July 30, 2015: Bombardier reported lower net income on slightly higher revenues for the second quarter.
The press release is here. The earnings call presentation is here. Bombardier-Q2-2015-Presentation-20150730-en
“Overall, the second quarter was in line with plan in terms of revenues, EBIT and deliveries, and our liquidity stands at $4.4 billion,” said Alain Bellemare, President and Chief Executive Officer. “After five months on the job, I have a better understanding of our challenges and opportunities. We are taking specific action, including the launch of our Bombardier transformation plan, a disciplined approach to cash management, and the strengthening of our leadership team to reshape the company and ensure our long-term success.”
Bombardier said it completed 2,000 of the 2,400 hours required for certification of the C Series, which will be delivered during the first half of 2016 to launch operator Swiss International.
During the earnings call, Bellemare outlined more details of the Transformation Plan designed to turn BBD around from its financial strains.
Posted on July 30, 2015 by Scott Hamilton
By Bjorn Fehrm
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Introduction
July 12, 2015, © Leeham Co. As we reported from Boeing’s Paris Air Show briefing, Boeing’s 777X project is progressing to a design freeze later in 2015. At the briefing everything was presented as being on track with no changes of key data. There have been signs that this in not fully the case. The 777X program is suffering the same disease that hits other aircraft programs, weight gain flu.
To understand it better, we compiled the many indications that points to weight increase and ran them through our proprietary model to understand why and see what it means for the aircraft’s performance.
Summary:
Posted on July 13, 2015 by Bjorn Fehrm
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Introduction
July 9, 2015, © Leeham Co. At the half way point of 2015, there are a number of signs emerging that require some interpretation. Some are signs of caution. Others are Go Slow.
Summary
Update, July 8: In our original post, we omitted 44 Boeing 737NGs from the YTD firm orders. The charts and text have been updated to reflect this information.
July 7, 2015, © Leeham Co. Airbus pulled ahead of Boeing in firm orders through June, and both companies have a number of commitments that were announced at the Paris Air Show that aren’t included in the year-to-date tally.
Airbus leads with single-aisle orders and Boeing leads with widebody orders, but at the half-way point of the year, the contest is far from over. The leads could shift or increase, depending on how the balance of the year goes.
Posted on July 7, 2015 by Scott Hamilton
By Bjorn Fehrm
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Introduction
July 6, 2015, © Leeham Co. Bombardier presented a slew of new data for their CSeries aircraft during Paris Air Show. Listening to Bombardier (BBD) officials it sounded like there was only positive news: increased range, better fuel economy, better field performance and lower per seat costs.
We have commented on the released information in two articles when at the Paris Air Show, “Bombardier makes it official: CSeries exceeds advertised numbers” and “CSeries range even better than Bombardier revealed.” We now follow up these articles with an analysis of the furnished figures to reveal how these improved performance figures were achieved.
Aircraft programs use sophisticated modeling tools to understand what performance a finished aircraft will have. A 10% range increase with standard payload from 2,950nm to 3,300nm does not come from any miscalculations with such tools. Nor does it come from claimed lower fuel consumption due to lower airframe drag alone.
There are other contributing factors. Using our proprietary model to identify the factors, we explain how BBD has achieved the claimed higher performance.
Summary:
Posted on July 6, 2015 by Bjorn Fehrm
June 29, 2015, © Leeham Co. Back on June 1, I wrote in this column I had yet to experience traveling on the Airbus A380, which entered service in 2007. The A380 doesn’t serve Seattle, where I live, and I really didn’t have a desire to add hours and a connection to my travels just to fly the A380 if I could go non-stop. Note that this is precisely the argument advanced by Boeing, but this is a coincidence. I have yet to fly on the Boeing 787, either, and it does fly into Seattle from Asia.
A reader Tweeted to me his incredulity that in all these years I hadn’t flown the A380. I replied, All in good time. I knew when I wrote that I would be returning from the Paris Air Show on an A380 via Los Angeles. The time had come for me to experience the airplane. (Interestingly, Dominic Gates of The Seattle Times, unbeknownst to either of us, wrote he’s doing the same thing via New York on Air France. I would be flying Air France. Friends warned me that the passenger experience on Air France, however, was hardly what the A380 is all about.
They weren’t kidding.
I had been on the test A380 during static displays before, but never in a passenger-configured model. At the PAS, Qatar Airways had its own little air show, displaying more airliners than any OEM: the A319, A320, A350 and A380 plus the 787. The A350 and A380 were open to the press. As with anyone in the industry, I had long-heard of how the Middle Eastern airlines went over the top on outfitting their cabins, but I wasn’t remotely prepared for the Qatar A380. Walking on board, into the first class section, was a jaw-dropping “wow” moment.
Posted on June 29, 2015 by Scott Hamilton
Airbus, Airlines, American Airlines, Boeing, Delta Air Lines, Paris Air Show, Pontifications, Qatar Airways, United Airlines
737, 747-8, A319, A320, A350, A380, Air France, Airbus, Akbar Al-Baker, American Airlines, BE Aerospace, Boeing, Boeing Sky Interior, Delta Air Lines, Lufthansa Airlines, Paris Air Show, Qatar Airways, Recaro, United Airlines
25 June 2015, © Leeham Co: With a few days in the office one can look back at Paris Air Show with a bit of perspective. So what are the impressions?
