PNAA Day 1: Boeing’s view of the global market

  • Feb. 9, 2016: Today is the first of three days of conference meetings organized by PNAAthe Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.

Randy Tinseth, VP-Marketing for Boeing, said forecasts predict oil as low as $7/bbl and as high as $80/bbl–as always, “giving themselves a lot of leeway.”

Asia remains the top growth market, adding 100m passengers every year (the size of Atlanta’s international airport, the world’s busiest, which served 100m passengers lasgt year.

The cargo market has been challenged over the last six years, and it comes and goes, but it will come back when trade comes back, Tinseth said.

  • Tinseth compared the 787-10 with the A330-800 to show a claimed 165nm range advantage–but in reality, the 787-10 competes with the A350-900, which has a much longer range.

The single-aisle market represents 70% of the market and half the value, including Airbus and all other competitors.

“We as an industry and we as a company have to focus on doing the right things…and build at the right cost” to be successful, Tinseth said.

He said that given the total forecast of 35,000 airplanes from regional jet to Very Large Aircraft, there is a need for 60% of the sales still to be made.

Tinseth said the company will deliver fewer 737s this year because the supply chain can’t keep up as the transition between the NG and MAX takes place.

Update: This email was received later from Boeing’s Corporate Communications department:

I wanted to touch base on this bullet in your coverage of Randy’s PNAA presentation.

After talking to Randy, I believe his response was lost in translation.

He was making the point that the transition to MAX is the reason we’ll deliver fewer 737s—because we’re producing several MAX airplanes this year that won’t deliver until 2017.

On a follow up question about separate production lines, he was simply making the point that the NG and MAX share a common supply chain.

So the supply chain is delivering precisely to our 42 per month rate. We’re producing 42 per month, but won’t be able to deliver to that rate this year due to MAX certification.

His point was the opposite of “can’t keep up.” Our suppliers are doing exactly what we need them to do. We can’t expect  them to deliver at a rate higher than 42 right now just so we can build more NGs to make up for the MAXs that won’t deliver this year. And of course, that would go against our own rate hike schedule.

China’s market has slowed,  but the government is restructuring the economy but “we see robust, double-digit growth” for the future, he said.

Despite the fluctuation of oil prices, “we haven’t seen a change in the replacement pattern,” Tinseth said. Aircraft reach maintenance requirements, interior upgrades and certain ages that simply need replacement.



PNAA Conference Day 1: Aerospace Clusters

  • Feb. 9, 2016: Today is the first of three days of conference meetings organized by PNAAthe Pacific Northwest Aerospace Alliance (PNAA), in Lynnwood (WA). We’re providing live reporting throughout the three days.

Aerospace clusters are evolving throughout the world, said Kevin Michael, vice president of ICF International.

California is on the decline. Two new clusters on the rise are Mexico and the Southeastern US. The Netherlands and Singapore are successful, long-term clusters.

California was the premier aerospace cluster for decades, but its demise began when Lockheed chose Georgia as the location to build the C-130. The founding of Airbus was not good news for SoCal, and neither was the end of the Cold War. The acquisition of McDonnell Douglas by Boeing in 1997 further precipitated the decline of SoCal.

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Pontifications: Dissecting Boeing’s 2016 delivery guidance

Hamilton KING5_2

By Scott Hamilton

Feb. 8, 2016, © Leeham Co.: Boeing’s surprise guidance for 2016 for fewer deliveries on the 737 and 767 lines raised as many questions as officials answered on the Jan. 27 earnings call.

The lower guidance led to about a 9% drop in stock, from $128 to $115. As of Friday, the stock had recovered some, trading in the low $120s.

Boeing’s explanation about the lower guidance for 737 deliveries—12 fewer this year than in 2015—seemed, on the surface, reasonable. As the 737 MAX entered production, both with test aircraft and the first production airplanes, officials said this will lead to fewer deliveries of the NG.

But as stock analysts digested the information, skepticism arose. David Strauss of UBS issued a note last week in which he concluded the real reason for the lower deliveries is a likely production gap—not enough NG sales were achieved to bridge the gap from the NG to the MAX.

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Irkut MC-21, first analysis

By Bjorn Fehrm

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Feb. 08, 2016, © Leeham Co: We recently covered China’s COMAC C919 and now the time has come to the other new narrow body aircraft from the old Communist bloc, the Russian MC-21.

The aircraft is called Irkut MC-21. Not many have heard of Irkut, so the first reaction is that this aircraft is made by a new Russian aircraft firm. The change is that United Aircraft (the Russian aircraft industry holding company) this time called the aircraft after its manufacturing company and not the design bureau, Yakovlev, that Irkut acquired in 2004. There are discussions to change back to the project’s original name Yakovlev 242 once certification is done.

When we looked at the first civil airliner that the Russian federation designed after the fall of Soviet Union, the Sukhoi Superjet 100, we found a well designed aircraft equipped with Western system. The MC-21 follows the same lines, but has more Russian technological development. It is therefore well worth a look.


