Leeham News and Analysis
There's more to real news than a news release.
Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 19. ICAO CORSIA.
April 24, 2020, ©. Leeham News: Before we wrap the series about technologies that can help us reduce the environmental footprint of air transport, we describe what the ICAO emissions scheme CORSIA is, its goals, and comment on its importance.
Figure 1. The world’s CO2 emissions increased at a fast pace until today. Source: Wikipedia.
Can a passenger airliner run as a freighter with today’s tariffs? Part 4.
By Bjorn Fehrm
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Introduction
April 23, 2020, © Leeham News: We spent the last weeks checking if passenger airliners used as belly freighters make economic sense.
With the present air freight prices, it does. The high freight prices are a result of half the World’s freight capacity disappearing with the grounding of passenger jets.
Our economic analysis assumed standard densities for the belly cargo. What happens if this is no longer the case? Can more voluminous cargo fly in the passenger cabin?
Figure 1. Air Canada Boeing 777 with humanitarian supplies (face masks) transported in the cabin. Source: Air Canada.
Summary:
- Widebody aircraft can temporarily fly as belly freighters without loading cargo in the cabin, but enabling cabin cargo will improve the business case with the present lower-density cargo.
- For single-aisle jets the belly cargo holds are too small, a cabin cargo loading system is necessary for efficient operation.
- Is it OK to take out the seats and load cargo in the cabin? For normal cargo no, it isn’t. We check what is required.
Supply chain focus: Hexcel’s first 2020 quarter
By Bjorn Fehrm
April 22, 2020, ©. Leeham News: With the COVID-19 meltdown of airline traffic and aircraft deliveries, we place a special focus on the airliner industry supply chain in the next months.
Hexcel Corporation reported its 1Q2020 yesterday. In addition to the absence of MAX deliveries for a year, the mounting COVID crisis meant revenue was down with 11% year on year and profits 40%. The merger with Woodward Inc. is off. “This is the time for crisis management, not a merger,” said management.
Hexcel is a key supplier to Airbus A350.
Read more
HOTR: Airlines, lessors cancel ~250 MAXes since January
By the Leeham News Staff
April 21, 2020, © Leeham News: Since the COVID-19 pandemic went viral beginning in January, there have been nearly 250
cancellations of the Boeing 737 MAX.
Some of these were related more directly to the grounding of the MAX. In fact, it could reasonably be argued that most were. COVID-19 exacerbated the problems, now that passenger demand fell by as much as 95%.
The MAX was grounded globally March 13, 2019. Purchase agreements generally allowed the customer to cancel the contract if delivery is delayed more than 12 months, provided there isn’t an “excusable delay.” Pandemics typically fall under an excusable delay. Grounding by regulators depends on the language in the specific contracts.
Japan seeks to develop aircraft industry ties through Asian trade partnerships
By Judson Rollins
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April 20, 2020, © Leeham News: Japan has long been known as an engineering powerhouse, and Japanese manufacturing titans like Mitsubishi Heavy Industries and Kawasaki Aerospace have been a key part of Boeing and Airbus supply chains for the last two decades.
Japan’s government wants to expand the country’s influence by signing agreements with members of the Association of Southeast Asian Nations (ASEAN) to secure improved cooperation with downstream suppliers. Aircraft and engine OEMs and key tier-one suppliers already have manufacturing operations in Thailand, Singapore, Malaysia, Indonesia, the Philippines, and India.
The first of these agreements is expected to be signed with Malaysia, which declared its ambition to become the biggest aerospace producers in Southeast Asia by 2030.
On the sidelines of February’s Singapore Air Show, LNA met with representatives of Japan’s Ministry of Trade, Economy, and Industry (METI) to discuss the proposed agreement with Malaysia. This article has been withheld until now due to the myriad aerospace issues caused by the COVID-19 crisis.
Summary
- Bilateral agreement postponed due to COVID-19.
- Areas of cooperation include manufacturing, training and more.
- Malaysia’s growing aerospace footprint.
Pontifications: What shape and how long will recovery take?
By Scott Hamilton
April 20, 2020, © Leeham News: There just is little good news for the aerospace industry right now.
Airbus announced it will reduce production by a third across the A-Series airliners. I don’t think this will be the last cut.
Boeing last week said it will resume production in the Seattle area of its wide-body airplanes. It’s also now preparing to restart production of the 737 MAX, clearly a piece of good news. Defense-related production for the P-8 Poseidon and the KC-46A tanker resumed last week.
But Boeing hasn’t laid out its production plans for the 7-Series airplanes. This undoubtedly will come next week. Monday is the shareholders’ annual meeting. This will be held virtually at 9am CDT. Access is via the Boeing website. The first quarterly earnings call will be held two days later, also accessible via the web. Either meeting may outline the production plans for the rest of the year.
Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 18. Low hanging fruit.
April 17, 2020, ©. Leeham News: We continue the summary of the series why e in ePlane should be more about environment focus than electric aircraft.
Last week we summarized the high hanging fruit technologies pursued presently, now we continue with the low hanging fruit.
Figure 1. The Gartner hype curve. Source: Wikipedia.
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.