1. NEWSWATCH
16th September 2011
Volume 11; Issue 35
In this Issue:
Air France KLM orders 110 new airplanes
The Air France KLM Board of Directors, which met on 15
 Air France KLM
orders 110 new
September, approved the Group’s order of 110 long-haul
airplanes aircraft (50 firm orders and 60 options), still subject to the
finalization of discussions with the manufacturers.
 Rolls-Royce Trent
This first joint long-haul order by Air France and KLM will
900 selected by
Skymark for Airbus be replacing, in the medium term, the aircraft with 200 /
A380 350 seats currently present in the fleet and support the
Group's growing operations.
 Aviation body
slams EU's
Consistent with the provisional fleet plan, this order will
'Massive' carbon result in the Group's operation of 73 next generation
tax aircraft through 2024: 43 Airbus A350-900 and 30 Boeing
787-9. The first aircraft Boeing 787-9 order will enter into
 Air India to go service with KLM in 2016 and the first Airbus A350-900 with
ahead with
Air France in 2018. Later, both airlines will operate both
acquisition of
Boeing 787s types of aircraft.
These new aircraft will reduce fuel consumption by over
 Airline survey 15% and will give rise to a significant reduction in noise
suggests further
and gas emissions, confirming the Group's commitments in
order delays for
Bombardier's terms of environment and sustainable development. Air
CSeries France KLM is a member of the Dow Jones Sustainability
Index since 2004 and also leader of the “Transport and
 747-8 receives leisure” sector.
ICAO ‘Heavy’
designation Within the framework of this order, Air France Industries
KLM Engineering & Maintenance, the Group’s aircraft
 Emirates SkyCargo maintenance department, is confirming its commitment to
leases its third position itself as a key market player for the maintenance
Boeing 777
of these aircraft and their engines.
 IBA Group News “For its first joint order, the Air France KLM group made
its selection after a detailed assessment showing all the
IBA Group Ltd. performance characteristics of each aircraft, including
IBA House
7 The Crescent their energy and environmental performance” declared
Leatherhead, Surrey Pierre-Henri Gourgeon, CEO of Air France KLM. Peter
KT22 8DY
United Kingdom Hartman, president & CEO of KLM added: “Their
Tel: +44 (0) 1372 224488 integration into the fleet will enable the Group to
Fax: +44 (0) 1372 224489
www.ibagroup.com continue to operate one of the youngest and most modern
fleets in the world”.
Source: dutchdailynews.com, 16th September 2011
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2. NEWSWATCH
16th September 2011
Volume 11; Issue 35
Rolls-Royce Trent 900 selected by Skymark
for Airbus A380
Rolls-Royce, the global power systems company, has signed a
letter of intent with the Japanese airline Skymark Airlines to
provide Trent 900 engines to power six Airbus A380 aircraft,
including TotalCare® long-term engine service and support. The
aircraft will enter into service in 2014.
“Skymark came
Skymark is a new customer for Rolls-Royce, and the airline is
the first in Japan to order the Airbus A380. Trent 900 engines to the conclusion
powered the very first A380 to enter service in 2007 and have that the Rolls-
now been selected by 11 of 16 airlines who have ordered the
Royce Trent 900
aircraft.
has superior fuel
Skymark will benefit from the commitment of Rolls-Royce to
continually improve the performance and dependability of its burn, reliability,
engines. The Trent 900s it has ordered will incorporate economic
enhancements in design and materials that will yield almost a
two per cent improvement in fuel efficiency compared with efficiency and
those in service today. aftermarket
Shinichi Nishikubo, President and Chief Executive Officer, support. This is
Skymark, said: “Skymark has been evaluating the engines for
the A380 since it decided to order the A380 in Nov 2010. As a why Skymark
result, Skymark came to the conclusion that the Rolls-Royce concluded that
Trent 900 has superior fuel burn, reliability, economic
the Trent 900 is
efficiency and aftermarket support. This is why Skymark
concluded that the Trent 900 is the most suitable engine for its the most
operation" suitable engine
Jim Sheard, Rolls-Royce Senior Vice President – Civil Aerospace, for its
said: “Skymark is a new customer for Rolls-Royce and we are
very pleased that they have put their trust in our leading edge operation”
engine technology and TotalCare support. This latest order, - Shinichi
from a new customer, confirms the Trent 900 as the true
Nishikubo
market leader and engine of choice for the majority of A380
operators.”
