Leeham News and Analysis
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Pontifications: “We’re sick and tired of new technologies:” Avolon CEO
By Scott Hamilton
Editor’s Note: As Airbus and Boeing consider new airplanes, their current generation aircraft are plagued with technical issues. The engines on the A320neo and 737 MAX families continue to have problems years after entry into service. The Boeing 787, which had ground-breaking technology when it was designed, has production issues. Flight testing early on revealed technical problems with the engine on the 777X, prompting the president of Emirates Airline to publicly suggest he won’t accept delivery until the engines are fully “mature.”
Aviation Week’s Check 6 podcast last week examined Boeing’s path toward a new airplane. Boeing CEO David Calhoun insists on waiting for new technology. But “new technology,” while in theory is a great idea, the phrase also scares people. LNA reported on this in March 2020. We’re reposting this article from then.
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Introduction
By Scott Hamilton
March 16, 2020, © Leeham News: “I can tell you from our perspective, we’re kind of sick and tired of new, new technology. It’s not proven to be the home run.”
This blunt assessment comes from the chief executive officer of the big aircraft lessor, Avolon.
Domhnal Slattery
Domhnal Slattery, the CEO, was giving his critique of whether Boeing should launch a new airplane once the 737 MAX crisis is over. (Update: Since this interview, Slattery retired from Avolon.)
Boeing was on a path to decide whether to launch the New Midmarket Airplane when the MAX was grounded one year ago this month.
Airbus was waiting for Boeing to move before deciding how to respond.
Summary
- Airbus and Boeing should “stick to their knitting.”
- Focus on incremental improvements for now.
- 2030s to 2050s will be the next big advance in technologies.
Discussion
Technology failures
New technology, while effective once bugs have been sorted out, proved problematic across several airframe and engine platforms. The disruptions caused headaches for airlines and lessors alike.
The Boeing 787’s leap for new composite technology and new industrial technologies were challenging. Design issues and delays plagued the program. The airplane was 3 ½ years late, upsetting schedules for airlines and lessors. The new engines, the GEnx and Rolls-Royce Trent 1000, still have problems nine years after entering service. Many 787s are grounded because of Trent engine problems.
It will take until 2021 or later for RR to fix the Trent.
In 2013, the 787 was grounded for three months after battery fires with the new-technology lithium ion batteries.
The Pratt & Whitney Geared Turbo Fan engines on the Bombardier C Series (now the A220) and the A320neo family had premature failures. The fundamental, new technology GTF architecture wasn’t the issue. The problems revolved around seals and parts of the core that are basically mature designs. But at one point, there were more than 100 A320neos stored without engines as PW tried to sort out the problems.
Like the Trent, it will be another year or two before the GTF is up to snuff.
The CFM LEAP engine on the A320neo and 737 MAX suffers from coking and other issues related to the very hot temperatures needed for higher fuel efficiency. On-wing time is well below was what planned, say engine experts.
The new GE9X for the Boeing 777X had a design issue that delayed first flight of the airplane by nine months.
No new airplane
Slattery urged Airbus and Boeing to “stick to its knitting” with the MAX and neo families.
The Big Two OEMs should “continue to iterate the half a percent or 1% improvements every year, that we’ve seen on airplane design or engine efficiency. Let the engine guys then put all of their time and effort and resources into a piece of technology that’s 15 years out.”
Slattery advanced an argument that Airbus makes: if Boeing launched an airplane program with an entry into service target of around 2028, Airbus could follow with an advanced technology model in the 2030 decade that would have even better economics and be more environmentally friendly.
“What’s the alternative [to waiting]?” Slattery asked. “You build an airplane that’s neither one thing, nor the other. From an efficiency perspective, if they decided to design it today, entry into service is six, seven, eight years from now. Meanwhile, Airbus will wait, and put a brand new airplane in six years later, and nobody will want to buy the Boeing product, because they’ll wait for Airbus.”
2030 decade
What technologies for the 2030 decade would be worth waiting for?
Airbus is focused on decarbonization designs. Electric and hybrid airplanes and eco-friendly fuels are another.
But Slattery, among others, doesn’t see electrically-powered airplanes, except for small ones, for another 30 years or more.
It’s not entirely the OEM’s fault, though, is it? If their customers didn’t want lighter and more fuel efficient planes that are quieter and pollute less they wouldn’t have got built. The OEMs have certainly overpromised and under-delivered but the airlines aren’t saying “let’s take a step backwards” – no, they’re saying “let’s take a step forwards but without the associated risk”. Is that realistic? Probably not if the limits of what is feasible are being pushed at.
