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.
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Bjorn’s Corner: China’s civil aviation, from nothing to world’s largest in 2030
Introduction
By Bjorn Fehrm
14 May 2015, C. Leeham Co: In my ISTAT Asia reports, I wrote about how China will overtake USA as largest civil aviation market in 2030. Airbus China Group chairman, Laurence Barron, and I had a chat after his ISTAT presentation where he described China’s evolution as a civil aviation market and how Airbus gradually worked itself from a late and hesitant start to today’s split of the market with Boeing.
Barron provided his slides, some of which we will use to review how China grew from virtually no civil aviation after the Chinese revolution in 1949 to the world’s largest market by 2030. We will also look at what aircraft have made up this growth and finally describe how Airbus progressed from a latecomer in 1985 to sharing the market with Boeing today.
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Posted on May 14, 2015 by Bjorn Fehrm
Airbus, Airlines, Bjorn's Corner, Boeing, China, Douglas Aircraft Co, Leeham News and Comment, McDonnell Douglas
707, A310, Airbus, Boeing, EADS
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.
Read more
76 Comments
Posted on May 13, 2015 by Scott Hamilton
Boeing
777, 777X, Boeing
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?”:
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5 Comments
Posted on May 12, 2015 by Bjorn Fehrm
Airbus, Airlines, Boeing, China, ISTAT, Leasing, Rolls-Royce
777, A330, Airbus, Boeing
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
5 Comments
Posted on May 12, 2015 by Scott Hamilton
Boeing
747-8, 777, 777X, Boeing, Boeing investors day, Buckingham Research, Canaccord, Credit Suisse, Goldman Sachs, Ray Conner, UBS, Wells Fargo
ISTAT Asia: Asian airline market update
Introduction
May 11, 2015, c. Leeham Co: We are participating this week in the ISTAT Asia conference in Singapore where IATA and different panels gave an interesting update on the Asian airline market. This is the fifth year that an ISTAT (International Society of Transport Aircraft Trading) conference is held in Asia and participation has virtually doubled from last year to 500 delegates.
IATA’s Conrad Clifford opened the event with the following overview about the Asian market for airline passenger travel:
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8 Comments
Posted on May 11, 2015 by Bjorn Fehrm
Airbus, Airlines, Boeing, Bombardier, China, Comac, Embraer, ISTAT, Leasing, Mitsubishi
Airbus, Boeing, Bombardier, Comac, Embraer, Mitsubishi
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.
27 Comments
Posted on May 11, 2015 by Scott Hamilton
Airlines, Boeing, United Airlines
777. 777-300ER, 777X, 787-9, airlines, Boeing, Jet Airways, Kenya Airways, United Airlines
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
23 Comments
Posted on May 11, 2015 by Scott Hamilton
Airlines, American Airlines, Boeing, Pontifications, United Airlines
airlines, Alaska Airlines, American Airlines, Braniff Inc., British Airways, British Caledonian, Delta Air Lines, Eastern Airlines, Emirates Airlines, Etihad Airways, Freddie Laker, Harding Lawrence, Laker Airways, Midway Airlines, Norwegian Air Shuttle, Qatar Airways, Richard Branson, SkyTrain, TWA, United Airlines, Virgin America, Virgin Atlantic
Paris Air Show: Boeing
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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
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Posted on May 10, 2015 by Scott Hamilton
Airbus, Boeing, Paris Air Show, Premium
737, 737 MAX 200, 747-8, 777 Classic, 777X, 787, A320NEO, A320neo 195, Airbus, Boeing, Middle of the Market, Paris Air Show, Turkish Airlines, Wizzair
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
41 Comments
Posted on May 7, 2015 by Bjorn Fehrm
Bjorn's Corner, Bombardier, Embraer
Bombardier, CSeries, E-Jets, Embraer
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%.
16 Comments
Posted on May 7, 2015 by Scott Hamilton
Boeing, CFM
737 MAX, Boeing, CFM, Leap-1B
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