Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
Boeing details 777 bridge plan
May 13, 2015: For the first time Boeing has detailed how it plans to bridge the production between the 777 Classic and 777X, according to aerospace analysts attending the May 12 investors day.
Boeing previously said it needs to sell 40-60 777s a year to maintain current production rates of 100/yr (8.3/mo) to the introduction of the X. This pledge has drawn a great deal of skepticism from analysts and this column.
Boeing’s detailed explanation, its first, does little to lessen doubts.
Boeing said it will feather the X into current production rates, with the X becoming the equivalent of two or three Classics, thus, it claims, maintaining current rates, according to Wells Fargo.
Boeing also claims that it will maintain rates by managing its skyline, advancing deliveries, according to Buckingham Research.
There are several problems with these claims.
ISTAT Asia day two: home for the elderly
Introduction
May 12, 2015, c. Leeham Co: As you would have guessed we are talking Asian civil airliners, where planning in the region for the fast growing older generations is inadequate. This was the subject of several sessions during day two of the ISTAT Asia (International Society of Transport Aircraft Trading) conference in Singapore.
The problem is new, as up to now a newly established airline fleet in Asia has not had any numbers of older aircraft. But the expansion over the last 20 years is now producing the first transition waves of aircraft and the planning around the problems this generates is inadequate.
The result will be surprising write-downs of airline assets as aircraft being replaced cannot be transitioned out at booked residual values. The scale of the problem was highlighted by a survey of the 500 gathered ISTAT industry experts. The question posed to them was “There are 4700 aircraft coming up for replacement until 2033, has Asian airlines planned adequately for this?”:
- 49% of the delegates responded a few airlines have.
- 45% answered there are only some that do it.
- 5% of the delegates answered most airlines does it.
- 2% thought all Asian airlines have done it.
Boeing investors day
May 12, 2015: Boeing held its annual investors day May 12. Note in particular the Buckingham and Wells Fargo commentary on the 777 bridge to 777X. Read more
Jet Airways, Kenya Airways dumping Boeing 777s
Jet Airways is disposing of all 10 Boeing 777-300ERs (five of which are already leased out) and Kenya Airways is disposing of three 777-300ERs, according to published reports from the regions.
The Jet aircraft are 2007 and newer; the Kenya aircraft are 2013-2014 aircraft.
Jet Airways, partially owned by Etihad Airways, wants to rid itself of the five 777s already leased to other parties. Kenya Airways can’t fill the -300ERs, according to a person familiar with the situation.
A Boeing spokesman said these late model aircraft coming to market won’t affect the company’s effort to sell new 777s as it works to fill the production gap between the Classic and the 777X.
On a recent earnings call, CEO Jim McNerney said the slots are essentially sold out in 2016, half sold out in 2017 and some 2018 slots have been sold. Through May 5, Boeing sold 25 777s this year, including 10 to United Airlines in a swap freeing up 10 Boeing 787-9s.
Pontifications: Qatar Air adds US service, US airlines ramp up whining
By Scott Hamilton
May 11, 2015: Qatar Airways is going to add service to three more US cities and the US airlines don’t like it. That’s too bad. We’ve heard this story before.
First, it was the proposed deregulation of the US airline industry. By the late 1970s, there hadn’t been a new scheduled airline certificated by the Civil Aeronautics Board since the end of World War II other than local service carriers. Non-scheduled airlines (non-skeds for short) and charter carriers received licenses for their lines of work, but every effort to obtain a scheduled certificate was defeated by those airlines already holding one. They didn’t want the competition.
When the move toward deregulation occurred in the 1970s, only United Airlines and the original Frontier Airlines supported it. United, then the nation’s largest carrier, had been rejected by the CAB for every major route expansion while UA’s competitors received new route awards. UA thought deregulation was the only way to expand. Frontier, a local service carrier that had become a “regional” airline by then (as designations evolved), also saw expansion opportunities. Read more
Paris Air Show: Boeing
Subscription required.
Second in a Series of Previews for the Paris Air Show.
Introduction
May 10, 2015, c. Leeham Co. Don’t expect Boeing to come away from the Paris Air Show next month with a ton of orders. It never does; this is Airbus’ home turf.
Although Boeing has said over and over and over again that it doesn’t hold back orders to announce at air shows, the fact is that it does, both for its own public 
relations value and at the behest of customers. Is this as aggressive as Airbus? No, but we know from talking with customers and with
Boeing’s own personnel that Boeing is just as aware of the air show PR value as is Airbus.
That being said, what can we expect from Boeing at the air show? A little bit here. A little bit there. But not a whole lot. The order cycle has flattened (though it’s certainly not collapsed) and the wide-body campaigns that are underway probably won’t be ready for Paris.
