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Boeing is a leading manufacturer of commercial and military aircraft, rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. Headquartered in Chicago, Boeing employs more than 170,000 people across the United States and in 70 countries.
Boeing is organised into two business units: Boeing Commercial Airplanes and Boeing Defense, Space & Security. Supporting these units is Boeing Capital Corporation, the Shared Services Group and Boeing Engineering, Operations & Technology.
Boeing’s main commercial products are the B737, B747, B767 and B777 families of aircraft and the Boeing Business Jet. New product development efforts are focused on the B787 Dreamliner, 737Max, 777X and the B747-8. The company has nearly 12,000 commercial jetliners in service worldwide, which is roughly 75% of the world fleet.
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SilkAir 737 MAX fleet to open up network options while boosting Boeing’s narrowbody presence in Asia
While Singapore Airlines regional subsidiary SilkAir is now celebrating delivery of its first of 23 737-800s, it is the second part of its largest ever aircraft acquisition programme that could be a game changer. The Singapore Airlines (SIA) regional subsidiary plans to take the first of at least 31 737 MAX 8s in 2H2017, enabling efficiency improvements and new medium-haul routes.
SilkAir will have the opportunity to use the MAX’s improved range to open new destinations in North Asia, Central Asia and Australia. The improved economics of the aircraft also potentially opens up destinations in India and China which are not viable with current generation narrowbody aircraft.
SilkAir is only one of four Asian carriers that has so far committed to the 737 MAX, along with Thailand’s Nok Air, Virgin Australia and Indonesia’s Lion Air. Nok, which announced its order at the recent 2014 Singapore Airshow, also expects to be one of the first carriers to take the MAX when it enters service in 2H2017.
Singapore Airlines (SIA) regional subsidiary SilkAir began a new chapter on 20-Feb-2014 as its first Boeing 737-800 entered service, taking over from slightly smaller A320s on four short-haul sectors. The carrier has just completed a momentous week as 21-Feb-2014 marked its 25th anniversary while on 17-Feb-2014 it rolled out a new brand campaign emphasising its full-service offering.
SilkAir has been extremely successful over the past decade, with steady profits and growth despite low-cost carriers invading its home market. LCCs now account for one-third of total capacity in Singapore and about half of the short-haul market, compared to virtually zero 10 years ago.
SilkAir, however, faces some of its biggest ever challenges as it begins its 26th year. Singapore’s short-haul market is suffering from overcapacity, impacting yields and load factors across LCCs and full-service carriers. SilkAir is fighting back with product, network and brand improvements but the market will not likely be able to fully absorb the capacity it is adding in 2014 as it places into service eight 737-800s.
US airline majors to add capacity despite unit cost rises. Is "capacity discipline" history already?
Nothing remains stable in the airline industry; even dynamic equilbrium is an elusive goal.
Thus, despite having a bullish view of demand and a positive outlook for 2014, the major US airlines are expecting both cost creep and capacity increases – usually not a combination that pleases investors hoping for continued sustainability among the country’s airlines.
But the US major network carriers are repeatedly stressing the efficiency ("discipline") of their capacity growth since the bulk of the expansion is attributable to aircraft up-gauge or adding slimmer seats to increase density of existing aircraft, and stressing their actions are by no means a return to the days of introducing irrational supply into the market place. The hybrid carriers JetBlue and Alaska continue to grow in the mid-to-high single digit range in FY2014 while Southwest still aims for flat capacity growth.
Those carriers, along with American, Delta and United are projecting unit cost increases for FY2014, citing various reasons for the creep - including IT investment and wage increases. Perhaps with a gradually improving US economy, the airlines collectively feel that their capacity increases will be easily absorbed and revenue momentum can help offset some of the cost pressure. But then again....
Air Canada’s FY2013 financial performance clouded by currency pressures - and aggressive competition
Air Canada’s decent FY2013 financial results are being overshadowed by a weakened 4Q2013 performance partly triggered by currency and weather headwinds that are carrying over into 1Q2014. While the carrier has some mechanisms in place to mitigate its expenses denominated in the USD, markets are spooked and the carrier’s stock price has fallen since it warned that it would face challenges in the first three months of 2014.
Aside from the weaker 4Q2013 results, Air Canada recorded a return on invested capital (ROIC) for 2013 of 11% versus 7.9% the year prior. Its return performance bodes well for Air Canada’s stated goal of reaching a sustainable ROIC of 10% to 13% by 2015.
While Air Canada remains bullish that it is on a well-established path towards sustainable profitability, it faces some immediate noise that could create a cloud over its business transformation. But despite the near-term challenges, its cost reduction efforts appear to be paying off as it forecasts unit costs reductions for FY2014, compared with projected increases at its main rival WestJet.
Boeing delivered a record 648 aircraft in 2013 and the manufacturer is set to continue to break its own delivery records in 2014. With plentiful demand for its narrowbody and widebody aircraft, Boeing continues to raise production even as its backlog continues to build, now standing at a record 5,080 aircraft.
Although wary of raising output too high, given issues with sections of its supply chain and its own manufacturing facilities, Boeing is also confident that there will be no production bubble. The company plans to deliver between 715 and 725 aircraft in 2014, an increase of around 10%, as it increases deliveries of its popular 737NG and 787 families.
After record ordering and deliveries in 2013 for commercial aircraft, 2014 is set to be another busy one for the world’s major aircraft manufacturers and their aircraft programmes. With the Singapore Airshow imminent, a new round of speculation is occurring, with much of it focussed on whether the array of new orders will lead to excess capacity, especially in the Southeast Asian market.
Boeing and Airbus are busy producing – and selling – next generation widebody programmes and re-engined narrowbodies. Bombardier is working to perfect and deliver its CSeries to customers. Embraer is starting the development of its second-generation E-Jets and ATR is trying to get its shareholders to agree to an all-new 90-seat turboprop. Elsewhere, major next generation regional jet, turboprop and narrowbody projects continue to mature in China and Russia, threatening an end to the set of not-so-cosy duopolies that have dominated the commercial aircraft manufacturing landscape for most of the past decade.
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