We’ve been traveling on business all week and naturally the conversation was all aviation. We spoke with lessors, aerospace analysts, hedge funds and private equity. In what amounts to a data dump, here is what is being discussed “out there.” This is in no particular order.
- The new outbreak of ad wars between Airbus and Boeing is viewed largely with eye-rolling and disdain that two world-class companies are behaving like two year olds.
- Nobody, but nobody we talked with believes the public numbers advanced by either Airbus or Boeing.
- Boeing will have virtually a new airplane with the 737 MAX by the time it’s done, similar to the design creep of the 747-8 and the magnitude of change between the 737NG and the 737 Classic.
- Airbus pulled a coup with the NEO, forcing Boeing to do the MAX….
- But there is some sentiment that Airbus and Boeing should have resisted doing a re-engine and stuck with the the current airplanes. Airbus should have let Bombardier proceed with the CSeries for the niche 100-149 seat market unchallenged, having bigger fish to fry.
- Bombardier doesn’t know how to effectively sell the CSeries and it is unwilling to cut deals that would sell the airplane.
- Operating leasing is a ticking time-bomb, largely (but not entirely) due to book values of the aircraft on the balance sheet far exceeding current market values.
- Boeing claims the 787-10 will “kill” the A330-300. The market agrees–but only by the middle of the 2020 decade. Boeing can’t deliver enough 787-10s to make a dent in the global fleet before then. By then, the A330 will be about 30 years old and broadly at the end of its natural life cycle anyway. So what’s the big deal?
- Airbus is doing a good job enhancing the A330 to keep it competitive with the 787.
- There remains skepticism that the LEAP engine development is proceeding well. The buzz on the street is CFM still has a lot of challenges with the development.
- There is some feeling the MAX will be late–not because of any concrete knowledge, but because of Boeing’s performance on the 787 and 747-8 programs.
Unrelated to Airbus and Boeing, our colleague Addison Schonland has this first-hand accountof Isreal’s Iron Dome.