressional delegation urges Boeing to take federal funding
April 7, 2020, (c) Leeham News: The Democratic members of the Washington State Congressional delegation urged Boeing CEO David Calhoun to take federal emergency 
funding to protect employee wages.
The Republican members did not sign the letter.
Calhoun previously said if an equity stake is required, Boeing would reject it and seek funding through other unspecified options.
The letter is below.
HOTR: American sees virtually no travel for up to 7 months
By the Leeham News staff
April 7, 2020, © Leeham News: “Nobody’s traveling in the next 30 or 60 days,” said Vasu Raja, American Airlines Group Inc.’s senior vice president for network strategy. “But nobody is really making any plans to go travel in the next 90 to 150 days, either.
So reported the Wall Street Journal Sunday.
That basically takes you through the end of the year.
Singapore will suspend its Changi Airport Terminal 2 for 18 months from May 1. (Associated Press.)
Pontifications: Assessing the impact of COVID-19: today’s take
By Scott Hamilton
April 6, 2020, © Leeham News: It’s going to be quite a while before there is a clear understanding how coronavirus will change commercial aviation.
LNA already touched on impacts to Airbus, Boeing and Embraer. None of it is good. For Boeing, burdened with the additional stress of the 737 MAX, is in the worst position. Even when the MAX is recertified, there won’t be many—or any—customers in a position to take delivery of the airplane.
Bearing in mind that what’s true today will change in a day, or even an hour, let’s take a rundown of where things seem to stand now.