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The Singapore MinistryCommercial
Embraer sees improving market
Embraer has increased its revenue guidance for the remainder of the year as it recorded an increase in net income for the second quarter.
The Brazilian airframer recorded net profit for the quarter of US$70.3m (A$77m), an increase of 3.7 per cent although revenue over the same period decreased by 7.5 per cent to US$1.46bn (A$1.6bn). The company delivered 69 aircraft during the quarter, 29 of which were for the commercial market and 40 business aircraft.
In delivering its results, Embraer said that the recovery of the market for commercial aircraft this year is showing good opportunities, some of which has resulted in new orders, including a number of significant orders at the recent Farnborough Airshow. As a result, the company has upgraded its revenue guidance for the year from US$5bn (A$5.5bn) to US$5.25bn (A$5.76bn) as well as an increase in operating margin to 6.5 per cent.
A320 production to rise to 40 per month
Airbus has announced that it will increase production of the A320 Family to 40 per month during the first quarter of 2012, while Boeing is poised to follow suit with its 737 range.
Airbus says that strong demand for the aircraft family has been behind its decision, with the backlog for A320 Family now at over 2200 aircraft. It is expected that this will increase over the next year as the global aviation industry continues its rebound and financing for new aircraft orders once again opens up.
The European manufacturer will gradually step up production over the next two years of the A320 Family, with output currently at 34 aircraft per month. In December this will rise to 36 per month, then 38 August 2011 before rising again in early 2012 to 40. The A340/A330 line will remain at 8.5 units per month.
Boeing is also expected to announce an increase in output from its 737 line. Boeing Company CEO Jim McNerney told analysts in a conference call on July 28 that the company was studying a further increase in 737 output above its currently planned increase to 35 per month from 2012, although supplier issues could limit any increase. An announcement is expected by the start of the northern autumn quarter.
Boeing’s Q2 profit falls
The Boeing Company has recorded a 21 per cent fall in net profit for the quarter ending June 30 as revenue dropped due to lower aircraft deliveries and lower volumes from its military operations.
The company recorded consolidated net income of US$787m (A$880m) for the quarter as revenue fell by nine per cent to US$15.6bn (A$17.4bn). Earnings from Boeing Commercial Airplanes declined by 16 per cent to US$683m (A$764m), while earnings from Defense, Space & Security were down by 19 per cent to US$711m (A$795m).
Despite the falls in revenue and profits, CEO Jim McNerney said that the results represented a solid operating performance for the quarter. “We are making progress on key commercial and military development programs, our production programs and services businesses are running well, and our enterprise focus on productivity improvement is funding investment in growth while maintaining our financial strength,” he said.
For the quarter, Boeing Commercial Airplanes delivered 114 aircraft, representing a nine per cent decrease over the same period last year, while it also took net orders for 68 aircraft. This saw the company end the quarter with a backlog of 3304 aircraft, valued at US$252bn (A$282bn).
The company commented that the 787 and 747-8F both passed critical milestones in their flight test programs, while it also firmed the design for the 787-9. However, it noted that both programs had “increasing pressure” on their delivery schedules, which could force some delivery delays, pushing delivery of the first of each to early 2011 instead of the final quarter of this year.
The company’s Defence, Space & Security unit fared well, although revenue was down in all businesses except Boeing Military Aircraft as deliveries of Chinook helicopters increased, while it also saw a charge against it related to the Turkish Peace Eagle AEW&C program (based on the RAAF Wedgetail). Backlog at Defense, Space & Security is valued at US$60.6bn (A$68bn), a decline of US$3.6bn (A$4bn) as run-off of multi-year contracts exceeded additions to backlog in the quarter.
McNerney said in his outlook that the company was well placed over the coming year to benefit from new opportunities as the world economy rebounds. “With our commercial markets recovering, and the priorities of our government customers gaining clarity, we remain well positioned for growth in 2011 and beyond.”
Boeing’s 2010 revenue guidance is reaffirmed at US$64-$66bn (A$71-74bn), with its earnings guidance for remaining at US$3.50-$3.80 (A$3.91-$4.25) per share. It also expects to deliver 460-465 aircraft for the full year, including the first few 787s and 747-8Fs, with all aircraft sold out.
Farnborough comes alive!
The Farnborough Airshow once again returned to its glory days this year, with a number of major aircraft orders and commitments announced during the week from lessors and airlines.
