Leeham News and Analysis
There's more to real news than a news release.
Analysts split on Boeing 2Q earnings
Aerospace analysts split in their reaction to Boeing’s second quarter earnings. Many were upbeat on the commercial aircraft results, while others didn’t like the higher-than-expected, continued deferred expenses for the 787 program and a big charge on the KC-46A program.
Bloomberg News was quick to point to the KC-46A program charge and the implications that this is yet another costly new airplane program for Boeing.
Traders didn’t like the news, either, with stock falling more than $3 despite higher profits for the period and higher profit guidance going forward.
The Bloomberg article cites several analysts who didn’t like elements of the earnings report.
Here are initial notes, pre-earnings call, based on the press release:
Odds and Ends: Hawaiian orders A330-800, drops A350-800; A330neo market potential; Engines and Airbus
Hawaiian Air’s A350-800s: Hawaiian Airlines July 22 ordered six Airbus A330-800s and simultaneously dropped its order for six A350-800s. HA also took six purchase rights for the A338. Deliveries begin in 2019.
The A338 is slightly smaller, nominally at 252 seats, and has somewhat less range at 7,600nm than the 276-seat, 8,250nm A358, but only Hawaiian knows how much it needed the extra range. Losing the extra seats does give HA a hit to revenue potential, however. For wide-body airplanes, Airbus says each seat has the revenue potential of $2m/yr.
Offsetting the revenue loss is a far lower capital cost for the A338 vs the A358. Our economic analysis, based on technical specifications estimated before the Farnborough Air Show and before Airbus revealed data for the A338, showed the A338 pretty close to the A358 on a pure operating cost basis, not including adjustments for capital cost.
Airbus A330-800 and -900neo, first analysis, part 3: performance
In our first two parts of the analysis of the Airbus A330neo launch at the Farnborough Air Show, we have gone through the information provided by Airbus and Rolls Royce and provided comments on what these really mean from a practical point of view.
Areas we wanted to verify with our independent model have been how the A330neo would perform versus the A330ceo, especially on shorter ranges, than the Airbus example of 4,000nm and how it would stack up against the Boeing 787.
We give the first answer to these questions with data from our proprietary, independent model. This is first-cut data and we bring it forward in time as there is some confusion on what Airbus has said about the shorter range performance of the A330neo. Read more
Ukraine claims Malaysian airliner shot down over air space–(Update)
Update, 1:10pm PDT: Jon Ostrower of The Wall Street Journal Tweeted that US intelligence officials confirm a SAM was fired at MH17; details to follow at The WSJ.
Photo via CNN, apparently showing MH17 falling from the sky.
Malaysian Airlines Boeing 777 (flight MH17) has crashed in Ukraine and government officials claim the airplane was shot down. As yet, this appears to be unconfirmed.
We’ve already been asked for our reaction. Here’s our statement.
“It’s hard to have a reaction within minutes of the first reporting. Reports claim the airplane was shot down, but has this been confirmed? Reports say the airplane was at 10,000 meters (roughly 33,000 ft), and cruising altitude, in-flight break-ups due to something wrong with the airplane are highly, highly unlikely, certainly suggesting an “outside force” may have been involved. But until a shoot-down is confirmed, the only reaction can and should be prayers for the victims.”
Here’s what will happen next, aside from the emergency response to the crash site:
- Given the allegation of a shoot-down, efforts will be made to confirm this as soon as possible.
- Flights may be rerouted as a precautionary measure until the shoot-down is affirmed or discounted.
- Investigators will consider (in no particular order):
- Shoot down;
- Sabotage;
- In-flight break up due to structural issues;
- Mechanical issues;
- Weather conditions; and
- Crew condition, among other things.
These are, except for #1, standard areas of investigation.
Farborough Air Show, July 16: Snipe hunts in an era of model improvements
- Upate, 5:30am PDT: The Wall Street Journal has an article that is more or less on point to the theme of this post.
It doesn’t matter what the competition does, it’s always inferior–until you do it yourself.
The continued, and tiring, war of words between Airbus and Boeing throughout the decades is monotonous and self-serving. If you step back, it’s also amusing.
Consider:
- Boeing constantly dissed the Airbus concept of fly-by-wire–until ultimately adopting FBW in its airplanes.
- Airbus dismissed twin-engine ETOPS of the 777 while promoting four-engine safety of its A340–until evolving the A330 into a highly capable ETOPS in its own right.
- Airbus put-down the 777X, saying the only way Boeing could make it economical was by adding seats…which Airbus has now done for the A330-900 to help its economics.
- Boeing ridiculed the idea of a re-engined A320, but then had to follow with a re-engined 737 MAX due to the runaway success of the A320neo.
- Boeing ridicules the A330neo as an old, 1980s airplane–neatly ignoring the fact that the 737 and 747 are 1960s airplanes.
- Airbus still calls the 777/777X/787 a “dog’s breakfast,” though we know some dogs who eat pretty well.
And so it goes.
The fact of the matter is, however, that minor and major makeovers of existing airplanes have long been a fact of life, maximizing investment and keeping research and development costs under control. The Douglas DC-1 was the prototype for the DC-2, which begot the DC-3. The DC-4 (C-54) begot the DC-6, DC-6B and DC-7 series. The Lockheed Contellation was reworked from the original L-049 through the 647/749/1049 (in various versions) and finally the 1649.
Then came the jet age, with vastly more expense, and model upgrades became the norm. The sniping today between Airbus and Boeing goes unabated in an era of historical model improvements.
Airbus A330-800 and -900neo, first analysis part 2: engines and maintenance costs
Further to our initial analysis of the launched Airbus A330neo, here is our follow up diving deeper into engine matters and maintenance costs.
The A330neo engine
We met with Rolls Royce Vice President Customer Marketing Richard Goodhead to talk about the Trent T7000 for the A330neo and to straighten some misconceptions around the engine. First the base facts as presented by Airbus and Rolls Royce Monday: Read more