Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 5.

January 17, 2020, ©. Leeham News: We continue our series why e in ePlane shall stand for environment and not electric, where we now examine the gains with electric/hybrid distributed propulsion systems.

We started last week with the type of boundary layer ingesting aft fans shown in Figure 1. Now we continue with wing mounted distributed propulsors.

Figure 1. Boundary-Layer Ingestion aft fans, driven by electric motors. Source: JADC.

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Air Canada inaugurates A220-300 service today

Jan. 16, 2020, © Leeham News: Air Canada inaugurates Airbus A220-300 service today, becoming the second North American carrier to operate the A220. Delta Air Lines was the first, with the A220-100 last year.

Air Canada A220-300. Photo by Scott Hamilton.

It is the first North American airline to operate the -300 model. The new service begins on the Montreal-Calgary route.

Airline and Airbus officials paid homage to Bombardier at a celebration yesterday in an Air Canada hanger down the block from Bombardier’s world headquarters on the edges of Montreal Dorval Airport.

Bombardier designed the aircraft, originally called C Series, in a bet-the-company challenge to Airbus and Boeing.

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Certification process for 777X is another hurdle for Boeing

By Scott Hamilton

Jan. 16, 2020, © Leeham News: Certification of the Boeing 777X is far off. The airplane’s first flight hasn’t occurred. There is no date announced when it will,  but sources suggest it could be this month.

Boeing 777-9. Source: Boeing.

The fallout from the 737 MAX crisis and its certification process isn’t fully understood. Neither Boeing nor the Federal Aviation Administration announced what the 777X process will be.

It’s assumed that the discoveries about the MAX certification process will result in a revision to the FAA’s approach to 777X certification.

There are questions circulating in the aviation community whether the FAA will revisit every certification step done so far for the 777X and what it will look like in the future.

A new question arises: will the 777X be certified as a derivative of the 777 Classic—the path Boeing wants. Or will the FAA decide that enough changes are designed into the 777X that it needs an entirely new type certificate?

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How far can Boeing’s remaining cash cow, the 787, pay the company bills, Part 2?

By Bjorn Fehrm
Subscription Required

Introduction

January 16, 2020, © Leeham News: Last week we started the analysis of how much margin the Boeing 787 program is generating to cover the costs for The Boeing Company’s Commercial Airplanes division when the other cash cow, the 737 MAX program, brings no revenue or margin.

The 787 program is now in a state where it generates significant revenue and margin. The other programs, the 767 and 747 freighters, the 737NG  (P-8A Poseidon) and 777 Classic make up less than 45% of deliveries with the 787 covering 55% of deliveries, and these programs are in phases where they deliver less margin.

Summary:
  • The 787 program accounting employs different accounting block production costs for the different 787 variants.
  • The 787-10 carries the highest accounting block cost and is accordingly the most important variant for the payback of the deferred costs.
  • The 787-8, despite leading the program, generated the largest deferred costs (due to learning curve effects), amortizes the least of the variants.
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Boeing hasn’t hit bottom yet. Neither have suppliers.

By Scott Hamilton

Analysis

Jan. 15, 2020, © Leeham News: The extent of the damage to Boeing from the 737 MAX crisis still is unfolding.

Billions of dollars in new costs and charges are expected to be announced on the 2019 earnings release and call, Jan. 29.

But the long-term effects, only surmised until now, are beginning to become evident following information obtained by LNA from multiple sources.

  • Restarting production will be at a low initial monthly rate.
  •  Ramp to previously targeted 57/mo likely lags by three years.
  • The impact on suppliers will be profound.
  • Impact on employee retention is unknown.
  • 737 backlog delivery schedule will require major adjustments.
  • Airbus stands to benefit from Boeing’s extended lower production rate.
  • New airplane years away—even as it’s needed for Boeing’s future.
  • Lower 737 production rate reduces cash flow; 787 rate reduction will hurt, too.

Boeing hasn’t hit bottom yet. The worst is yet to come for suppliers.

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MAX delivery process will be slowed by FAA’s fewer resources

By Scott Hamilton

Jan. 14, 2020, © Leeham News: Boeing likely faces an extended timeline to clear its inventory of 400 737 MAXes. LNA estimates it will be well into 2022 before these new-production airplanes are delivered to customers.