The MAX and NEO will be around longer than their predecessors. The great leap in technology, especially in engines is not there. And “if” it was, would one trust it? Not surprised by comments about the lack of enthusiasm for new tech.
These are machines that move humans in environs humans were not design for, high in the sky and very fast. Might be time for everyone to pause on the Climate Change intiatives.
LNA:
After the A321XLR, what will be Airbus’ next development?
[…] The A320/A321 is Airbus main source of revenue and margin. It would, therefore, be a logical focus for further development to keep the success going into the next decade.
Bit by bit AB is going to dominate the NB segment.
Depends on what Boeing does. Airbus doesn’t want to move first.
AB better not follow BA; maintain its lead, remain a step or two ahead by 2028-2030.
Airbus’s decision is rewing the A320 family (most likely) or new fuselage and wing (why?). Either way, it will have to revamp its cockpit controls to meet new Cockpit regulations.
In the meantime keep banking 7000 backorder, and hope PW gets its house in order so it can increase production.
Airbus doesn’t have to move first – the ball is solidly in Boeing’s court. AB can focus on sales and production, getting the A220 program on track and chipping away at the WB market.
They’ll also work on building up the rainy day fund, which is the prudent thing to do.
I can only surmise that AB was all to happy to hear that BA was not going to see a new jet for a decade. They’ll probably make sure that they aren’t playing possum, keeping up on designs and engineering – but I don’t think anyone there was displeased with the news.
The real issue is what does moving first get you?
Boeing needs to move and Airbus has one significant move it can do (new wing)
But you also get the 787 affect, it was new and advanced and Airline managers fall for it (and yes it was an improvement but nothing an upgraded A330 could not match in some areas)
But what happens if Boeing actually does a TTBW and its a bigger jump (5-10%) over Airbus and a new wing?
An A220-500 is probably part of the answer
Airbus made a mistake on the A340 (that was a hard call) and another one in believing their own propaganda on the 787.
One good example is Ford and their Tractors. They worked, they were low cost, but they were not as good as the competition that came out.
By the time Ford realized they needed to modernize, they lost the tractor markets and eventually the line was sold off.
Your engineers need to assess things in advance and the management needs to listen.
@williams
‘Either way, it will have to revamp its cockpit controls to meet new Cockpit regulations.’
Are you referring to the talk about a single pilot cockpit? Really? AFAIK, it’s all just that…talk. You let me know when it get’s past regulators, pilots unions and the flying public at large.
In other words…not happening any time soon in large commercial airliners.
If you`re AB, would you move?
You`re winning on both ends, only the Max 8 is playing 50-50.
A321N is winning 4 to 1 ore so.
A220 is coming from the bottom, an A225 might be another trump card in hand.
You might think about a new composite wing, but a complete new design might not have enough benefits over the existing Max/Neo.
If a clean sheet with recent technology gives you 10%, would you pay 10 bn. $ for?
Boeing has made this calculation 3x times now, first when they did the Max, then with the NMA in its`first try and now with its 2nd.
Their conclusio: “development would not be pursued until new engines and development tools are mature”
Airbus can enjoy a pretty comfortable position and maybe take a look on a A330 replacement / development, that`s their weakspot.
Their strategic near/mid term options are:
– develop A225 when A220 fam. is profitable
– develop new A321n wing
– develop A330n (freighter?) or replacement
– develop A35K stretch
Let`s see what they will do.
I hope This Duopoly does not wait too long to come up with greener airplanes. 10% of annual carbon energy based emissions come from commercial air travel. Every one likes to jump all over Greta Thunberg when she travels to a Climate initiative, well then maybe she should be given more new tech options…
We have had exponential technological development since the industrialization started around 150 years ago. It is getting harder and harder to come up with stuff that is better than what we already have. To do that we need to push closer and closer to the limits of what the laws of physics allows, which adds complexity, cost and risk. A good exemple might be the current jet engine designs that are getting close to the theoretical termodynamic efficiency, but this is not just the case in aerospace, many other sectors are experiencing the same thing.
In the case of P&W they were pretty conservative. They had a big gain with GTF and did not push the envelope on the rest (they can and will down the road)
That is the P&W puzzler in that some stuff they should be able to design and implement did not push the envelope and they had issues.
I suspect it has more to do with experienced engineers and more and more being heaped on the shoulders of those who can and the failures of management in not keeping a balanced work force.
