Boeing earnings call: still hopes for 4Q recertification

Oct. 23, 2019, © Leeham News: Boeing reaffirmed its belief that the Federal Aviation Administration will authorize a return to service for the grounded 737 MAX this quarter.

The FAA certification flight will occur soon, said Dennis Muilenburg, president and CEO.

He made the remarks during the third quarter earnings call today.

“We look forward to regulatory approval for return to service this quarter. This may include a phased approach” with other global regulators, Muilenburg said.

Boeing has hosted 545 participants more than 140 customers and regulators around the world to understand the technical changes. Meetings with more than 1,100 others, including the finance community which funds MAX acquisitions, also have been held.

At this defining moment, Boeing must take a leadership role to increase safety, he said.

We expect to maintain the current production rate of 42/mo, followed by incremental rate increases to 57/mo by the end of next year.

Majority of deliveries of stored production should be delivered in the first year, but it is clear deliveries will spill into 2021. Muilenburg was not more specific.

Trade environment hurts 787 and cargo market

Muilenburg said the current global trade environment, a subtle reference to Donald Trump’s trade wars, hurt the demand for the 787 and cargo operations.

Boeing announced it is reducing the production rate of the 787 from 14 to 12/mo, beginning in late 2020, for two years. Cargo air traffic is down.

An improvement in the trade environment is necessary for improvement.

More than 1,000 small-to-medium widebody aircraft needed in the next decade, he said.

777X

The GE9X engines are the pacing items for the 777X to begin flight testing, which Muilenburg now sees as early 2020, a further slip from 2019’s schedule.

Delivery rate of the 777 Classic will be 3/mo in 2020.

There are 364 orders and commitments for the 777X, Muilenburg said. Of these, 344 are listed on the Boeing website as firm.

However, LNA sees substantial weakness in this skyline. Boeing shows Etihad Airways with 25 firm orders. A fleet restructuring reduces this to six.

Emirates Airline has 150 777X orders. As many as 40 of these are at risk if Emirates swaps orders for the 787-10. This brings the “firm” backlog to 285, by LNA’s analysis.

The 767 production will increase from 2.5 to 3/mo in 2020, reflecting more KC-46A tanker orders.

Financial forecasts

CFO Greg Smith outlined a host of caveats for future financial performance. No guidance was provided, given the variables facing Boeing. These include but are not limited to:

  • The timeline of regulatory approval for return to service;
  • The ability or desire of customers as to when they will accept delivery of newly produced airplanes; and
  • The amount and type of compensation to customers. He did say this financial impact will be seen for years.
Analyst reaction

Below is a synopsis of the initial analyst reaction, preceding the earnings conference call.

Bernstein Research

Boeing reiterated its assumption of a Q4 return to service of the MAX. This follows comments yesterday from FAA head Steve Dickson, who said the FAA received software and documents from Boeing and was now running software tests and reviews. Boeing confirmed its plan to ramp MAX production, targeting 57/month in late 2020. The is in line with our assumptions.

Boeing updated progress it has made on the MAX return to service and internal process improvements, involving a number of organizational and governance changes, as well as test and production flights. In a separate update Boeing confirmed it has successfully completed a dry run certification test flight. Boeing also announced yesterday that BCA CEO Kevin McAllister would be replaced by Stan Deal, who ran BGS.

Production on the 787 will be lowered from 14/month to 12/month for starting late 2020, with a goal to move to 14/month in 2023. This responds to softer demand for widebodies, as we have previously outlined. The rate cut lowers this risk, but may dilute margins in 2021-2. 787 performance was strong, with deferred production down by $1.14bn, or $27.2m per airplane. 787 deliveries in the Q3 were 35 – below the production rate of 14/month. The low delivery result was due to other factors, including the hurricane in Charleston. First delivery of the 777X has been moved to 2021, as we have already modeled. Defense and BGS margins were below our estimates. But, this will not be the investor focus at this stage.

Buckingham Research

We think BA shares could trade modestly higher this AM as an anticipated B787 rate cut was less than expected and BA’s new guide for the MAX return to service was better than expected. We maintain our Neutral view and we are no longer tactically bullish. Looking at the quarter, a below consensus print and no guide for 2019 are no surprise and expected. What was not in expectations was a B787 production rate cut – the rate cut occurred earlier than expected, but the rate cut to 12/mo was clearly better than 7/mo or 10/mo expected by many. BA’s 3Q19 cash flow was worse than expected, but given valuation is off of 2020/2021E, we don’t think it amounts to much. Finally, it was expected that BA would move its expectations for MAX certification to the right – but BA’s new guide was earlier than the 1Q20 date we think many expected. We wouldn’t be surprised if the stock traded modestly higher today.

