Premium #342 – Aircraft transactions through July

Despite the slower activity at air shows, the commercial aircraft business is not moribund. There has been quite a bit of action among airlines. The first table shows the top 20 airlines in terms of fleet changes. The list is in descending order by the total. Note that the top 20 account for about a quarter of the fleet changes this year through July. Although Boeing is winning the order race this year, Airbus fleet activity is close among the top 20. The table also underscores that the top four OEMs are basically where all the activity has been. If we focus on the Airbus and Boeing columns, we can see those who favor one OEM and others who balance their business. An interesting item is Delta, where one might have thought is no longer favoring Boeing. Yet we see a near even fleet growth between the two main OEMs. This is probably going to change though as the Airbus fleet grows faster and the Bombardier CS come into service. Another interesting item to note is the emergence of LCCs among the top 20. Especially Norwegian. There has been talk about the airline being financially stressed. Bear in mind its A320neo fleet is coming soon. The growth at this airline must be setting off alarms. Assuming it can balance its financing requirements with fleet growth, competitors must be wary about where these aircraft will be deployed. This is especially a concern as the new MAX8s start serving the US east coast. There was news this week from the Iceland carriers (Icelandair and WOW) adding more cities. The US network airlines might want to reconsider their pricing – their basic economy can’t compete with the LCCs in our view. If we look at the Bombardier vs Embraer competition, it is surprising to see that Bombardier is ahead of Embraer. With so much negative news about Bombardier, one might have expected Embraer to be ahead. Embraer has a big lead at United Express. If one were to assume this gives Embraer’s E2 an advantage at United, bear in mind the pilot pools are way different. The Express pilots (mainly at SkyWest) are regional and subject to the scope clause. United’s ongoing interest in the 100-seat segment is likely to ensure a brutal competition between Bombardier and Embraer. Note that SkyWest a US-based regional airline, is listed at #9. That is remarkable. Who would have imagined that a regional would grow so large? This critical mass ensures SkyWest is increasingly treated as an equal by its network customers. If a network airline were to drop SkyWest the pain would be equally distributed. Network airlines do not have the capacity to cover the gap in their schedule. And SkyWest could, or could, start to fly as its own brand, as it has the capacity. airBerlin is also among the top 20 but is likely to go away soon given its financial state. Wil the Lufthansa deal be allowed to go through without any challenge? Ryanair is said to be trying to acquire the whole company. If Ryanair gets a piece, Airbus loses and Boeing gains. If Lufthansa gets the deal, Airbus keeps a customer. This reorganization should be watched closely. There are significant risks on the table for the big two OEMs. Next looking at the registration changes by model numbers provides the following. First, Airbus. The table shows the market is still doing deals on the A300 - all for freight purposes. But the aircraft remains a viable option. Similarly, the A318 and A319, although not winning many new orders, have a brisk second-hand market. Several A319s are being moved from airBerlin to Eurowings. Among the various A320 models, sharklets (WL) indicate new deliveries. The same applies to the A321. Among widebodies, the A350 is seeing better deliveries this year. The A380 is slowing though. The A330 models continue to see activity. Among the A340s, there were several trades between Castlelake and HiFly of Malta. Looking at the Boeing activity by model, we note the following. The 717 transactions went to Hawaiian. We saw the first wave of MAX deliveries. The 747-8 deals were new deliveries to Korean and include the last 747-8i to be built most probably. Boeing continues to deliver 737-800s at a remarkable rate. Bear in mind Boeing has only production facility compared to four for Airbus. Southwest Airlines accounted for several 737-700s that came from China. No doubt at deep discounts. Among the 737-800 deals, the big traders were American, Southwest, Norwegian, several Chinese airlines and of course Ryanair. Ryanair, Southwest and Norwegian were top three and accounted for nearly 20% of the deals. The 787-9 continues to outsell the -8 by a growing margin. There are many rumors that Boeing might use the -8 decline to phase it out and take the resources to focus on the NMA (MoM). With news this week that SWISS is considering the A321LR, yet another market opportunity is slipping out of Boeing's hands. The MAX9 and MAX10 are not attractive enough. Boeing is doing well in every segment but this one. How much longer can Boeing wait? Next, we look at Bombardier. The early model CRJs (100 & 200) are moving around, but the big move was 24 at SkyWest. The CRJ-1000 deals were Air Nostrum aircraft moving to Binter and Croatia. American Eagle continues to acquire CRJ-700s. Bombardier won deals for the CRJ-900 from SAS, China Express, Lufthansa and Air Canada Express. The CRJ remains primarily a US-focused product and is ring-fenced by scope clause. The Q series keeps winning follow-on orders. But clearly, the focus is on CSeries. SWISS is deploying the CS100 in new markets, while airBaltic is disrupting markets with the CS300. It can be assumed that Delta will deploy its CS100 in an equally disruptive way. How much longer can American and United sit on the sidelines in this segment? If JetBlue selects the E2 or CSeries, these two big airlines will see more of their business disrupted. Finally, we look at Embraer. The ERJ-140 saw good deals moved to Airlink in South Africa. This was along with several E-190 deals to the same airline, which is using the E-190 to move beyond the southern African market. it's pending service to St. Helena will attract a lot of attention. The E-175 is the OEMs best selling model by some margin. It is especially popular in the US among regional airlines. Outside the US, the only customer is KLM. The E-175 is the primary competitor of the CRJ-900. In terms of the larger models, Austrian has been adding E-195s and aeroMexico Connect added E-190s. The market is aware of the E2 models and could be juggling current models while they await the EIS of the new models. Embraer is sitting on a large pool of existing E-Jet customers who may be eager to update with the E2.

US Flight Planner	Airbus vs Boeing
US Airline Schedule Performance	Daily Production & Deliveries

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