You need to keep a good mix of experienced people and new people so that when the experience people retire, you have experienced people to replace them (oh and treat your people well and not abuse them aka Cowering Workers)
New technology and the new type of leadership that was spawned by, oh let’s say the Boeing McAir merger, the GE Jack Welsh philosophy and the Rodney Dangerfield “Back to School” MBA types – this doesn’t bode well for invention and development. They are in a hurry to get mega rich.
Sabotage from the Top.
The prevalent philosophical stance of management is destructive.
Be that penny pinching in the wrong domain
or hating your workforce.
( Interesting that Airbus themselves are less visible in this though equally hit via dependencies. )
Additionally bringing destructive influence to bear on your competition is much cheaper than excelling on your own ( GE’s forte IMHO)
‘( Interesting that Airbus themselves are less visible in this though equally hit via dependencies. )’
All it takes is one part, from a sole source supplier – and the aircraft isn’t going anywhere.
But on that subcontracting note; how much of an aircraft, could an OEM be reasonably expected to make?
Is it worthwhile, for example – to have a landing gear shop? Avionics? Interiors? A shop that makes wiring? Sheet metal plant? A rivet maker?
It’s not an AB or BA thing, but rather an industry. What components would you say “Hey – we should make that” versus “Those guys over there are better and cost less than we could produce it for”
Frank P:
Valid points, but also to be kept in mind Boeing sold off the 737 fuselage plant (and they farmed out the vast majority of the 787, keeping in mind Charleston was never intended to be a Boeing plant)
Also to be kept in mind chunks of the 767 are Japan sourced (fuselage).
Airbus was following Boeing but could not sell the various plants and then decided to keep them in house.
But at some point, Boeing was proposing to just assemble aircraft and then the huge surprise that others were making more margin than Boeing was. hmmmm
Like all of it there is a balance. Boeing is lucky Japan is not going to be a commercial aircraft mfg and they gave away the crown jewel in the wing of the 787.
Bjorn in his series brings up a fuselage is more complex (it is, has more stuff) but the aerodynamics of the wing are what determines how efficient the aircraft will be and it was foolish of Boeing to loose that.
777X has the wing built in Everett though shipping wings that size is iffy (granted Airbus does it)
One of my working decisions was not just can I do the work, do I have the time and is there something nasty I need to do when I could hire out aspects (vast majority of conduit was hired out, I did the greasing and drive belts)
So yes, rivets, fasteners and the sheets of aluminum or CFRP by someone else (I think Tory built a plant in Everett)
777X has an outfit for the gear that never made gear that size. They showed the other gear mfgs a thing or two (assuming no gear issue)
I have a different take (I am not aware that the GenX had problems that were not all that hard to correct)
There are two major different factors involved here.
Airbus has not had Boeing failure to execute on a program. Its not that Airbus has not had issues but they are the more common in any program.
Boeing issues are directly due to management trying to get free lunch and the shoving the safety culture off the cliff.
787 Battery: I will see if I can find my final report link, but the key was Boeing outsourced the whole thing and what management was involved came up with a stupid nail through the battery to test its meltdown.
Boeing went with Yuasa for the batteries, they are a good firm but they had not a clue on LI tech and the factory was a nightmare of dirt and bodged work methods that had no quality control.
The rest was a trail of tears on a hacked together entity for the control board that was of all things a Aviation burglar alarm company.
Top company was in Europe, the battery alarm company in Arizona as I recall, the monitor board was another separate Japanese company and Yuasa none under any supervision (the Arizona operation burned down the building in a insane test setup)
The rest of the 787 debacle was management, joint ventures aka free lunch and the amazing thing was it eventually succeeded (at an insane cost)
The 787 Joint issues have nothing to do with tech and all to do with slop that was allowed into the system as all the focus was on getting money out and not spending a dime to ensure it was done right.
We all have seen the MAX tragedy and MCAS. One horrid piece of software killed a lot of people. And before others jump in, the 737 has a lot of software that works perfectly (speed trim). As far as I am concerned it was driven by the no special training cost (and no one has addressed the manual trim lock up issue).
I don’t have any in depth on RR but that was biblical incompetence and the earlier Trent engines were good and the Trent 900 and 1000 no.
P&W puzzles me in that they have the experience for seals and such and its something fell off the quality map there (did the seal division loose all its people?)
Reports are coming out that P&W is getting back on track and sooner than was thought they would.
But Time on Wing can only be tested with time on wing and there is no such thing as a mature engine until its been through many years of service and finding the weak spots.
The 777X is incremental and having issues with a new engine? Would they have bought the aircraft without a new engine?