BA’s reported EPS of $1.45 fell well below $2.08 consensus and our $2.26. However, and as we previewed, we think BA’s 3Q19 print isn’t likely to be a focus item for investors or move the stock. What is important and likely to drive the stock this AM is that BA altered its guide for an early 4Q19 return to service for the MAX to 4Q19 – better than expectations (which we think were 1Q20). The issue, however, will be if anyone believes BA’s guide as some of the issues pertaining to the MAX return to service are outside of BA’s control.

Cutting B787 production earlier than expected – but less than expected. BA raised 787 production rates to 14/mo earlier this year, but announced today that they are cutting production back to 12/mo in 2020. In general, BA changes rate when they have expectations for at least two years of production at that rate. While it’s been well known that BA needs at least 50 orders for the B787 in 2020 to fill ‘holes’ in the skyline, an announcement of a production cut wasn’t expected until next year at the earliest. Furthermore, we think expectations for a production cut were closer to 7/mo or 10/mo. Consequently, investors could treat BA’s announcement as a positive as the production cut was less than expected.

BA took on significant additional debt in the quarter. BA’s debt now stands at $24.7B versus $19.2B at the end of 2Q19. We don’t see that as an issue and we note that BA has nearly $11B in cash and short term investments. While we previously anticipated BA would re-institute share buybacks sometime in 2020, we’re not so sure now as we think BA will put priority on trying to repay the nearly $10B in debt it’s taken on since December. Assuming BA doesn’t start repaying the debt until after MAX deliveries begin in 2020, estimates will also likely be driven lower by the additional interest expense. At this time, we don’t see a risk that BA has to lower or eliminate its dividend.

Cowen & Co

Investors may be neutral/positive to Q3’s results which were better than feared and updated 737 MAX schedule, which still assumes delivery by y/e and ramp to 57 by y/e 2020. Questions on the call are apt to focus on the MAX recovery.

Core EPS of $1.45 topped our est. $1.10 with essentially on track ops and tax rate help (0.8% vs. 16%E). However, free cash outflow of $2.9bn topped our $2.2bn on MAX disruptions.

Indicated 777x slip into 2021 is no surprise; and planned 787 rate dip from 14 to 12/mo in late 2020 was indicated as possible. Given the continuing mix shift to the Dash 10, supplier price step-downs, and productivity gains, we expect cash contribution/unit to hold relatively stable.

BCA loss of $40m vs. $100m est reflects (1) lower R&D, (2) modestly pared profit accrual rates for 737 (cut by $0.3m/unit) and 787 program (reflects planned rate cut). Impressively, 787 amortization of deferred production costs & tooling improved to $1.28bn vs. Q2’s $1.24bn and Q1’s $1.04bn; and core unit deferred amortization increased to $36.7m/unit vs. $31.0m/unit in Q2.
 Credit Suisse

We see these results as slightly positive: No incremental negative news on MAX will be a relief for most, partially offset by the confirmation of a 787 rate cut for late 2020, which will likely trigger downward revisions to out-year consensus FCF estimates.

787 Rate Cut: BA announced in its presentation slides that 787 rate will come down for ~2 years beginning in late 2020. This is largely consistent with CS of Q1’21 though ahead of most sell-side consensus (we believe) which has forecasted a rate cut in 2022.

JP Morgan

Boeing burned ~$3bn of cash in Q3. This was ~$1.5bn worse than our forecast. The company built $4.7bn of net working capital vs our estimate for ~$2.5bn. Physical commercial inventory (inventory less deferred production and tooling) is up ~$5bn in Q3 vs ~$2.5bn built in Q2 and perhaps reflects 787 deliveries below the production rate (35 vs 42, which could be $600m-700m). On the plus side, Boeing outperformed our 787 deferred balance estimate at a $1.1bn reduction vs our $900m estimate.

Liquidity update. Boeing ended Q3 with $10.9bn of cash and securities on the balance sheet. Yesterday, Bloomberg reported that Boeing is in discussions to sign a $9.5bn revolver that will replace its current ~$5bn facility. Net debt at Boeing now stands at ~1x 2018 EBITDA. Boeing should have access to plenty of capital, but we do not think the idea of burning through > $4bn of cash per quarter for operations and the dividend is appealing to credit markets and that is why we will be seeking more info from management on expected cash burn.