Following is a summary of orders and commitments made at Farnborough by manufacturer and type:
Commitments
* AIRBUS A320 FAMILY: LAN Airlines signed an MoU for 50 A320 Family aircraft including 10 A321s. Virgin America signed an MoU for at least 40 and up to 60 A320s.
* AIRBUS A330: Hong Kong Airlines committed to acquiring an additional 10 A330-200s. Thai Airways International signed an MoU to purchase seven Airbus A330-300s.
* AIRBUS A350: Hong Kong Airlines signed an MoU to acquire 15 A350s. The A350 order represents the conversion of 15 existing A330 orders.
* EMBRAER E190: Republic Airlines has signed a letter of intent to order 24 Embraer E-190s
* SUKHOI SSJ: Orient Thai Airlines signed a letter of intent to buy up to 24 SSJ 100s. Bermuda based Pearl Aircraft Corporation signed an MoU for 30 SSJ100s and 15 options.
Firm orders
* AIRBUS A320 FAMILY: Berlin-based Germania ordered five A319s, which will be delivered from 2011. Lessor GECAS ordered 60 A320 Family aircraft, with the breakdown not yet specified. Lessor Air Lease Corporation ordered 31 A320s and 20 A321s.
* AIRBUS A330: Garuda Indonesia ordered six A330-200s for delivery from the second quarter of 2012. Aeroflot has firmed an order for 11 A330-300s.
* ATR: Lessor Air Lease Corporation ordered 10 ATR 72-600s with options on a further 10 of the type. Brazilian carrier Azul placed an order for 20 firm and 20 options for ATR 72-600s, making it the launch customer for the -600 series in South America. Swedish regional carrier Golden Air ordered two ATR 72-500s, which will be delivered in August and October 2010. Lao Airlines has purchased two ATR 72-500s, which will be delivered by the end of the year.
* BOEING 737: Lessor Air Lease Corporation ordered 54 737-800s with options on a further six. New lessor Avolon has been identified as the customer for 12 737-800s sold in December 2009 and attributed to an undisclosed customer. Norwegian Air Shuttle exercised purchase rights for 15 additional 737-800s. Lessor GECAS ordered 40 737-800s. Chinese carrier Okay Airways placed an order for 10 737-800s.
* BOEING 767: Azerbaijan Airlines has ordered one Boeing 767-300ER and two 767 Freighters. The order replaces a previous order for two 737NGs.
* BOEING 777: Reunion Island based Air Austral has ordered two Boeing 777-200LRs, for delivery in mid 2011 and 2012. Emirates ordered 30 additional Boeing 777-300ERs, 18 of which were previously attributed to an unidentified customer.
* BOEING 787: Royal Jordanian ordered an additional three 787-8s, which were previously allocated to an undisclosed customer.
* BOMBARDIER Q400: Qantas exercised options on seven Q400s
* EMBRAER E-JET: Air Lease Corporation signed a letter of intent with Embraer for 15 E-190s and options on a further five. Brazilian carrier Azul has ordered five E-195s. TRIP Linhas Aeras of Brazil ordered six E-175s.
* SUKHOI SSJ: Indonesian carrier Kartika Airlines has firmed a tentative agreement to order 30 Sukhoi SuperJet 100s. Russian operator Gazprom Avia has also signed a firm order for 10 SSJs, with deliveries commencing in 2012.
In addition, Boeing announced orders from Alaska Airlines and American Airlines away from the Farnborough Airshow.
One of the most influential buyers at the airshow was Air Lease Corporation, the new lessor founded by former ILFC CEO and industry stalwart Steven Udvar-Hazy. The company recently raised US$3bn (A$3.36bn) in debt financing, most of which is expected to go towards the orders placed. While the lessor placed large orders for both Boeing and Airbus narrowbodies, the Embraer and ATR orders were somewhat more surprising, particularly the latter as Udvar-Hazy never ordered turboprop aircraft while he was at ILFC.
While the airline orders were outshone by those placed by lessors, there were a number of commitments announced at the airshow, possibly signalling that airlines are once again moving to restock their fleets after many reduced their capacities during the downturn. A number of Boeing’s orders had already been taken but not announced, while Airbus took a number of memoranda of understanding which are yet translated into firm orders. This could indicate that some airlines are still experiencing difficulty financing their aircraft purchases and are waiting for finance approval before firming up their orders.
Also surprising was the activity around the SSJ100, the first of which should be delivered by the end of the year. While the sales were not to well known operators, that could be about to change as SCAC has been in discussions with Alitalia on a possible order for the aircraft.
