July 19, 2019, © Leeham News: Boeing yesterday announced a $4.9bn charge connected to customer compensation for the 737 MAX grounding. It also announced a $1.7bn additional cost associated with the accounting block and forecast a 4q2019 return to service.
Wall Street analysts overall were positive with the new. Aftermarket stock trading was up; pre-market trading today is slightly down from the aftermarket high.
Below are excerpts of research notes issued last night and this morning.
July 19, 2019, ©. Leeham News: The European Aviation Safety Agency EASA has issued an Air Worthiness Directive (AD) to instruct operators of the Airbus A321neo of a Pitch instability issue.
EASA writes “excessive pitch attitude can occur in certain conditions and during specific manoeuvres. This condition, if not corrected, could result in reduced control of the aeroplane.”
We analyze how this is similar or different to the Boeing 737 MAX pitch instability issues.
NOTE: We have got an update from Airbus, see below.
July 18, 2019: Boeing just issued this press release:
Boeing will record an after-tax charge of $4.9 billion ($8.74 per share) in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding and associated delivery delays. This charge will result in a $5.6 billion reduction of revenue and pre-tax earnings in the quarter.
While the entire estimated amount will be recognized as a charge in the second quarter, the company expects any potential concessions or other considerations to be provided over a number of years and take various forms of economic value.
By Bjorn Fehrm
July 18, 2019, © Leeham News: Airbus’ new A321XLR is labeled as an Boeing NMA killer. It shall, with its capability to fly the same routes as the NMA, nibble away on its market space.
This discussion takes the Airbus passenger and range data for the A321XLR and compares it with the announced capabilities of the NMA. As we will see, it’s not that simple.
He now faces a new integration with the planned merger between United Technologies (Collins’ parent) and Raytheon. The new company will be called Raytheon Technologies. There’s little he can do until the merger is approved by regulators, except plan internally how to integrate and expand the aftermarket business.
July 15, 2019, © Leeham News: There are 14 new and derivative aircraft scheduled for entry into service (EIS) through 2027. This rises to 16 if Boeing launches the New Midmarket Aircraft (NMA).
But there are plenty of uncertainties around precise EIS hanging over some of these.
LNA sees the Boeing 777X EIS slipping into early 2021. China’s C919 is now slated for a 2021 EIS, but development has been tricky and delays have been common. Russia’s MC-21 flight testing has been slow and international sanctions hang over this aircraft.
Mitsubishi’s MRJ90, now called the M90, is slated to enter service next year. It, too, has been plagued by delays. The redesigned MRJ70, the M100, moves from a 2021 EIS to a planned 2023 EIS—but given the MRJ90’s history of delays, the company has to persuade the industry no more slippages are likely.
Here is a rundown by year and aircraft of the EIS dates.
July 15, 2019, © Leeham News: Boeing can’t catch a break.
Some may argue it doesn’t deserve one, given what’s come out about the 737 MAX development. And the sloppy production of the 787 at the Charleston (SC) plant. And the FOD issues with the KC-46A at the Everett (WA) plant.
To be sure, Boeing has gotten a lot of bad press it’s deserved. But last week, two pieces of news had connections to the MAX that were (1) overwrought and (2) unwarranted.
July 12, 2019, ©. Leeham News: Norwegian Air Shuttles’ (Norwegian) founder and CEO for 17 years, Bjorn Kjos stepped down yesterday. Over the last year the CFO, Board chairman and now the CEO have changed.
This signals a change in strategy for Norwegian. The new management is focused on halting growth and cutting costs. Norwegian must now consolidate itself to profitability.
By Judson Rollins
July 11, 2019, © Leeham News: Boeing is expected to proceed with the New Midmarket Airplane (NMA) once the 737 MAX gets clearance to return to service. News from the Paris Air Show indicates Boeing may launch the larger model, the NMA-7, first.
The 270-passenger version of the NMA is viewed by some—including Boeing—as the airplane that would effectively kill the A330neo.
Twelve years ago, the 787 was supposed to finally kill the A330 once and for all … and we saw how that turned out. But this time may well be different.