Reducing 787 production to 12/mo. Boeing has been signaling pressure on the 787 production skyline in recent months, and we reduced our estimates to account for most, though not all, of today’s cut last week. The production cut takes effect in late 2020 and lasts for two years, with management citing the global trade environment. We believe that receiving a large order from China as part of a trade settlement with the US is critical for shoring up the 787 skyline. It is unclear whether 787 orders would be part of a “Phase 1” US-China deal.

737 MAX assumptions. Management reiterated its assumption that the MAX return-to-service will occur in 4Q19, with a gradual production ramp to 57/mo by late 2020. As we have noted recently, the MAX appears to be making progress on the technical side, but there are still political and regulatory hurdles to overcome. Boeing added $900m of cost to the 737 accounting block, which brings the total cost added since the grounding to $3.6bn; each $1bn of cost is worth ~50bp of margin for the program.

 

91 Comments on “Boeing earnings call: still hopes for 4Q recertification

  1. Met with 545 technical representatives and 1,100 stakeholders? But doesn’t Boeing know its first priority is answering comment posts on Leerham News and Pprune and providing confidential design and regulatory data to amateur aerodynamicists? 😉

    • The bellweather of crediblity.
      It would be nice if they could just give the pilots some idea of how the damm thing works.

    • Have you read the JATR report.

      The JATR report was NOT written by LNA posters. So don’t blame LNA posters for what will happen.

      Anyway I agree Boeing have talked to hundreds and thousands. But nobody believes them. That’s nobody’s fault but Boeing.

      So yes, I agree Boeing do talk but don’t listen.

    • I am supprised of the lack of tranparency in this industry. In nuclear business all incident and transients are carefully analysed and checked against the modells of system behavour and peer reviewed in the international community involving also students at school.

      • Not surprising. Monopoly’s tend to become secretive, isolated, and paranoid about transparency.
        Boeing also engages with the students, but in an entirely different way. See the video at the bottom of this Boeing page to hear the people who are running Boeing into the ground and why. It gives you a very good feel of their character and quality…they are to a very large extent, nothing but pretenders with seemingly grand (and self proclaimed) corporate titles.

        http://www.boeing.com/commercial/innovation-challenge/index.page

    • Do you think that in addition, Boeing might also have engaged a PR firm to do some of its talking?

    • @sPh,

      You do realize that the experts (Scott, Bjorn, et al) as well as many of the “amateur aerodynamicists” who post reader comments here on LNA usually offer insightful & accurate commentaries & analyses that more often than not prove to be far more reliable than the fantastical, tall tales that is McBoeing’s PR spin?

      Of course, that’s when McBoeing isn’t working furiously to keep the skeletons stuffed into its bursting at the seams closets from tumbling out into the light of day, say the way emergent problems with MCAS were known in 2016 (and before entry into revenue service) but only became known to airlines, regulators, pilots, shareholders and the flying public well AFTER two crashes and 346 lives were lost.

      Just sayin’ 😉

  2. Muilenburg: “We look forward to regulatory approval for return to service this quarter. This may include a phased approach.”

    It will be a phased approach only if the other agencies agree with the FAA premises and the lag is of a technical nature.

    The risk here is that other agencies might not agree with the FAA and would not authorize a return unless Boeing brings other modifications. If that happens it will become an out of phase approval.

    This approach can only work in the context of a coordinated effort with no apparent contestation of the process worldwide.

    Otherwise the passengers might refuse to fly on the MAX if they know that other agencies around the world think the MAX is still unsafe.

    • Hi Normand, India’s DGCA is reported as saying they will start their own recertification study of the MAX only after it receives FAA approval.

      • Hi Martin, I am not worried about eastern agencies because they don’t carry much weight in America.

        However, if EASA requires other modifications and refuses to recertify the aircraft until those modifications are carried out, that could become problematic for Boeing because Europe is more respected in the US and passengers will want to know why EASA thinks the MAX is still unsafe.

        I don’t buy the argument that the American people think that EASA drags its feet to do a favour to Airbus. For as soon as the reasons for the refusal will be known the travellers will not feel safe and this could become a real problem for the airlines in the US.

