Looking ahead to 2013 in Commercial Aviation

Last year yielded a few surprises in an otherwise predictable year.

Jim Albaugh shocked the aviation world when he retired unexpectedly at age 62. He was expected to remain in his position as CEO of Boeing Commercial Airplanes until mandatory retirement at 65.

EADS CEO Tom Enders unleashed a surprise merger proposal with BAE Systems. The deal didn’t work due to German government opposition, but he ultimately accomplished a governance restructuring—a key objective of the merger—that will reduce government meddling in the future.

Those were about it. Boeing’s much-anticipated Authority to Offer the 777X didn’t happen. ATO for the 787-10 was stealthily granted. Airbus and Bombardier, to no surprise, delayed the A350 and CSeries by a few months. Boeing came roaring back to become sales leader for the first time in about a decade, on the strength of 737 MAX sales.

What’s ahead for 2013? Here’s what we see.

Overview

With the spurt of 737 MAX sales over, narrow-body sales competition between Airbus and Boeing should return to normalcy. Will twin-aisle sales become the next growth market because of the first flight of the A350 and the program launch of the 7870-10? Will ATO of the 777X evolve into a program launch as well? Will Bombardier’s first flight of the CSeries and subsequent testing validate its claims for the new technology airplane and finally spur a large number of sales of the “show me” crowd?

Here’s our OEM-by-OEM rundown.

Odds and Ends: Airbus and Boeing BBJs; Oops by Sen. Cantwell; positive SPEEA talks

MAX BBJs: Boeing is offering 737-8/9 MAX BBJs but not, as yet, a 7 MAX BBJ. Boeing says it is still studying a 7 MAX BBJ. there have so far been no orders for the 7 MAX.

Airbus ACJ A318: Airbus says it’s offering an enhanced A318 Airbus Corporate Jet. Improvements are mainly to the interior, though the press release says, “These include Sharklets on the wingtips, which make the aircraft look nicer….” The Boeing and Airbus announcements were at the NBAA trade show.

Oops by Cantwell: Sen. Maria Cantwell (D-WA) is running for reelection. One of her TV ads is called The Hub, in which she promotes Washington State as the Hub for aerospace and her work in Congress on behalf of Boeing.

Only there was a big Oops in the first version: it opened with stock footage of US Airways Airbus A320s. Not only were these not Boeing airplanes, US Airways hasn’t ordered a Boeing since Steve Wolf was CEO–nor has America West, now combined with US Airways, ordered a Boeing aircraft since the 757.

The ad ran for some time on KING 5 (NBC-Seattle) until it was scrubbed and replaced with opening stock footage of a Boeing 767.

All YouTube videos containing the Airbuses have been “removed by the user.” Here is the revised ad.

Someone in Cantwell’s campaign really muffed this one.

Positive SPEEA talks: Last Friday, Boeing and SPEEA each released statements indicating negotiations have taken a positive turn. The Seattle Times sums it up here.

The mid-size, twin-aisle battle

The mid-size twin-aisle battle

While a plethora of new entrants are nipping at the heels of Airbus and Boeing in the single-aisle market, the battle in the twin-aisle segment is strictly between the two behemoths.

The two OEMs differ on the size of the market by a wide margin. Airbus, in its 2011 20-year Global Market Outlook, the most recent available, forecasts a need for 6,525 twin-aisle airplanes: 4,518 “small” twin aisles and 1,907 “large” twin-aisles. Boeing, which does not publicly distinguish this segment, forecast a need for 7,950 twin-aisles. This is in the 200-400 seat segment (Airbus uses 210-400 for its forecast).

Given their methodology differences in the total market forecast, both nonetheless come to the same market share—24%–of the mid-size, twin-aisle segment.

The line-up is:

Understanding appraisers in aircraft values

There has been an active discussion in the comment section on the “Rate 35” post and the relative merits of appraisals and appraisers with respect to the Airbus A320 and Boeing 737NG.

We’ve been involved in the airline business since 1979 and from 1990, when we co-owned Commercial Aviation Report (CAR), have followed the appraisal business. Given the discussion in “comments,” we think a dedicated post is worthwhile.

CAR created the industry’s first commercial appraisal conference in 1990. ISTAT–the International Society of Transport Aircraft Traders–at that time was still largely a small, professional organization, far difference than what it is today.

CAR’s first conference brought together nearly every appraisal company then in existence in the US to compare and discuss appraisals of what was called Enhanced Equipment Trust Certificates (EETCs) and appraisals published by the firms.

Bankruptcy fears swirl again around American Airlines

With bankruptcy fears swirling again around American Airlines, some questions arise what happens to the orders AA has with Airbus and Boeing if the carrier goes into Chapter 11.

This hand-wringing piece paints a dire picture for Boeing. There is a lot to argue with over this particular writing, but the piece’s headline is particularly off-the-mark. (Note that the writer of the piece and the headline writer may not be the same person.)