Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
- Supplier Howmet exceeds expectations despite tariffs May 1, 2025
- Airbus 1Q2025 results: So far, so good, but US tariffs make future results unpredictable May 1, 2025
- Does an Airbus A220-500 need a new wing and engines? May 1, 2025
- Teamsters, Boeing have a new contract April 29, 2025
Bjorn’s Corner: New aircraft technologies. Part 35. Prototype manufacturing and Testing
By Bjorn Fehrm
October 20, 2023, ©. Leeham News: We are discussing the different design phases of an airliner development program. The typical phases and their time use and manning are described in the Gant chart in Figure 1.
After covering Conceptual, Preliminary, and Detailed design, we now discuss Prototype manufacturing and Testing.
Figure 1. The development plan for a new airliner. Source: Leeham Co.
Order Risk for Boeing: Warning Flags
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By the Leeham News Team
Oct. 19, 2023, © Leeham News: Airbus and Boeing have airplane order backlogs exceeding 10,000 aircraft. Most of the respective production lines are sold 
out to 2026 and even beyond 2030. Airlines and lessors must place orders soon to get into the queue. If early delivery positions are sought, the customers must hope Airbus and Boeing can find a few slots—but there won’t be many.
Like airlines selling their seats, Airbus and Boeing overbook production slots. The OEMs bet on boosting production rates, customers willing to defer deliveries (for whatever reason), cancellations to open earlier slots, or to meet delivery commitments. These bets sometimes pay off—and sometimes they don’t.
Today, LNA looks at the Top Boeing Customers of each product line and assesses the risk factors of whether these carriers will likely take delivery of their orders. We looked at Airbus’ Risk Orders on Oct. 16.
Risk Adjusted Business for leasing aircraft
By William Loh, International Aviation Advisors and
Dr. David Yu, CFA, Senior ISTAT Appraiser, AAVA Group, NYU Shanghai and Stern
Airbus A320neo. Credit: Leeham News.
Oct. 17, 2023, © Leeham News: We have seen over many years that mainstream commercial aircraft are attractive assets to own and lease. They are easily recoverable, and produced by a stable duopoly of manufacturers. In normal times, aircraft generate fairly predictable US dollar cash flows over their long economic lives. There is no near-term risk of technological obsolescence, especially for the latest generation narrowbody aircraft.
Demand for travel drives demand for aircraft. On average, the aircraft fleet has doubled approximately every 15 years as travel demand has risen by 5% annually. Passenger growth has grown by 1.6 to two times world GDP growth over the last 30 years, but these relationships have been shaken to the core since 2019.
The airline industry is a derivative of the economic cycle. It is also prone to occasional external shocks as the result of war, terrorism or as we’ve recently seen, disease. Historically the industry has a proven resilience to these shocks. Over the last 30 years, the industry generally recovered within a relatively short time, with demand reverting to the long-term trend line.
Such stability does not mean that investors should be lulled into a false sense of believing that they understand the details well enough. This is where the rubber meets the runway and good advice plus prudent models come into play.
In this article, we discuss our Internal Rate of Return/Net Present Value (IRR/NPV) Model and the results of changes in some of the parameters. The main drivers of the return are normally the equipment cost, the monthly lease rate, and future sale value (FSV) (and year). Downtime is obviously also important, but we will assume none in this case. The following is a table of (pre-tax, annual) IRRs based on changes in these parameters, for a 2023 Airbus A320-200neo. Note that the parameters that have changed from row to row are in bold.
Order risk for Airbus: Warning flags
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By the Leeham News Team
Oct. 16, 2023, © Leeham News: Airbus and Boeing have airplane order backlogs exceeding 10,000 aircraft. Most of the respective production lines are sold out to 2026 and even beyond 2030. Airlines and lessors must place orders soon to get into the queue. If early delivery positions are sought, the customers must hope Airbus and Boeing can find a few slots—but there won’t be many.
Like airlines selling their seats, Airbus and Boeing overbook production slots. The OEMs bet on boosting production rates, customers willing to defer deliveries (for whatever reason), cancellations to open earlier slots, or to meet delivery commitments. These bets sometimes pay off—and sometimes they don’t.
Today, LNA looks at the Top Customers of each product line and assesses the risk factors of whether these carriers will likely take delivery of their orders. We’ll do the same for Boeing.
Bjorn’s Corner: New aircraft technologies. Part 34. Design for Certification
October 13, 2023, ©. Leeham News: We are discussing the Detailed design phase of an airliner development program. We have discussed program management methods, development techniques, tools for Detailed design, that improved production methods are as important as improved technology, and that the interaction with the suppliers is key.