  • The MC-21 has its own profile. It is not a copy of a Western aircraft. It has a wider cabin than the A320, a wing which allows a higher cruise speed and a higher capacity in its base variant, the MC-21-300.
  • To make a meaningful comparison between the MC-21 and established aircraft, we have chosen to compare the MC-21-200 with the Airbus A320neo, as the MC-21-300 is larger than the A320neo but smaller than an A321neo. The MC-21-200 is closer in size to an A320neo. Read more

Bjorn’s Corner: Efficient systems


By Bjorn Fehrm

By Bjorn Fehrm

05 February 2016, © Leeham Co: In recent Corners, we looked into technologies which have made the new breed of airliners more efficient.

We’ve talked about how new engines can raise efficiency by about 15% and how aerodynamic improvements, like more efficient split winglets, can add another 1%-2% over single blade winglets. We have also looked into modern ways to manufacture the more resilient and lighter composites structures that designers want to use to increase aircraft efficiency.

There is one area which we have not covered: the aircraft’s systems and how these can be made more efficient. An improved system architecture can add the efficiency improvement of a split winglet. So let’s have a look at the trends in aircraft systems.

We start this week with power distribution.

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Can the 787 pay its debts?

By Bjorn Fehrm

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04 February, 2015, © Leeham Co: Boeing has presented its results for the last quarter of 2015. It was a quarter for Boeing with solid performance in revenue ($96.1bn) and in cash generation ($9.4bn).

Despite that, Wall Street was not pleased. The 747-8 program is not selling well and the upcoming production bridges for 737NG to 737 MAX and 777 to 777X are no longer to be ignored.

The results presentation is also our chance to check our analysis around the 787 program; will it be able to pay its debts within the forecasted period by Boeing (in the program accounting block of 1,300 units)?


  • Boeing reports deferred costs in line with or slightly better than expectations. We decode what this means for the deferral curve for the 787 and from which parts of the 787 program the improvements came.
  • Smith also gave new information regarding learning effects for 787-8 and 787-9 and when the 787 goes cash positive. We check if this changes any of our assumptions for our forecast for the program. Read more

The MAX flies ahead of time

By Bjorn Fehrm

2 February 2016, ©. Leeham Co: The Boeing 737 MAX flew for the first time Friday. On Saturday it was in the air again. Boeing has communicated they will deliver the first aircraft to Southwest next year in the third quarter. We doubt it.

Just over seven weeks after it rolled out of the paint hangar, Boeing’s first 737 MAX — the “Spirit of Renton” — flew for the first time Friday, taking off from its namesake city at 9:48 a.m. January 29th, 2016

Boeing 737 MAX 8 takes off for first flight. Picture: Seattle Times.

It will be earlier, barring a major problem cropping up (and the chances are good there will be none).

Delivery of aircraft projects ahead of time is almost unheard of. And when it is Boeing that looks like being early, people start to think about the Dreamliner debacle. It was over three years late.

We would say: absolutely be skeptical, but in this case, there is reason for optimism.

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A380 order welcome, but may not add to Airbus backlog

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The news of orders by Iran Air and ANA for 12 and three A380s respectively is good news for Airbus, but A380 Trent XWBthese probably don’t do much to boost the backlog in practical terms.

These orders will likely replace some of those in the A380 backlog that are unlikely to be delivered.

In our annual examination of the backlogs of Airbus and Boeing, little has changed for the A380—until the Iran Air and ANA orders, there hasn’t been a sale of the A380 in more than two years.


  • As deliveries continue, the backlog shrinks.
  • Orders from Virgin Atlantic are deferred and unlikely to be delivered. Look for a swap to another Airbus aircraft.
  • Amedeo has yet to place any of its orders. First deliveries in 2017.
  • Air Austral orders deferred, unlikely delivery.

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Pontifications: Bad week for aerospace stocks

Feb. 1, 2016, © Leeham Co. Ouch.

Hamilton KING5_2

By Scott Hamilton

Boeing stock tanked about 10% last Wednesday when the company surprised analysts with unexpected news and below expectations 2016 guidance.

Bombardier became a penny stock.

What the heck happened?

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Bjorn’s Corner: Exciting 2016

By Bjorn Fehrm

By Bjorn Fehrm

29 January 2016, ©. Leeham Co: In the corner of two weeks ago we did a retrospective of 2015. Time for looking ahead. The year of 2016 will be quite interesting. We had entry into service of the first re-engine single aisle aircraft this week, the Airbus A320neo, the same week as we expect first flight from its main competitor, Boeing’s 737 MAX 8. We will also see first flight of the Embraer E190E2 and A350-1000 before the year is over.

The Mitsubishi MRJ shall go test flying in earnest and Bombardier’s CSeries 100 and 300 shall enter service. On top of that, the COMAC 919 will probably start ground roll tests this year and we should see roll out of Irkut’s MC-21. I would say 2016 is a busy year for civil aviation.


In the 2015 corner we talked a lot about engine technology as a key driver to further efficiency of air transportation. Now will dissect the airframe technology that all these new projects will bring us. Read more