Leeham News and Analysis
There's more to real news than a news release.
Blockbuster deal for PCP: analysts’ first take
August 11, 2015: Berkshire Hathaway’s blockbuster $37bn acquisition proposal for Precision Castparts (stock symbol NYSE:PCP) takes one of the aerospace 
industry’s major suppliers out of the public trading and into one of the scores of Warren Buffet’s stable of companies under the Berkshire name.
PCP–we’ve always been amused by this stock symbol that shares initials with an illicit drug–is a major supplier to Boeing and other aerospace companies. PCP has grown through acquisitions of its own in addition to organic growth. PCP is a supplier to other industries besides aerospace.
Aerospace analysts have this first take on the acquisition, which is subject to shareholder and regulatory approvals:
C Series: challenges ahead
Subscription Required
Introduction
Bombardier CS300 (L) and CS100 (R). Click on image to enlarge. Photo via Google images.
Aug. 10, 2015, (c) Leeham Co. Bombardier came away from the Paris Air Show with positive reviews after finally displaying its new C Series. The CS100 was present in launch operator Swiss International colors and the spacious interior installed. The larger CS300, in house colors, was also on display and performed flying maneuvers, impressing the crowd with the quiet of the Pratt & Whitney P1000G Geared Turbo Fan engines, also a new product. Once airborne and circling around the runway, the engines could not be heard over the loud speakers of the show’s announcer.
BBD officials came away encouraged by response to the airplanes and they said potential customers were stopping by the chalet with new and renewed interest in the program.
But there remain formidable challenges ahead for the program. There were no sales announced at the Air Show, although BBD officials were clear in advance none was expected. None has been announced in the six weeks since the Air Show. Whether there will be any of substance by year end, and to whom, remains to be seen.
Focus is on execution: getting the aircraft certified by year end and preparing for delivery to Swiss in the first half of next year.
But the customer base remains of iffy quality and a number of the deliveries scheduled 2016-2018 fall into Leeham Co.’s Yellow and Risk Risk Assessment.
Summary
- Of nearly 200 deliveries scheduled 2106-1018, more than half fall within our Yellow-Red risk assessment.
- Country and region risk are concerns.
- A major customer has a changing business plan that puts deliveries into a Risk Assessment.
Pontifications: Talk about government interference in private industry; book review of United “Flight 232”
- There are many topics on which to comment, n one of which requiring a full Pontification, so today’s column is going to be a bit of a free association.
By Scott Hamilton
August 10, 2015, (c) Leeham Co. Government interference: While right wing Republicans and Tea Party members decry supposed ExIm Bank interference with private industry, there is now a bill in Congress to sell millions of barrels of oil from the USA’s Strategic Oil Reserve in order to raise $15bn.
Unlike the ExIm Bank’s participation in the global capital markets, Congress’s action–if it passes–won’t create jobs. It will compete with jobs and companies trying to sell oil in the global market place. It will help drive prices down.
Once more, the hypocrisy of Congress is glaringly evident.
Bombardier: Pierre Beaudoin should have left Bombardier last February when he relinquished the title of president and CEO to Alain Bellemare instead of assuming the chairman’s title. This is the opinion of a few people with whom I’ve talked just in the last week.
Furthermore, the Beaudoin family needs to step out of the company entirely and give up its voting control (it has 54% of the voting stock) if BBD wants to attract new investors, says one Canadian aerospace analyst who hasn’t written any of this publicly.
“I can’t even see how they’re going to raise money for BT. I can’t imagine European investors would like subordinate shares either. Equity markets won’t be supportive unless the Family gives up control,” this analyst wrote me.
Bjorn’s Corner: Why is the real range of an airliner always shorter then what the OEM says?
By Bjorn Fehrm
07 August 2015, ©. Leeham Co: Now that we have explained the range consequences of weight and fuel limited airplane operations, we might as well explain the last important part of the range of an airliner: Why the practical range is always shorter than what the OEM says.
