Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Five for Five: Air India crash points to systemic problems at Boeing that CEO Ortberg must fix June 15, 2025
- Airbus sees Boeing as medium-term competitor, with Comac next June 14, 2025
- Boeing bullish on 20-year forecast, despite short-term headwinds June 14, 2025
- Embraer’s 20-year market forecast under 150 seats: fewer turboprops, jets about the same June 14, 2025
- Airbus Canada CEO: Airbus is here to stay in Canada June 14, 2025
Odds and Ends: Wait a minute, we’re No. 2
We’re at the Credit Suisse aerospace conference in New York. Occupy Wall Street is demonstrating outside and passed out a flier criticizing defense spending. Boeing is listed as the number 5 defense contractor.
Jim Albaugh, CEO of Boeing Commercial Aircraft, looked at the flier and with his ever-present sense of humor said, “That’s wrong. We’re number 2. Take this out and have them retract this.”
Stay tuned for updates throughout the day.
American, parent, subs file Chapter 11
It’s done: American is the last legacy carrier to file for bankruptcy. Press releases here, here and here.
Our discussion last week of what a bankruptcy would mean to orders is here.
787: Breaking Even, Operating Costs and Worldwide tour
The Everett Herald Nov. 27 had an interesting article assessing the break-even of the Boeing 787. The article neatly summarizes what Boeing CFO James Bell described on the 3Q earnings call. The Herald’s article is slightly out of date, not accounting for the cancellation of 24 airplanes by China Eastern and dropping the firm orders to just under 800.
Graphic (would not load in our Firefox but did load in Chrome).
Separately, the company that created PIANO–the cost-analysis tool to determine aircraft operating costs–published an assessment of the 787’s operating costs and related CO2 emissions reduction. The results were surprising.
Boeing found a way to utilize one of the first three test airplanes longer-term. These airplanes won’t be sold and have been written off. The company took #3, painted it up in the Boeing colors, outfitted it with the full interior and embarked on a world tour as a marketing and sales tool. It’s a highly creative solution to what to do with the test airplane now that testing is over. It’s only a six month tour but it’s a good move.
Bankruptcy fears swirl again around American Airlines
With bankruptcy fears swirling again around American Airlines, some questions arise what happens to the orders AA has with Airbus and Boeing if the carrier goes into Chapter 11.
This hand-wringing piece paints a dire picture for Boeing. There is a lot to argue with over this particular writing, but the piece’s headline is particularly off-the-mark. (Note that the writer of the piece and the headline writer may not be the same person.)
Odds and Ends: A380 cost, American’s engine order, ‘war on Boeing’
A380 cost: Flight Global reports that Air France–a launch customer of the Airbus A380–just concluded a lease deal for one of the giant airplanes for a rental of $1.8m per month.
For an airline of Air France’s credit, lease rates are typically on the 0.80% range and sometimes as low as 0.72%. This, then, infers a purchase price of $216m-$230.4m.
American Airlines: It was announced Monday AA split its engine order between CFM (for the Airbus A319) and IAE (for the A321). Given American’s large CFM-powered Boeing 737 fleet, some might think CFM should have won the entire engine deal. But the IAE V2500 is viewed as the better engine for the larger A321–more thrust and lower fuel burn–and American follows Lufthansa Airlines in splitting the engines for the smaller and larger Airbus family.
Aviation Week has an article that provides some other interesting information about the leases for the Airbuses.
Pratt & Whitney: Does the American deal mean PW has a good change of placing the GTF on the A320neo order by American? PW’s buyout of the Rolls-Royce share of IAE certainly gives PW the ability to do a “global” deal involving V2500 and GTF engines, something CFM has been able to do for CFM56 and LEAP engines from inception. While Rolls-Royce was involved in IAE, there was no incentive for RR to be flexible on V2500 sales that might lead to GTF transactions. Now PW can wheel and deal all it wants.
War on Boeing? Aviation Week has a speculative piece that US airlines have declared “war on Boeing.” This think-piece relates to the Air Transport Association suing the US Export-Import Bank over plans to finance 787s ordered by Air India, a financial and management basket-case.
While AvWeek raises some interesting points, we’re told this has more to do with a dispute between Delta Air Lines–instigator of the ATA action–and India. We think Boeing is merely getting mugged in the process and that this is not a “war on Boeing.”
Turboprops: Jets always draw the most attention but Aspire Aviation has a long piece about turboprops, specifically the Q400 vs the ATR series, that merits reading. Turboprops are slowly regaining favor in some quarters.
The Beauty of it: From Randy Tinseth’s blog, here is a photo that is just a beauty, from the Dubai Air Show:
Do airframers listen to customers?
Aviation Week has an interesting story asking whether airframers truly listen to customers when designing airplanes.
The question is not an idle one. Airbus and Boeing constantly say they do, but Airbus is getting loads of flak from Qatar Airways and Emirates Airlines (both of whom like to negotiate in the press) over the revamped A350-1000 announced at the Paris Air Show. Qatar says the changes came as a surprise (we were told otherwise at the time by Airbus).
Airbus CEO Tom Enders since said Airbus won’t keep changing the A350’s design in response to customer comments. One can appreciate how he might be tired of this. The A350 went through five or six iterations in response to customer comments, a somewhat awkward display.
It’s official: Lion Air revealed as a MAX customer; ACG announces MAX and NG
Update, 1:45pm: Aviation Capital Group announced a commitment for 35 MAXes and a firm order for 20 737-800NGs. ACG becomes the first lessor to commit to the MAX.
ACG announced a firm order for 30 Neos at the Dubai Air Show.
Update, 7:30 AM PST: Boeing says the signing will be for a “commitment” to the MAX. The photo shows it to be the 737-9.
Original Post:
It’s now official: Lion Air has been revealed it is a customer of the Boeing 737 MAX, joining American Airlines as the only two of nine disclosed customers.
We previously identified Lion Air as one of the original five airlines to announce commitments.
The revelation was made in connection with President Obama’s trip to Indonesia.
The type of MAX was not identified, but with a list price of of $21.7bn ($94m per unit), this suggests the planes could be the 737-9, the priciest of the 737 line. There is a 201/29 split for MAX and -900ERs. Options for 150 have also been revealed.
Lion Air is the largest customer for the 737-900ER.
The news article described the deal as an “order.” A signing ceremony is planned for November 18 Indonesia time, so we’ll see if the commitment has been converted to a firm order. If so, it would be the first.