      • Remember, in this context, that the CAAC in China took AGES to certify the A350…only giving it a green light years after it was certified by the FAA and EASA. It’s possible that they (and other agencies) will do the same in the current MAX mess.

    • One of my questions is this: per AviationWeek Boeing is using a 737-7 Max for the pre-certification test runs. If they fly a 737-7 for certification, but the two accidents were in -8s, as are I believe all the delivered MAXs so far, can we really have confidence? I believe BA will have sorted the overly aggressive MCAS responses, but will the thrust-induced issues MCAS was meant to overcome really be properly and vigorously tested?
      I will do my damndest to book away from MAX flights for at least a year after SWA puts them back in service (by mostly flying DL, thank you.)

      • Not to defend Boeing, but I think they and the FAA probably have ;though of it.

        I don’t know if all are tested or moves to the -8/9 but the testing will be relevant.

        I don’t know that length actually affects this issue, there is some info out there that I am not remotely capable of assessing that seemed to say it did not (or larger surfaces)

        • Vertical and horizontal stabilizer size is driven by the shortest member of the family. So if there is sufficient authority in the case of the MAX 7 then the same will be true for the longer variants.

          This is why the A318 ended up with a vertical stabilizer 30 inches taller than that of the rest of the family.

          • Depending on the distance between CoG and the stabilizer.

            I wonder how much LA610 and ET302 could have pitched up if all passengers moved to the back.

          • Depending on the difference between CoG and stabilizer each MAX variant could have a different powerful MCAS.

          • If MCAS was same powerful (same 2.5 degrees) for all MAX variants and was only tested on a MAX-7, MCAS had more effects on longer variants, especially if the CoG of the test MAX-7 was closer to the back limit of the CoG.
            So a MAX-9 should have more problems than a MAX-8, but IIRC there were only few MAX-9 in service.

          • There was this famous Cooper hijacking of a B727 in 1971, Cooper was alone in the cabin, only 4 people in the cockpit. Cooper parachuted off the aft stairway. The aircraft’s tail section sustained a sudden upward movement, significant enough to require trimming to bring the plane back to level flight. This shows how much passengers can trim a plane.

            https://en.wikipedia.org/wiki/D._B._Cooper

      • Both accident flights happened in hot area’s of the world. What was the density altitude? What was the weight and balance? We should have this data when the accident reports come out. If they were tail heavy or not etc.

      • I did some googling…
        ===========
        JT610
        According to the weight and balance sheet, on board the aircraft were two pilots, five flight attendants and 181 passengers consisted of 178 adult, one child and two infants. The voyage report showed that the number of flight attendant on board was six flight attendants.
        ===
        It also stressed that operational documents should be properly filled in – pointing out that the JT610 weight and balance sheet said five flight attendants were on board, when actually there were six.
        =========
        We’ll have to see what the official report tomorrow says.

        • None of it is relevant to what happened.

          The point is that this is highly public and the FAA is not going to let themselves go down with Boeing, even if Boeing submits a bogus setup be it more bad software or an aircraft that is not reflective of the issue.

          Spiraling off into wild speculation.

      • The center of gravity CoG is always moving because passengers are allowed to move and fuel gets less every minute. Boeing calculated limits for the CoG, a limit to the front and a limit to the back, and also mentioned the CoG empty. With knowing the CoG empty it can be recalculated how much passengers would need to move to get to the limits of CoG.

        For flight tests both limits should be tested. Since Boeing is hiding each MAX variant should be tested, MAX-7, MAX-8, MAX-9.

        The ET302 report mentioned that the balance was within the limits. I was surprised that the operating empty weight was so high, 47090 kg, because I couldn’t find this info elsewhere. In Wikipedia it was listed with only 45070 kg.

  3. I take it the ideas that all pilots will train in a MAX specific simulator, and that the manual trim wheel will be regeared are not part of the program anymore.

    • Probably cuz if they need to make a change in Trim Wheel- via a seperate electric-battery motor or similar – then the existing NG fleet comes into view

  4. McAlister resigned.

    See how far up the chain this goes ………………..

    • I believe he was made an offer he could not refuse re keeping his optionsfor many thousands of shares of stock…
      which is ther polite way of saying he was fired ..

      • He listened too much to other managers telling him this was “just a
        quick fix software patch needed” and it will be flying very soon.
        When this did not happen he was not quickly out at airlines explaining how Boeing would take care of them.
        Like you will be offered to lease brand new certified MAX’es for free for the same time you have been grounded + some time and we will provide some Aircrafts for you as fast as we can even if it means helping HiFly getting a bunch of A380’s flying for you.