Summary
- Look for “Unidentifieds” to be revealed to bolster air show numbers, though this will be strictly a PR exercise;
- Watch the 737 MAX 200–so far only Ryanair has ordered this variant;
- Closely watch whether new orders for the 777 Classic are forthcoming; last week’s Swiss order, for three, were already accounted for in the Unidentifieds;
- 777 Classic production gap is much larger than generally recognized;
- Don’t expect much in the way of 777X orders; there are active campaigns but these probably won’t be ready by Paris;
- It’s doubtful if there will be many 787 orders; the backlog stream is just too far out to prompt airlines to commit right now; and
- Nothing on the Middle of the Market airplane or (probably) the 747-8I.
Bjorn’s Corner: Bombardier’s and Embraer’s first quarter
By Bjorn Fehrm.
07 May 2015, C. Leeham Co: Last week we looked at Airbus first quarter result and compared its commercial aircraft unit with Boeing’s. Now with do the same with Bombardier and Embraer. As both have sizeable Business jet businesses we will include these in the analysis as they share many technologies and developments with the commercial aircraft.
Embraer reported their results last week and Bombardier today. Both reported quarters in the aerospace area which were a bit inferior to last years first quarter and for the same reason, the Biz jet market has gone soft.
Bombardier, who has a larger proportion of its turn-over in Biz jets, has managed this better, it has delivered more aircraft and generated slightly higher revenue and profits from the area but new orders has been slower.
Embraer does separate its business segments for revenue but not for profits. It reports that the lower revenue and profit for the quarter was mainly because the Biz jet area delivered fewer aircraft at less margin. Commercial aircraft deliveries were strong, with good efficiencies in the production and delivery of E-Jets. Read more
CFM LEAP-1B enters flight testing
May 7, 2015: The CFM LEAP-1B has entered flight testing on GE’s company-owned Boeing 747. The engine is for the Boeing 737 MAX. Aviation Week has a story and one section in particular caught our eye, as it relates to the controversy over the test results of fuel consumption.
“When we build development engines they are heavily instrumented and built to accomplish extreme test conditions and durability,” he explains. “They are intentionally deteriorated and have open clearances because they are built for the ‘corner point’ in the test effort. We do pre-test predictions and we are within 0.5% of every one, so we are right on track. We fully expect to be right on our commitment as we enter into service.”
Aspire Aviation reported last month that the LEAP-1B was coming up 4%-5% short, a huge number that Boeing immediately denied; CFM declined comment at the time. Airline Economics later reported the same figure. Our information from our sources was conflicting: we were told by one that the shortfall was 2%, a figure we had been hearing for some time and which was characterized as not unusual at this stage; and one other that reported the 4%-5% figure. There it sat. We did a “what-if” analysis of the effect on the MAX at the 2% and 4% numbers.
Last week, we received a clarifying explanation that appears to track with the Aviation Week article and the excerpt above. We were told that the 4%-5% number came from a test stand test in which the tolerances of the engine were much looser than the optimal performance engine. The clearances, we were told, were not to specification–and the result was the 4%-5%.
Airbus A350 start stretching its wings
By Bjorn Fehrm
Introduction
May 6, 2015, c. Leeham Co. Qatar Airways, as the first operator of the Airbus A350, now has four months of experience of the new twin aisle aircraft. As we have described in Bjorn’s Corner two weeks ago, the introduction has gone well, without major incidents.
Qatar Airways’ A350 stretching its wings. Source: Airbus.
The first destination was Doha-Frankfurt, to be followed by Doha-Singapore on June 1. Both destinations are mid-range, with flying times of six to eight hours. These can be seen as introductory rotations, close to Qatar’s base should replacement aircraft or maintenance actions be needed.
With the first period in the bag, Qatar now feels confident enough to announce how they will take the A350 to its true job types. Here the relevant parts of what Qatar Airways announced Tuesday this week:
“Increasing passenger demand to America’s largest city and financial centre, New York, has prompted Qatar Airways to add a second daily service to the city from 1st March 2016. Qatar Airways has served the city daily since the initial route launch in 2007. The second daily service to New York’s JFK will be operated by the Airbus A350 XWB aircraft providing passengers an opportunity to experience both the Boeing B777 and the A350 aircraft types on the route.
“ From 16th March, 2016, the airline will launch daily flights to Boston, the capital and largest city of Massachusetts, and will operate its latest flagship A350 XWB in a two-class configuration with 36 Business Class seats in a 1-2-1 configuration, featuring an 80” fully flat bed and 17” HD in-flight entertainment screen.”
This is more challenging work for an A350 and we will therefore take a first look into what Qatar can expect in terms of overall aircraft performance on such destinations come spring next year. Read more