What it amounts to is there is a balance. At some point you can’t increment (A330NEO Rev 1-4) as people refused to buy it (so we get the A350 and then they claim they want the A330CEO after all.
Good management works on threading the channels and not going aground. Boeing has it wrong, Airbus has done much better but is not perfect.
Back in the late 70s or early 80s my boss bought a new Chevy Suburban. Rear seal started to leak and he asked me to fix it (I did that kind of work as a sideline)
I looked at him and told him, its under warranty, I open that up and at the very least it voids the rear end warranty, and its not a worn seal, something odd is going on and it could be a shaft surface, and that gets into some serious work and no, not going to touch it (the local Chevy dealer was awfull to work with)
So he took it into his regular repair shop, they took it apart and then he gets the phone call. The good news is yes its the seal, the bad news is its a new seal design and we can’t find one. Same truck, same rear end and they decided something was wrong with a many many years proven seal? Yep.
Now the shop new about the new seals but they did not know they were installed on trucks with his serial number, all they had seen were latter.
It took them a couple of weeks to find the seal.
Why? Well its a new seal, it won’t fail for 50-80,000 miles and they had few spares.
It can be a weird world.
Apparently a lot of misinformation being spread around. I suggest to look for a best source than poster here.
-> The incident resulted from Boeing’s failure to incorporate design requirements to mitigate the most severe effects of an internal short circuit within an APU battery cell and the Federal Aviation Administration’s failure to identify this design deficiency during the type design certification process.
-> The enclosure Boeing had to add was 185 lb (84 kg) heavier, negating the lighter battery potential.
“-> The enclosure Boeing had to add was 185 lb (84 kg) heavier, negating the lighter battery potential.”
Engine start from battery drains capacity quite a bit.
Charging after tha needed to be fast because:
In an engine out emergency landing the RAT looses power at landing speeds.
But the brake control and activation is fully electric.
IMU a dead engine landing will tax the battery to near depletion.
The volatile battery chemistry was needed to allow a full capacity drain in ~180 seconds.
The ermergency application required a full battery and thus a fast charge to archieve that on short notice.
AFAIK Both battery nonfires happened 20..25 minutes after an autonomous engine start.
DC 3 is still the best for him.
WSJ: Auto CEOs Make 300 Times What Workers Make
I remember the vast majority of the big buyers such as Emirates, Qatar and others, all pressing for more advanced and fuel economical airplanes. Now all are complaining for the technological lack of maturity (mainly on the engine’s side).
It is easy to press and to threat buying the competitor that takes the risk (but announces the new marvel technology), and also easy to blame them for not delivering to the promises.
Looks like Boeing CEO, Mr. David Calhoun, saw this and decided to act accordingly.
Over-promises by airframers/engine makers. Salesmen want their year-end bonuses.
“I think we’re going to have a shutdown” of government.
https://twitter.com/ByERussell
This is not new, new engines both commercial and military has a history of major problems and upgrades. People got spoiled by the CFM56-3 and later versions. We are now back to “normal” engine developments and improvements SB’s where maybe 30% are a step back.
Fully agreed.
What we would call complaining when complicit and its easy to dump on the source when you in fact were at least part of the cause.
I am a full believer in incremental improvements, but at some point you need a new design to be able to go further and factors like emissions and fuel economy and even pretending to be Green all factor in (note the use of an A350 to fly the Green Party Leader of Germany to the US)
So it goes, you don’t take people like that seriously.
There are complainers and doers.
The production volume of new engines onto the market was much less back then and many were used to planning engine changes every weekend on a small fleet of for example Caravelle’s with RR Avon engines. Just look at the initial 747-100 engines compared to the then mature P&W JT3D’s on the DC-8’s and 707’s. Now airlines explode if they cannot get 15000 cycles on wing “right out of the box”. Look at Delta A320neo and the number of spare engines and spare parts Tech ops have to keep a big majority of their A320neo’s with PW1100G’s in the air.
Agreed.
Just because your cell phone is a wonder does not mean your engine is!
-> Breeze is “days away” from being able to fly international charters, and expects certification for scheduled international flights by year-end, Neeleman says. Mexico, the Caribbean, Ireland, or deep into Central or South America are possible destinations.
https://twitter.com/ByERussell/status/1707093724193309031
You want new technology?
Have a look at: https://droneliner.com/home !
American readers probably will not recognise the reference, but the Droneliner 350 seems to me to bear more than a passing resemblance to Thunderbird 2! (From the TV puppet series “Thunderbirds are go!” of the 1960s).