The Trent 900 is currently in service with three airlines and has
been selected by all A380 customers who have made engine
selection decisions this year. Firm and option Trent 900-
powered A380 aircraft on order total 129. TotalCare® long-term
service agreements, in place on 90 per cent of Trent engines,
are designed to minimise customer financial risk and enhance
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3. NEWSWATCH
16th September 2011
Volume 11; Issue 35
operational performance and reliability, allowing operators to
concentrate on their core business. Source: rttnews.com, 16th September
Source: 4-traders.com, 15th September 2011
Aviation body slams EU's
'Massive' carbon tax
The International Air Cargo Association (TIACA) is urging the
European Union to suspend implementation of its controversial
Emissions Trading Scheme (ETS) for aviation and to instead
pursue a global agreement of aviation carbon emissions through
the International Civil Aviation Organization (ICAO).
In a letter to EU Climate Action Commissioner, Connie
Hedegaard, TIACA’s Industry Affairs Committee states four
main concerns over the upcoming legislation, which from
January 1, 2012, will require any airline landing or taking off
inside the EU to take part in the regional bloc's emissions “ By directly
trading scheme.
regulating
Under ETS, airlines flying to Europe will be required to
conduct outside
purchase permits to allow them to emit additional tons of
carbon dioxide above a predetermined cap. According to the of EU airspace,
proposals, sanctions for non-compliance will include fines and the EU ETS
flight suspensions.
encroaches upon
Warning that the ETS will impose "massive new taxes on
aviation", Hedegaard states that: the sovereign
"By directly regulating conduct outside of EU airspace, the EU authority of
ETS encroaches upon the sovereign authority of each State over each State over
its own airspace. The Chicago Convention also prohibits any
levies on international flights except on a cost basis 'related to its own
the provision of facilities and services for civil aviation'.” airspace”
“According to the International Air Transport Association, the
-Connie
cost to airlines of purchasing the necessary carbon allowances
will rise from USD1.3bn in 2012 to USD3.5bn in 2020. There is Hedegaard
no requirement that EU member states must use these
revenues to reduce carbon emissions, either from aviation or
any other sector – nor that they dedicate the money to any
environmental effort at all.”
“Ironically, the EU ETS will cripple the industry’s ability to
continue investing on its own in greener technologies. In recent
years, the industry has made impressive progress in reducing
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4. NEWSWATCH
16th September 2011
Volume 11; Issue 35
emissions, largely through utilization of more efficient aircraft
and operating procedures. Furthermore, the industry has
actively supported development of sustainable alternative
aviation fuels and implementation of next-generation, more
efficient air traffic management systems. The cost of EU ETS
emissions allowances will divert crucial monies away from
investment in such initiatives.”