        • He was non existent in presence during all this.

          Hiding behind your desk is now allowed.

          What his input into the higher reaches was we do not know.

          He is gone.

  5. I’m surprised that the FAA got the final software and complete system descriptions yesterday. Since the FAA started the JATR team review I wonder if the JATR members will get the COMPLETE system descriptions now too.

    • I’m surprised too. This article doesn’t say it. Do you have a link. Yesterday, Boeing said they were making progress and had a dry run test flight.

      • Philip,

        it was reported from Reuters, found the link on wikipedia with the MAX groundings.

        • https://www.reuters.com/article/ethiopia-airplane-boeing-idUSL2N2770HB

          Boeing Co is making progress toward getting its 737 MAX aircraft in the air again but the Federal Aviation Administration (FAA) will need at least several more weeks for review, FAA Administrator Steve Dickson said on Tuesday.

          Dickson told a news conference in Washington that the agency has received the “final software load” and “complete system description” of revisions to the plane, which was grounded after two fatal crashes.

          The FAA must complete pilot workload management testing and have U.S. and international pilots conduct scenarios before a key certification test flight.

          “It is going to be several more weeks before we go through all of that part of the process,” Dickson said. “We’ve got considerable work to do.”

          • Thanks for the link. Yep it says what you said

            So who do we be believe, the FAA as reported by Reuters or Boeing’s own press release.

            A dry flight test means that even Boeing haven’t test flown the final software.

            I’m confused.

          • Sorry N7201S is the Boeing test aircraft, if anyone is interested to see if it’s doing dry runs or test flights.

  6. It would be good to see analysis of what they gained by 787 rate 14 vs what it cost to get there and what the projected impact or costs are when it drops back.

    A rte drop of 2 is ?

    It seems to me they should have gone to 10 previously, and long term rate 8.

    • Interesting that Airbus has refused to go past 10 per month for the A350. They have a record (look at A320) of only increasing production when they can see it is for the long term. The production graphs are interesting.

      • part of that undoubtedly has to do with european labor laws.

        in the US it is trivial and cheap to lay people off when you do a rate drop (or for any other reason) but in Europe, and particularly in France, hiring and firing are much more expensive propositions.

        so if Airbus increases rate on hope, then the sales don’t come, they could be paying thousands of unneeded employees for a long time, where in the US, it is a friday noon meeting, 2 weeks severance and done. yay unfettered capitalism….. (there are some technical reporting laws in the US that require 45 days notice of layoffs above a certain headcount/proportion of company, but large companies just keep one of those “possible layoff” notices active at all times to cover their butts.)

  7. ‘At this defining moment, Boeing must take a leadership role to increase safety, he said.’

    Does he mean by defining moment, the moment where he personally and Boeing as an entity has shown the only leadership they are fit for is a complete disregard for safety.

    • Also funny that he used the word SOON instead of when.
      How can he say what the FAA WILL do, when it’s not his decision.
      Did he honored the killed victims?

  8. “Buckingham Research
    We think BA shares could trade modestly higher this AM as an anticipated B787 rate cut was less than expected and BA’s new guide for the MAX return to service was better than expected.”

    What was expected, by who, in hindsight? Free of charge positive BS. Baseless stock protectionism.

    • What is the actual foundation for Boeing’s constant and inaccurate “return to service” predictions? They seem calculated to maintain investor confidence, but are they just strategic? Are they honest? Are they ethical?

      • you cn be sure the 90 day predictions are technically exactly in agreement with all ‘legal’ definitions and rules and by such legal rule definitons they are ‘ honest’ ( eg not knowingly a lie ) and techically ‘ethical’ To be otherwise would open the door to fraud,lawsuits, etc.

        But that does NOT mean they are ‘ true’

        Thats why they have a cadre of big bucks legal types who scrub every word, period, comma, etc.

        You could get the same exact response from a robot

      • Sir Tim Clark said at the IATA conference in Korea roundabout May/June “You’re going to have a bit of a delay in terms of regulators, Canada, Europe, China. It’s going to take time to get this aircraft back in the air. If it’s in the air by Christmas I’ll be surprised,” Clark told reporters during the sidelines of the IATA annual meeting in Seoul.