The new timeline is based on LNA discussions with key people and our analysis. Boeing won’t comment. Wall Street analysts so far haven’t significantly shifted their forecasts of 3Q or 4Q2021.

The decision last year by the Federal Aviation Administration to assume responsibility to certify each Boeing 737 MAX before delivery is key to LNA’s estimate.

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Embraer’s challenges

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By Vincent Valery

Introduction  

Jan. 13, 2020, © Leeham News: It is no exaggeration to say that 2020 is a pivotal year for Embraer. Whether the tie-up with Boeing materializes will determine its future.

As crunch time approaches for the creation of Boeing Brasil, LNA thought it relevant to study the company’s financial records since 1999. This is another in a series of financial analysis of leading aerospace companies and airlines.

From humble beginnings, the company achieved a dominant position in the regional market with the E-Jet family. After a slump in defense and security business revenues in the early 2000s, the company undertook significant programs. It also entered the business jet market to diversify its revenue streams.

So far, E2 E-Jet sales have been tepid. After years of significant development spending, the Commercial aircraft division is just above red ink, the Defense and Security division isn’t profitable and the Business jets are not adding anything to the bottom line.

Regardless of whether the tie-up with Boeing materializes, Embraer will have to take major strategic decisions, especially in the Commercial Aviation division.

Summary
  • From government project to world-class OEM;
  • Profitability challenges;
  • (Not so) diversified revenue sources;
  • Plans with Boeing;
  • And without it.

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Pontifications: Boeing Board needs major shake-up

Jan. 13, 2020, © Leeham News: Today is David Calhoun’s first day as the president and CEO of The Boeing Co.

To say that he’s got his work cut out for him is an understatement.

By Scott Hamilton

I’ve put together a list below, which probably is only half of the important tasks at hand. Most of this list is obvious and doesn’t need any additional reporting because of all the coverage in 2019.

This column is focused on another task that should be, and in the view of many, must be done.

Boeing’s Board is preoccupied with the MAX crisis, but on the theory it can do more than one thing at a time, it need to also turn its attention to some introspection.

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Guest Column: Boeing’s Calhoun: Fantastic 9-month CEO or disastrous multi-year CEO?

  • Jan. 12, 2020: David Calhoun assumes his position as president and CEO of The Boeing Co. tomorrow. Richard Aboulafia of The Teal Group has some thoughts about this move.

By Richard Aboulafia

Richard Aboulafia

Vice President of Analysis

The Teal Group

Guest Column

December 2019

Dear Fellow C-Suite Watchers,

Person of the year awards go to people who did something noteworthy in the past year. Instead, why not appoint a person in advance, for the year ahead? That’s more exciting, since that person has yet to do the something for which he or she is being recognized. Incoming Boeing CEO Dave Calhoun is the perfect recipient of this, for the choice he will make. In 2020, he will choose either to be a fantastic nine-month CEO, or he will stay on, becoming a potentially disastrous multi-year CEO. This is a pivotal decision for Boeing, and for the industry.

Calhoun is replacing Dennis Muilenburg because the latter CEO’s year has been disastrous. The company’s communications with Congress, the FAA, international regulators, airline and lessor customers, suppliers, the victims’ families, and pretty much the entire outside world were a master class in bad crisis management. This month’s 737MAX line shutdown, with no guidance at all provided to suppliers, was the final swirl in a downward spiral. The company’s legal department chief, another key player in Boeing’s MAX strategy, has also departed.

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Bjorn’s Corner: Why e in ePlane shall stand for environment, Part 4.

January 10, 2020, ©. Leeham News: We continue our series why e in ePlane shall stand for environment and not electric.

Before we continue the discussion about low CO2 footprint propulsion opportunities we look into some of the distributed propulsion concepts proposed for electric/hybrid airliners.

In this and the next Corner, we examine the substance in claimed aerodynamic gains and increased efficiency from such concepts.

Figure 1. The Ampere distributed propulsion concept as presented by ONERA. Source: ONERA.

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