Leeham News and Analysis
There's more to real news than a news release.
JetBlue, a carrier at crossroads
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By Vincent Valery
Introduction
Feb. 17, 2020, © Leeham News: JetBlue Airways has come a long way since it started operations in 2000. The airline celebrated its 20th-anniversary last week.
While the US legacy carriers were struggling financially and busy with consolidation, the airline successively expanded. It now generates more revenue than numerous flag carriers around the world.
JetBlue built significant focus city operations outside its main New York–JFK base in Boston, Fort Lauderdale, and Orlando. The carrier profitably grew faster than most competitors in the years after the financial crisis. It also announced the start of trans-Atlantic operations from next year.
The airline has had some resounding successes over the years, notably the introduction of Mint service on US transcontinental flights. However, there have also been strategic failures.
After resisting the usage of ancillary fees, the carrier is aggressively increasing those revenues. Management announced in 2018 a shift towards expanding capacity in the focus cities where the airline has a significant market share.
LNA analyzes JetBlue’s performance over the years and the rationale behind the latest strategic decisions.
Summary
- Succeeding where many others failed;
- Some resounding successes;
- And strategic failures;
- Increasingly looking like a legacy carrier;
- Setting itself up for a merger?
Pontifications: In chaos there is opportunity for Boeing during MAX grounding
Feb. 17, 2020, © Leeham News: Boeing executives said that while the 737 MAX production is suspended, efficiencies are being implemented on the assembly lines.
By Scott Hamilton
At a Cowen & Co. conference last week, EVP and CFO Greg Smith outlined some of the efficiencies that are being put in place.
But another area that could be improved, not addressed by Smith, while the lines are shut down is supply chain tracking. This has huge ramifications for cost savings and streamlining. It’s part of the business plan for the next new airplane, whatever this is.
This process is called ERP, or Enterprise Resource Planning. Boeing is transitioning to a more advanced method, called SAP, or Systems Applications Projects.
Boeing Australia and Boeing Global Services have made the transition. But Boeing Commercial Airplanes’ transition is stalled due to middle management inertia, said several people who attended the Pacific Northwest Aerospace Alliance annual conference Feb. 4-6.
Boeing should use the production halt and slow ramp up to implement SAP, they said.
Boeing 737 MAX 2020-23 backlog will require to 2026 to deliver: analysis
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Introduction
By Scott Hamilton
Feb. 14, 2020, © Leeham News: It will take Boeing years to deliver new production airplanes scheduled for delivery in 2020-2023 because the restart of the 737 MAX production will fall far short of delivery commitments.
There are an estimated 2,682 deliveries scheduled in this timeframe. Boeing’s production restart and ramp up provides delivery positions for an estimated 1,827 aircraft. This leaves an estimated 855 aircraft that will have to be rescheduled into the future, from 2023.
These will compete with Boeing sales for new order delivery slots. For example, the MOU for 200 MAXes from IAG, the parent of British Airways and other carriers, has delivery slots in these periods.
An analysis by LNA indicates it will take at least until 2026 to deliver these 855 airplane if no other orders are slotted in through 2025.
Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 9. Hydrogen, cont.
February 14, 2020, ©. Leeham News: Last week we started looking at hydrogen as an alternative energy source for our air transport system. We discussed the use of hydrogen as a direct fuel replacement to jet fuel, burning the hydrogen in the combustor of the aircraft’s turbofans.
Hydrogen works fine as a fuel for the turbofan but it has challenges in its onboard storage, it’s handling and production. Good reader discussions followed around those problems. Now we look at hydrogen as a fuel in a fuel cell/electrical motor propulsion system.
Figure 1. Components of a fuel cell-based aircraft propulsion system. Source: NASA.
Boeing sued in Seattle over 737 MAX
Feb. 13, 2020, © Leeham News: A Seattle law firm filed what is believed to be the first lawsuit over the Boeing 737 MAX crisis in King County Superior Court.
King County includes Seattle and Renton, where Boeing’s Commercial Airplanes division is headquartered.
Lane Powell PC filed the lawsuit (20-2-04003-7) naming The Boeing Co. and BCA as defendants. The plaintiffs are two special purpose companies (SPC) that own two 737-8-based MAX BBJs (business jets.) This is believed to be the first BBJ owners to file suit against Boeing.
Airbus 2019: an operationally good year hit by compliance costs
February 13, 2020, © Leeham News in Toulouse: Airbus presented its results for 2019 today in Toulouse. Operationally, the company made a profit of €6.9bn but heavy fines (-€3.6bn) to settle a long-running bribery case and contingencies for A400M development cost coverage brought the net result to a loss of €1.3bn.
The Commercial aircraft division delivered 8% more aircraft 2019 (863 units vs. 800 2018). The mix of aircraft changed towards higher-margin single-aisle types like A321neo and A321LR whereas widebody margins peaked during 2019. The helicopter business is flat in a tough market and the profits of the Defense and Space division declined 40% on flat revenues.
MAX, 777X certification questions abound at Singapore Airshow
By Judson Rollins
February 13, 2020, © Leeham News: Despite depressed turnout at this year’s Singapore Airshow, there was still plenty of conversation around the return to service for Boeing’s beleaguered 737 MAX – and potential impacts on the certification of the 777X.
Summary
- Ungrounding will take ~30 days from certification flight; operators also have work to do
- Every MAX produced to date will require its own validation flight
- FAA will gradually hand back some oversight to Boeing
- 777X, other future certifications will be different; regulators still figuring out how
Airbus buys Bombardier’s share in A220, now sole owner together with the Government of Quebec
By Bjorn Fehrm
February 13, 2020, © Leeham News in Toulouse: The news this morning that Airbus is now the sole owner of the A220 (75%) together with the Government of Quebec (25%) is good news for the A220 and for Quebec.
Bombardier is a company in trouble and it was forced to try and save cash in the A220 partnership rather than invest in the future. This potential limitation on the A220 program is now resolved. Airbus gets sole responsibility for future plans and it has in the Government of Quebec a partner that will be positive to the growth of the A220 as it means more business for the Quebec aeronautical industry.
Could A220 fly Air Canada’s Montreal to Toulouse route? Part 2
By Bjorn Fehrm
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Introduction
February 13, 2020, © Leeham News: We continue our analysis if the Airbus A220 is a credible long-range aircraft. We started looking at the limitations of the aircraft last week and how these could be lifted.
Now we continue with an analysis of the economics of the A220 compared to established long-range aircraft like the Airbus A330 and A321LR/XLR. Is a higher frequency A220 route competitive with an A330 or A31LR/XLR operated route? We also examine how Breeze air will operate its A220s on long-range routes.
Summary:
- By virtue of its size, the A330-300 has good economics when it can be filled to a high load factor.
- The A321LR comes close in operating costs to the A330-300 on these types of routes.
- The surprise is the competitiveness of the A220-300 on a route type it wasn’t designed for.
CAE readied MAX simulators, prepared to boost production
Feb. 9, 2020, © Leeham News: The principal provider of airliner simulators sold six for the Boeing 737 MAX since the first of the year.
CAE Inc. now sold 56.
In the third quarters earnings call Friday, Marc Parent, president and CEO, said that a “high majority” of airlines that ordered the MAX have ordered a simulator from CAE.
CAE has about 80% of the simulator market.
There are 36 MAX simulators across the globe now from all providers. CAE, as of the end of the year, provided 23 of them.