Odds and Ends: Cargolux, Qatar to split; P-8A and MAX; More on Sequestration; Dodging that depth charge

Cargolux, Qatar Airways to split: Several news stories report that Qatar Airways is going to dump its 35% stake in Cargolux. The stories indicate a disagreement in the direction of Cargolux. This story is the most detailed, although it’s now a month old  and out-of-date.

The day before the news broke last week, we were told that Qatar wanted to set up a Cargolux hub in Doha and decline more deliveries of Boeing 747-8Fs to Cargolux in favor of using Qatar Airways’ Boeing 777Fs. This tracks similarly with the month-old story linked above. Cargolux has eight 748Fs on order.

There is a general softness in global air cargo traffic that is causing some cargo airlines to consider deferring 748Fs as well, complicating Cargolux’s viability.

We were also told there are sharp personality differences between the Qatar and Cargolux board members that aggravated relations between the two companies.

P-8A and MAX: Bloomberg has this story that looks at an angle about the Boeing 737 MAX that hasn’t been discussed before: Boeing will stick with the NG-based P-8A Poseidon and not shift to the MAX.

Sequestration: We had a recent think piece on how sequestration might not be a bad thing in the long run because it would force the Pentagon to truly re-think its global defense strategy. This piece in Defense News, an authoritative trade publication, picks up a similar theme.

Dodging that depth charge: EADS wanted to merge with BAE Systems. BAE is the prime contractor of the UK’s nuclear submarine fleet. Read this story about the HMS Astute. EADS may well have dodged that bullet–er, depth charge.

Odds and Ends: Air France v Rolls-Royce for A350; Virgin America rejigs; Last A340s sold; Heading South with SPEEA

Air France v Rollsr-Royce: The saga continues-see this Bloomberg story. We understand there is more to it than just maintenance. Rolls wants AF to order the Trent 1000 for the 787 order, too.

Virgin America: This airline, headquartered in San Francisco, has been an airline in search of a business plan. Its operations don’t have a niche and didn’t fill a void (like jetBlue created and filled at NY-JFK). It’s lost hundreds of millions of dollars. And, finally, the losses have caught up. Bloomberg has this story about aircraft order deferrals and cancellations. The deferrals are Airbus A320neos (note to Alabama: VA was going to take the first neos from the new Airbus Mobile plant in 2016).

Virgin is seeking to restructure aircraft leases, according to two industry sources. Failing to do so could lead to a Chapter 11 filing, the sources say.

Last A340s Sold: The remaining two Airbus A340-500s, originally destined for ailing Kingfisher Airlines, have been sold.

SPEEA and Boeing: Things appear to be heading south with SPEEA. This could affect Boeing’s year-end push to deliver as many as 50 787s as well as the other 7-Series.

Boeing 737 MAX update

Update: Aviation Week has this piece that has some good close-ups of artwork.

Boeing held a tele-conference updating the 737 MAX program. Beverly Wyse, VP and GM of the 737 Program are Michael Teal gave the briefing.

Beverly Wyse (BW)

Michael Teal (MT)

BW: 737 MAX has met firm design concept. Honeywell will provide an electronic bleed air system. Flight deck will have large displays from Rockwell Collins. MAX production will have future growth capability.

MT: We have in place a plan to preserve training commonality with large flight deck displays. We engage with regulators for training regulations and feel this will not be an issue.

Development team made significant progress to have aerodynamic design. We removed nose gear door bump from earlier iterations. We can get longer gear within the wheel well. LEAP 1B reached architectural freeze in September, freezing fan size and core size. Final design freeze will be in April 2013.

With the completion of firm concept, the completion of production design can move forward.

BW: It is important we maintain stability in our production plan. The 737 MAX transition allows us to maintain stability with NG rate increases and into the MAX.

Q&A:

BW: Third production line begins in 2015 with construction of first flight test aircraft. Eventually will use the third line for future rate increases beyond the planned 42 a month.

MT: Will only offer radial tires on nose gear, nose gear retracts further into the wheel well.

MT: 13% fuel reduction is a per-seat off the 737NG from today’s most efficient NG (19% better than original 1997 NG.) MAX will continue with the same maintenance cost as today’s NG.

MT: Goal is to have the same field performance as NG.

BW: 737-7 MAX: Many of our customers select a primary model but have substitution rights into other model. We see the -7 as being part of a family of aircraft where airlines can use -7 on thinner routes. It also serves missions in high-hot regions, such as in Tibetan plateau. We see the -7 serving these critical missions. I would no say “no question” that we will build it, but customers have asked about it and it is in our family today.

MT: Flight test plans for -8 will have four test planes. Expect to have two flight test airplanes for the -9 and -7.

BW: Part of the reason for more flight test airplanes is to proceed as fast as possible.

MT: Can’t give you at this time an exact count of the amount of change of MAX vs NG. This is part of the design process between now and the middle of next year.

MT: This airplane is an amended type certification, do not see re-certification.

[Editor: UBS Securities issued a new research note even as the teleconference was proceeding, with this comment:

[Systems changes represent onset of scope creep: This morning BA announced that it had achieved “Firm Concept” on 737 MAX including new bleed air system from HON, new tail cone, new winglets, and surprise move to upgrade 737 NG displays from HON with 787 large format displays from COL. BA’s move to incorporate updated systems beyond the engine represents a departure from its stated strategy of minimal design changes on 737 MAX.

[When MAX was announced, former CEO of BCA Jim Albaugh said he wanted minimal changes. The MAX has, for some time, appeared to be undergoing design creep, hence the questions about commonality and re-certification.]

