Earnings week for Airbus, Boeing, Bombardier and Embraer April 25, 2016, © Leeham Co.: Airbus, Boeing, Bombardier and Embraer having their first quarter earnings call this week. Bombardier also has its Annual General Meeting concurrent with its 1Q earnings on Friday.
The big anticipation will be with Bombardier.
Earlier this month, The Wall Street Journal reported Delta Air Lines was going to order 75+50 C Series from BBD. Delta, on its 1Q earnings call, said it had nothing to announce but would have more to say at its investors day. This is May 16.
But at the same time, BBD postponed its AGM and 1Q call from the 28th to the 29th. Delta’s board of directors meets on the 28th. Previously, BBD postponed by one day its year-end earnings call to coincide with Air Canada, which announced an order for 45 C Series, plus options.
Is Bombardier’s rescheduling another harbinger of the Delta order, or will Delta hold off any announcement until that May 16 investors day?
Or could Delta announce the Bombardier order Friday and the widely reported, expected order for 30-37 Airbus A321ceos?
The world aviation geeks wonder.
Boeing
Boeing’s 1Q earnings call is Wednesday. No doubt analysts will ask about the news, also broken by The Wall Street Journal, about the prospect of dumping the 737-7 MAX as currently envisioned and proceeding instead with what The WSJ’s Jon Ostrower dubbed the 737-7.5. This is a slightly enlarged version, bigger than the current 7 MAX but smaller than the 737-8 MAX.
(LNC will publish our take on the 7.5 MAX Wednesday, ahead of the earnings call.)
Rob Spingarn, the aerospace analyst for Credit Suisse, hit the nail on the head in a weekly note published Friday.
[Boeing] has sold 60 Max 7s, accounting for just ~2% of the total Max order-book. If BA is truly looking to improve its positioning at the lower end of the Max market, it would appear to acknowledge CSeries as a legitimate competitor at the low end, and that any momentum created by a potential Delta order lead to other orders, which is part of our thesis on BBD. Given that BA’s Max 9 is already struggling to compete with A321neo, it would seem that BA needs to improve Max 7 if it wants more than a single model (Max 8) family. This was not as large a concern in competitions such as United where BA offered the current model 737-700 and competed strictly on price, but becomes more important when competing on technology.
We’ve been saying for a long time the MAX family is essentially a one-and-a-quarter airplane family, the 8 MAX and the struggling 9 MAX. We had already written off the 7 MAX as a commercial failure. Pursuing a MAX 7.5 seems to validate this.
Last week, before the 7.5 news, Ron Epstein of Bank of America Merrill Lynch downgraded Boeing to Underperform (Sell) from Neutral (Hold). His concern was that by BAML’s reckoning, Boeing will only recover about $14bn of $29bn Boeing 787 deferred production costs by 2022, well short of Boeing’s guidance. He thinks Boeing will have to extend the accounting block significantly or take a write-down, or both. Thus, his downgrade.
Boeing’s comments on these issues Wednesday probably won’t be illuminating.
Airbus
For Boeing’s rival, delayed deliveries due to engine issues with Pratt & Whitney’s GTF and supplier challenges for the A350 will probably be the main topic of questions. Reports that Airbus will also slow production on the A380 and not ramp up as quickly as liked on the A350 will undoubtedly also draw questions.
Embraer
I don’t expect anything unusual coming out of Embraer, except perhaps about the first flight of the E190-E2. The plane rolled out to great fanfare Feb. 20. It’s slightly more than two months later, and it hasn’t flown. Someone may well ask about this.
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