KC-46A progress toward summer milestones

Boeing’s KC-46A is moving ahead through milestones as summer approaches, despite being a the Sequestration “hit list” of programs that could be curtailed.

The USAF has previously said it wants to do all that it can to protect the program and the contract, seeking to avoid having to renegotiate the contract with Boeing.

Separately:

  • The Puget Sound Business Journal has this article concerning the forthcoming NTSB hearing on the JAL 787 incident.
  • US Airways now has echoed Delta Air Lines, saying Sequestration hurt March bookings and last minute travel.
  • Buzz here in Seattle is that the 787 will fly another test flight today.
  • UBS tracks Dreamlifter flights to gauge 787 production rates and notes that more flights than ever are now occurring. From this, UBS infers 787 production will ramp up according to plan.

Washington State air facilities that could close with sequestration

The FAA has released a list of air traffic control facilities that could close with Sequestration, which is due to take effect March 1.

The following facilities in Washington State are on the list:

ALW Walla Walla Regional Walla Walla WA
MWH Grant County International Moses Lake WA
OLM Olympia Regional Olympia WA
PAE Snohomish County Airport (Paine Field) Everett WA
RNT Renton Municipal Renton WA
SFF Felts Field Spokane WA
TIW Tacoma Narrows Tacoma WA
YKM Yakima Air Terminal/McAllister Field Yakima WA

Additionally, the over night shifts in the following control towers are at risk:

BFI Boeing Tower Seattle WA
GEG Spokane Tower Spokane WA

The FAA warns that passengers at TSA lines could be up to three hours and tarmac delays at major hub airports could be up to 90 minutes.

First production CSeries reveal March 7; BBD sees Russia as ripe market

Bombardier earnings call today:

CSeries: Bombardier will reveal its first production aircraft March 7, the company said on its earnings call today. First year production will be 20-30 aircraft, and up to 120 a year by 3 1/2 years. BBD is still holding to its first flight target by the end of June, EIS of the CS 100 a year later and EIS of the CS300 by the end of 2014. Pratt & Whitney, BBD and Transport Canada announced certification of the GTF 1500G this week. This is the engine that will power the CSeries.

Russia a ripe market: BBD sees Russia as a ripe market for the Q400, CRJ and CSeries. (And for rail, but we don’t cover rail.) Ilyushin Finance yesterday announced it signed a firm order for 32 CSeries and optioned 10 more. This compares with 10+10 announced in an MOU at the Farnborough Air Show last year. On the earnings call, BBD said the Q400 already is operating in Russia and has proved to be a good cold-weather airplane there. CRJ-200s, which have fallen out of favor in the USA, are being remarketed in Russia with success.

American/US Airways, SkyWest and United targets: These three airlines are major targets for RJ sales campaigns this year.

Program Accounting: “Boeing averages the costs over 10 years. We don’t do that. We take the real price and the real cost.”

Unrelated:

Politico has an article on the impact of Sequestration on the air travel industry: long lines at security, delays on the tarmac.

Boeing hopes for March or April return for 787; we think this is challenging

Update: Aviation Week’s Guy Norris has this detailed article in which the third week of March is identified as a target date for the 787 to re-enter service.

Original Post:

Boeing hopes to return the grounded 787 to the skies in March, according to  customer briefings, or April, according to news reports, following a planned briefing to the Federal Aviation Administration tomorrow.

See The Wall Street Journal (subscription required) and The Seattle Times for details of the FAA briefing and Boeing’s planned program for a permanent fix. These articles suggest an April return to revenue service. The New York Times has this report. Reuters has this report.

A customer we talked with who has been briefed by Boeing said the target date is next month, which squares with another customer briefing we previously reported.

Either date sounds aggressive. The FAA has to review the proposals and satisfy itself that the approaches proposed by Boeing are safe to precede a redesign of the battery. Having been proved wrong once before, we think the FAA isn’t going to rush to judgment this time and (in any event) being the government, nothing moves quickly.

Then there is Sequestration, due to take effect March 1. The FAA’s track record on approving changes proposed by supply chains on unrelated matters that require Supplemental Type Certificates is already excruciatingly slow. Layoffs following Sequestration are expected to hit the FAA’s research and development and will this affect Boeing?

Also an unknown is the investigation into the 787 JAL fire by the National Transportation Safety Board. The NTSB’s preliminary findings are expected in the first half of March. Will the FAA want to wait for this before moving? Furthermore, the NTSB has already criticized the FAA certification of the battery and related systems in its press briefings and is examining the certification process as part of its investigation. The tension between the FAA and NTSB is long-standing. Will the FAA take more time because it’s one of the targets of the investigation?

Having initially declaring the 787 safe, only to ground the aircraft within days, Transportation Secretary Ray LaHood said the plane won’t be returned to service until the FAA (which is part of Transportation) is “1,000%” sure the airplane is safe. It’s a ridiculous statement, but has LaHood painted the FAA into a corner that will delay a decision about Boeing’s proposals?

Finally, having issued Special Conditions in approving the battery in the first place, will the FAA want more Special Conditions for the fix and the battery redesign?

Any and all of this will take time. There certainly is a recognition on the part of the FAA about the economic impact to the airlines from the grounding.

We don’t think this will move quickly. March-we don’t think so. April-maybe, but challenging.

KC-46A contract “restructure,” Blue Angels grounded in Sequestration (very local to Seattle)

The US Air Force will have to “restructure” the USAF KC-46A tanker contract with Boeing if Sequestration hits on March 1, according to a new document issued today. The document doesn’t indicate what “restructure” means, but we’d guess the fixed price deal that won Boeing the contract will eventually become a lot more expensive to taxpayers.

