Odds and Ends: S&P; C-17; AA-US merger (again); 777X wing work; WA aerospace future

S&P says don’t pay attention to our ratings: On the same day Delta Air Lines was named to the S&P 500, The Los Angeles Times had this article commenting on Standard & Poor’s legal defense of its investment grade credit ratings of companies involved in the 2008 financial collapse in the US that led to the global recession in 2008, affects of which are still felt today.

S&P’s defense included the argument that nobody should pay attention to its ratings, according to the article.

The ratings issue is important because airlines, lessors (and, of course, others outside aviation) covet investment grade ratings for the capital-intensive aerospace industry. Airlines and lessors need “cheap” money to buy airplanes. Air Lease Corp recently obtained its first investment grade rating, for example, something for which it issued a press release. Delta gained headlines for its return to investment grade status. Airlines have long used S&P, Moody’s and Fitch for rating equipment trust certificates used to finance airplanes.

The columnist for the LA Times is incredulous that S&P’s legal defense in the federal lawsuit is, essentially, nobody should pay attention to its ratings. It is indeed remarkable.

Final C-17 for US Military: Boeing’s C-17 program has been struggling to stay alive for the past several years and the challenge will get worse when Boeing hands over the final order to the USAF. The airplane’s survival depends now entirely on non-US sales, and these come few and far between. It’s also the last program of McDonnell Douglas; Boeing killed the MD-11, MD-80, MD-90 and MD-95 lines not that long after the two firms merged, though it did keep the MD-95 alive for a short time, renamed the Boeing 717.

The Long Beach Press-Telegram has a couple of additional stories here and here.

Why States opposes AA-US merger: Micheline Maynard writes in Forbes why she thinks states have joined the US Department of Justice lawsuit to block the merger between American Airlines and US Airways. The actions have nothing to do with consumer protection, the alleged motive of the DOJ, she opines. Rather, the states’ interests are far more parochial.

ElectroImpact competes for 777X work: ElectroImpact makes wings for the Airbus A380 and A350 XWB and it’s headquartered in Boeing’s back yard at Everett (WA). Now it’s hoping to build wings for the 777X. This Seattle Times report tells the story.

Washington State’s future in aerospace: The Pacific Northwest Aerospace Alliance hosts its second annual series of luncheons with members of the Washington State Legislature to talk about what needs to be done for the future of aerospace in this state. The first lunch is in Bellevue (WA) September 24 and the second is September 26 in Spokane, the other major aerospace cluster in the state.

Confirmed Bellevue Panelists

• Sen. Nick Harper (D), District 38 – Everett

• Sen. Paull Shin (D), District 21 – Lynnwood

• Rep. Mike Sells (D), District 38 – Everett

• Rep. Bruce Chandler (R), District 1 – Yakima

• Rep. Larry Springer (D), District 45 – Kirkland

Confirmed Spokane Panelists

• Sen. Michael Baumgartner (R), District 6 – Spokane

• Rep. Timm Ormsby (D), District 3 – Spokane

• Rep. Kevin Parker (R), District 6 – Spokane

• Rep. Mark Schoesler (R), District 9 – Ritzville

Information and registration for Bellevue is here.

information and registration for Spokane is here.

Clever headline: The Street.com column has a clever headline this morning in a post written by Ted Reed concerning the on-going sales battles between Airbus and Boeing.

7 comments on “Odds and Ends: S&P; C-17; AA-US merger (again); 777X wing work; WA aerospace future

  1. The story of the last USAF C-17 being delivered Thursday was written to tug on the emotions. The USAF has stated for many years they have enough C-17s, and in fact the first one, know as T-1 is now in the USAF Museum at Wright-Patterson AFB in Dayton, OH. Congressmen from California for years added extra C-17s to the Defense Budget knowing there was no need for these extra airplanes. But they did it to keep people, who would vote to keep them in office, working. The C-17 became a welfare program in the US.
    But Thursday is not the last of the C-17s to be delivered. There are still another 10-20 of them on order, so there is still about two years of production left. Boeing has been trying to sell more C-17s to international customers, with some limited success. Other countries around the world are suffering budget problems, too, just like the US is.
    The C-17 is an outstanding airlifter, but even its production years will come to an end.

  2. Re: “Delta Shuns Boeing Dreamliner, Buys Airbus Ordinary-Liner”

    If you look at Northwest Airlines’ instead of Delta fleet strategy it’s not a surprise at all. NWA had been buying cheap DC9 and DC10 well into the nineties. Leasing cheap SW 717’s. Giving them new interiors and paintjobs. Buying old stocks, pulling new seatcovers over old seats. And just parked the paid for girls for a while shortly after 9/11. Next to the spanking new jets of UA.

    In good NWA tradition DL in 2014 will start introducing glass cockpits on 182 MD88 and MD90s. 2030 anyone?

    http://www.innovative-ss.com/platforms/index.asp?ID=73&L1=2&L2=4&L3=0&display=1

    Delta seems to have inherited NWA’s tricks (&mngt). Nobody knows what price Delta Airlines paid for the (slow selling) 100 x Boeing 737-900ER’s at the moment (late 2011) Boeing was being overtaken by the NEO at e.g. 737 operators AA and Qantas.

  3. I believe ElectroImpact builds wing tooling for the A380 and not the wings themselves. From the Times story, it looks like the company is interested in building the 777X wing tooling as well.

  4. The C-17 was delivered at a rate of 10 a year in 2012, and as much as 16 a year in 2008. 16 a year appears to be the maximum rate. Initial rates were at 6 a year. It would have been probably beneficial to stretch deliveries by reducing yearly numbers. Many countries are keeping their production facilities busy with very low production rates. See Japan, Italy, France (Rafale) or Russia (Su-34, IL-76). Of course, it is far less economical, but it allows to keep production available for a longer time.

  5. Business is business and politics was always at the whim of business. Let’s see if the courts are as well. I wonder just what these states will present as evidence to oppose this merger.

    S & P’s defence is so crass it is almost obscene. Have they slit their owns throats as an ongoing business with this defence?

    • Essentially the same defence the rating agencies used for asserting their innocence. This collides with some legal requirements for their ratings.
      Wait a couple of years and the aircraft valuators will use similar wording
      in relation to below expected performance on forex the 787.

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