    • “Indonesian AOA was not calibrated and still to be explained is why speed was off badly as well in an unrelated system”

      Suspect that AOA is part of FCC to determine or adjust speed display and value.

      Consider a “high ” AOA means the pitot tube aligned with pitch-centerline is also NOT direct in line with movment thru air. Thus there must be some adjustment in measured pitot value to get to actual.

      IMHO- when AOA is fubar at 25 degrees, the speed is also fubar- and away we go …

      standing by for some expert – knowledgeable – competent agreement or rebuttal …

      • No, there are three totally separate speed PITOT systems that are direct read (may move to Mach scale at higher speeds)

        That is the reason I asked the question. If they are not related in any way then why was there common speed issues.

        May get more detail Friday when Indonesia releases full report.

      • Bubba, you are right. There is adjustment because of local airflow and the adjustment is based on speed and altitude. That is done in the FCC. It’s determined during flight testing by Boeing and provided as an upload to the FCC

        But there may be another adjustment for the purpose of analog to digital conversion, depends on how the alpha vane is packaged.

        Need to wait for the report.

    • Interesting bloomberg article, thanks.

      Sort of reminds me of the post-deregulation rush of growth in the US a few decades ago. The push for aircraft to not come off the flight line may well have contributed to the crew of the previous Lion Air flight failing to report a serious control issue.

      After the ride they went on (which other media reports made sound quite bad, and survival hinged on a three person flightdeck team just happening to be on hand), they certainly should have logged the issue, one would think.

      Rapid growth models for airline businesses anywhere should be watched closely, irrespective of nation. Boeing absolutely takes a large share of fault for MCAS, the missing documentation, and the faulty reliance on one sensor.

      But the public also has to understand how the push to fly super cheap can result in bad management processes.

      I feel that *all of this* is in part the fault of airlines (including the 3 US customers!) not wanting a 737 upgrade to cause sim time and longer pilot difference training. Cheap on the front end, expensive in human lives on the back end.

  9. So Boeing has been roundly criticized in the media for placing undue pressure on employees to meet schedule on the MAX. And now Muilenburg and Calhoun are signing up for a plan to step up production to 57 by the end of next year and to deliver most of the stored production next year.

    Does that sound like a sound strategy? Have these individuals learned anything from this debacle?

  10. Some good news for Boeing is that the combined Deferred Production and Tooling & NRC costs for the 787 are down to $22.0B from the all time high of $32.4B in 1Q16. That’s more than a $10B reduction in 3.5 years including 1.5 years of slow roll-off in quarterly decreases. If the 4th quarter numbers turn out the same as this quarter, the total 2019 reduction could be something like $4.8B. It will be very interesting to see how throttling back to 12/month will affect the deferred production and tooling cost reductions.

    • With the only 737 Max compensation available in the form of steep 787 discounts, can’t see the deferred costs falling so fast in the next few years. Plus any wavering 777X orders may be sweetened by some more 787 discounts.
      The 737 was called the cash cow, the 787 seems to become Boeing’s loss leader.

      • We also hit the 1000 delivery mark soon. After that Boeing came up against the A330neo. So my view is that Boeing have been offering steep discounts since 2014 to compete against the A330neo.

        With regard to compensation, it will be interesting what the current steep discounts mean?

      • Yeah, and you probably had a bunch or reasons lined up for a while now as to why the deferred production and tooling costs could never have decreased by $1B per quarter. OK, Boeing’s decreasing loss leader.

        • Give it a break. Add $18 billion of development costs to the $22 billion. That’s still a $40 billion loss.

          My only wish for the 787 is Boeing develop it. The 787-9/ -10 should be developed into 787-9/10ERs as per the original 777. But they will need to have their weight reduced, a bigger wing, extended winglets and a trailing edge extension may do, and new engines, the Trent XWB is a good contender.

          Boeing may then sell 2000 more. Will they make a profit. Doubt it. But they will reduce the loss.

          But, give it a break. Nobody wants Boeing to go out of business. But they must change.

          • I agree that normally is the ER verison that is the most successful one. The T-XWB is a pretty heavy engine, hence the a RR Advance with max fan diameter possible on the 787-10 has the possibility to be a great combination of mass, thrust and TSFC to sell really well if quality and price is right.

          • @philip

            The 787-9 doesn’t need a new wing. An UltraFan powering a re-winged 787-10X and a further stretched (75 m long) 787-11X, on the other hand, should be able to generate compelling returns for Boeing and its stakeholders.