It was surprising how many orders Airbus and Boeing landed. Both had played down the expectations, telling that it will be a decent show but nothing close to record. Yet both were booking orders or commitments which were better than expected going into the PAS. Read more
Posted on June 26, 2015 by Bjorn Fehrm
AirAsia, Bjorn's Corner, Boeing, Bombardier, Comac, CSeries, Farnborough Air Show, Future aircraft, GE Aviation, Irkut, Paris Air Show, Pratt & Whitney, Rolls-Royce, Sukhoi, United Aircraft, YAK
737 MAX, 787, A320NEO, A330neo, Airbus, Boeing, Bombardier, Comac, CSeries, GE, Pratt & Whitney, Rolls-Royce
June 23, 2015, © Leeham Co. The Memorandum for Understanding for expansion of the Boeing 747-8F fleet of Volga-Dnepr announced at the Paris Air Show is somewhat less than met the eye at the time.
Despite a few orders subsequent to this chart’s creation in January 2015, the 747-8 production gap is insurmountable. The Paris Air Show announcement of Volga-Dnepr fleet “expansion” by 20 747-8Fs is more about options than firm orders, according to market intelligence, which does nothing to fill the gap unless exercised. The expansion is over seven years, which also fails to fill the gap at current production rates. Click on image to enlarge.
Although Boeing said the 20 airplanes will be added through a mix of direct purchases and leases over seven years, it didn’t indicate how many firm orders, options and leases were involved nor the delivery timeline. Market Intelligence indicates perhaps two of the 20 are white tails, aircraft that were built without customers. If correct, this won’t add to the backlog or production stream. Neither would options, unless exercised. Market Intelligence also indicates that firm orders are in the mid-single digits, which if correct is a far cry from what Boeing needs to fill the production gap
Some media and aerospace analysts concluded this deal meant 20 firm orders equal to a year-and-a-half worth of work for the struggling 747-8 production line, but Boeing said the fleet “expansion” is streaming the deliveries over seven years. If evenly spread, adds up to three aircraft in the production stream if all were new orders and not white tails, and options were converted to orders. Even this interpretation fails to fill the production gap.
A Boeing spokesperson said, “We are in discussion with Volga-Dnepr Group and will provide details when ready. There is nothing else we can add here.”
Accordingly, we expect Boeing to announce a reduction in the 747-8 production rate sooner than later. The current rate is 18/yr, declining to 16/yr from September. Boeing previously said it can still make money at 12/yr, so we expect the rate to be reduced to at least this level. However, as the chart shows, the current firm order backlog doesn’t support even this reduced rate.
The USAF indicated it wants to receive the first of two replacements for Air Force One in 2018.
What raised questions over the solidity of the Volga announcement was the way Boeing worded the press release last week at the PAS. All other press releases were specific about orders and options, except the Volga release, which contained highly unusual wording, a departure from Boeing’s standard boiler-plate. Excerpts of these releases are below the page break. We made inquiries in the market, and the results are outlined above.
Posted on June 23, 2015 by Scott Hamilton
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Introduction
Embraer CEO Paulo Cesar Silva. Photo: AINOnline via Google Images.
June 22, 2015, Paris Air Show, © Leeham Co. Embraer has emerged as the#3 commercial aircraft producer over the years, behind Airbus and Boeing and overtaking Bombardier, by approaching risks carefully and conservatively. No other decision in recent years reflects this approach than what to do when events outside its control forced officials to decide what to do about the future of the E-Jet.
Bombardier launched the CSeries with a new design and a new engine. The larger of two models, the CS300, was a direct challenge to Airbus and Boeing and their smallest aircraft. Airbus responded with the New Engine Option family, forcing Boeing to react with the re-engined 737, the MAX.
With the smallest CSeries, the CS100, a competitor to the largest EJets, the E190 and E195, Embarer had to do something. The question was what.
Embraer could launch an entirely new, larger aircraft, following the Bombardier example. It could do a “simple” re-engine of the EJet. Or it could do something else.
Officials chose to stay away from confronting Airbus and Boeing with a CS-300-sized EJet. Instead, they drew the line at 133 seats in highest density, adding 12 seats to the E-195. The Pratt & Whitney GTF was chosen to power a fundamentally new airplane, one with new wings, new systems, aerodynamic upgrades and other improvements.
We met with CEO Paulo Cesar de Souza e Silva at the Paris Air Show to talk about EMB’s approach to global risk factors.
Summary
Posted on June 22, 2015 by Scott Hamilton
June 22, 2015, c. Leeham Co. The Paris Air Show was largely as expected, with a few small surprises. Boeing did better than expected via-a-vis Airbus, actually leading slightly in firm orders and tied in orders-and-options going into Thursday. This is virtually never the case, particularly at the Paris Air Show, Airbus’ “home” turf. At the same time, some Wall Street analysts noted the firm orders fell below expectations. I’m not especially concerned about whether an announcement was firm or a commitment, because the latter typically firm up, if not within the current calendar year then usually in the next. Note, for example, Boeing announced the launch of the 777X program at the 2013 Dubai Air Show was some 200 commitments, or thereabouts, but the orders didn’t firm until 2014. Airbus announced a commitment for 250 A320s from Indigo in 2014 and it will likely be firmed up this year.
Posted on June 22, 2015 by Scott Hamilton
Airbus, Airlines, Boeing, Dubai Air Show, Emirates Airlines, Farnborough Air Show, GE Aviation, MOM, Paris Air Show, Pontifications, Qatar Airways, Rolls-Royce
747-8F, 757, 757 replacement, 767-200ER, 777 Classic, 777F, 777X, 787-10, A300, A350-900, Airbus, Boeing, Dubai Air Show, Emirates Airline, EVA Airlines, Farnborough Air Show, IATA, John Leahy, Middle of the Market, MOM, Paris Air Show, Qatar Airways, Seattle Times, Tim Clark