Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- AIN Media Group Agrees to Acquire Leeham News & Analysis June 17, 2025
- 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
Financing airplanes in 2010
Geneva, Switzerland: During the Aircraft Finance and Commercial Aviation Conference, we filed a couple of stories in aircraft finance with Commercial Aviation Online. Since CAO is a paid subscription service, our arrangement with CAO is that it gets exclusive use for a few days before we can post the stories here.
The stories are below the jump. In them, we report what panelists had to say about the “funding gaps” in 2009 and 2010 and about aircraft values.
Get over it and move on (Part 2)
A flurry of activity has been happening on the air force tanker front while we’ve been in Geneva, Switzerland, (working, not playing). Unfortunately, we think the activity has all been rather sad.
In the aftermath of the World Trade Organization issuing its final report on the US Trade Representative complaint about illegal subsidies to Airbus, the anti-Airbus crowd has once again seized on this issue to attack the new reports that Airbus parent EADS is now likely to bid on the KC-X contract against Boeing’s KC767NewGen.
EADS: decision within days on tanker
Update, March 29: Airbus CEO Tom Enders now says a decision will be made in two-three weeks.
Original Post:
Geneva, Switzerland: EADS will decide within days whether to pursue a bid on the KC-X tanker program, this column has learned.
The Pentagon has yet to officially decide whether to grant a 90 day extension so EADS can be fully briefed on what is necessary to make a bid, something that Northrop Grumman had previously done as the prime contractor. EADS needs to be brought up to speed on everything Northrop learned during the previous effort to bid on the tanker.
Day 2 from Geneva
The second day at the Aircraft Finance and Commercial Aviation Conference in Geneva, Switzerland, covered a lot of ground but the most interesting for our readers is the skepticism over the prospect of re-engining the Boeing 737 and Airbus A320 families.
Potential buyers are anything but convinced this is the way to go. They look at the unknown capital cost, the new costs associated with maintenance, inventory and other factors, and have yet to be convinced that the net-net fuel savings will be sufficiently large to offset the added costs.
Report from Geneva
Here are our thoughts and observations from Day 1 of the Aircraft Finance conference in Geneva, Switzerland:
- The mood here among the 300+ attendees in generally upbeat. There is a general sense that the airline industry has seen its worst and recovery is on the way. A leading indicator is the improvement in the cargo market, which is showing substantial gains year-over-year. Passenger traffic is up but premium traffic, while also showing gains, has a long way to go to recover. Even the notoriously pessimistic IATA was upbeat.
- Aircraft financing for new airplanes is available but expensive. Aircraft financing for used aircraft is much less available.
- The Airbus A319 and Boeing 737-700 cannot effectively compete with the Bombardier CSeries, even if re-engined, is some of the talk here. We were on a panel with James Billing of Boeing and Richard Aboulafia of The Teal Group. Billing prudently avoided being dragged into the discussion over the CSeries, sticking with market forecasts for the single-aisle segment; Aboulafia termed the CSeries a “niche” aircraft. We suggested that Airbus and Boeing could and should “crush” the CSeries by pricing the A319RE and 737-700RE as part of a family offering in airplane campaigns with the A320/321 and 737-800/900 by offering prices on the smaller models Bombardier couldn’t hope to match with the CSeries. Boeing’s Billing and Randy Tinseth, who was in the audience, figuratively ran for the hills on this suggestion—anti-trust regulators would be all over the company on this scenario. An Airbus official in the audience caught us afterward and merely suggested this wouldn’t be a good idea. The genesis of this is that Airbus introduced the A318 to kill the McDonnell Douglas MD-95 and Boeing priced the 737-600 at a reputed $16.7m to undercut MDC’s launch customer sale to SAS. The MD-95 never recovered from the two actions; the A318 and 737-600 proved to be sales dogs.
- There is a growing belief that the Open Rotor engine will not be a successful solution for A320/737 replacement airplanes and the second generation GTF and Leap-X engines will be.
Air India’s 787 penalty payment, 787 vs A330 efficiency
This article from India has an interesting reference to the penalties paid to Air India by Boeing (and what the airline originally wanted) for the delays of the 27 787s on order.
The article also notes that Air India’s analysis is that the 787 is 17% more fuel efficient than the A330.
More bizarre twists in the tanker saga
Update, 10:00AM PDT: Defense News has this item that adds more to this increasingly goofy story. A firm named World Aviation Maintenance Co. from Omaha, Neb., is identified as the US company involved in this story–but Google does not provide any “hits” on this firm and neither does the anywho.com web-based telephone directory.
Original Post:
George Talbot of The Mobile Press-Register has this bizarre twist in the KC-X tanker saga: a Russian official with United Aircraft Corp. says he doesn’t know what the California attorney purporting to represent UAC is talking about when it comes to the report last week that UAC will enter the tanker contest. Yet the attorney provided documents to Talbot backing up his claim. Read the story here.
A little irreverence
We came across a news item that in the wake of the weird new Russia’s United Aircraft Co. will bid for the KC-X that just seems to call for a moment of irreverence.
Let’s recall that as a youth, we learned that to clean the gunk that built up on automobile battery terminals, you could use Coca Cola. (What this does to your insides, one can only imagine.) Then there are the numerous reports that too many hamburgers and hot dogs, sweeteners and such can cause cancer.
Now here’s the irreverent news item. It seems that, according to this report, aviation can use apricots to strip the paint off airplanes.
We’ll have to stick with ice cream….