Leeham News and Analysis
There's more to real news than a news release.
The higher level game
By Bjorn Fehrm
Introduction
May 4, 2015, c. Leeham Co. The other day one of our readers asked something along the lines, “now that Airbus has the A320neo 20% more efficient than today’s A320, how shall Boeing’s 737 MAX fair in the market? It is only 15% more effective and there are question marks around the LEAP-1B?”
This made me realize that marketing works. I decided to write about the phenomenon that the OEMs seem to find further improvements all the time and how these continually higher improvements seem to work beyond the physical laws as we know them.
The answer boils down to the fact that there is more than meets the eye around how much fuel an aircraft uses to transport people from A to B. In fact, the OEMs’ marketing departments excel within the complexity of the task and can always find a way to say “my mousetrap has now improved another x% and is therefore Y% better than yours”.
To cut through these marketing moves one need a bit of background and first grade math. Let’s see how they do it. Read more
Pontifications: the A380, Airbus and Boeing
By Scott Hamilton
May 4, 2015, c. Leeham Co. Of all the things we write about, nothing stirs responses and readership than news–of any kind–about the Airbus A380.
Last week I wrote about Malaysia Airlines putting a large number of its Airbus and Boeing wide-bodies for sale or lease. MASCargo’s entire fleet of Boeing 747-400s and Airbus A330Fs is on the chopping block. Some Boeing 777-200ERs are, too. The six A380s (all of those in the MAS fleet) are also being offered for sale or lease.
Holy crap. This news headlined not only international press but sent the social media into a frenzy. Within 12 hours it had become our second most read story of 2015. In less than 36 hours, it became our top story of the year so far.
I also wrote last week about the 10 year anniversary of the A380. It was a mixed review: the plane is a technological success, if by now a bit dated, but sales continue to be poor. I talked about the prospect of an A380neo and how Boeing is rooting for Airbus to proceed, sucking up money and resources in the process. I wrote about the urban legend that Boeing tricked Airbus into launching the A380 program as a way to divert money and resources.
And then I suggested that Boeing’s own failed strategy, ineptitude and arrogance prevented the company from taking advantage of Airbus’ focus on the A380.
CNN.com had this on its home page Saturday. Even though there are more than 250 Boeing 787s in service, the strategic industrial and early design blunders continue to dog the airplane.
You’d have thunk I dropped a skunk at a lawn party.
One reader suggested I was part of the Airbus PR department or Airbus’ John Leahy ghosted the article. Never mind that the day before I wrote a strong defense of the Boeing 787 and suggestions that “everyone” was deferring the 787; and gave an equally strong defense of the 787 in TheStreet.com. Perhaps Boeing’s Randy Tinseth ghosted my article and impersonated me to The Street.
I didn’t go into detail in my article about Boeing’s “failed strategy, ineptitude and arrogance” because I thought after all these years, these were pretty obvious. Apparently not. So I’ll hit some highlights. Read more
Paris Air Show Preview: Airbus
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Introduction
May 3, 2015, c. Leeham Co. The Paris Air Show is June 15-19 for the trade/industrial portion. Beginning this week, Leeham News and Comment will provide our 
Market Assessment and insight about what to expect. We begin this weekly exercise by looking at Airbus. Future posts will look at Boeing, Bombardier, Embraer and other major players at the PAS.
Summary
- First, an overarching look at what to expect;
- What to expect for Airbus at the show;
- The future of the A380neo;
- Outlook for the A330ceo/neo; and
- Outlook for the A321LR.
Bjorn’s Corner: Airbus’ and Boeing’s first quarter
By Bjorn Fehrm
30 April 2015, C. Leeham Co: Airbus Group presented their first quarter results today Thursday, a week after Boeing presented theirs. It is a good occasion to look at how these companies performed. We will focus on commercial aircraft for Airbus and compare its performance with Boeing’s commercial aircraft and then comment on other Airbus activities more summarily.
In a later article we will look at Embraer, who also published their results Thursday, and compare with Bombardier’s first quarter which they announce on May 7th. Read more
Malaysia Airlines fleet restructuring
April 30, 2015: Malaysia Airlines is offering for sale or lease all six of its Airbus A380s, its two Boeing 747-400Fs and four Airbus A330-200Fs and four Boeing 777-200ERs as it seeks to restructure following a disastrous 2014.
MAS lost two 777s last year: MH370, the flight that disappeared and still hasn’t been found; and MH17, the flight that was shot down over Ukraine.
Elimination of the freighters wipes out MASCargo.
MAS, the passenger operation, has six A380s, 15 A330-300s, 57 Boeing 737-800s with 14 on order and 10 options and 13 777-200ERs, according to Wikipedia. Read more
Fundamentals of airliner performance; Part 7, the wing.
