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Thursday, July 30th, 2020

Boeing to end production of 747 by 2022

The effects of the COVID-19 pandemic have continued to hit the world’s second-largest planemaker to the point where it is now further revising output schedules. Growing hostilities between the U.S. and China have now seen the latter shelve plans to purchase larger jets from the U.S., which has caused further problems for Boeing. The 777X launch has now been delayed for a further year, while the 747 is now scheduled to end production completely by 2022.

Demand for the 777 and 787 Dreamliner have tumbled, to which David Calhoun, Boeing CEO told analysts: “Our industry and our company are weathering challenges like none we have ever experienced in our lifetimes.” 787 output is now being pared back to six units per month in 2020, a third reduction in output since it peaked at 14 units a month last year. Plans for the production of the 777 mini-jumbo and its sister aircraft, the 777X, will be cut to two units per month. Boeing is also exploring the possibility of consolidating the production lines for the 787 Dreamliner, which is currently split between Everett, Washington and North Charleston, North Carolina. This consequently casts a large shadow over the future of the Everett hub as the 787-10, the largest of the variants, can only be manufactured in South Carolina.

Boeing does not anticipate commercial air travel returning to pre-pandemic levels until 2023, and further delays in obtaining renewed airworthiness certification for the 737 MAX means that the current stockpile of approximately 450 of the jets will take a year to clear once certification has been obtained. This will likely see Boeing move a production target of 31 of the jets a month into 2022.  

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AerCap posts second quarter net income of US$246 million, cancels order for 15 Boeing 737 MAX aircraft

AerCap has posted second-quarter net income of US$248 million compared with US$331 million for the same period in 2019.

Basic lease rents were US$948 million for the second-quarter of 2020, compared with US$1,077 million for the same period in 2019. The decrease was primarily due to lease restructurings, transitions and the impact of airline bankruptcies.

Maintenance rents and other receipts were US$224 million for the second quarter of 2020, compared with US$109 million for the same period in 2019. The increase was primarily due to higher maintenance revenue recognized as a result of lease terminations during the second quarter of 2020.

Net gain on sale of assets for the second quarter of 2020 was US$10 million, relating to nine aircraft sold for US$188 million, compared with US$78 million for the same period in 2019, relating to 22 aircraft sold for US$502 million. The decrease was primarily due to the lower volume and composition of asset sales.

Other income for the second quarter of 2020 was US$15 million, compared with US$17 million for the same period in 2019.

In July 2020, AerCap has reached an agreement with Boeing to restructure its order book for Boeing 737 MAX aircraft, including the cancellation of 15 of its Boeing 737 MAX aircraft on order. Following this cancellation, the company has 80 Boeing 737 MAX aircraft on order.

As of June 30, 2020, AerCap's portfolio consisted of 1,357 aircraft that were owned, on order or managed, as adjusted to reflect our cancellation of 15 Boeing 737 MAX aircraft orders in in July 2020. The average age of our owned fleet as of June 30, 2020 was 6.4 years (2.7 years for new technology aircraft, 11.7 years for current technology aircraft) and the average remaining contracted lease term was 7.3 years.

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CDB Aviation delivers three Airbus A320neos to new customer Frontier Airlines

CDB Aviation, a wholly owned Irish subsidiary of China Development Bank Financial Leasing (CDB Leasing), has commenced the deliveries of three Airbus A320neos to new customer, Denver-based low-fare carrier Frontier Airlines as part of a sale-and-leaseback transaction.

The LEAP-1A engine-powered aircraft, delivering from Airbus’ A320 Family jetliner final assembly line in Mobile, Alabama, are bound for an immediate entry into passenger service on U.S. domestic routes.

Both the lessor and airline teams took the opportunity to commemorate a milestone delivery as one of the aircraft, Chinook the Gray Wolf, became the 100th A320 member of Frontier’s fleet, in addition to the other two aircraft named Cortez the Green Turtle and Parish & Daisy the Burrowing Owls.

JetBlue deploys Honeywell's Ultraviolet Cleaning System

Honeywell’s new UV Cabin System has been put in service as part of a pilot program by JetBlue Airways, marking the first time a U.S. airline has implemented the Honeywell technology.

In clinical studies, ultraviolet light has been found to be capable of significantly reducing certain viruses and bacteria when properly applied at prescribed levels. The Honeywell UV Cabin System can traverse an aircraft cabin in less than 10 minutes, and JetBlue will be gauging the system’s place in its operation, while continuing other cleaning methods.

Honeywell has delivered eight of the devices to JetBlue, and the devices are now being put into service as part of JetBlue’s "Safety from the Ground Up" program at two of the airline’s focus cities, John F. Kennedy International Airport in New York and Fort Lauderdale-Hollywood International Airport. These two locations kicked off a 90-day pilot program for JetBlue to evaluate the Honeywell solution.

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CAAC approves HAECO Xiamen’s Airbus A320 part-out capability

HAECO Xiamen, a member of the HAECO Group, has released that its Airbus A320 part-out capability has been formally approved by the Civil Aviation Administration of China (CAAC).