In addition, the EU ETS may lead to some unintended “the scheme is
consequences such as encouraging carriers to fly less direct
ludicrous as
routing that could increase aviation carbon emissions. For
example, a direct flight from Hong Kong to Amsterdam has 5% analysis has
lower emissions than the same flight with a stopover in showed that on a
Moscow. However, the stopover would sharply reduce the
airline’s emissions charges – thereby benefiting the airline’s flight, for
bottom line, but not the environment.” example, from
“Aviation is intrinsically an international industry. It is the San Francisco to
transportation mode that ties together the globe most
London only 9%
expeditiously, and many airlines and aircraft operate across
borders. The EU has seemingly ignored this reality in taking a of emissions are
regional approach [on] the issue.” emitted in EU
st
At an aviation seminar held on August 1 , attended by industry
airspace; the
leaders, the Vice President of Environmental Affairs at the Air
Transport Association of America, Nancy Young, noted that the majority instead
scheme is ludicrous as analysis has showed that on a flight, for is emitted in US
example, from San Francisco to London only 9% of emissions are
and Canadian
emitted in EU airspace; the majority instead is emitted in US
and Canadian airspace, but would face the same amount of airspace, but
taxation as an internal EU flight. would face the
Furthermore, the issue of double taxation has been raised by
same amount of
airlines. Japan, Australia and New Zealand have all announced
they are considering their own cap-and-trade emissions taxation as an
schemes, and China said in July that it planned to commence internal EU
regional pilot schemes, with the aim of establishing a national
cap-and-trade regime by 2015. flight”
The EU legislation does provide that an airline will be tax -Nancy Young
exempt for the portion of the trip that a similar tax is imposed
domestically, but its implementation may be problematic, and
if another country, or group of countries, were to impose an
identical levy to that of the ETS significant disputes and double
taxation could indeed arise.
The US and China have both placed significant pressure on
European ministers. The US considers that by 2020, if
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5. NEWSWATCH
16th September 2011
Volume 11; Issue 35
implemented in its current form, it could cost the US industry
USD3bn. Chinese estimates are more conservative in the short-
term but as the domestic industry grows; losses as a result of
the tax are expected to surpass those in the US.
United States airlines have begun legal proceedings, arguing
that the system infringes, for one, the Chicago Convention,
which grants individual countries the right to complete and
exclusive sovereignty on taxation issues within their territory.
The EU's ETS is thought to also infringe bilateral open skies
agreements between the EU and other nations. US authorities
are reportedly even considering outlawing airlines from
complying with the ETS.
Source: Ulrika Lomas, Tax-News.com - 15th September 2011
Air India to go ahead with acquisition of
Boeing 787s
Air India would go ahead with the acquisition of Boeing 787
Dreamliner aircraft as part of its overall expansion programme
and seek government's nod for it, official sources said on “the Board
thursday. reviewed the
A decision to this effect is understood to have been taken by modified
the Air India Board which met today in the backdrop of Civil
Aviation Minister Vayalar Ravi's statements that the ailing turnaround plan
airline did not have enough money to go in for a massive fleet prepared by SBI
acquisition plan.
Caps, which
While the airline has placed orders for 27 Boeing 787s with the
suggested "a
first delivery expected later this year, the group of Ministers
headed by Finance Minister Pranab Mukherjee, which is scenario for
reviewing its turnaround plan, is likely to take a final decision expansion" if Air
in this regard, the sources said.
India was to
At the meeting, the Board also reviewed the airline's liquidity
position and infusion of funds from the government, an airline grow as per the
spokesperson said, adding that Air India has so far received Rs growth rate of
1,200 crore by way of equity infusion in 2011-12.
the aviation
On the aircraft acquisition issue, the Board reviewed the
market”
modified turnaround plan prepared by SBI Caps, which
suggested "a scenario for expansion" if Air India was to grow as
per the growth rate of the aviation market, he said.
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6. NEWSWATCH
16th September 2011
Volume 11; Issue 35
The acquisition of Boeing 787 deal is understood to have been
part of this modified turnaround plan and expansion
programme and a presentation on the Dreamliner acquisition
was made at the Board meeting. The turnaround plan was
based on the recommendations of the Committee of Officers
from the Finance and other ministries, which had earlier
suggested that "a scenario for expansion should be prepared if
Air India was to grow as per market growth rate".
Source: moneycontrol.com – 15th September 2011
Airline survey suggests further order delays
for Bombardier's CSeries
Interest remains high in Bombardier's new CSeries aircraft but
many airlines feel no sense of urgency to place orders, says an
RBC Capital Market survey.
