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Boeing’s 2017 O&D

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Boeing clearly had an excellent year.  As Boeing’s Randy Tinseth noted in his blog:  “Regardless of the final figures from Airbus next week, 2017 shaped up to be a better year than anyone could have predicted.”  No argument.  We were among those thinking the year would be gloomy.  Here is our table using the latest Boeing O&D data.

As good a year as it was, there are some items worth noting:

  • 737-700 (and MAX7) has not done well
  • 737-800 (and MAX8) generated just over 40 deliveries per month, all from one FAL, which is amazing
    • These models account for ~87% of all 737 deliveries
  • 777-300ER has a good year in orders even if they were discounted
  • 787 deliveries was a highlight

The Boeing numbers show that the 737 program generated 81% of orders and 71% of deliveries.  The 737-800 and MAX8 accounted for most of this activity.  The 737 program is heavily weighted to this one model size.  Boeing continues not to break down the MAX model data in their numbers.  Customers may be switching from the -800 to MAX8 and the book-to-bill on the 737 program reached its highest level in three years. The backlog at year-end was about nine years.  That said, the 737 program is MAX8 heavy and looking ahead, it is the only 737 model giving Airbus any serious competition.

The 787 program generated 10% of orders and 17% of deliveries.  It is clear that having two FALs working on this program and the acceleration of work was a very good idea.  With a backlog of ~658, at current delivery rates, these plants have ~5 years of work.  The market continues to switch to the larger models which are more capable and also more profitable for Boeing.  The -10 is going to add considerably to the attraction of the 787 family.

To provide some perspective on the 2017 numbers we created some charts.  First, let’s look at order history.  Note that we did not include the data listed as “Unidentified” and the sheer size of this could move the data significantly.   At the same time last year we thought that 2016 was not going to be the bottom and yet it was.  The Middle East and Asia were surprisingly robust.

Boeing’s orders mainly come from three regions:  Asia, Europe, and North America.  The Middle East market is a recent phenomenon as the next chart illustrates.

These charts are very busy. The next chart goes in five-year increments through 2015 to make it easier to see.  Using Asia as an example,  we can see that the market is concentrated.  China has long been a Boeing favorite.  And 2017 saw Boeing’s best Asian customers in the order book; Singapore, Japan, and China.

There is a high concentration in the order book as the next chart illustrates.  Once again, using Asia as the example. Asia accounts for 27% of orders and three customers account for 79% of those orders.

Europe accounts for 10% of orders and of those, three customers account for 68%.  North America accounts for 21% of orders and the top three customers account for 55% of those orders.  The Middle East accounted for 29% of orders and of those, 87% came from one customer.

Next looking at deliveries we see the following. Boeing’s ability to increase its deliveries is impressive.

To provide a similar perspective to the order chart above, here is the delivery history.  As we can see, there is some concentration here too.  Note the steady rise in Asian deliveries.  As was the case with orders there are three main players and the growing Middle East.

This time using Europe as an example, we can see there is concentration also.  Ireland was the big market last year and this was driven by the leasing companies and their aircraft end up all over the globe.  We can see that Turkey is growing in importance.

Europe accounted for 21% of deliveries with the top three customers accounting for 58% of those deliveries.  Asia accounted for 33% and the top three customers accounted for 31% of those deliveries.  North America accounted for 33% and the top three customers accounted for 44% of those deliveries.

In summary, the Boeing numbers are impressive.  Any stumbles by a key customer or in a significant market could upset future numbers.  For example, as has been stated numerous times, if the ME3 stumble then the 777X program, which accounts for 72% of the orders, could be severely impacted.

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Ben Sandilands – an appreciation

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Last Friday the aviation journalism fraternity lost a special member, Ben Sandilands.

Here is a link to background on this remarkable character.   Ben followed and reported on aviation for 60 years.  There was very little about the industry he did not know or have an educated opinion on.   You will read that Ben was a legend – he really was.  He was a walking aviation encyclopedia; having covered the industry for so long he knew everyone and also knew when the truth was scarce.  He had a warm giggle and smile, but a sharp word for those who skirted the truth.  Commercial aviation has a few of those.  You just have to read his work on MH370 to get a glimpse.

Ben was most frequently the first place to go when there was an “incident”.  He had that crucial item in the midst of news frenzy – context and experience.  Here is talking about the Germanwings crash.  You will note his calm voice and reasoned thinking.

Here is a list of Ben’s recent work.  We will miss him very much.

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C919 first flight coming

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China has scheduled this week to conduct the first C919 flight test. The C919 was built to meet world travel demand and challenge the dominance of Boeing and Airbus. China’s Commercial Aircraft Corporation (COMAC) has been set to take wing to Shanghai on Friday, the company said on Wednesday, according to the Xinhua News Agency.

“If climate conditions are unsuitable, the initial flight will be reprogrammed,” COMAC said, adding that “engineers had completed about 118 tests.”

The C919 represents nearly a decade of efforts to reduce dependence on Airbus and Boeing. The C919 is China’s first big passenger plane and the latest sign of China’s growing ambition and technical ability, arriving a week after China launched its first national aircraft carrier and signaled a Spacecraft with an orbiting space laboratory.

The C919 can accommodate 168 passengers and has a range up to 5,555km. According to IATA, the Chinese travel market should surpass the United States by 2024. China is a huge battlefield for Boeing and Airbus, with its ever-expanding travel market. Airbus estimates that Chinese airlines need nearly 6,000 new aircraft in the next two decades, while Boeing estimates 6,800 aircraft. Both put combined price tags for those planes to about $ 1 trillion.