BW: Right now we are saying 2017 EIS, [Southwest Airlines previously told us 4Q17, Jim Albaugh hoped to advance this schedule); as we move forward we will get more definitive about the schedule.

Very un-British report on Ryanair-AerLingus

This amused us a lot–from the free British e-newsletter from Airline Fleet Management.

Talking Point
Pesky pursuer Ryanair claims Aer Lingus is a done deal

Ah, Ryanair. It’s like the Granny no one wants a sloppy kiss from, or the colleague no one wants to sit next to at the Christmas dinner. In fact, many of its hardened customers don’t really like it that much. Bottom of the friends list though is Aer Lingus.

To Aer Lingus, Ryanair is a sleazy old man with relentless ambition and bad intentions. Despite continuous rebuttals, it keeps trying to woo, or win Aer Lingus by force.

Ryanair now says it is “confident” that its €700m takeover bid for Aer Lingus will gain approval from the European Commission, despite the regulator recently sending the airline a list of objections based on rules governing competition.

The carrier said it has devised a number of remedies, including: “new airline bases in Dublin, new entrant competitors on over 40 routes to/from Dublin, Cork and Shannon, as well as specific competition solutions that guarantee increased price competition”.

It has until December 31 to finalise these plans before the watchdog makes its final decision.

Ryanair already owns 30 per cent of Aer Lingus and has had two failed attempts at a takeover. In 2007, the Commission turned down a bid for completion issues and in 2009, Ryanair dropped its second bid.

Poor Aer Lingus, when is it going to convince Ryanair that ‘no means no’?

Mary-Anne Baldwin, Editor, Airline Fleet Management

Odds and Ends: To fly or not to fly–CSeries; Qatar’s A350s; A320 production rates

CSeries: Bombardier’s sales chief says the CSeries might fly earlier than the six month delay announced on the earnings call. See this Reuters report from China’s Zhuhai Air Show.

Qatar’s A350: Flight Global’s David Kaminski-Morrow reports Qatar switched 20 A350-800s to the larger -900, via Twitter. He was on the delivery flight of the Boeing 787 from Seattle to Doha.

A320 Production Rates: Airbus gives this assessment to Reuters at the Zhuhai Air Show.

A350-What’s the Fuss? CNN International gives this review of the A350.

CNN Travel: We’ve now started contributing to CNN Travel. Here’s our first report, the Qatar Airways Boeing 787 delivery. This writing is different than what we do here–lighter, and being travel-oriented, will trend more toward consumer and general audiences than the aviation geek world served here.

Qatar wants to be first 787-10 customer; praises EU for ‘face-saving’ freeze of ETS

Akbar Al-Baker, the CEO of Qatar Airways, said he wants to be the first customer for the Boeing 787-10. He has some competition for this status.

Boeing is talking with customers now for the new sub-type, which is expected to get the Board go-ahead this month. Air Lease Corp., British Airways and Singapore Airlines have widely been identified as likely launch customers in market talk.

Also at the delivery ceremony for Qatar’s first 787-8, Al-Baker praised the European Union for freezing plans to impose its carbon trading scheme called ETS. He termed the move “face-saving,” noting that several countries ordered their airlines to refuse payment, led by France China.

“This was a very wise decision,” Al-Baker said.

Qatar takes delivery of Middle East’s first 787

Qatar Airways took delivery November 12 of the Middle East’s first Boeing 787. Qatar took contractual delivery of the airplane earlier but physical possession in ceremonies at Boeing Field Monday night.

CEO Akbar Al-Baker said the carrier will take delivery of four more 787s this year. Deliveries of a total of 59 continue into 2017.

Al-Baker said Qatar has conversion rights between the 787-8, the 787-9 and the forthcoming 787-10. Although Boeing and Qatar have discussed the -10, Boeing has yet to formally launch the program. Ray Conner, CEO of Boeing Commercial Airplanes, said formal Authority to Offer the -10 will be coming soon. Customers who recently attended a Boeing meeting expect the ATO to come this month. It had been expected last month, but the Board had additional questions, customers tell us.

Al-Baker called the 787-10 the most cost efficient aircraft on a unit (seat mile) basis.

EU caves on ETS, for now–but says it didn’t really cave

The European Union caved in on implementing the carbon trading scheme known as ETS that would have taxed international airlines flying into Europe.

The EU claimed it didn’t really cave to international pressure (Financial Times, free registration required) but clearly it did. China was the first country to tell its airlines not to pay. This was followed by counties in the Middle East, India and the US Senate. But we’re going to give credit to China, not only as the leader but a country which adeptly uses its strength in ordering-or not-aircraft from Airbus or Boeing as political tools.

China put on hold ordering $14bn worth of Airbuses, notably 35 A330s. Airbus froze production rates pending this order–which means a loss of jobs.

As countries protesting the unilateral ETS scheme noted, such taxation should come from international agreements through the airline organization ICAO.

What is so annoying about the ETS scheme is that the taxes would go into the countries’ general fund and not be applied to environmental improvements.

 

Airbus, Boeing under price pressure

The Wall Street Journal has two articles about Airbus and Boeing being under price pressure. There is a third article by the WSJ about Airbus wanting its suppliers to consolidate.

The two companies have accused each other of engaging in a price was in the single-aisle category. Airbus also is dropping prices on the A330 vis-a-vis the 787, as we reported following an Airbus presentation last May at its Innovation Days in which it illustrated a $900,000 lease rate for the A330-300 vs a $1.2m rate for the 787-9. The A330 had a slightly higher list price than the 787-9 and the time (Boeing since has raised its list price and is now higher).