Boeing delivers 800th aircraft to China
Boeing has delivered the 800th Boeing airliner in China, a 737-800 for Air China, with Boeing and the Civil Aviation Administration of China celebrating a partnership which stretches back to 1972.
“We have witnessed the rapid development of the aviation industry in China. We are honoured to be part of the development by providing our best products and services,” said Jim Simon, vice president of Sales for China, Boeing Commercial Airplanes. “We are also proud that China has a sophisticated and expanding role in the commercial aviation industry and on all Boeing commercial airplane models including the 787 Dreamliner.”
China has been a major market for both Boeing and Airbus in recent years, with Boeing’s Current Market Outlook predicting that the country will help to drive an average 6.8 per cent per annum growth in passenger traffic in the Asia Pacific region over the next 20 years.
Republic to order more E-190s
US regional carrier Republic Airlines has signed a letter of intent to order 24 Embraer E-190s at the Farnborough Airshow.
Republic is the largest operator of E Jets in the world, most of which operate under contract for other airlines, while Republic also owns Frontier and Midwest airlines.
Boeing gets Okay for 10 737s
Privately owned Chinese carrier Okay Airways has placed an order for 10 Boeing 737-800s.
The order had been recorded on Boeing’s orders and deliveries website as an unidentified customer.
Air Austral orders 777s
Reunion Island based Air Austral has ordered two Boeing 777-200LRs, which will be delivered in mid 2011 and 2012.
The airline already operates a fleet of three 777-200ERs and two 777-300ERs, with a further -300ER to join the fleet next year.
American orders more 737s as 787s delayed
American Airlines is now facing a two year delay to its order for Boeing 787s after reaching a new delivery schedule agreement with the manufacturer. AA was originally scheduled to receive its first 787-9 in 2012 as part of an order for 42 aircraft and… [Continue reading]
Bombardier to test camelina fuel on Q400
Bombardier will utilise a Q400 turboprop owned by Canadian airline Porter Airways to conduct a biofuel test program by 2012.
The program, which is being led by Target Growth Canada in association with Sustainable Oils and Honeywell UOP, is targeting a camelina-derived biofuel for its test flight. Funding for the project is being provided by the partners as well as by Sustainable Development Technology Canada (SDTC), and Green Aviation Research & Development Network (GARDN).
“The Q400 aircraft is already one of the greenest regional aircraft in service around the world, and this test program provides Bombardier and the partners an opportunity to further the industry’s biofuel efforts and ultimately help reach its emissions reduction targets,” said Helene V. Gagnon, vice president, Public Affairs, Communications and Corporate Social Responsibility for Bombardier Aerospace.
Superjet boosted by new sales
Sukhoi Civil Aircraft Company announced at the Farnborough Airshow three significant new commitments for the Superjet 100 (SSJ100) from Orient Thai Airlines, Pearl Aircraft Corporation and Gazpromavia  for up to 79 aircraft.
Orient Thai Airlines has signed a letter of intent with Sukhoi Civil Aircraft Company which is expected to see it buy up to 24 Superjet 100s, with deliveries to commence from 2011. The order is expected to be finalised later this year, and will be comprised of 12 firm orders and 12 options. Bermuda based Pearl has signed a memorandum of understanding for 30 firm orders of SSJ100s and 15 options, representing the first North American order for the Russian regional jet. In addition, Russian operator Gazprom Avia has also signed a firm order for 10 SSJs, with deliveries commencing in 2012.
As well as the two new commitments, SCAC is understood to be in talks with Alitalia for a possible order of SSJ100s. SCAC is 75 per cent owned by Sukhoi, with 25 per cent owned by Alenia Aeronautica.
Lessors lead Farnborough sales again
Air Lease Corporation, the new lessor headed by former ILFC CEO Steven Udvar-Hazy, has continued its buying spree, leading the orders announced on July 20, while ATR also had a major day.
A summary of the announced sales is presented below:
Air Lease Corporation ordered 54 737-800s with options on a further six. Air Lease signed a letter of intent with Embraer for 15 Embraer E-190s and options on a further five, while it also announced an order for 10 ATR 72-600s with options on a further 10 of the type.
New lessor Avolon has been identified as the customer for 12 737-800s sold in December 2009 and attributed to an undisclosed customer.
Royal Jordanian has ordered an additional three 787-8s, which were previously allocated to an undisclosed customer.