          • Philip,
            My comment is a response to dukeofurl, as evidenced by the single indent relative to his comment. If I was responding to you my comment would been indented relative to your comment. Keep up now.
            Any source for your $18B development number besides “google it yourself”?

          • Claes:

            What, another RR engine on the 787?

            Sheese, that has got to set an all time record except WWI.

          • Mike Bohnet

            Try the Seattle Times, but it says $15 billion as of 2011. I can’t be bothered to do any looking. I had this argument with TW and did all the reseach for him.

            The delayed production costs exclude development costs. He wouldn’t accept it as normal.

            So all by memery, but the Seattle Times article is referenced by Wiki in it’s article on the 787. By memory.

          • “What, another RR engine on the 787?”

            Why not . When was the 787 launched ? Something like 2003 which was when the engine parameters were set out and the tech available.
            2025 will be almost 25 years , thats longer than the 777-300ER had to wait which ( eventually) will have the GE9X in under 20 yrs.

          • Transworld,

            I sometimes think some of you Americans want Boeing to fail. The 787 is Boeing’s best airplane, but Airbus is surrounding it.

            Time to break out! I said the Trent XWB was a contender. It’s the best engine out there and the right size for a 280-290 tonne version of the 787-9/-10

  11. What is clear is that Boeing will ignore the JATR report. As others have said, the big question is whether the FAA will do the same.

    EASA won’t ignore the JATR report, I don’t think other international regulators will do either.

    Anyway we are told that December is now the crucial month, after being told a long string of months were the crucial month. Let’s see.

    • “” EASA won’t ignore the JATR report, I don’t think other international regulators will do either. “”

      I’m not sure about EASA anymore. They seem too polite to me, maybe because of the uncalibrated AoA sensor from Lion Air. EASA might take flight tests but what will they do then? I hope they won’t be a joke.

      FAA might not even ask for complete documents, as if Boeing provided complete infos. I think FAA is a joke.

      I hope that other regulators are more strict. India? Canada?
      Why are there regulations when nobody respects them. I don’t want a MAX flying over my head.

      • Uncalibrated alpha vane. Can you provide the link to that to. I don’t disbelieve you. I can believe the world is flat at the moment. Everything is crazy.

        It’s taken a year to make public that the apha vane was uncalibrated. Jesus.

        • This is the vane in question
          https://www.satcom.guru/2019/03/aoa-vane-must-have-failed-boeing-fix.html

          but note the cheesy way its been assembled- setscrew loose is all it takes to cause problems

          Why no spline, d shaped mount to shaft, D ring to keep things from sliding off shaft, etc. Sure great reliability until . .
          And then there is maybe getting whacked by loading ramp on left side due to higher nose wheel. Poor repair and of course the ultimate problem – use lof a single sensor to drive a major flight surface..

          • Thanks, Bubba. Engineer first. Don’t expect anything else even if we disagree.

        • Philip, the mis-calibrated alpha vane seems to be reported in the powerpoint presentation that the Indonesians recently gave to the victims of the air crash. The details should be out tomorrow (Friday 10-25-2019) in the full official accident report.

      • If Boeing is redoing MCAS to only do one .6 degree down cycle .. then how are they going to deal with the low speed stall situation? Is the tiny elevator on the 737 big enough to use for recovery? In 2012 test pilot Ray Craig was flying and noticed a problem, that they originally solved using MCAS with two sensors. Four years later test pilot Ed Wilson was doing the slow speed stall testing and that’s when they put in the deadly change to MCAS and took out the G-Force sensor according to this article. So, if that’s true, how will Boeing fix the low speed stalling problem without a 2.5 degree MCAS?
        =======
        https://www.irishtimes.com/business/manufacturing/fatal-flaw-in-boeing-737-max-traceable-to-one-key-late-decision-1.3912491

        • Good question.

          According to your link the test pilot said it had to be fixed. If that’s the case, stall problems occur at a lower AoA on the 737 MAX as opposed to the 737 NG, otherwise it would have had to be fixed on the 737 NG.

          Add to the evidence that the 737 MAX has a poor moment curve.

      • A DOT report released on October 23 says that the FAA faces a “significant oversight challenge” to control that delegation of certification activities “maintain high standards and comply with FAA safety regulations.”