By Bjorn Fehrm
Introduction
April 28, 2015, c. Leeham Co. In our articles where we present an analysis of different airliners, we use a number of terms like aspect ratio, wetted area, etc and we assume that the reader understands what these terms mean and how they are defined. As will be clear from the description below, this is asking for a lot. Several terms which seem straightforward have a more complicated background and definition than what meets the eye.
It is, therefore, high time that we explain how these terms are defined and why we use them in the form they have. It might seem pretty clear what a simple term like wing area is. It should be pretty straightforward what one means and how this is measured, shouldn’t it? Nothing could be further from the truth. It does not describe the area of the wing (only), and there are several definitions of the term and different principles on how these are measured.
So let’s get started, and let’s demystify these terms and understand how they are used and why. We will start with the wing as this has the most terms that need to be explained. We will only touch on the most important definitions, those that we refer to all the time. For a complete understanding of the nomenclature of a modern airliner wing, there are several good sites on the internet and books on the subject. Read more
A380, 10 years later
April 28, 2015: Airbus is celebrating 10 years of its A380 super jumbo.
Just about everybody else is taking pot shots at it.
There’s little doubt the airplane is a masterful achievement. But production miscues delayed the airplane by two years, the market moved on it and when it was envisioned in the late 1990s, the Boeing 777-9 wasn’t.
So 10 years after entry-into-service, and a mere 15 after the program was launched, Airbus faces a crossroads: does it re-engine the airplane on an iffy business case or can it come up with enough Performance Improvement Packages for the airframe and with the engine makers chipping in to give it new life until the market grows into the airplane–if it ever does, say detractors.
Some at Boeing we talked with are rooting for Airbus to take the neo plunge. Read more
Tipping point for supply/demand? We don’t think so
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Introduction
April 28, 2015, c. Leeham Co. Goldman Sachs over the weekend issued a research note, Is the new aircraft supply/demand equation nearing a tipping point?
GS cited the recent United and American airlines actions involving the Boeing 787 and Boeing 777 and other fleet activity or inactivity at Lufthansa Airlines and Virgin Atlantic as harbingers for its thesis.
Goldman has a Sell rating on Boeing stock, based on its belief the demand is leveling off and announced production rate increases by Airbus and Boeing will lead to oversupply.
Summary
- Goldman sees recent fleet actions indicating a softness in demand, driven in part by lower fuel prices.
- United, Lufthansa actions delaying retirement of older aircraft cited.
- Virgin Atlantic decision on Boeing 747 replacements delayed, says Goldman.
- We see other reasons for the above and no meaningful impact.
- Key wide- and narrow-body campaigns pending.
Pontifications: “Everyone” deferring Boeing 787s? Not hardly.
By Scott Hamilton
April 27, 2015: c. Leeham Co. With the announcement on the 1Q2015 earnings call that American Airlines is deferring Boeing 787s, I received an inquiry from a media person: what is it with the 787 that “everyone” is deferring the airplane?
I found the question puzzling.
True, this comes on the heels of United Airlines swapping 787 orders for 777-300ER orders, but this hardly counts as “everyone.” And the reasons for the maneuvering was well-stated and for very different reasons. Read more
Can PIPs bring the A380 what Emirates Airlines wants?
By Bjorn Fehrm
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Introduction
26 April 2015, C. Leeham Co: With Emirates Airlines deciding for Rolls-Royce Trent 900 engines for its 50 new A380s and admitting that it would accept that this could be for all of them if Airbus does not proceed with an A380neo, the time has come to look at how much incremental improvements can be brought on the present A380.
Our proprietary aircraft model is particularly suited for such studies as we can change any parameter and read the result off the efficiency scale. We can also play with the aircraft’s configuration and see what effect it will have. Based on Emirates’ new configuration of A380s equipped with the Trent 900 engine, we have checked what incremental improvements are doable and what would they bring.
Summary
- Our deep analysis of 18 Dec. 2014 showed that the present A380 is the most economical aircraft one can operate if one can fill it to normal load factors.
- Emirates COO Tim Clark complements this fact with the statement, “It is Emirates’ most profitable aircraft” in the press conference in London last week when announcing the Trent 900 deal with Rolls-Royce.
- Clark’s statement also covers the fact the passengers prefer A380 over other aircraft if they have a choice, it operates with higher load-factors then Emirates other aircraft.
- The A380 is a rather special design and its characteristics make Product Improvement Packages, PIPs, possible in a number of areas. We discuss which they would be and model their effect on overall performance.
- While the sought-after 10%-13% improvement would not be in there, incremental changes can cover up to half of that with more or less plausible business cases. Airbus is right now deciding which of these they see as worthwhile and introducing them.