More like a streamlined AN225 with a sexy paint job.
Thunderbirds related transport would exchange the whole payload section.
https://static.wikia.nocookie.net/thunderbirds/images/8/87/Bleathman_Thunderbird_2_Cross-Section.jpg/revision/latest/scale-to-width-down/240?cb=20190126130630
Impact of a US federal government shutdown:
“We would immediately have to stop training air traffic controllers, and furlough another over 1,000 controllers that are in the training pipeline.”
https://twitter.com/ByERussell/status/1707067523353497846
-> The federal government is gonna shut down but the Senate has a dress code…..
https://twitter.com/bresreports/status/1707168262482538739
-> Is a U.S. government shutdown just a political game?
This March 2019 reporting from @WSJ , days after the 2nd 737 Max crash, has this key line.
The government shutdown directly stalled a software fix that might’ve prevented the second crash in Ethiopia.
https://twitter.com/jonostrower/status/1707171632186613863
-> SCOOP: U.S. government has started formally telling federal employees a shutdown may be imminent and they may soon lose pay. Official notices are starting to go out as Congress fails to strike a deal.
https://twitter.com/TonyRomm/status/1707397153599971643
‘Congress fails to strike a deal.’
Correction. The GOP cannot even get an agreement amongst themselves as to what to put in a bill, to bring to the floor for a vote.
They have the majority, after all – they bring the proposal to the table.
There is no deal to be struck.
…and as I expected:
‘Risk my job’: McCarthy gives in on funding deal with speakership on the line
Democrats are likely to give the speaker the votes he needs to pass a “clean” 45-day bill with no money for Ukraine.
https://www.politico.com/live-updates/2023/09/30/congress/house-gop-eyes-deal-00119259
Speaker Kevin McCarthy is pushing the House toward a last-minute escape hatch from a government shutdown before Sunday’s deadline— one that will require support from Democrats and potentially endanger his gavel.
————————————————-
He doesn’t have a consensus from within his own party to pass a budget, so he is reaching out across the aisle to work with the other side, to pass legislation and keep the gov’t open, acting with the adults in the room.
Maybe he should just change parties, as they seem more amenable and care more about the country, that his side…
I believe Jefferies (sp) would object!
@TW
https://www.politico.com/news/2023/09/30/kevin-mccarthy-government-shutdown-deal-00119290
House Minority Leader Hakeem Jeffries, who has refused to engage in hypotheticals involving his party helping save McCarthy’s gavel, deferred on Saturday when asked if the speaker did the right thing by putting up the bipartisan spending bill.
“The House, led by Democrats, was able to accomplish the right thing on behalf of the American people,” the New York Democrat said.
Err, prepare for another game in 45 days.
@Pedro
…and prepare for McCarthy to reach across the aisle again, to save his position as Speaker
-> ‘ Actually, “aviation safety” is a game. Boeing ante-ed up, but it wasn’t their chips. Boeing continues to gamble. It is most likely that Boeing would have parked the ‘fix’ alongside the other 737 noncompliance/conformance issues. Its a 1967 aircraft.
https://twitter.com/DanimoosDad/status/1707187978878038459
BTW BA fell like a rock (down a steep slope). Dark clouds have arrived. No delivery to China yet. No MAX 7 certification yet and the government is shutting down.
Calhoun/West now have the perfect excuse why they’re going to miss their target. Worry not, deliveries are only “deferred”, same as cash receipt!
BA stock down 20% in two months.
BA stock is down over 5 dollar today. Oopsie.
While you’re not wrong about the share price, I’ve really come to realize that there little in relation to how well the company is doing.
Shareholders want two things (ok, three):
1) Share price to go up
2) Dividends to be issued
3) Cash to be put into buybacks (which will drive up share price)
It’s all a function of FCF, which BA has said will be around $10 billion by 2025/26.
Airbus doesn’t put that much into buybacks and is banking money for a rainy day fund. Not what investors want to hear.
Frank P:
Is it the shareholders or is it Wallstreet?
With Boeing loss of stock value share buy back is clearly not the way to go. (long term).
Granted the shakers and movers on Wallstreet dump and buy on a penny value, but I don’t consider them share holders, opportunists.
Top 3 Institutional Shareholders
Institutional investors hold the majority of Boeing’s shares at about 62% of total shares outstanding.
https://www.marketbeat.com/stocks/NYSE/BA/institutional-ownership/
I think Boeing doesn’t need moon shot innovations for an whizz bang new aircraft to regain market share.
