The most brutal area of commercial aerospace is the single aisle market. Competition between Airbus and Boeing is fierce. So fierce that new entrants rightly fear the news these giants are going to increase production. The pool may be growing bigger, but it is also getting tougher to enter as the two OEMs swamp the market with aircraft. Between them, Airbus and Boeing are heading into a situation that sees them delivering over 100 single aisle aircraft every month.
Take a look at the situation from another angle. Airbus and Boeing are doing very well selling single aisle aircraft. The chart illustrates the state of play. Even at ~100 aircraft deliveries per month, with no new orders, the two OEMs have over five years of production in backlog. (Note how much better Airbus is doing in the largest size. )
Now consider this. … Continue reading
As Lufthansa tweaks its business to become more competitive, it has undertaken some interesting actions on the long haul fleet. As the chart below shows, the three aircraft involved are seeing significant changes. The key item here is Lufthansa adding premium economy seating.
The 747-400 loses first class and gets nearly 12% more seats. This allows the airline to focus this fleet on markets which are more leisure focused – or as the airline puts it, “markets where there is less demand for first class product”. Example? Bangkok.
The 747-8 by contrast keeps first class. The addition of premium economy sees fewer economy seats. This fleet is focused on markets where demand for first class is justified. Examples? USA, India, selected Asia markets plus Mexico and Brazil. Possibly Argentina from October (yes how about that, defaulting Argentina). Interestingly Argentina and Venezuela have traditionally been the best first class markets for… Continue reading
We published a premium story today on the timing of the A380’s launch. The timing of the A380 launch was driven by many factors and certainly one of the principal factors was competing with Boeing’s 747 and its monopoly of the VLA segment of its era.
Providing perspective of how Airbus had to view its decision at the time, we spoke with Professor Tobias Kretschmer, an expert on strategy and game theory from Ludwig-Maximilians-Universität München. Professor Kretschmer uses the A380 vs 747 in his game theory lectures and is familiar with the key decision Airbus faced at the time the A380 was launched.
Bloomberg reports that Malaysian Airlines is likely to see some big changes. A possible new CEO, layoffs and an aircraft order review are the identified changes.
The current CEO has a contract that expires in the next few weeks. It is doubtful that he would want to renew it given the past year. Who could blame him? It may have been the most awful year any airline CEO ever had to go through.
The layoffs could be big – 3,000 to 4,000 according to the Bloomberg story. There are some 20,000 employees at the airline, and laying off a fifth will be be a severe blow. Once the state effectively takes the company private, the unions will have a tough time overcoming any layoffs.
What about fleet rationalization and orders? The table below lists the fleet and orders. Airbus is not exposed… Continue reading