Leeham News and Analysis
There's more to real news than a news release.
Boeing statement on loss in Bombardier trade case
Statement by The Boeing Company
January 26, 2018
“We are disappointed that the International Trade Commission did not recognize the harm that Boeing has 
suffered from the billions of dollars in illegal government subsidies that the Department of Commerce found Bombardier received and used to dump aircraft in the U.S. small single-aisle airplane market. Those violations have harmed the U.S. aerospace industry, and we are feeling the effects of those unfair business practices in the market every day.
“While we disagree with the ITC’s conclusion today, we will review the Commission’s more detailed opinions in full as they are released in the coming days.
“Boeing remains confident in the facts of our case and will continue to document any harm to Boeing and our extensive U.S. supply chain that results from illegal subsidies and dumped pricing. We will not stand by as Bombardier’s illegal business practices continue to harm American workers and the aerospace industry they support. Global trade only works if everyone adheres to the rules we have all agreed to. That’s a belief we will continue to defend.”
Breaking News: Bombardier wins at USITC–no harm to Boeing, in stunning unanimous vote
Jan. 26, 2018: In a shocking reversal and a stunning defeat for Boeing, the US International Trade Commission ruled unanimously Boeing was not harmed by Bombardier’s government subsidies and low-price deal to sell 75+50 CS100s to Delta Air Lines.
This means the prospect of tariffs, of 292%, is dead.
Details to come.
Bjorn’s Corner: Aircraft drag reduction, Part 14
By Bjorn Fehrm
January 26, 2018, ©. Leeham Co: In the last Corner, we discussed Induced drag after having covered Friction drag and Form drag. These are the main drag components of a subsonic aircraft.
As the aircraft flies over Mach 0.5, an additional drag is added, this time based on the air’s compressibility, transonic or supersonic drag.
Figure 1. The first supersonic airliner, the Concorde. Source: Google images.
Lessors and investors disagree on transparency
Special to Leeham News
By Jack Dutton
Jan. 25, 2018, © Airfinance Journal, Dublin: The opacity of the industry in regard to asset prices is one of the main challenges for aircraft lenders and investors, according to a panel of investors speaking at the 
20th Annual Global Airfinance Conference in Dublin.
“The lack of transparency on pricing is your biggest challenge as an aircraft lender or holder. The leasing companies were in the best position to hold good pricing information,” said David Andrews, managing partner of transport, Hudson Structured Capital Management.
20-year old ISTAT definitions “archaic”
Special to Leeham News
By Michael Allen
- ISTAT definition “quite archaic.”
- Appraisers says aircraft disparity in ABS transaction can be due to lack of information provided by the arrangers.
Jan. 25, 2018, © Airfinance Journal, Dublin: “We get asked to value a portfolio of 35-aircraft,” says Rikard de Jounge vice president – asset valuations at Avitas.
“No one tells you that the valuation is for an ABS transaction. They just ask for market and base values,” he adds.
Stuart Hatcher, head of intelligence at IBA Group, says it is still a “secretive market”.
“Providing that we are dealing with sellers, the information is generally good. The issue we tend to find is with the arrangers. And the communication can be quite sporadic,” he says.
The other issue is how much you are including into a valuation for a lease-attached aircraft.
Chinese and Russian Widebody takes shape. Part 3.
By Bjorn Fehrm
Subscription Required
Introduction
January 25, 2018, © Leeham Co.: In the second article about the new Chinese/Russian widebody, CR929, we looked at the size of the aircraft and its passenger capacity. The CR929 can be best described as a shorter range version of Boeing’s 787-9. We also presented the chosen technologies for the project.
Now we continue and look at the challenges the aircraft poses to the involved manufacturers. Neither of them (COMAC of China and United Aircraft of Russia) have developed and certified an aircraft like the CR929 before.
Summary:
- The Chinese and Russian widebody program has high ambitions. The structure shall be composites and the systems state of the art.
- We now go through the aircraft’s chosen technologies and review what experience base the Chinese and Russian aeronautical industry has and what challenges they will face. Read more
Boeing aims for half of 100-150 seat sector with 737-7
Jan. 24, 2018, © Leeham Co.: Dublin, Ireland: Boeing sees the 100-150 market sector as 10%-15% of the 20-year single-aisle market demand, or about 3,000-4,500 aircraft.
This compares with the 6,000-7,200 forecast by Bombardier.
Other companies fall within the 4,000 range.
Boeing doesn’t specifically segment the sector in its Current Market Outlook the 20-year forecast for regional, mainline, twin-aisle and cargo aircraft. However, Robert Michael, senior manager of product marketing for Boeing, disclosed the figure at the 20th Annual Airfinance Journal Conference Monday.
Michael said he expects the 737-7 MAX to capture about half the demand.
Airbus, Boeing list price hikes will have little affect
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Introduction
Jan. 22, 2018, © Leeham Co.: Airbus and Boeing hiked their list prices on their airliners last week by about 2% and 4% respectively.
There is little impact for either company in the near term. Single-aisle lines for both companies are sold out until the early 2020 decade, so any price hikes today will be reflected for sales will deliveries after the current backlog clears.
The wide-body lines could have better near-in returns; the backlogs aren’t as far out as single-aisle and near-term opportunities exist.
Summary
- Initial deposits might see an uptick in cash flow.
- Will price hikes translate into higher revenue or larger discounts?
- Production rate hikes would create revenue opportunities.