Leeham News and Analysis
There's more to real news than a news release.
The Airbus A220-500, a deep-dive analysis: The launch date challenge
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By Bjorn Fehrm and Vincent Valery
Jan. 30, 2023, © Leeham News: In the previous articles, demand in the Airbus A320 family gradually shifted from the smaller A319 and A320 to the larger A321. This shift is laying the groundwork for the arrival of the A220-500.
Airbus can develop the A220-500 with relatively minor technical modifications that are not extremely challenging. In an aircraft performance analysis, we saw that the light aircraft weight gave the A220-500 an advantage against the A320neo and 737-8.
What is then preventing Airbus from launching the A220-500 now? While most of the attention has been on the cannibalization risk with the A320neo and the lack of urgency given Airbus’ market share lead, other and more critical factors, in LNA’s opinion, are at play.
Being an aircraft OEM is not just about designing airplanes that meet payload-range requirements and satisfy stringent safety regulations. It is also about efficiently building aircraft with millions of parts and consistent production rates. The recent challenges OEMs are facing ramping up after the Covid-19 pandemic show that aircraft production is far from a walk in the park that can be taken for granted.
It is common for aircraft OEMs to spend as much cash nursing production through the learning curve until the first profitable delivery as developing the aircraft itself.
The final article on this A220-500 series discusses why Airbus is rightfully cautious about launching the new variant.
Figure 1. A rendering of an A220-500 that takes 157 passengers. Source; Leeham Co.
Summary
- Current planned A220 production rates and variants can satisfy demand;
- Adding the A220-500 brings the program to a new demand level;
- Several clients would place large A220-500 orders;
Hexcel reports increased demand for aerospace composites as industry rebounds
By Bryan Corliss
Jan. 27, 2023, © Leeham News: Composites materials supplier Hexcel Corp. reported that its fourth-quarter sales were up 29% over the same period last year, driven by increased demand from all across the aerospace industry.
“Virtually every platform from narrowbody to widebody to business jets is growing, and the customers continue to ramp as fast as the supply chain allows,” CEO Nick Stanage said.
As international air travel recovers, airlines are seeking more widebody jets, which is good for Hexcel, because newer widebodies have higher percentages of composite materials, Hexcel executives told investment analysts. However, new business jet and military aircraft models also incorporate higher percentages of composites.
Stanage and Hexcel CFO Patrick Winterlich noted that their company is not immune from the inflation and labor issues facing most manufacturers, but said they’re coping.
“You can’t give someone five years, three years, of experience in six months or nine months,” Stanage said. “We are working as hard and are focused as hard as we can on training and accelerating it.”
- Hexcel profits beat Wall Street expectations
- Analysts: Can Hexcel match Boeing ramp-up?
- CEO: Commercial aerospace can withstand recession
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Bjorn’s Corner: Sustainable Air Transport. Part 55. Sustainable Aviation Fuel feedstocks
By Bjorn Fehrm
January 27, 2023, ©. Leeham News: Last week, we learned the main pathways to Sustainable Aviation Fuel and their production volumes for the next years.
Now we look at the feedstocks, what output we get from these, and how to safeguard the pathway is ethical and sustainable. Finally, we look at the cost of SAF until 2050.
Figure 1. The main pathways to SAF. Source: Clean Skies for Tomorrow report. Click to enlarge.
The Airbus A220-500, a deep-dive analysis, Part 2
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By Bjorn Fehrm
Jan. 23, 2023, © Leeham News: Following Thursday’s article about an up-and-coming Airbus A220-500, we now look at the operational cost for the A220-500 and compare it with the A320neo it should replace.
We put the data we discussed in Thursday’s article in our Aircraft Performance and Cost model, fly the aircraft on a typical single-aisle mission and look at the results.
Figure 1. A rendering of an A220-500 that takes 157 passengers. Source; Leeham Co.
Summary:
- The A220-500 would be a viable replacement for an A320neo.
- With the changes/improvements we discussed, it beats the A320neo on operational costs. The differences are not of the speculated level, however.
Update 2: Boeing pauses remarketing China’s airplanes, outlines prerequisite for a new airplane program. Update 1: Calhoun feels good despite earnings miss; Boeing reports 4Q, full year loss but financial progress continues
Jan. 25, 2023, © Leeham News: The Boeing Co. recorded a net loss in 4Q022 and for the full year while reporting positive cash flow. There were no one-time charges, the first time in many 
quarters—a key metric some Wall Street analysts were watching for. Long-term debt declined by 10% as current debt increased. Negative stock equity increased. Cash and marketable securities increased slightly.
- Cash increased to $14.6bn from $8bn year over year. Marketable securities decreased to $2.6bn from $8.2bn.
- Advances and progress billings (deposits and progress payments) were essentially flat: $53.1bn vs $52.98bn.
- Short-term debt (that is due within 12 months) increased to $5.2bn from $1.3bn.
- Long-term debt declined from %51.8bn from $56.8bn.
- The shareholders’ deficit increased to $15.88bn from $15bn.
- Free cash flow was $3.1bn for the quarter and $2.3bn for the year.
- Revenues for the quarter were $19.98bn vs $14.79bn and $66.6bn vs $62.286bn for the year.
- Operating loss was $353m vs a loss of $4.2bn for the quarter and $3.5bn vs $2.9bn for the year.
- Net loss was $663m vs a loss of $4.16bn for the quarter and $5bn vs $4.3bn for the year.
The full press release is here.
CEO Dave Calhoun said challenges remain to achieve production stability and within the supply chain.
