Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
- Does an A220-500 need a new wing and engines? Part 2. May 8, 2025
- Embraer downplays tariff impact on 2025 results May 6, 2025
- 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
ISTAT 2016: Air transport market at cross-roads
By Bjorn Fehrm
September 29, 2016, ©. Leeham Co: We visited ISTAT (International Society of Transport Aircraft Trading) 2016 conference in Barcelona this week. The most interesting part of the conference was the economists panel with discussions between the economist: Brian Pierce, chief economist of IATA; Peter Morris, chief economist at Ascend; and Adam Pilarski, SVP and Head of Consulting, AVITAS.
The economists agreed that the air transport market is at a cross-roads, but not which route it will take.
Let’s start with the market facts presented by IATA’s Pierce: Read more
Russian-Chinese wide-body: Program responsibilities
By Bjorn Fehrm
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Introduction
September 29, 2016, ©. Leeham Co: We will now finish our series about the Russian-Chinese wide-body with looking at who will have what role in the program.
Figure 1. Concept for new wide-body airliner. Source: United Aircraft.
As we described in the initial article, “Background and outlook,” Russia and China have vastly different competencies when it comes to making a state of the art wide-body aircraft.
Russia has made airliners since the 1930s, including wide-body jets. China did not design its own jet aircraft (military or civil) until the mid-1980s. Most of the aircraft produced still today in China have their origin in Russian designs.
At the same time, we saw in the article about the market demand for the aircraft that the Chinese market is 90% of the home market. This makes for China demanding important parts of the aircraft’s production, and China has the money to invest in production facilities.
All this will influence how different parts of the project will be shared between Russia’s United Aircraft Corporation (UAC) and Commercial Aircraft Corporation of China (COMAC).
Summary:
- Russia and China enter the wide-body project with widely different knowledge bases.
- Russia has long time knowledge on how to develop and produce aircraft and their engines.
- China on the other hand has the market for the aircraft.
- China also know a lot about serial production and have money to invest. Read more
Weekly Analyst Synopsis: Rolls, Boeing and leasing companies
Sept. 28, 2016: This week’s aerospace analyst research synopsis looks at Rolls-Royce. aircraft leasing companies and the implications to supply-and-demand, and the Iran Air order clearance by the US for Boeing.
No sanctions will be levied on Airbus and Boeing in WTO dispute
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Introduction
Sept. 26, 2016, © Leeham Co.: It’s hazardous to use the word “never,” but the US and European Union will never impose trade sanctions or tariffs on Airbus or Boeing airplanes.
No sane president would do so. (Cue Donald Trump.) It would start a devastating trade war and the collateral damage on innocents in the Airbus-Boeing illegal subsidies disputes would be severely harmed.
Summary
- US tariffs on Airbus aircraft and EU tariffs on Boeing aircraft would hurt engine makers, suppliers—innocents in the illegal subsidy disputes.
- Some key customers order from Airbus and Boeing. Tariffs on one or the other company risk alienating these customers.
- Sanctions/tariffs permitted on other companies, industries.
- Canada, Brazil never imposed sanctions in Bombard-Embraer violations.
Pontifications: Hypocrisy and illegal subsidies at the WTO
By Scott Hamilton
Sept. 26, 2016, © Leeham Co.: There are two airplanes under development that are in the 150-220 passenger space.
Both are under development by companies that get state aid and make no bones about it. The aid would likely be found in violation of World Trade Organization (WTO) rules.
But the most vociferous opponent to illegal subsidies hasn’t said a peep about it.
Neither has the opponent’s rival—although this company publicly recognizes the irony of it all.
I call it hypocrisy.
Bjorn’s Corner; The Russian civil aircraft engine companies
By Bjorn Fehrm
September 23, 2016, ©. Leeham Co: In our Corners on East bloc aeronautical industries, we now look at the main Russian civil aircraft engine companies. As with the aircraft side, there is one overall Russian engine company since 2008, United Engine Corporation (UEC), Figure 1.
This is a state-owned holding which incorporates 80%of the gas turbine engine companies from the Soviet times, employing 80,000 people.
The aim is to coordinate and optimize Russia’s engineering and production resources around present and future gas turbine engines for Aeronautical, Naval and Stationary use.
Figure 1. Engine companies in United Engine Corporation. Source: UEC.
Soviet and Russian engines have historically been named after their chief designer in the design bureau. We will now describe the main entities in UEC that work with airliner engines. Read more
WTO slams EU, Airbus
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Sept. 22, 2016: The World Trade Organization (WTO) today found that the European Union not only did not cure its previous finding that Airbus received illegal financing aid in launching the A300 through A380, it further violated rules by obtaining launch aid for the A350 XWB.
Stories are here and here. The Seattle Times has some specific detail here.
The WTO has yet to issue a ruling on an appeal that Boeing failed to comply with the EU’s finding that the US provided illegal subsidies to Boeing. The Wall Street Journal reported yesterday that the WTO is expected to do so.
The EU can appeal the latest finding, which allows the US to impose up to $10bn in sanctions. The US doesn’t have to do so but if it does, it doesn’t even have to be against Airbus–it can be against entirely unrelated industries.
Boeing issued a press statement that was predictable in its tone. It is reproduced below the jump.
Airbus, predictably, has a different spin. Its press release follows Boeing’s.
The WTO’s synopsis is here. The full report is here. The excerpt of the Conclusions and Findings are here. Summaries of key findings are here.
Boeing positioned to narrow market share gap
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Introduction
Market sahre data from February–little has changed since–for sales of the A320neo vs 737 MAX families.
Sept. 22, 2016, © Leeham Co.: Early this year Boeing officials began a new message in pushing back against market data that show Airbus captured about 60% of the single aisle market in the A320neo vs 737 MAX sector.
There’s plenty of time, Boeing said, for the MAX to catch up to the neo. Just look, officials said. Southwest Airlines and Ryanair ordered only a fraction of the MAXes they need to replace the 737s they currently operate.
Airbus, on the other hand, has hundreds more neos ordered by the likes of new airlines such as AirAsia and Indigo.
The implication is that the AirAsia and Indigo orders are not as solid as the potential for Southwest and Ryanair.
It’s a fair point.
But it’s not the whole story.
Summary
- An analysis of airlines that have not ordered the A320neo or 737 MAX families shows Boeing has more upside potential.
- Boeing companies still have thousands of orders yet to be placed.
- Forecasting ahead, Boeing has a solid prospect of narrowing the market share gap with Airbus—but probably not closing it entirely.
LCC changes face of long-haul
By Bjorn Fehrm
21 September 2016, ©. Leeham Co: Norwegian has announced that it has now flown its three millionth passenger on their long-haul network.
Figure 1. Norwegian Air Shuttle long-haul 787. Source: Wikimedia.
Norwegian first launched low-cost flights from Scandinavia to the U.S. in May 2013, followed by services from London to the US beginning in July 2014. Today, the airline offers 37 nonstop routes between Europe and the U.S. with a steady load factor of 90 per cent or more – in August this year, Norwegian’s long-haul flights achieved a 96 per cent load factor.
As we wrote last week the carrier will augment this network with the arrival of the Boeing 737 MAX 8 next spring. Norwegian has now obtained a UK Operating License which allows the airline access to markets in Asia, Africa and South America. With the MAX 8 and the 787 Norwegian will have a powerful fleet which can operate both on thin long-haul destination as well as larger ones.
Southwest Airlines, Ryanair and JetBlue is also eyeing long haul when they get their longer range 737 MAX and Airbus A320neo. Add to that the established AirAsia X and Jetstar are now on a steady long-haul expansion. The world-wide long-haul market is in for a major change. Read more