Most of the 26 airlines surveyed — representing more than a
third of airlines around the world who fly similar-sized 100- to
149-seat capacity aircraft — had favourable views of the plane,
which offers an estimated 20 per cent fuel burn savings and 15 “airlines
per cent lower operating costs.
preferred to
But the airlines preferred to take a "wait and see" approach
take a "wait and
with placing orders, says the report by analyst Walter
Spracklin. see" approach
That sentiment suggests further order delays for the plane, a with placing
point that was reaffirmed by Delta Air Lines' decision this week
orders”
to delay an order for about 100 mid-sized aircraft.
The RBC survey found that fleet commonality was the key -Walter
concern for potential buyers as airlines worry about the costs Spracklin
and complexity of introducing another aircraft type to their
fleets.
Spracklin said the lack of urgency expressed by airlines and
emerging macroeconomic headwinds suggest the Montreal-
based manufacturer may not be able to achieve its goal of 300
orders by late 2013 when the first plane is set to enter into
service.
Bombardier has received 133 firm orders and 129 options for
the two sizes of CSeries.
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7. NEWSWATCH
16th September 2011
Volume 11; Issue 35
Some observers question, however, whether Republic Airways
will maintain its US$3-billion order for 40 larger CSeries planes
in light of its decision to become launch customer for Airbus' Republic – “has
rival A319neo. insisted it plans
Delivery of the Bombardier planes to Republic is set to start in to stick with
2015. It also has options for another 40 aircraft, that could
raise the contract to US$6.34 billion at list prices. both planes,
The airline has insisted it plans to stick with both planes, even even though
though they will be powered by different engines. they will be
Bombardier's shares fell to a new 52-week low Wednesday and powered by
the current pace of CSeries orders might not be enough of a
different
catalyst to propel the stock price significantly higher, Spracklin
added. engines”
On the Toronto Stock Exchange, Bombardier shares were up 19
cents, or 4.5 per cent, at C$4.39 in morning trading on
Thursday.
Source: Ross Marowits, The Canadian Press – 15th September 2011
747-8 receives ICAO ‘Heavy’ designation
The International Civil Aviation Organization (ICAO) has cleared ICAO HEAVY
Boeing’s new 747-8 to operate at the same separation distances designation -
as its earlier 747-400, after the aircraft was classed as ‘Heavy’
for wake turbulence considerations. “means that
An ICAO team of wake vortices experts from the US FAA, airports will be
European Organisation for the Safety of Air Navigation able to operate
(EUROCONTROL) and EASA analysed both simulated and flight
test data for the 747-8, which was assessed for “landing, more efficiently
departure, climb/descent and cruise operation” wake vortex and not have to
effects on other commercial aircraft, including a former Korean slow down
Air 747-400 used during the accreditation process.
operations to
“The safety case supports the assertion that the Boeing 747-8 is
safely categorized as HEAVY. Consequently, the wake accommodate
turbulence separation minima specified for HEAVY aircraft this airplane” -
should be applied,” ICAO said in a statement.
Todd Zarfos
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8. NEWSWATCH
16th September 2011
Volume 11; Issue 35
Boeing 747 program engineering vice president Todd Zarfos said
achieving the ICAO heavy designation was an “important
accomplishment for the 747-8 program”, which will allow the
aircraft “to operate in the same markets and routes they use
for the 747-400″.
“We did extensive testing to show that even though the 747-8
is longer, heavier and has a bigger wingspan than the 747-400,
it does not create greater wake vortex effects. That means
that airports will be able to operate more efficiently and not
have to slow down operations to accommodate this airplane,”
Zarfos said.
