Boeing announced its results this week and its quarterly profit beat analyst estimates. Boeing predicts it should do well in 2015 by converting more of its order backlog into deliveries. One of the key items everyone is watching for in this regard is 787 deliveries, and the long road back to profitability for a program that began with multiple disasters.
But the story at Boeing is more than about 787 deliveries. If one looks at the portfolio of Boeing’s Commercial Aircraft Division, it is clear the rise in profitability is driven by more than 787. Since 2000, Boeing’s big story has been 737. In 2012, the 737 (131-200 seats) peaked at 90% of annual orders, largely because of the successful introduction of the MAX that year. By 2014 737 orders declined back to a more normal mix of 65% of annual orders. The recent strong growth in… Continue reading
Observers have been saying for some time that single aisle aircraft buyers like to order the smallest model and then when the time comes, convert the initial order to a larger variant. We asked Boeing about this and they declined to provide us with any data on conversions.
Taking a look at orders and deliveries from 2000 through 2014, we created the following chart. We color coded the NG (solid) and MAX (pattern) models so readers can follow the sizes. Of course orders and deliveries don’t track year to year. That said, we can see what airlines and lessors are ordering and what gets delivered. Continue reading
Mark Lapidus is CEO of Amedeo, a leasing firm with with 20 A380s on order. Selling the A380 has proven to be a complicated task. The aircraft is the largest passenger airliner and for many airlines, the A380 is intimidating. Yet, among the users of the aircraft there are voluble fans, like Emirates. One of the leading A380 fans is Mark Lapidus, who thinks many airlines do not understand the aircraft’s capabilities (but should and could benefit from it) and many who have deployed the aircraft are not optimizing its capabilities.
It has been almost a month since we last saw Ross Mitchell in Mirabel. There have been some big changes at the company since that visit. On the sidelines of the 17th Global Airfinance Conference in Dublin we caught up with Mr Mitchell and got to talk about Bombardier in terms of how the year ended and what 2015 is starting to look like.
Delta Air Lines release its 2014 financial statements, highlighted by $4.5 billion in pre-tax profit, $3.7 billion in free cash flow, $1.35 billion returned to shareholders through stock repurchases and dividends, and a 20.7% return on invested capital. This is Delta’s fifth consecutive year of profitability, and is indicative of the market power of the big 4 airlines in the US market, which operate as an oligopoly.
Richard Anderson, Delta’s CEO, stated that “Our 2014 performance – an industry-leading operation, superior customer service, and a 70 percent increase in profits – shows that Delta is focused on delivering growing value for its employees, customers, and investors. As we being 2015, we have a significant opportunity from lower fuel prices which will drive more than $2 billion in fuel savings over 2014. Through our capacity discipline, pricing our product to demand, and the fuel savings, we expect to… Continue reading
One of today’s best panels was titled the “Fleet Managers” and moderated by Helane Becker from Cowen & Co. On the panel were Nathaniel Pieper from Delta, Jude Bricker from Allegiant and Jose Yunda from Avianca.
Mr Pieper started off by telling the audience that Delta is still interested in used aircraft. (He joked that Delta and Allegiant together accounted for the world’s biggest used airplane buyers). Used aircraft offered excellent ROI and ensured a strong balance sheet. (It helped Delta’s results reported today were so good) Low fuel costs have offered further support to the decision by Delta not to buy new aircraft at the same level as other airlines. This strategy will continue to play at Delta. The airline’s fleet plan is driven by matching aircraft to routes. He used the 717 as an example – Delta frequently makes use of the 717 to… Continue reading