Sept. 5, 2016, © Leeham Co.: August was unusually slow, so today is sort of an Odds and Ends clean-up of the summer.
There was the Southwest Airlines engine incident and the reports that ANA’s Boeing 787s have engine issues, but I wrote about these last week.
Today, the Odds and Ends include more on the Mitsubishi MRJ; Airbus deliveries; sales campaigns and other stuff.
Mitsubishi suffered another setback with its MRJ90 flight test program after there were two failures in the air conditioning system on two ferry flights from Japan to Washington State.
Both flights returned to Japan, where the OEM and supplier, United Technologies’ UTC Aerospace Systems try to figure out what went wrong.
The MRJ was en route to Moses Lake (WA), where four aircraft are to be based for flight testing. Mitsubishi scheduled an all-day media event Sept. 9, which now has been cancelled. No new date has been set.
I’m picking up solid signs that Airbus may miss its delivery targets this year.
Given the well-publicized problems Airbus has with suppliers for the A320neo and A350 and the impact on deliveries, this is hardly surprising. Aerospace analysts have speculated all year that delivery targets may not be met.
But as we enter September, it looks like the suppliers won’t be able to catch up on their deliveries and therefore neither will Airbus.
I’m not talking about a major shortfall, perhaps not even a dozen airplanes. But it will be noticeable.
I keep getting conflicting signals whether Emirates will make a decision this year on the big order for either the Boeing 787-9/10 or the Airbus A350-900. It was supposed to be last year, but was put over to this year. Now I’m hearing it might be next year. Stay tuned on this one.
In the meantime, Boeing still is pursuing EK for 777-300ERs.
Ken Herbert, the aerospace analyst for CanaccordGenuity, issued a note Aug. 23 focused on Boeing’s services unit, commonly called CAS (for Commercial Aviation Services).
Boeing, as Herbert notes, is increasingly focused on CAS as a profit center. Herbert writes:
Commercial Aviation Services (CAS) is a ~$8.1B business that will generate ~$1.1B in 2016 operating profit. CAS represents 13% of total BCA sales but over 18% of the segment profits. Relative to other diversified industrial and aerospace firms, this services contribution is significantly lower than peer companies, and highlights a significant opportunity for Boeing. The broad commercial services market is a ~$2.8T market over the next twenty years. On an absolute basis, Boeing has a ~6.5% share of this fragmented market, trailing only GE. In our model, we believe CAS can be a ~$10B business in 2020, with 16% margins, which will represent over 40% of the limited BCA margin expansion we currently expect.
CAS is headed by Stan Deal, who holds an SVP title. He previously headed BCA’s supply chain management unit.
CAS has 12,000 employees.
Deal is one of three internal people whose names I’ve heard as a potential successor to BCA CEO Ray Conner, whose contract runs through December 2017.