Leeham News and Analysis
There's more to real news than a news release.
Weekly analyst report: Hold on Bombardier
Aug. 17, 2016: Bombardier’s first-half orders from Air Canada and Delta Air Lines for the C
Bombardier got a needed boost for C Series orders in the first half, but some analysts need more. Photo via Google images.
Series helped, but didn’t eliminate skeptics.
Canadian securities firm GMP issued a note Aug. 5 (though we received it only Aug. 12) that maintains a Hold rating.
Goldman Sachs worries about wide-body production rates and overall supply and demand. Morgan Stanley also points to supply-demand.
WTO near decisions on Airbus, Boeing compliance
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Reuters reports that the World Trade Organization (WTO) is nearing decisions on whether Airbus and Boeing complied with previous rulings to fix subsidies the WTO found were illegal in the production of their commercial airliners.
In the meantime, the United Kingdom’s Serious Fraud Office (SFO) investigation into improper use of consultants by Airbus appears to be spreading to the US Department of Justice, according to press reports.
The website AL.com (for Alabama) his this report, focusing on the potential impact to the Airbus’ presence in Mobile (AL). AL.com referred to an original report in The Times of London.
Boeing is not without its own problems. The Us Securities and Exchange Commission is said to be probing alleged improprieties in its use of program accounting for the 787 and 747-8. Program accounting is an approved method of cost accounting. The reported SEC probe is looking into whether Boeing improperly applied costs in the two aircraft programs.
What’s happened to the VLA sector?
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Introduction
Aug. 15, 2016, © Leeham Co.: Boeing says it may discontinue the 747 program.
Airbus put the A380neo on indefinite hold. Qantas Airways says it doesn’t want its last eight orders. The OEM will reduce the production to 12/yr in 2018.
There haven’t been any Boeing 777X sales since June 2015. There are only six identified customers and there has been a new, identified customer added since July
Boeing is considering a larger 777-10, which will carry 50 more passengers than the 777-9. But is there a market? Boeing photo via Google images.
2014, when ANA ordered the X.
Sales have dried up for the 365 passenger Boeing 777-300ER and only a smattering of orders have come in for its competitor, the Airbus A350-1000.
What’s happened to the Very Large Aircraft sector? What’s happened to the large, medium twin aircraft sector?
Summary
- The VLA market pioneered by Boeing and pursued by Airbus is virtually nonexistent.
- Yet there are those in Boeing who want to launch a 450-passenger 777-10 into a dubious market demand.
- 777 Classic sales dried up, but A350-1000 isn’t doing great, either. Are these too big, too?
Pontifications: Mitsubishi ramping up flight testing for MRJ
By Scott Hamilton
Aug. 15, 2016, © Leeham Co.: Mitsubishi Aircraft Corp. (MAC) is about to dramatically ramp up its flight testing of the MRJ-90.
Media has been alerted to an all-day event next month, complete with a tour of the Moses Lake (WA) facility, where test airplanes will be based.
The program is two years behind schedule for the brand new design, the first commercial airliner produced by Japan since the YS-11 turboprop more than 50 years ago.
Boeing KC-46A cleared for production
Click on image to enlarge. Image via Google.
Aug. 14, 2016: The Pentagon cleared Boeing’s KC-46A aerial refueling tanker for Low Rate Initial Production (LRIP) after the aircraft completed Milestone C refueling tests.
All that remains now is for the US Air Force and Boeing to execute the contracts.
This is welcome news for Boeing and the USAF.
Bjorn’s corner; Runway safety systems
By Bjorn Fehrm
August 11, 2016, ©. Leeham Co: I recently wrote about the need for Synthetic Vision and other aids to increase the situational awareness of commercial pilots. I asked the OEMs what their plans were for such aids.
One OEM answered that the system will take time until it gets offered as the additional training for the pilots to use the system is not popular with the airlines. It’s hard to monetize a concrete operational benefit for Synthetic Vision systems.
Figure 1. Embraer’s E190-E2 currently under flight test. Source: Embraer.
I have now got a slightly different answer from Embraer. Here is what they say. Read more
Boeing lays ground to cut 777 rates again
Greg Smith, CFO of The Boeing Co.
Aug. 11, 2016, © Leeham Co.: Boeing is laying the groundwork to further reduce the production rate on the 777 Classic and scrap a planned rate increase for the 787 from 12 to 14/mo.
Greg Smith, CFO of The Boeing Co., reiterated a message from CEO Dennis Muilenburg during the 2Q2016 earnings call that these rate adjustments may be forthcoming.
Smith made his remarks at an investors day conference sponsored by Jefferies & Co.
Irkut MC-21-200 deepened analysis
By Bjorn Fehrm
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Introduction
August11, 2016, ©. Leeham Co: In February we did the first analysis of the Irkut MC-21-200. The analysis was made on the first data available. During the Farnborough Air Show, we got more information around the MC-21 and could see that an update of our first analysis was called for.
Figure 1. MC-21-200, the smaller varaint of the MC-21. Source: Irkut
At the time we compared the MC-21-200 to Airbus A320 and concluded they are about the same size. With the new information, we could see that there is a size difference.
Summary:
- The MC-21-200 is close to Airbus A320neo in external dimensions, a bit smaller in the cabin and has lower take-off weights.
- Irkut, the OEM, suggested standard two class capacity is 132 seats. This is with space to spare in several places.
- To make a fair efficiency comparison with the A320neo, we develop an optimized cabin for the MC-21-200.
Embraer books 1H2016 loss and lowers guidance
By Bjorn Fehrm
August09, 2016, ©. Leeham Co: Embraer presented its second quarter and first half 2016 results on July 29, posting a loss and lowering guidance for the year.
The company is in a bridge period on its commercial aircraft side, with sales and deliveries focusing on the scope clause optimized E-Jet 175 while the company readies the upgraded E-Jet E2 series.
Figure 1. Embraer’s best-selling E175 regional jet. Source: Embraer
At the same time, the company’s buoyant Business Jet side has started to feel the slump that has hit this market since 2014. Combined with a domestic Defence and Security market which is dependent on Brazil’s economy, it’s been a first half of 2016 which has been a bit tougher than Embraer planned.
The company judges that the slow Business jet sales will continue and has therefore lowered its full year guidance. Read more
Air Lease sounds caution note for Airbus, Boeing
Air Lease Corp. made the predictions on its 2Q2016 earnings call Friday.
ALC also predicted Boeing will further lower the production rate of the 777 Classic from the announced 5.5/mo in 2018. ALC did not specify a rate, but some aerospace analysts believe a rate of 4/mo is coming.
They also believe neither Boeing nor Airbus will increase production rates of the 737 to 57/mo or A320s to 60/mo. Boeing announced previously that it is considering increasing the 737 rate from the announced 52/mo, effective 2018, to 57/mo. Airbus previously announced it will increase the production rate of the A320 to 60/mo and is considering a rate of 63/mo.
Airbus is bringing the rate up from 44/mo to 60 by 2018.
Read more
22 Comments
Posted on August 10, 2016 by Scott Hamilton
Airbus, Boeing, Leeham News and Comment
737, 777 Classic, 787, A320, Air Lease Corp., Airbus, Boeing, John Plueger