        COMPLY WITH REGULATIONS do I read here

  12. Muilenberg reminds me of US president Herbert Hoover: when the 1930s Great Depression hit, Hoover did nothing effective to combat it, but was fond of saying that “Prosperity is just around the corner”. A hot-air slogan that got him ousted at the next election.
    I wonder what it’s like having your head in the sand to that extent…

    • The Great Depression was caused by the US Federal Reserve removing an incredible 35% of money from circulation. That was determined by Milton Friedman and conceded by Chairman Bernake.

      The Fed Reserve Board was made independent of the Treasury Secretary by the Federal Reserve Act. So Hoover could have done nothing. Roosevelt didn’t have to deal with the severely contracted money supply but all his crazy frantic and heavy handed actions only prolonged the depression greatly though it looked like he was doing something to the population. Pointless Action+Platitudes. See “FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression“ by Jim Powell.”

      The hair brained reason for contracting the money supply was to make poor quality banks collapse. The reason US banks are unstable is because of poor regulations restricting their operating to several states and preventing national expansion. They were too small to spread risk.

      • Everyone, let’s not get into political commentary here.

        Hamilton

  13. Notice that the analysts make no mention of the the investment required for NSA or NMA. 3 years is as far as they go and that’s pretty vague. Where Boeing went wrong.

  14. The Seattle Times reported that Boeing convinced FAA regulators to relax certification requirements in 2014, that would have added to the development cost to the MAX.

    Will this start a new WTO dispute?

    • And where are the ‘old’ GE jack welch trained managers and executives- On the Boeing Board ( calhoun ) and in charge of Commercial and a few have retired before and during the MAX decisions. Then of course those from MDC wound up at Boeing and or in club fed – or in FAA
      the welch mantra profit uber alles- cut the ‘ bottom ‘ 10 percent’ worker bees every year.

      Did wonders for GE and MDC and Boeing . .

      Gives one a warm feeling
      Like the flu or the plague

    • 2000 units to repair, it’s a huge amount, and has to be done within recommended 10 cycles period. Ufff, tough times to 777s owners which significantly brakes from a longer time. I wonder how much time is needed to change parts in one engine?

      • Only 811 777-300ER were delivered and only 8 particular serial numbers are mentioned.

        • Yes, but according to GE via Flight Global “Over 2,000 of the powerplants are in service, the company points out.” or maybe they referred to overall amount of 777 engines.

  15. Today, on CNBC SWA CEO Gary Kelly thought things were progressing on the return of the 737MAX. He also said he interfaced with McAllister as opposed to Muilenburg and he was good to work with. When pressed by the CNBC reporter he said in 2020 he and SW people would decide on whether to add another type of airplane to their fleet of just 737s. He said over the years he implied the company and Kelleher were interested in new technology. Again, when pressed he said “No” to a wide body aircraft and that if they went with a different plane if would be a single aisle. Just guessing, but I would think they would be studying the E195-e2, the A220-300, or the A321 in some form. I’m sure the file is there of the interview with Phil LeBeau.

    • The SWA story is interesting for me, the only thing I know about them is from the internet however. Looking at diversifying the fleet is a big story, is it about size of aircraft only or reducing exposure to risk like in the MAX case. Also what is the future of the MAX (problems) in the long term and passenger perception.

      The A220’s and E195E2’s are good aircraft but will bring a very different engine type among others to an SWA fleet. The 320NEO is fairly similar in size to the MAX8 but is slightly smaller (10-15 pax) and lighter (~1T). It is also only 1.5m longer than the 737-7, for fleet diversification could the A320N work for SWA as 737-700 replacement?

      The price for AB could be big enough to introduce A321XLR like wing updates to an A320N for SWA (and others), CFM could also tailor a LEAP-A (thrust, etc) that will be optimum for SWA’s requirements.

      AA and UAL eventually will need to replace large numbers of A319C’s, maybe such a variant (A320NX) might find favour with them.

      • Apart from fleet diversification, there’s also the fact that Boeing currently doesn’t have any realistic alternative to the A321NEO. At slot-restricted airports in Europe, operators that have the A321 (such as WizzAir and EasyJet) — with 235 pax per plane — are laughing at the fact that Ryanair is stuck with a 737-800 — with 189 pax per plane. Moreover, with the LR and XLR variant, those same operators can operate a host of new routes non-stop, far beyond the 5-6 hour limit with which Ryanair is stuck. I can imagine that Southwest sometimes casts an envious eye at the A321s at JetBlue and Hawaiian…

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