Just right capacity (200 seat single class), optimized payload range (not overly capable/heavy), engine choice, modern seat width, AKH options would do the trick. Add SAF ready improved LEAP and PW1000 variants, get some (Asian) partnerships, thermoplastics etc. ..
Developing an new aircraft is a huge investment, absorbing short term free cash flow. IMO at Boeing that was more a trigger to avoid new aircraft then new wonder technology being required.
Because the A320 offers the options above & Airbus took the (significant) risk of getting in the CSeries, accepted a ROI of many years & put addition billions in the program, they covered the lower part of the NB segment.
BTW I believe the A220-500 will be launched within 2 years. Airbus prefer$ A321 variants in their slot planning iso A319s, a320s. And need scale / a family concept on the A220 line, the A220-100 seems a niche already.
https://groups.google.com/group/aviation_innovation/attach/5533c07c26288/A220%20500%20competitors%20737%20A320%20Airbus%20Boeing.jpg?part=0.1&view=1
https://groups.google.com/group/aviation_innovation/attach/57f1d448a2948/Airbus%20Future%20A320%20portfolio.jpg?part=0.1&view=1
A straight forward 102t A322NEO seems a good idea too. Using the A321XLR’s landing gears, modified wings, fuel system etc.
‘BTW I believe the A220-500 will be launched within 2 years. ‘
Step one of any new launch in the A220 program will be getting the Quebec gov’t out of the way. I don’t think that there is the political will to fund another aircraft here.
Airbus still has about 2,500 A319/320Neo’s in the backlog and the future is A220-100/300/500 A321Neo/LR/XLR (yah, they could do a A322Neo/A320+ variant) there is no urgent need to launch anything new as long as things remain the same.
If you’re Airbus, what’s not to like about the way things have developed?
Like I stated before Boeing, should have called AA’s bluff and let them order Airbus and continued with its NB new plane it would be in a better position. Heck if they went with the 7J7 and not the 737NG………………no the 737ng was quite successful.
Airbus has the upper hand here in the NB market. Boeing was smart to pass on the A220 Black Friday offer, it would have been more of an orphan in Boeing’s portfolio than in Airbus’s. Both Airbus and Boeing are going to have drop big money to come up with new cockpit systems to meet future regulations. Airbus has the airframes in place, Boeing needs to develop an airframe to take on the A220 and A320 families. If Boeing’s management get out of the way and the let the engineers do what they do best, and they succeed, then Airbus is in the hot seat. Go up against an improved airframe with a 30 year old design with new wings and avionics ( yes, been done before and very successfully too), or go totally new. Which in that case makes the A220 purchase, even for a $1, look foolish.
High stakes poker.
“.. Boeing, should have called AA’s bluff ..”
Beoing had no tangible product to offer.
( independent on “reasonable timeframe” or far, far in the future )
Additionaly they had no idea on how to manufacucture that mirage.
@williams
‘Boeing was smart to pass on the A220 Black Friday offer, it would have been more of an orphan in Boeing’s portfolio than in Airbus’s.’
Perhaps because the BA cockpit is older and outdated?
Try this on for size: BA takes the C-Series cockpit, makes the A220-500, then uses the same modern set-up to create their own slightly wider 3×3 fuselage, plastic wing to replace everything up to a BA A321Neo/XLR competitor.
Then they have an added pool of engineering talent in Canada, along with the benefits of having another company spending the R&D money on a new program.
————————————————–
‘Both Airbus and Boeing are going to have drop big money to come up with new cockpit systems to meet future regulations. ‘
Which future regulations are you talking about, that the A220 does not meet?
————————————————–
‘Boeing needs to develop an airframe to take on the A220 and A320 families. ‘
Correct. But if THEY had the C-Series in their stable, they’d only have to worry about competing with the A320Neo family and using what they got from BBD to create that modern design.
But let’s look at this realistically;
IMHO you can’t cover the entire segment from 120-130 seats, all the way up to 240 seats/4,700 NM with just one size fits all. The shrinks would be too heavy (like they are with the A319Neo & the Max 7 against the A220-300). It’s like the 757 & the 767 are needed to effectively cover the MoM segment.
——————————————————-
‘If Boeing’s management get out of the way and the let the engineers do what they do best, and they succeed, then Airbus is in the hot seat. ‘
…and if my grandmother had wheels, she’d be a wagon. It’s the same reason that they didn’t pick up the C-Series; ego and greed.