Very localized to Seattle, Sequestration also means the Blue Angels will likely be grounded by the Navy as well. This aerobatic group has been a staple of the local Sea Fair for decades, and has been a key in public relations for the Air ForceNavy. While we acknowledge the Blue Angels have nothing to do with readiness, since we live in Seattle, and this is our blog, we get to be highly provincial once in a while.

Odds and Ends: KC-46A vulnerable to cuts; SPEEA talks resume today

While the aviation world is absorbed with the Boeing 787 drama, there actually is more going on.

KC-46A Defense Cuts: We were the first to report this when the White House issued its Sequestration hit list, but with Congress once again failing to do its job, Sequestration is over the horizon . Defense News has this update.

SPEEA Talks Resume: Boeing made its second contract offer Monday. SPEEA reviewed it yesterday. Talks resume today.  We’re very pessimistic, but SPEEA presented the following today:

With the desire to focus all attention on solving the emergent issues with The Boeing Company’s 787, the union representing engineers and technical workers today (Jan. 16) proposed incorporating areas of agreement from ongoing negotiations into existing contracts and extending the agreements for another four years.

This “best and final” offer by the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001, was presented as negotiations resumed at 1 p.m. with the assistance of the Federal Mediation and Conciliation Service (FMCS) at the SeaTac Hilton.

SPEEA’s unprecedented offer would free Boeing and 23,000 engineers and technical workers from protracted and increasingly contentious negotiations that appear headed for a strike. It also allows the company and its technical workforce to focus on reaffirming confidence and proving the 787 is the reliable and safe product employees know it to be. Completing negotiations also helps Boeing stay focused on supporting customers, engineering the 767 tanker, 737 MAX, increasing 737 and 777 production rates and the other products needed for our national defense.

“These negotiations have been going on for more than a year,” said Tom McCarty, SPEEA president and Professional Team member. “At this point, we should move forward with the items upon which we can agree, and leave the status quo in place for the remaining items.”

In addition to the proposed contract extension, SPEEA requested that Boeing continue to meet under the auspices of FMCS mediation to tackle the difficult issues that have proven so divisive in these negotiations.

“Our hope is that we can work collaboratively to find solutions in a data-rich environment outside of the constraints of the collective bargaining process” said Ryan Rule, Professional Team member.

In making the proposal, SPEEA agreed to accept Boeing’s funding mechanism for the Ed Wells Partnership training program.  The status quo proposal continues to offset company medical costs through annual deductible increases based on salary growth.  To put to rest the pension issue, a major point of contention, SPEEA proposes to accept the same pension proposal that Boeing negotiated with the International Association of Machinists (IAM District 751). Finally, the contract extension offer is made with the understanding Boeing recognizes same-sex survivor pension benefits pursuant to Washington state law.

“With our contracts put to rest, we can all roll up our sleeves and work the issues facing the 787 and Boeing,” said Sandy Hastings, Technical Team member. “SPEEA members know this is a great airplane, and we are eager to prove this to our customers, the flying public and the FAA (Federal Aviation Administration).”

DOD worries about sequestration affect on non-defense industries

The National Journal magazine has an interesting article detailing why the Defense Department is worried about the impact on non-defense sectors. Among the key points in the article:

  • Half Boeing’s revenue comes from the commercial aircraft sector and adverse impacts on airlines could ripple to Boeing Commercial Airplanes;
  • Air Traffic Control will take an immediate $800m hit, costing 2,200 controllers their jobs;
  • The FAA’s NextGen system investments would be slashed;
  • Lockheed Martin provides security services to departments like Social Security, and would be affect; and so on.

Here’s an article specifically on the FAA controller cuts.

There are charges and counter-charges among DC politicians about why no deal has been struck yet to avoid the fiscal cliff. The latest is that House Speak John Boehner wants to get past his reelection as Speaker Jan. 3. This is a pretty cynical theory.

Supplier Honeywell thinks Sequestration is OK; Mystery photo

In a break from major defense contractors, politicians and just about everybody, the CEO of Honeywell thinks Sequestration might be a good thing.

We opined about this on Election Day.

For a switch in topics and our usual stuff, let’s have a little contest. You win nothing except bragging rights.

What is this?

To the next President and next Congress: Maybe Sequestration should happen after all for the long-term good

As voters go to the polls today, we’ve turned our thoughts to Sequestration and the impact on Defense budgets.

Defense sequestration is widely view as a disaster for national defense and for employment. Sequestration requires a cut of $500bn over 10 years, or $50bn a year. Spending for FY2013 is $902.3bn, according to government figures, excluding the Afghan war. A $50bn cut would be 5.5%.

We certainly acknowledge the adverse impact of cutting $50bn from next year’s budget, but we can’t help but wonder if there isn’t 5% that is “fat.” Parochially, Boeing’s KC-46A tanker is on the hit list for cuts. Given the difficulty it took in getting to this contract and the pressing need to replace the KC-135, we would hope this program would survive.

But we’re thinking on a higher plain.

Continue reading

US Defense sequestration: USAF tanker on hit list

The White House issued a 394 page report on what defense programs are subject to sequestration. The USAF tanker replacement–a program won by Boeing in a bitter contest–is on the hit list (PDF Page 274, document page Appendix B 38). It’s something called the Replacement Transfer Fund, Appropriation Discretionary. Whatever all this means.