The company is the only MRO in Eastern China to have obtained this approval, following its first A320 part-out project for Yan Wu Group, disassembling four aircraft for the Chinese mainland operator.

In recent years, the aviation industry has seen a growing number of aircraft retirement. Disassembling retired planes in order to re-use parts and recycle materials enables operators to optimise the residual value of the aircraft, whilst minimising environmental and safety risks.

Airbus reports half-year results

Airbus has reported consolidated financial results for the half-year ended June 30, 2020.

“The impact of the COVID-19 pandemic on our financials is now very visible in the second quarter, with half-year (H1) commercial aircraft deliveries halving compared to a year ago,” said Airbus Chief Executive Officer Guillaume Faury. “We have calibrated the business to face the new market environment on an industrial basis and the supply chain is now working in line with the new plan. It is our ambition to not consume cash before M&A and customer financing in H2 2020. We face a difficult situation with uncertainty ahead, but with the decisions we have taken, we believe we are adequately positioned to navigate these challenging times in our industry.”

Net commercial aircraft orders totalled 298 (H1 2019: 88 aircraft), including eight aircraft in Q2, with the order backlog comprising 7,584 commercial aircraft as of June 30, 2020. Airbus Helicopters booked 75 net orders (H1 2019: 123 units), including three H145s, one Super Puma and one H160 during the second quarter alone. Airbus Defence and Space’s order intake increased to €5.6 billion.

Consolidated revenues decreased to €18.9 billion (H1 2019: €30.9 billion), driven by the difficult market environment impacting the commercial aircraft business with around 50% fewer deliveries year-on-year. This was partly offset by more favourable foreign exchange rates. A total of 196 commercial aircraft were delivered (H1 2019: 389 aircraft), comprising 11 A220s, 157 A320 Family, five A330s and 23 A350s. Airbus Helicopters reported stable revenues, reflecting lower deliveries of 104 units (H1 2019: 143 units) partially compensated by higher services. Revenues at Airbus Defence and Space were impacted by lower volume and mix, in particular at Space Systems, as well as delays in some programs caused by the COVID-19 situation.

Consolidated EBIT Adjusted totalled €-945 million (H1 2019: €2,529 million). Airbus’ EBIT Adjusted of €-1,307 million (H1 2019: €2,193 million) mainly reflected the reduced commercial aircraft deliveries and lower cost efficiency. Steps have been taken to adapt the cost structure to the new levels of production, the benefits of which are materialising as the plan is executed. Also included in the EBIT Adjusted is €-0.9 billion of COVID-19 related charges.

Commercial aircraft are now being produced at rates in accordance with the new production plan announced in April 2020, in response to the COVID-19 situation. The current market situation has led to a slight adjustment in the A350 rate from six to five aircraft a month for now. On the A220, the Final Assembly Line (FAL) in Mirabel, Canada, is expected to progressively return to pre-COVID levels at rate four while the new FAL in Mobile, U.S., opened as planned in May. At the end of June, around 145 commercial aircraft could not be delivered due to COVID-19.

Airbus Helicopters’ EBIT Adjusted increased to €152 million (H1 2019: €125 million), reflecting a favourable mix, mainly in military, and higher services partially offset by the lower deliveries. The five-bladed H145 and H160 helicopters were recently certified by the European Union Aviation Safety Agency.

Consolidated EBIT (reported) was €-1,559 million (H1 2019: €2,093 million), including Adjustments totalling a net €-614 million.

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American Airlines names Stacy Morrissey as Vice President of Engineering and Quality

American Airlines has appointed Stacy Morrissey as the Vice Pesident of Engineering and Quality.

With extensive technical knowledge and leadership experience in various engineering, safety and quality assurance roles, Morrissey’s skills will be integral in the continued growth of American’s world-class technical operations team. She will report to Kevin Brickner, American’s senior vice president of Technical Operations.

In this role, Morrissey will oversee engineering, quality control, quality assurance, reliability, aircraft configuration management, maintenance programs and technical publications.

Morrissey joined American 22 years ago as a fleet operations engineer, where she was responsible for engineering support of the Boeing 757, 767 and 777 fleets.

Spirit AeroSystems signs agreement with Aerion to design AS2 forward fuselage

Supersonic aircraft company Aerion, has entered into a memorandum of agreement to expand the role of Spirit AeroSystems in the development of the AS2 business jet to include production of the forward fuselage. As part of the agreement, Spirit has committed to additional investment in the AS2 program and has increased engineering resources working on the design of the AS2’s forward fuselage.

Aerion and Spirit first began formal collaboration in early 2019, working on preliminary design of the AS2’s forward, pressurized fuselage. Joining the project in the early formative stages of the AS2, Spirit’s technical expertise has significantly advanced the design evolution as Aerion moves the supersonic business jet toward production beginning in 2023. At full rate, it is expected that Spirit will build 36 forward fuselage assemblies per year.

Aerion’s pursuit of faster point-to-point travel begins with the launch of the new AS2 supersonic private jet. Designed to be inherently environmentally responsible from first flight, the AS2 is the first supersonic jet designed to be powered by 100 percent synthetic fuel and reach supersonic speeds without the need for an afterburner.
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