Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- The Boeing 767 Cross Section, Part 1 November 24, 2022
- Movie Review: Devotion November 21, 2022
- China will accelerate development of its commercial aerospace sector November 21, 2022
- Bjorn’s Corner: Sustainable Air Transport. Part 46. eVTOL comparison with helicopter November 18, 2022
- The economics of a 787-9 and A330-900 at eight or nine abreast November 16, 2022
Pontifications: Going where the excitement is
By Scott Hamilton
July 3, 2017, © Leeham Co.: Friday’s news leak to Reuters that Airbus CEO Tom Enders will assume direct control over commercial airplane sales is but the latest in a nine-month-long set of changes not just at Airbus but also at Boeing.
Pontifications: Boeing-Bombardier dispute’s big winner: Airbus
By Scott Hamilton
June 12, 2017, (c) Leeham Co.: Boeing won round one Friday in its price-dumping complaint against Bombardier over its sale of the CSeries to Delta Air Lines.
The US International Trade Commission (ITC) voted 5-0 to continue the investigation. It now goes to the US Department of Commerce to determine whether tariffs should be imposed on the deal, and how much. Delta Air Lines would have to pay the tariffs.
Boeing won this round but the big winner is likely to be Airbus.
Pontifications: ATR, Q400 replacement not any time soon
By Scott Hamilton
June 5, 2017, © Leeham Co.: The prospect of a new generation turboprop airliner remains as elusive as ever.
This is the clear conclusion from Media Days I attended Tuesday through Friday with Pratt & Whitney and Embraer at their respective Florida operations in West Palm Beach and Melbourne.
There are just two major manufacturers, ATR and Bombardier—and the latter is fading fast. ATR now has about 80% of the backlog. Bombardier is down to about two dozen unfilled orders.
Pontifications: No sale for Boeing in Bombardier complaint
By Scott Hamilton
May 29, 2017, © Leeham Co.: I’m having a really hard time buying into Boeing’s arguments in the complaint about alleged price dumping by Bombardier in its deal with Delta Air Lines.
I say this despite the fact that Boeing lawyers at least four times directly and twice indirectly cited “trade publication” Leeham News and Comment in support of its case. While flattering to be used as an authoritative source, Boeing’s testimony doesn’t support the claim that Bombardier acted improperly, in my view (nor that of AirInsight, which also reviewed the testimony). There are, of course, scads of exhibits and confidential information not available for public review that could, if available for public dissemination, might change opinion.
The thing is, Boeing is known among journalists and analysts for its occasional descent into hyperbole. Or, as one reporter I talked to put it, this is an example of Cirque du Soleil acrobatics. It is with some amusement that I note Cirque du Soleil is, like Bombardier, headquartered in Montreal.
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Pontifications: The pricing jigsaw puzzle
By Scott Hamilton
May 22, 2017, © Leeham Co.: The prices airlines and lessors pay for their airplane purchases have long been of intense interest to just about everybody associated with the airline industry.
The manufacturers want to know what their competitors are selling the planes for.
The airlines want to know what their competitors pay for their airplanes. The same is true for lessors and their competitors.
(Airlines are less interested in what the lessors pay; they are only interested in what they must pay the lessors to lease the airplanes, and aren’t really concerned about the lessors’ costs.)
Appraisers want to know the prices of new aircraft, and prices on the secondary market, to have a basis for predicting base and current market values today and 25 years in the future.
The credit rating agencies want to know that values of the airplanes to rate financing deals.
Pontifications: Emirates profits drop 83%, MC-21 and more news last week
By Scott Hamilton
May 15, 2017, © Leeham Co.: It was a busy news week last week.
- Emirates Airline headlined its 29th consecutive year of profits, but downplayed an 83% decline.
- The Irkut MC-21 moved to the tarmac, an indication first flight may be coming shortly.
- Multiple media reports indicate that electronics flight ban from the Middle East may be extended in part to all of Europe.
- Boeing suspended test flights on the 737 MAX after CFM discovered some quality issues in some LEAP 1B engines.
Let’s look at these events.
Pontifications: Bombardier’s challenges beyond Boeing complaint
By Scott Hamilton
May 8, 2017, © Leeham Co.: The fallout and speculation continues after Boeing filed a complaint April 27 over Bombardier’s deal for 75+50 CSeries with Delta Air Lines.
The complaint was filed with the US government and the International Trade Commission.
Our stories are here, here and here.
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Pontifications: Boeing complaint against Bombardier no surprise
By Scott Hamilton
May 1, 2017, © Leeham Co.: The Boeing Co. filed a complaint with the US Commerce Department and the International Trade Commission charging the Bombardier “dumping” the CSeries in the US to the detriment of Boeing and its 737.
Brazil, on behalf of Embraer, another competitor to Bombardier and the CSeries, previously filed a complaint with the World Trade Organization over similar charges that the Canadian and Quebec governments improperly subsidized BBD when they bailed out Bombardier for the CSeries.
The federal and provincial governments provided about US$1.5bn in investments in a new company that segregated the CSeries from Bombardier. A quasi-government pension fund took an investment in BBD’s rail division, also for more than US$1bn.
Neither move is a surprise.
At the time, the Canadian investments in Bombardier and the CSeries pretty much transformed the CSeries into a government program, managed by BBD.
Pontifications: Lessor cites cool reception to MAX 10
By Scott Hamilton
April 17, 2017, © Leeham Co.: Buckingham Research Group last week issued back-to-back notes about Boeing. One was a recap of an investors call with Steve Rimmer, CEO of Altavair Airfinance (nee Guggenheim Aviation partners). The other was BRG’s earnings preview, the first off the mark for Boeing’s earnings call on April 26.
I’ll include a summary of BRG’s earnings preview in a subsequent post when other analysts issue their previews.
BRG’s Rimmer note is lengthy and covers industry issues beyond Boeing. Here are a couple of the Boeing-focused points:
Pontifications: 787 production rate remains a question
By Scott Hamilton
April 10, 2017, © Leeham Co.: Boeing’s first quarter earnings call is scheduled for April 26, two weeks and two days from today. Officials said on the January earnings call, for year-end 2016, that they will decide this year whether to increase the 787 production rate to 14/mo by the end of the decade.
LNC has long believed this won’t happen. In fact, we predicted last September Boeing will have to lower the production rate from 2020.
The question of the rate is sure to come up on the 26th. I doubt CEO Dennis Muilenburg will be prepared to announce a decision one way or the other. It’s Boeing’s pattern to put off announcements like this until the very last minute, so a go-no go on rate 14 probably won’t be announced until toward the end of the year.