GE, Raytheon report orders surges, but labor and supply chain headwinds
By Bryan Corliss
Jan. 24, 2023, © Leeham News – Aerospace suppliers GE and Raytheon both reported fourth-quarter sales surges, as the commercial aviation industry continued its recovery from the worst of the Covid pandemic.
Both companies also project strong sales growth in 2023, but warned investors that there are lingering supply chain issues and labor shortages that could hold them back.
“While we are broadly beginning to see our supply chain improve, it is not yet at the levels we need,” Raytheon CFO Chris Calio told stock analysts during the company’s fourth-quarter earnings call on Tuesday. “We are assuming a recovery as we move into the back half of the year.”
- GE reports backlog near 10,000 for LEAP
- Raytheon expects double-digit growth for Collins, P&W
- Supply chain improving, but still tangled
- Raytheon talks about Boeing, Airbus rates
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Pontifications: Do you really want the Jetsons zipping around?
By Scott Hamilton
Jan. 24, 2023, © Leeham News: “For those of you old enough to remember, this is the Jetsons. This is the dream. This is what everybody would love to do.”
This cartoon is what former Boeing CEO Phil Condit used to segway into the hot topic of Urban Air Mobility vehicles (UAM). A cartoon is an apt illustration of UAMs.
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You walk out your front door, climb into the vehicle, and off you go. “All of a sudden, it looks like you can do that,” Condit said. Condit made his remarks on Jan. 9 at the University of Washington aerospace class.
Today’s Urban Air Mobility concepts hark back to the 1960s cartoon series, The Jetsons.
There is a concept called Air One, a battery-powered two-place UAM that has folding wings and a folding structure for the rotors. It fits in the garage. It uses a landing pad in front of the house. “This is a step to the Jetsons. What’s the problem?” Condit posited. “Well, there are a number of them.”
The advertisement shows Air One has 771 horsepower and a 96nm range. Reserves aren’t mentioned. A competing concept called Icon A5 shows 100hp, a range of 427nm, and a 45-minute reserve. This has wings to carry the lift. “Taking off vertically is not cheap. Wings are way more efficient than vertical lift.”
Condit pointed out that Air One suggests you could fly to a favorite fishing spot. But, Condit said, “unless your fishing spot has a charging port, I’ve got two vertical take-offs and two vertical landings. I have a net effective range of 30 miles. So, your fishing spot has to be within 30 miles.”
A deep dive into the single-aisle market
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By Vincent Valery
Introduction
Jan. 23, 2023, © Leeham News: Boeing’s share of outstanding single-aisle orders has fallen significantly behind Airbus. If we include the order book for single-aisle aircraft seating 100 or more passengers of Airbus, Boeing, COMAC, Embraer, and UAC, the American OEM’s market share is now 37% (Airbus has 58%, COMAC 3%, Embraer 2%, and UAC 2%).
Richard Aboulafia sees a risk that Boeing’s market share in the single-aisle market will dip below 30% without the entry into service of a new aircraft before 2035. Boeing Commercial Airplanes CEO Stan Deal said that it is viable for the American OEM’s single-aisle market share to stay around 40%.
A321neo Credit: Airbus
In the 2022 Boeing outlook, LNA also noted that there are significantly more A320ceo than 737 NG operators. A broader operator base means more opportunities to place new orders with a more diversified group of airlines. In the context of no new single-aisle family entering service in the next 10 years, convincing operators to “flip” to the competition will be the primary way to increase market share.
Exclusively looking at the nominal order books and A320ceo and 737 NG operators does not provide a comprehensive view of Airbus’ and Boeing’s relative positions in the single-aisle market, though.
In their 2022-2041 commercial market outlooks (CMO), Airbus and Boeing indicated that nearly half of all single-aisle deliveries would replace older-generation aircraft. Looking at the existing in-service fleet of older-generation aircraft provides a better picture of replacement order opportunities by the OEM.
LNA investigates in this article the existing order books of the five major OEMs and operator bases to better assess their relative competitive positions and quantify the current replacement order opportunities.
Summary
- A comprehensive single-aisle fleet snapshot;
- Breaking down the order books between replacements and growth;
- Keep track of order choices for older-generation operators;
- Remaining replacement order opportunities;
- A word about single-aisle freighters.
Bjorn’s Corner: Sustainable Air Transport. Part 54. Sustainable Aviation Fuel Production
By Bjorn Fehrm
January 20, 2023, ©. Leeham News: Having introduced Sustainable Aviation Fuel, SAF, as essential for reducing Green House Gases (GHG) until 2050, we now look at how SAF is produced, what pathways from feedstock to SAF are the main ones, and what are the short and long-term potentials of the different pathways.
I was helped to grasp the area by Neste’s EVP of Renewable Aviation fuel, Thorsten Lange, who, after we met when he presented at the Airbus Summit in November (Neste is a leading SAF producer), took the time to explain the subject to me last week. He also recommended a report we use to understand SAF.
Figure 1. The mebers of the Clean Skies for Tomorrow forum. Source: The World Economic Forum.
HOTR: Boeing ponders 777-300ER P2F program, again
By the Leeham News team
Jan. 19, 2023, © Leeham News: Already well behind the 8 ball in delivering 787s, Boeing quietly advised some customers recently that they may see yet another delay—this one up to 15 months. Some customers expecting 787s in 2024 now expect them in 2025.
These additional delays are causing some airlines to retain Boeing 777 Classics longer than planned. Others want to re-lease 777s returned or sold to lessors on the expectation of 787s deliveries.
Retaining 777 Classics has implications for the cargo market. There are three conversion companies: IAI Bedek, the launch P2F firm; Mammoth Freighters; and Kansas Modification Center (KMC). These companies rely on feedstock from the airlines and lessors for their conversions. Retaining 777s may cause a dip in the feedstock.