Shanghai’s COMAC has a long way to go before it can challenge Boeing and Airbus. COMAC could be able to rely on purchases by rapidly expanding Chinese airlines. COMAC has already received 570 orders by the end of last year, almost all from China’s national airlines. It is possible that in the next century China will become a player in the world aviation game.

China has dreamed of building its own civil aircraft since the 1970s when it began working on the narrowbody Y-10, which in the end was thought to be invaluable and yet it never entered into service. The first regional COMAC jet, the ARJ21 with 90 seats, came into service in 2016, many years late. The ARJ21 is currently reserved for Chinese domestic routes, and an FAA certification is still missing, which will allow it to fly in the United States.

The first C919 flight test was due in 2016 but was delayed. In addition to the C919, China is also working with Russia to develop a long-haul jet C929. Although the C919 is made in China, foreign companies are playing an important role by providing systems as well as engines, made by CFM International, a joint venture between General Electric (GE) and Safran of France.

During a visit to COMAC in 2014, President Xi Jinping said he did not have a domestic airplane in China and this left the country at the mercy of foreign industrial groups, the state media said then. China last August launched a new multi-billion dollar jet-engine conglomerate with nearly 100,000 employees, hoping to fuel their own aircraft with self-produced engines.

After this first flight of the C919, it will still have to pass a series of tests to obtain the Chinese airworthiness certification before COMAC can sell the plane. The first prototype of the C919 is currently engaged in ground tests, which are taking place at Shanghai Pudong. In March last year, the CAAC completed the review of the entire project, technically approving the first flight.

The C919 “air baptism” was actually expected in 2014 but it progressively slid due to development issues. In particular, COMAC has been hit by a number of technological disadvantages and a long list of supplier-related problems. In the end, the C919 roll-out arrived in November 2015, following a strong pressure from the Beijing authorities. The first delivery, for this reason, has been postponed from 2018 to 2020.

The launch customer will be China Eastern Airlines, which acquired 20 of the aircraft. COMAC received the special flight permit from China’s Civil Aviation Administration on April 22, as well as a temporary registration of civil aircraft and an aeronautic aviation license. The flight permit and the station license expire on May 31st. The European Aviation Safety Agency (EASA) has also started working on the certification of the C919. This confirms COMAC’s departure from the FAA for the Western certification of its aircraft but highlights its intention to market the C919 internationally.

Fabio Gigante

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Vietjet announces Five-year Plan

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Vietjet announced it is embarking on a Five-year Plan to enable sustainable growth beginning 2017. The ambitious plan was announced at the Annual Shareholders’ Meeting of the Vietjet Aviation Joint Stock Company in Ho Chi Minh City.

The program, focusing on sustainable development, involves investments in enhancing internal human resources; protecting the environment; carrying out corporate social responsibilities; complementing national tourism development strategy; promoting local economic development; popularizing cultural practices and aviation civilization among passengers and in the community.
In 2017, Vietjet is committed to operating the airline with top priorities on safety and reliability, continuing to innovate and improve service quality and operation efficiency and managing the recently listed company in accordance with international standards and the Vietnamese Accounting Standards (VAS) and International Financial Reporting Standards (IFRS).

“Vietjet is ready to conquer new heights. I am confident that there is a bright future in the air and Vietjet is making every effort to bring it closer,” said Vietjet Chairwoman Nguyen Thanh Ha.
The meeting also reviewed the operation of the fast growing new-age carrier in 2016, approved the business plan for 2017 as well as the contents related to management and administration.  The company had an excellent year.

In 2016, Vietjet received 12 new aircraft, increasing its fleet to 41 aircraft consisting of 30 A320 and 11 A321 aircraft, transporting 14 million passengers, an increase of 50.9% compared to 2015, leading the Vietnam domestic market.

Meanwhile, the airline’s shareholders approved a move to raise foreign ownership levels. Foreign shareholders are now able to hold up to 49% of the company.  It might not be the kind of news item reported much in the west, but Vietjet ranks second in the list of five airlines having the most attractive flight attendants.  The company is, apparently, attractive on several levels.  (How will Tony Fernandes compete with that?)

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Premium – A Fleet Review of Air France/KLM

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Air France and KLM merged in 2004.  The joint company has hubs in Amsterdam and Paris.  Because of their long histories in aviation, these two airlines have a reach to every corner of the globe.  Both companies have numerous subsidiaries that cover regional and cargo services.  In this analysis, we only looked at the mainline passenger fleets.

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ATR denies signing the contract with Iran Air: We are “still working”

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ATR denies signing the contract with Iran Air to provide twenty aircraft. The news was reported yesterday by the Iranian news agency and later reported by Reuters. The Franco-Italian aircraft manufacturer, a joint venture between Airbus and Leonardo, has now explained they are “still working” to finalize the contract and there are “no updates” on the agreement previously signed between the two parties.

In February of 2016 ATR and IranAir signed a first Memorandum of Understanding for the firm order of twenty ATR 72-600s and options for another 20.  At list prices, the value of the deal is about one billion Euros. After the pre-agreement, however, as in the case of contracts already signed between IranAir and Boeing and Airbus, the parties define issues related to finance and procedural matters. In particular, one of the areas which is under discussion between IranAir and ATR is the maintenance of PW100 turboprop engines, built by the Canadian division of Pratt & Whitney, a division of the American conglomerate United Technologies Corporation. Although the contract at least four ATR 72-600 has not been signed yet, in any case, they have already been painted in the livery of Iran Air and are supposed to be delivered within fifteen days of signing.

Although the contract has not been signed yet, at least four ATR 72-600s, have already been painted in the livery of IranAir and are supposed to be delivered within fifteen days of signing.

Fabio Gigante

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