JPM’s aerospace analyst Seth Seifman met with Boeing CEO Dennis Muilenburg, CFO Greg Smith and Boeing Commercial Airplanes VP-marketing Randy Tinseth Dec. 4. In a research note issued yesterday, Seifman reported that the business case for the New Midmarket Aircraft still hasn’t closed—but “if Boeing launches the NMA, it will be with the intention of earning a return on the aircraft itself that is comparable to existing programs; it will not be a plan to accept lower margins on the aircraft and make it up in the aftermarket.” (Emphasis in original.)
The “NMA must stand on its own as a traditional aircraft program,” Seifman wrote. “While the NMA decision is not yet made, Boeing believes the moves it has taken to de-risk development would still allow a 2019 launch to result in a 2025 entry-into-service.”
However, he added that the NMA will “jump start” activities in the new businesses and vertical integration of actuators, APUs, avionics and seed the growth of Boeing Global Services.
Seifman wrote that he was “relieved to hear” NMA must stand alone in its business case.
“Boeing holds the NMA cards close to its vest,” he wrote. “We see arguments on both sides” of a go ahead or a decision to shelve the project. But Seifman “tends” to believe a program launch, probably at the Paris Air Show, next year.
“NMA appears to be as much about transforming Boeing as it is about the aircraft and we found [the] discussion consistent with this view,” Seifman wrote.
“The intention here is to deliver both the cost that Boeing believes the market needs to buy the NMA AND a path to the production system for an eventual 737 replacement.”