When an airliner OEM gives the design or brochure maximum range of an aircraft, they do that with an aircraft in a “show-room” configuration and which is loaded with a filled cabin only; no cargo is included in the calculation. Further, in the cargo area, there is only bulk-loaded passenger bags. Container loading of the bags would have cost tare weight for the containers used and weight is to be avoided when stipulating the maximum design range.
In practice, we would have to consider tare weight for bags containers and possible cargo when discussing what practical range an airline can plan for a certain aircraft model. But this is far from the whole story. Here is what has to be considered in addition.
MH370: “Presumption” becomes “high presumption,” but little else
August 5, 2015: French authorities said today there is a “high presumption” that the flaperon found last week on La Reunion Island east of the African coast is from Malaysia Airlines flight MH370, a Boeing 777-200ER.
The prime minister of Malaysia was more certain, saying the wing part was definitely from MH370.
When the flaperon was found and identified by photos as coming from a 777, the presumption then was that it was from MH370. Now it’s a “high presumption.”
Beyond this, there is nothing new.
Mitsubishi opens Seattle Engineering Center ahead of MRJ90 first flight
The MRJ90 testing and entry into service timeline. Source: Mitsubishi. Click on image to enlarge.
August 3, 2015, © Leeham Co.: Mitsubishi Aircraft Corp. today opened its Seattle Engineering Center jointly with local company AeroTEC in advance of the first flight of the MRJ90 in September or October. During the second quarter of next year, four of five MRJ Flight Test Vehicles will be domiciled in Moses Lake in Central Washington for the bulk of the flight testing over the following year. Entry into service is planned for 2Q2017 with launch customer All Nippon Airways.
The engineering center represents the first in Washington State for an aircraft OEM other than Boeing. Mitsubishi will assign 50 engineers from Japan to the new SEC, in South Seattle a short distance from Boeing Field. One hundred engineers will be hired locally.
AeroTEC and Mitsubishi began discussing working together only last January, said president Lee Human, who added that the seven months from January to the opening of the SEC today was remarkable for the speed in which negotiations, contracts, permits and hiring was achieved.
Pontifications: Mitsubishi nears first flight for MRJ-90
By Scott Hamilton
Aug. 3, 2015, © Leeham Co. Mitsubishi is just a few months away from beginning flight testing on the first commercial airplane designed and built in
Japan’s first commercial airliner after World War II was the YS-11 turbo-prop. Photo via Google images.
Japan since the NAMC YS-11 in the 1960s.
The 60 passenger turbo prop had its first flight in 1962 and entered service three years later with ANA. Only 182 were built, and it had a surprisingly wide customer base in the primary and secondary markets. Google images has a nice montage of the operators, which spanned the globe.
Japan’s first commercial airliner since the YS-11 is the MRJ-90 by Mitsubishi. Photo via Google images.
The Mitsubishi MRJ 90 as yet doesn’t have wide acceptance. There are about 200 firm orders and about an equal number of options, but the customer base is thin: 100 of the orders and 100 of the options come from the USA’s SkyWest Airlines and 50+50 are from the USA’s Trans States Airlines. All Nippon Airlines orders 15 and Japan Air Lines ordered 32. Air Mandalay ordered six and the new Eastern Airlines, a start-up carrier, ordered 20.
And that’s it.
The MRJ is a 2×2 passenger cabin configuration with comfortable 18-inch wide seats. The passenger experience should be similar to the Embraer E-Jet that’s been in service since 2004 and better than the Bombardier CRJ Series, which is a cramped cabin.
The MRJ is two years late. The first flight is now scheduled for October and entry-into-service in 2017. But with the vast majority of the orders coming from US regional airlines that contract for US majors, there’s just one problem: the MRJ-90 exceeds the allowable airplane weight in the pilot contracts permitting regional flying on behalf of the majors. This is under what’s called the Scope Clause.