LAN Airlines has signed a memorandum of understanding for 50 A320 Family aircraft. The commitment includes 10 A321s.
Hong Kong Airlines has signed a memorandum of understanding to acquire 15 A350s and 10 additional A330-200s. The A350 order represents the conversion of 15 existing A330 orders.
Brazilian carrier Azul placed an order for 20 firm and 20 options for ATR 72-600s, making it the launch customer for the -600 series in South America.
Swedish regional carrier Golden Air ordered two ATR 72-500s, which will be delivered in August and October 2010. The airline will operate the two aircraft on behalf of SAS subsidiary Blue1 in Helsinki.
Lao Airlines has purchased two ATR 72-500s, which will be delivered by the end of the year.
The orders from Air Lease Corporation come after the cashed up lessor ordered 51 A320 Family aircraft on July 19, with the company indicating that it plans to operate a diverse portfolio. In particular, the ATR order appears interesting, with Udvar-Hazy never ordering turboprops during his time in charge of ILFC.
The orders from ATR cemented a successful start to the year, with the company having recorded orders for 42 new aircraft this year and 30 options. The company also delivered 26 new aircraft during the first half of the year, while its backlog at June 30 was at 152 aircraft, representing more than two years’ of production.
Alcan launches AirWare

Rio Tinto subsidiary Alcan has released a new lightweight aluminium alloy which could compete against advanced composites, particularly on new generation narrowbody aircraft.
Called AirWare, the new line of alloys is up to 30 per cent lighter than current alloys thanks to its lower density and strength, which means that less material needs to be used. As such, it could become a cost-effective competitor to carbon composite materials for some aircraft, with Bombardier and Airbus reportedly in talks to use the new alloy for some parts of its planned future aircraft.
While composites have gained in popularity for use on large aircraft such as the Boeing 787 due to their reduced weight compared to metals, concerns about the potential for ground damage and the poor scalability are leading the major manufacturers to consider new alloys for the primary structures of new generation narrowbody aircraft. AirWare also offers an advantage in recycling, with metals still much easier to recycle than composites
Orders kick off Farnborough
Boeing, Airbus, Embraer and Sukhoi have used the opening day of the Farnborough Airshow to announce a flurry of new orders, led by lessors ordering new narrowbody stocks as well as a significant order from Emirates for 777s.
A summary of the orders announced to date is presented below:
Emirates has ordered 30 additional Boeing 777-300ERs. Emirates is already the largest operator of 777s in the world, with 86 in service and 16 on order from previous orders. Of the 30 ordered, 18 were previously listed as ordered to unidentified customers.
Norwegian Air Shuttle has exercised purchase rights for 15 additional Boeing 737-800s. The purchase rights were secured as part of its 2007 order for 42 737s.
GECAS has ordered 40 Boeing 737-800s. GECAS also placed an order for 60 A320 Family aircraft, with the breakdown not yet specified.
Air Lease Corporation has ordered 31 A320s and 20 A321s. Air Lease Corporation is the new leasing venture launched by former ILFC CEO Steven Udvar-Hazy.
Aeroflot has firmed an order for 11 A330-300s. The aircraft will be configured to carry around 300 passengers and will be used on long haul services.
Brazilian carrier Azul has ordered five E-195s. Fellow Brazilian carrier TRIP Linhas Aeras ordered six E-175s.
Indonesian carrier Kartika Airlines has firmed a tentative agreement to order 30 Sukhoi SuperJet 100s.
The orders from Air Lease Corporation and GECAS have led to speculation that other lessors are looking to boost their stocks as the global airline industry recovers and may announce more orders later in the year, including for more widebody aircraft.
The Emirates order has also been seen as significant, and comes one month after the airline announced an order for 32 A380s at the Berlin Airshow. After announcing the new order, Emirates president Tim Clark told ATW that the airline has held discussions with Boeing over its “777 wish list” for upgrades to the aircraft, although the most recent order has no provision for swapping to an upgraded 777.
Bombardier says CSeries is moving forward
Bombardier says that development of the CSeries is progressing well and that it has captured 50 per cent of the net orders in its class, although it appears unlikely that it will announce any new orders soon.
The Canadian manufacturer briefed media at the Farnborough Airshow on July 19, noting that ultimate load testing of the CSeries’ wing had been completed at Belfast, while aircraft systems testing on the Complete Integrated Aircraft Systems Test Area (CIASTA), located in Mirabel, Quebec, was progressing on schedule. Bombardier also said that it had conducted wind tunnel tests on the CSeries’ design at three centres in Europe which have confirmed the aircraft’s overall performance benefit. The aircraft is currently still on track to enter service in 2013.