Source: australianaviation.com.au – 15 th September 2011
Emirates SkyCargo
leases its third Boeing 777
Emirates SkyCargo, the freight division of Emirates Airline, has
leased its third Boeing 777 Freighter as it launched its new
service to the Far East and Australasia, it was announced on
Tuesday. “ This new route
The leasing was arranged by DAE Capital, the aircraft leasing not only bolsters
division of Dubai Aerospace Enterprise (DAE) and Deutsche Bank
capacity, it
and DVB Bank provided financing to DAE.
provides our
Emirates SkyCargo uses the Boeing freighter aircraft on its new
Dubai-Singapore-Sydney-Hong Kong-Dubai route. The aircraft customers with
made its debut flight to Sydney on Monday and has the more options
capability to carry up to 103 tonnes of freight.
and increased
“This new route not only bolsters capacity, it provides our
customers with more options and increased trade trade
opportunities,” said Hiran Perera, Emirates’ senior vice opportunities”
president of cargo planning and freighters.
“We currently transport cargo in the belly-hold of 126 -Hiran Perera
passenger flights a week between Dubai and Australia, as well
as 28 Hong Kong flights and 42 Singapore flights, and the
freighter – with a wide main deck door – will increase our
ability to carry oversized shipments,” added Perera.
Source: Shane McGinley, arabianbusiness.com– 13th September 2011
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9. NEWSWATCH
16th September 2011
Volume 11; Issue 35
IBA Group News
Press Releases & Presentations can be viewed in the News & Views section of our website, www.ibagroup.com
Conference Dates
18th – 20th September 2011 – ISTAT Europe 2011, 18th European Conference, Barcelona - Phil Seymour will be speaking,
James Uniacke and Adrian Lee will be attending
26th – 28th September 2011 – SpeedNews 12th Annual Aviation Industry Suppliers Conference in Toulouse - IBA is a
sponsor and Ben Jacques will be speaking
28th – 30th September 2011 – ERA General Assembly, Rome – Ben Jacques will be speaking and Adrian Lee will be
attending
5th – 6th October 2011 – UBM Aviation, Aircraft & Engine Finance & Leasing USA Conference, Chicago – Phil Seymour
will be speaking
31st October – 2nd November 2011 – Euromoney Asia Pacific School of International Aviation Finance, Hong Kong –
Stuart Hatcher will be presenting
3rd – 4th November – 12th Annual Asia Pacific AirFinance Conference – IBA will be speaking
7th - 8th November - Aircraft Asset Management Training Seminar, Dublin, Ireland
1st – 2nd December 2011 – Aviation Investors Summit, London – Phil Seymour and Owen Geach will be speaking
24th – 26th January 2012 – Euromoney 14th Annual International Aviation Finance Conference, Dublin – IBA is sponsoring
and will be speaking
Country Visits
- Owen Geach and Steve Fisk will be in Tokyo from 25th to 30th September 2011 - Please contact Owen Geach if you
would like to arrange a meeting: owen.geach@ibagroup.com
Phil Seymour’s Notes on the Week
I had a fun week at the Boeing Appraisers sessions in Charleston, South Carolina. A fantastic part of the USA!
We looked at some initial data about the 737MAX and hopefully we will see more definitive information in the coming
months. The CFM LEAP-1B engine should help the aircraft deliver significant fuel savings and or range increases with
an in service date sometime in 2017. It will be a while before we are able to put our value curve together, I will let
you know as soon as it is ready!
A quick turnaround in London beckons - off to ISTAT in Barcelona on Sunday. See you there?
Phil
Publications – 2011 Editions
Please contact marketing@ibagroup.com for more information.
Aircraft Values Book Published in February 2011 & August 2011 £660 per year
Lease Rate Digest Published in February 2011 & August 2011 £360 per year
Engine Values Book Published in April 2011 £650 per year
Maintenance Cost Journal Published Quarterly £200 per year
“Newswatch” is a free weekly round-up collated by IBA Group Ltd.
Go to our website to find the last year editions of Newswatch archived.
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The items in this document do not necessarily represent the opinion of IBA, and is intended to be for information purposes only.
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party, with regard to the information and views contained.
As a leading independent aviation consultancy, IBA Group Ltd. offers technical advice, commercial business
solutions & asset valuations for our worldwide client base.
Compiled & Edited by Mike Yeomans
www.ibagroup.com
Tel: +44 (0)1372 224488 Fax: +44 (0)1372 224489
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