Dec. 11, 2019, © Leeham News: With confirmation by the Federal Aviation Administration that recertification of the 737 MAX won’t happen until 2020, Boeing is rapidly facing a decision whether to reduce or suspend MAX production.
With no end in sight, Boeing can’t continue production of the MAX at the rate of 42/mo much longer.
Through Dec. 6, there were just under 400 MAXes that have been produced. Another 381 MAXes were in service when global regulators grounded the fleet March 11-13.
Dec. 11, 2019, © Leeham News: A new round of Congressional Hearings about the Boeing 737 MAX got underway today.
Before the hearing began at the House Transportation Committee, FAA Administrator Steve Dickson appeared on CNBC today. Among his statements: recertification of the MAX will slip to 2020, confirming what had become apparent for some time.
“Like I said there are a number of processes, milestones, that have to be completed,” Dickson said in an interview on “Squawk Box.” “If you just do the math, it’s going to extend into 2020,” he told CNBC.
Dec. 10, 2019, © Leeham News: The first reporting from last week’s Boeing briefings for analysts, opinion-makers, influencers and consultants (but not the media) began to emerge Saturday. (Media briefings may be scheduled in January.)
The briefings are the latest in Boeing’s effort to restore confidence in the 737 MAX.
Dec. 9. 2019, © Leeham News: The US Trade Representative (USTR) Friday dismissed Airbus; conclusion last week that the tariff authorized by the World Trade Organization (WTO) should be lowered by about $2bn.
The WTO’s Compliance Panel last Monday largely rejected the European Union’s appeal of the amount the Arbitration Panel set in October that $7.5bn in tariffs could be levied by the US.
The Trump Administration levied tariffs on a wide variety of non-aerospace goods from across the EU. It also levied a 10% tariff on Airbus airplanes imported into the US. It exempted the A320 family of planes assembled at the Mobile (AL) plant.
Airbus responded to the Compliance Panel’s decision by noting it viewed reduced the “harm” to Boeing as a result of the decision in February by Airbus to cease production of the A380 in 2021.
Accordingly, Airbus asserted that the tariff should be reduced by about $2bn.
Contesting the assertion
The USTR issued a statement Friday rejecting this claim.
“Two months ago, the WTO arbitrator found that the EU’s subsidies caused adverse effects worth $7.5bn per year,” the USTR said. “Nothing in the WTO report even suggests that the compliance panel found that the amount has decreased. There is accordingly no basis for Airbus’s assertions that the report “implies” that the U.S. countermeasures should be reduced by $2bn.
By Vincent Valery
Dec. 9, 2019, © Leeham News: There are now more firm orders for the Airbus A321neo than all the latest generation widebody programs combined: Airbus A330neo and A350, Boeing 787 and 777X. The largest Airbus narrowbody makes up 44% of all A320neo family orders, compared to 22% for the A320ceo family.
After peaking in 2015, twin-aisle aircraft now represent a smaller portion of all deliveries. Boeing will lower the future Dreamliner production rate from 14 to 12 per month, while Airbus did not proceed with an A350 rate hike.
Being at a later point in the cycle, economic slowdown, and trade tensions explain part of the lower demand for widebody aircraft. However, there are good reasons to believe something more fundamental is at play.
LNA wrote a few months ago that Trans-Atlantic market fragmentation is hurting large widebody sales. This article analyzed the strategic shift occurring at numerous airlines that is hurting all twin-aisle sales, including the smaller A330neo and 787.
Dec. 9, 2019, © Leeham News: I know Boeing is preoccupied right now. But it has to get off the pot and decide to proceed with a new airplane.
We believe the New Midmarket Airplane is still required. But Boeing salesmen have also floated the concept of a new, single-aisle airplane to key players in the market. Either way, Boeing has to do something.
At least, that’s how we see it at Leeham Co.
The order last week by United Airlines for 50 Airbus A321XLRs should be a wake up call.
It’s not the only one Boeing has had.
December 6, 2019, ©. Leeham News: The FAA issued a draft of the updated Master Minimum Equipment List (MMEL) for the Boeing 737 MAX 8 and 9 on its website yesterday. It’s there to be commented on by anyone who has input to its content within 30 days.
This step is the first external sign the re-certification of the 737 MAX has begun.
December 6, 2019, ©. Leeham News: We now finalize the series about the Lion Air JT610 crash by analyzing the changes Boeing has made to the aircraft to avoid further problems with MCAS (Maneuver Characteristics Augmentation System).
The changes bring MCAS to the level it should have had from entry into service and in some aspects further.
Dec. 5, 2019, © Leeham News: The Trump Administration Tuesday threatened to increase the tariffs on European goods after a World Trade Organization (WTO) compliance panel concluded Airbus and the European Union have not fully cured illegal subsidies on the A350 and some residual “harm” to Boeing remains as the A380 program winds down.
The EU and Airbus criticized the conclusions as faulty. The EU is expected to appeal by next Wednesday.
The Administration already imposed a 10% tax on the A320 family, the A330neo and A350 imported into the US. So far, the A320 family assembled at Airbus’ Mobile (AL) plant are exempt.
US airlines and lessors whose lessees are US carriers are required to pay the tax. Airbus and its customers are working the problem behind the scenes.
Dec. 3, 2019, © Leeham News: United Airlines today announced an order for 50 Airbus A321XLRs.
The airplane has an advertised range of 4,700nm (5,400 statute miles), or a nine hour flight.
UAL will replace its aging Boeing 757s on a one-for-one basis beginning in 2024.
The XLR’s targeted entry into service is 2023.