——————————————————-
‘Go up against an improved airframe with a 30 year old design with new wings and avionics ( yes, been done before and very successfully too), or go totally new. Which in that case makes the A220 purchase, even for a $1, look foolish.’
But this is some fantasy world that doesn’t exist, does it? One could even say that if mgmt didn’t spend $43 billion on buybacks since 2013-2019, they’d have all the capital they needs, instead of being in dire straights.
But they did spend it. They don’t have it. They don’t let engineers run the show. There is no other option to sell to customers. They didn’t take the C-Series option that Airbus did. They don’t have a product there to compete effectively. There is no ‘new airframe’ being sold that competes. The MBA whiz kids didn’t get out of the way.
If, if, if….
@FP
In an interview, Jon Ostrower concludes that the current top mgmt of BA is following the exact strategy it followed last decade, to extract the most to return to shareholders thru’ share buybacks (and dividends to a lesser degree), similar to LBO business model.
@Pedro
Yah – I’m hearing a lot of ‘should’s’ and ‘if’s’ here… wishful thinking, in other words.
He’s not wrong – if mgmt got out of the way and let engineers do what they do best, the company would be doing a lot better.
But reality is quite different.
Frank P:
You need to have boundaries for engineers, we need good management that is looking at all 3 corners of the mfg operation.
Sutter did not get his way on all the 747 items, he got the important ones.
Boeing management is horribly unbalanced.
@TW
‘You need to have boundaries for engineers, we need good management that is looking at all 3 corners of the mfg operation.’
You’re not wrong. However, I’ve heard that the MBA whiz kids, when the engineers told them what the 787 was and how much it would cost, they were told:
“No. You’re going to make it, as you’ve specified – for THIS amount of money (something like $7 or 8 billion)”
As if they were masters of the universe and could will it…
Why would Boeing take on the A220 to cover the 737-7 market when their biggest customers would not want it? Even if Boeing did a stretch to cover the 737-8 (which sells pretty good on its own), that still leaves the 170-200 market left to the 737-9 and 10. A split NB product line.
We will see how well it works for Airbus.
‘Why would Boeing take on the A220 to cover the 737-7 market when their biggest customers would not want it?’
IIRC – LUV was kicking the tires and considered the A220-300 for it’s fleet, as a replacement for the 737-700, no? Why, if BA were to add in an A220-500, would their customers not want it? How do you reach that conclusion?
———————————————
‘that still leaves the 170-200 market left to the 737-9 and 10. A split NB product line.’
You take the A220 cockpit, you get the designers to create an enlarged version of the A220 fuselage that seats 3×3. You get Belfast to make you a larger wing (or maybe you make it yourself as a smaller version of the 787 wing up in Wash). You offer an engine choice of either the Leap or an uprated version of the GTF.
The 737 goes away.
———————————————————
Your line-up becomes the Boeing 797-100, 797-300, 797-500 (A220-100, -300, -500), 797-700 (3×3 seating that competes with the A321Neo) 797-900 (3×3 seating that replaces the 757-200 in the MoM and competes with the XLR).
Metal fuselage, plastic wing, common cockpit.
-100 & -300 are already paid for, courtesy of BBD. -500 has already flown in the computer and is a simple stretch of -300, plugged fore and aft of the wing, no other changes. Probably a billion to get that to market.
R&D spend in focused on the 797-700 & 900. You’ll also need a stronger landing gear, but it’ll be right sized for the model.
Then you’ve got 5 models to cover the NB segment, with a production/engineering facility in Canada and a gov’t that has shown it will kick in some money to save jobs. They slowly work their way up to 14 a month, the old 747 space in Wash get’s the new A220 line as the NG is phased out. The more numerous (as exhibited by the A321Neo order book) production line of the wider 3×3 NB line stays in Washington State, with Boeing Canada producing the 2×3 NB.
But BA then has the newest clean sheet NB on the market, with updated and common cockpit across all models.
Or you make an enemy of Delta, keep pushing the envelope of the 737 and end up where you are now, in cert hell with the 737-7 & -10, with older designs that just aren’t selling as well as the competition.
@Williams
It’s essentially the sneaky smart 757-767 move that Boeing pulled in the 80’s, keeping commonality up front and just changing the fuselage/engine & wing – across the entire NB line.
“Why would Boeing take on the A220 to cover the 737-7 market when their biggest customers would not want it?
BA can’t innovate when it mortgages its future to the most conservative customer. That fits current strategy of BA: no clean-sheet design, return cash to shareholders is more important- the McDonnell’s future.
“Why would Boeing take on the A220 to cover the 737-7 market when their biggest customers would not want it?”