Bombardier currently holds orders for 33 CS100s and 57 CS300s from Lufthansa, Lease Corporation International and Republic Airways, as well as options on a further 90 additional aircraft over both types. Bombardier has not announced any new orders for the CSeries since Republic placed its order for 40 CS300s and 40 options in February this year, but there is mounting speculation that Steven Udvar-Hazy’s Air Lease Corporation could order the aircraft, particularly as Udvar-Hazy has backed the CSeries in his previous role as CEO of ILFC.
Qatar Airways also confirmed at the airshow its continued interest in the CSeries, but a deal has not yet been concluded due to “issues”, according to CEO Akbar Al Baker, with engine manufacturer Pratt & Whitney. Separately, Reuters is reporting those issues relate to negotiating a support agreement for the engine.
Airbus delivers 10th A380 this year
Airbus says that it is on track to meet its goal of delivering 20 A380s this year, with the manufacturer delivering its ninth and tenth A380s for 2010 on July 16.
MSN051 was delivered to Singapore Airlines while MSN041 was handed over to Lufthansa earlier the same day, bringing their respective A380 fleets to 11 and two. SIA now joins Emirates in operating 11 A380s in their current fleets, while Qantas has six and Air France has taken delivery of three.
Meanwhile A380 development aircraft MSN004 visited Schiphol airport in the Netherlands last week for airport compatibility evaluations.
Boeing ups sales forecast
Boeing has issued its latest Current Market Outlook, which anticipates that 30,900 new aircraft will be ordered over the next 20 years, an increase of 6.5 per cent from its forecast last year, representing robust growth in passenger numbers.
“The world market is doing much better than last year, but there are still challenges,” said Randy Tinseth, vice president of marketing, Boeing Commercial Airplanes. “Looking at 2010, we see a world economy that continues to recover. We expect the world economy to grow above the long term trend this year. As a result, both passenger and cargo travel will grow this year. Airline revenue and yields are up, but fuel prices remain volatile.”
In its forecast, Boeing predicts that long term passenger growth will average 5.3 per cent per annum up to 2029 which, along with a wave of fleet replacement in the 2015-2017 timeframe, will result in demand for 30,900 new aircraft valued at over US$3.6 trillion (A$4 trillion). Of those new aircraft, 69 per cent are expected to be narrowbody aircraft, while 23 per cent will be for twin aisle widebody aircraft. Large aircraft, such as the Airbus A380 and Boeing 747-8 are expected to represent only two per cent of the market (or 720 units), most of which will be delivered to Asian and Middle East carriers.
As in previous years’ forecasts, the Asia Pacific region is expected to drive the market for new aircraft, with the region to account for 43 per cent of global passenger traffic. As such, airlines from the Asia Pacific region are expected to order 10,320 new aircraft valued at more than US$1.3 trillion (A$1.5 trillion), with the total fleet to nearly triple to 12,200 by 2029. Of the new aircraft, 64 per cent will be narrowbody aircraft, with 28 per cent twin aisle aircraft.
Growth in freight traffic is also expected to be resilient, averaging 5.9 per cent each year, requiring 2490 aircraft, of which 740 are expected to be new build aircraft. Most of the new freighter aircraft are expected to be standard freighters of less than 45 tonnes and will account for 42 per cent of the market, followed by large freighters at 31 per cent, with the remainder comprised of medium size freighters. Most new build freighters are expected to be in the large category, with demand for 520 new aircraft, compared to 210 for medium freighters and only 10 smaller freighters.
787 debuts at Farnborough
Boeing 787 ZA003 has made the type’s first visit to foreign soil, with the aircraft landing at Farnborough shortly after 9am local time on July 18 to take part in the Airshow.
“It’s an honour to showcase the 787 here at the Farnborough Airshow,” said Scott Fancher, vice president and general manager of the 787 program, Boeing Commercial Airplanes. “I can’t think of a finer stage on which to present this highly anticipated airplane.”
Fancher added that ZA003, which is being used primarily for interior testing, conducted some flight testing along the way during its nonstop flight from Seattle to Farborough. The aircraft will be open for limited tours during the show, and will depart back to Seattle on July 20 to resume its testing.
Boeing is currently planning to deliver the first 787-8 before the end of the year, although recent rework issues could push this into the beginning of 2011.
787 facing delivery slip