But another consideration that affects detail design is the influence of the Certification process. Certification has a major influence on the program work in every step of the aircraft program.
Figure 1. The online version of the FAA 14 CFR Part 25 Airliner Airworthiness regulations. Source: US CFR.
Further developments of the A321, Part 3
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By Bjorn Fehrm
October 12, 2023, © Leeham News: We do an article series about what can be the next development for Airbus’ most popular aircraft, the A321neo. We started with the base data last week to understand the present aircraft and its limitations.
Now, we use our Airliner Performance and Cost Model (APCM) to look at possible changes that can increase the capacity and efficiency of the aircraft and what can be achieved at a reasonable cost.
Summary:
- The capacity of the A321neo can be increased within a rather limited project.
- The more challenging part is not to lose range and field performance from the capacity increase.
Pontifications: For aviation geeks and historians; Boeing’s next airplane
By Scott Hamilton
Oct. 10, 2023, © Leeham News: For aviation geeks—and there are plenty of us—and historians, a resource that is the best single place I’ve seen is Chris Sloan’s TheAirchive.Net – The Hub of Air Transport History. Sloan—who joined LNA yesterday as a writer—started The Airchive 20 years ago. It’s a compilation of just about everything a geek or historian could imagine: timetables, route maps, brochures, information about airport terminals, cabins, cockpits and so much more.
Sloan’s data of course includes photos of airplanes, memorabilia, safety cards, boneyards, and even menus. He also has a section highlighting museums. This section includes many well-known museums and also some I’d never heard of.
Personnel changes for LNA announced
Oct. 9, 2023, © Leeham News: Leeham News announces several personnel changes today.
Bryan Corliss, who has been a Contributor to LNA for years, is leaving to become a corporate communication specialist with The Society of Professional Engineering Employees in Aerospace (SPEEA). SPEEA is the engineers and technicians union for Boeing and Spirit AeroSystems. LNA is sorry to lose Corliss’ depth of aerospace and labor knowledge. Corliss’ email with LNA will be active for a month so readers may connect with him.
Earnings season about to begin. Here’s what to watch for.
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By Scott Hamilton
Oct. 9, 2023, © Leeham News: Earnings season reporting is about to start and there are some key things to look for. The first companies, including Boeing, begin reporting the week of Oct. 23.
A few companies already raised red flags. Boeing said it will report a loss in the third quarter, which ended Sept. 30, because of problems at Spirit AeroSystem. Spirit Aero builds the entire fuselage for the Boeing 737 and the nose sections for the Boeing 787, 777, and 767/KC-46A. Spirit Aero has been plagued with quality control issues, delaying deliveries and requiring rework of planes already produced or in final assembly at Boeing.
When Spirit Aero sneezes, Boeing can catch the cold.
The aforementioned problems continue to push Spirit Aero into financial disarray. LNA has reported extensively on its financial condition and trends.
Another Spirit, the US-based ultra-low-cost airline, is also headed in the wrong direction. LNA doesn’t normally cover airline earnings—there are plenty of outlets that do—but in this case, Spirit Airlines has a major outstanding order from Airbus. Spirit Airlines is also the subject of a merger application with JetBlue, another major Airbus customer.
Spirit Airlines recently adjusted its third quarter guidance significantly downward. It now forecasts a 3Q loss margin of 14.5% to 15.5%, nearly triple the same period last year. A year ago, LNA expressed concerns over the proposed merger between JetBlue and Spirit (JetBlue was the bidding company). Our concerns have deepened. JetBlue may be well advised to exercise a clause that is presumed to be in the merger agreement: Material Adverse Change. Withdrawing from the merger may well be the best course for JetBlue. Acquiring Spirit Airlines may well be a financial black hole for JetBlue.
The supply chain remains stressed. As in the case of Spirit Aero and Boeing, if any key supplier falls down on the job, the Original Equipment Manufacturer (OEM) catches cold.
Here’s a rundown of companies to watch.
Bjorn’s Corner: New aircraft technologies. Part 33. Supply chain
By Bjorn Fehrm.
October 6, 2023, ©. Leeham News: We are discussing the Detailed design phase of an airliner development program. We have discussed program management methods, development techniques, tools for Detailed design and that the production methods today are as important as technology for achieving aircraft performance.
Another decisive part is how to involve and manage the suppliers to a project. The supply chain contributes about two-thirds of the value of an aircraft. Methods and tools to control this part of the project are therefore critical for the program.
Figure 1. The development plan for a new airliner. Source: Leeham Co.