Leeham News and Analysis
There's more to real news than a news release.
Shakeout for Europe’s low-cost airlines
By Bjorn Fehrm
October 11, 2016, ©. Leeham Co: Alitalia, Air Berlin and now Monarch have all filed for insolvency since the start of 2017. These are all airlines with an emphasis on low cost flying, with an important leisure part. Alitalia and Air Berlin had histories as network carriers, which hasn’t helped.
What happened in summary; When the European low-cost market got rough, their cost levels weren’t tough enough.
US declared Bombardier impeded trade probe, uncooperative and found dumping as a result
Oct. 10, 2017: The US Department of Commerce concluded Bombardier was uncooperative, didn’t answer its questions and impeded the trade investigation in the Boeing complaint.
Accordingly, under US law, Commerce could draw negative conclusions toward Bombardier and found it “guilty” (our word) of violating anti-dumping laws in its sale of the CS100 to Delta Air Lines.
Boeing’s Bold Ambition, Part 2
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Introduction
Oct. 9, 2017, © Leeham Co.: When Boeing launched the 787 program in 2003, an after-market maintenance program called Gold Care followed.
It wasn’t successful. Few customers signed up for it.
Stan Deal, CEO of Boeing Global Services.
But the lessons learned are important for Boeing’s drive to vastly expand its presence in the global commercial airplane after-market business.
Boeing Commercial Airplanes and Boeing Defense, Space & Security (and the latter’s predecessor, Integrated Defense Systems) provided services to the airlines, lessors and government customers, but now there is a dedicated business unit.
Boeing Global Services was announced nearly one year ago, on Nov. 21. When Boeing reports its third quarter earnings at the end of this month, for the first time revenues and profits for BGS and its predecessors will be a line-item in the earnings statements.
Stan Deal, the CEO of BGS, acknowledged the poor start of Gold Care in an interview with LNC. But from this unhappy experience, Boeing learned what officials hope lays the foundation of a new, robust business.
Summary
- 787 Gold Care didn’t start out well.
- Gold Care is rejigged and rebranded.
- BGS services Airbus aircraft, too.
Pontifications: The view from 51,000 feet
Oct. 9, 2017, © Leeham Co., Montreal: The National Business Aviation Assn. (NBAA) annual exhibition begins tomorrow in Las Vegas.
LNC doesn’t ordinarily follow business aircraft, but when I was in Montreal last month visiting Pratt & Whitney Canada, I had the opportunity to meet with leaders of the PW800 team.
This new engine powers the new Gulfstream 500/600, a corporate aircraft undergoing testing.
Admittedly, not being conversant with the G500/600 or the PW800, details of which may be not new to some others, I was taken by a fewer pointers shared by PWC.
Bjorn’s Corner: Laminar flow aircraft, Part 2.
October 06, 2017, ©. Leeham Co: We introduced the Airbus “Blade” laminar flow research program in the last Corner. Now we continue to look into what this research is all about.
We will explain the difference between laminar and turbulent flow (really, laminar and turbulent “boundary layer” flow) and discuss some of the work that has been done with laminar flow structures.
Figure 1. The “Blade” equipped A340-300. Source: Airbus.
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Airbus preparing to hike A350 production rate
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Introduction
Oct. 5, 2017, © Leeham Co.: Airbus is gearing up to increase the production rate of the A350 from 2018’s planned 10/mo to 13/mo, perhaps as early as the following
year, LNC has learned.
The move follows Boeing’s announcement in September that it will increase the production of the 787 from the current 12/mo to 14/mo in 2019.
Airbus is producing the A330 at a rate of 6/mo.
Next shoe in Bombardier trade complaint to drop tomorrow
Oct. 3, 2017, © Leeham Co.: The other shoe in the Boeing-Bombardier trade complaint is to drop Wednesday when the US Department of Commerce makes its decision whether Boeing suffered harm, or there is a threat of harm, in the CS100 order by Delta Air Lines.
Bombardier CS100 ordered by Delta Air Lines.
The DOC last week determined that Bombardier received illegal subsidies dating to the 2008 program launch of the CSeries, through the 2016 equity investments by the provincial government of Quebec and the federal government of Canada. Certain tax breaks were also deemed illegal subsidies by the DOC.
The determination was expected, even by Bombardier. But the DOC shocked the global aviation community by levying a 220% tariff. The rate is preliminary and won’t be finalized until next year, but absent some extraordinary event, it’s expected to be confirmed—followed by lengthy appeals.
The decision Wednesday relates to harm, or anti-dumping in legal terms. Here’s where the aviation community and observers, except for one who is prominent and who receives funding from Boeing, universally believe there is no case.
American hopeful Trump Administration will take on Mid-East 3 airlines
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Introduction
Oct. 2, 2017, © Leeham Co., Grapevine (TX): American Airlines officials dodged commenting about the specifics of the Boeing-Bombardier trade dispute when asked about it at the investors/media day last week in this Dallas suburb.
Instead, the general counsel, Steve Johnson, offered up only a general statement supporting the Trump Administration’s hard line on trade.
The reason for this generality is obvious: American, along with Delta Air Lines and United Airlines, is engaged in its own trade war and needs support from the Administration.
AA, DL and UA are battling Big Three airlines from the Middle East over being subsidized and abusing Open Skies treaties. The US carriers want Trump to knock down the ME3, Emirates Airlines, Qatar Airways and Etihad Airways.
Oddly, no question was asked of the American officials about the current state of the battle during the day.
LNC asked American CEO Doug Parker about the issue following the event, however.
Summary
- Recent meeting with US was encouraging.
- No commitment yet from Trump Administration.
- Market conditions don’t matter to ME3, American says