Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- JetZero readies effort for private equity fund raising May 5, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
- Supplier Howmet exceeds expectations despite tariffs May 1, 2025
- Airbus 1Q2025 results: So far, so good, but US tariffs make future results unpredictable May 1, 2025
- Does an Airbus A220-500 need a new wing and engines? May 1, 2025
Boeing 787 payback gap widens
By Bjorn Fehrm
Subscription Required
Introduction
July 20, 2017, © Leeham Co.: The 787 Dreamliner is now on its sixth delivery year, well past half calendar time in the program’s 1,300 unit accounting block (for the explanation of accounting block and program accounting read here).
Within two quarters we also reach half time for deliveries at 650 aircraft. Production cost improvements must now create a margin, so that the $30b deferred costs to date can be amortized by remaining units. Is the margin created? Not so far.
We will know more in a week’s time. Boeing has its 2Q2017 call next week, where the production cost improvements can be monitored through the decline of the $30bn deferred costs. Right now, the decline is at a slow pace.
Summary:
- Program accounting means deferred production costs shall be nil at the end of the accounting block.
- Right now, there is $30bn to amortize and not too many aircraft left that can pay the sum.
- We explore the payback margins necessary to reach a black nil at 1300 units.
Is Norwegian in trouble? Part 2
By Bjorn Fehrm
July 19, 2017, © Leeham Co.: Last week we raised the question if Norwegian Air Shuttle was in trouble. The CFO, Frode Foss, left a few days earlier. Analysts were worried and the stock dived 8%.
Last Friday, the airline presented its 2Q2017 result. An optimistic report. New destinations, increasing revenue and a profit of NOK 861m ($107m). But the stock tanked further, now down 11%. What’s behind the increased worry?
Business case for NMA remains uncertain
Subscription Required
Introduction
July 17, 2017, © Leeham Co.: We’re half way through 2017. Boeing reported orders through July 11, a week ago. Airbus won’t update its July orders until the end of the month.
Through July 11, Boeing reported 116 net wide-body orders: 15 for the 767, 33 for the 777 and 75 for the 787. Net cancellations of -7 for the 747 are included in the net 116 figure.
The 15 767s were not commercial models, however, but 767-2C tankers for the USAF.
Over at Airbus, none of China’s 40 commitments announced July 5 for 40 A350s are in the June summary, and won’t be in the Orders tally until the commitments turn into firm orders. Through June, airbus had net 26 widebody orders: three A330-200s and 29 A350-900. There were cancellations of four A330-800s and two A380s.
If the 40 China A350s were included, this would bring Airbus to 66 widebody orders, still well short of Boeing’s YTD figure.
Summary
- Airbus product gap widens as A330-200/800 stalls.
- Boeing 787 strength comes from 787-9; 787-8 remains minor player.
- Middle of the Market business case still unproved.
Pontifications: Mississippi’s aerospace footprint
By Scott Hamilton
July 17, 2017, © Leeham Co.: Living in the Seattle area, the highest profile, dominant industry is the commercial aerospace sector.
Boeing, of course, headlines just about everything when it comes to aviation.
Boeing’s competition is principally Airbus—or at least it used to be until Boeing claimed teeny tiny Bombardier, a company one-sixth the size of Boeing’s revenues, is poised to put Boeing out of business with BBD’s CSeries.
Bjorn’s Corner: Electric aircraft, Part 3
By Bjorn Fehrm
July 14, 2017, ©. Leeham Co: In the last Corner, we developed a hybrid aircraft propulsion system and looked at system efficiencies. Today, we look a bit deeper at how hybrid propulsion can be implemented on an aircraft.
What are the advantages on an aircraft level, that such a chain can have? Can aircraft level efficiencies compensate for more parts and lower propulsion efficiency of a hybrid systems?
Figure 1. Zunum aero regional airliner. Source: Zunum aero.
Electronic check-in is out in new US security plan
London Heathrow Airport. Photo via Google.
July 13, 2017. © Leeham Co.: If you thought the US government ban on carrying electronic devices on board airliners in the name of heightened security was bad, that was going to be a minor inconvenience compared with what is in the works, LNC has learned.
The US Department of Homeland Security may announce as soon as next week a series of revisions to check-in procedures outside the US that will set the airline world back 30 years.
An international carrier advised LNC of the following, revised procedures DHS has notified it that will be put in place between now and October.
Jet sales in 75-150 seat lag Airbus, Boeing
Subscription Required
Introduction
The Mitsubishi MRJ90 hasn’t recorded a sale in a year. Photo by Scott Hamilton.
July 13, 2017, © Leeham Co.: While analysts and reporters focus on the high-profile order competition between Airbus and Boeing, it’s time to look at Bombardier and Embraer, along with the 75-150 seat sector.
Boeing is doing better than expected this year, due largely to the launch of the 737 MAX 10. Airbus is struggling year-to-date, but received a big boost post-Paris Air Show with an agreement to sell 140 A320s and A350s to China. At this stage, it’s not a firm order, however.
How are Bombardier and Embraer doing in their core markets of 75-150 seats?
Just awful.
Sukhoi and Mitsubishi aren’t doing any better.
Summary
- Few new sales in 2017 in the 75-150 seat sector.
- Low fuel prices, Scope Clause and general order downturn converge.
- Embraer’s Paris Air Show results boosted this OEM’s year-to-date performance.
Is Norwegian in trouble?
By Bjorn Fehrm
July 11, 2017, © Leeham Co.: In our review of Norwegian Air Shuttle (Norwegian) the 8 of February, we pointed out the company’s ambitious fleet expansion plans with a rather weak balance sheet. We followed up with a second article the 15th of February where we analyzed the risky fleet plans further.
Last week, the longtime Norwegian CFO, Frode Foss, departed. It sent shock waves through analysts and the stock tanked 8% in a day.
The departure of a CFO is many times the pre-warning of troubled times. Foss was with Norwegian for 15 years. It was not a planned departure and Foss has no successor. The post is run by the Investor Relations manager in the interim.
Read more
Pontifications: 10 years after the Boeing 787 roll-out
By Scott Hamilton
July 10, 2017, © Leeham Co.: Saturday was the 10th anniversary of the roll-out of the Boeing 787. The date was 7/8/07, nicely coincided for the airplane’s name.
The event was an extravaganza never seen in commercial aviation, surpassing even that of the Boeing 707 in 1954.
Technology, of course, had a lot to do with the hyper-event 10 years ago. There was no Internet in 1954, no cable news networks, no laser light shows, etc.
There were also no orders for the 707 in 1954, compared with the hundreds for the 787 in 2007.
A380Plus: First analysis, Part 2
By Bjorn Fehrm
Subscription required.
July 10, 2017, ©. Leeham Co: We went through the changes that are included in the Airbus A380Plus development study last week.
The study packages several improvements to the A380, improving the aerodynamics, increasing the passenger capacity and lowering maintenance costs.
The aim is to improve the cost per seat of the A380 to keep it competitive with the new Boeing 777-9. With the rundown of the improvements complete we now use our aircraft model to see if the cost per passenger can compete with the 777.
Summary:
- The A380Plus improvements makes the A380 competitive on Cash Operating seat mile Costs with the Boeing 777-9.
- The problem on how to fill the 70% larger A380 remains. It needs other solutions.