BA first tried to frighten off that customers by way of litigation and later seems to have bent over backwards to offer “irresistiable pricing”.
tagging this “no interest” in the competitors products is hilarious.
@ FrankP
Very Plausible but cockpit commonality goes out the window with 777 and 787. But new cockpit regs are coming for both OEMs anyway. Plausible
” .. new cockpit regs are coming for both OEMs anyway.”
Whatever. Looks like Boeing has signficantly more exposure to this.
@Williams
‘Very Plausible but cockpit commonality goes out the window with 777 and 787.’
Is there cockpit commonality now with the 737Max to the 787 & 777X? I don’t think so.
Mentour talks about this and both OEM’s:
‘Despite entering service decades apart, the 777 and 787 share the same type rating. We don’t know if this is something Boeing could pursue for its next aircraft, to ease airline training.
But even if Boeing doesn’t do this fully, type rating considerations could still delay the adoption of sidesticks. Airbus, for instance, has a common type rating for its A330/340/350 families, which is different from that of its A320 family. But pilots with one of these ratings can benefit from a shorter/abbreviated course for the other.’
So the Max and A320 have different type ratings from their larger brothers.
But back to your point;
That would be the optimal solution, wouldn’t it? Have one type rating across every aircraft you make. (If that’s even possible…)
Back when … Airbus formed a rather well thought out abstract aircraft model and UI interface.
FBW properties are adjusted to have all Airbus models behave in a way conforming to that abstract model.
Thus even the nonidentical UI instances are sitting rather close together.
While the GTF gearbox appears to have been relatively fault-free, I wonder whether the architecture has pushed the engine into unknown areas(i.e. revolutionary rather than evolutionary) – looking at the N1 speed, the gearbox allows it to max at 10,047 rpm vs 5,650 for the V2500 (and 5,382 for the CFM56-7 and 3,894 for the LEAP-1A). Even the low bypass JTD8 only ran to 8,800rpm. The LPC compressor is running at nearly double speed of the previous generation. I’m nor sure why the GTF architecture should need the HP to run faster, but it jumped from >15,000rpm on the V2500 to over 22,000 on the PW1100G (and over 15% faster than the LEAP).
I guess it could be the smaller diameter? I suspect that could be somehting to do with it, but even the CF34 N2 max is only 17,710rpm (and N1 7,360rpm)
The Hotter T4 and higher pressure ratio is the answer here.
Charles:
Its a package and I have to assume P&W engineers looked at both current engines and state of the art as well as the GTF end and came up with the best solution they could manage.
They also have the experience with the Turbo Prop end, the V2500 program as well as the F-35 engines.
I have watched the vehicle engine world for as long as I can remember.
At some point, you can only change so much and then you need a whole new block, you cant add in the upgrades. If you are going to do a new engine, you also need to future proof it so it has a long run.
P&W did that with the GTF. They clearly got some things wrong but all that went into it was part of a plan not just for current but future.
AIR FRANCE was launch customer of 777 300 ER in april 2004.
This biggish fleet (around 50 incl KLM) will be replaced by A350 900 and A350 1000
Saw that, Boeing sure wanted that order.
FG:
Ural A320 field-landing crew did not realise undercarriage had …
https://t.co/0rQxjsb0CC
-> MU to receive its 3rd C919 in Oct
Reuters:
-> “Ryanair faces broad delivery delays of the 737 Max aircraft as Boeing deals with the latest supplier glitch afflicting the jet, with disruptions poised to linger through mid-2024, Bloomberg News reported on Wednesday.”
“Boeing advised the Irish low-cost carrier at a meeting this week that it will only be able to deliver 14 of the 27 aircraft due by late December, according to the report, which cited an interview with the company’s CEO.”
I think 400 Max’s is looking a little too far…
When you thought the AB bribery scandal was settled….
Not so fast. https://simpleflying.com/indonesia-wants-part-of-airbus-990-million-bribery-settlement/
Indonesia to sue UK’s SFO. 😂
It is rather amusing isn’t it !!
Here’s another one that’ll bring a smile to your face..
Looks like Garuda will finally say bye-bye to that long dormant 330neo order after all…
Hilarious 😂😂 or what !!
No wait ..they don’t have to abide by ASC 606 standards…
Another pointless order still in the books, till all eternity 😂😂
Who should I believe?? 🤣
Ch-aviation:
Garuda Indonesia says MAX order *axed*, A330 order rejigged
Define Rejigged..!!.
Just like the United a350 order was rejigged..
In other words;
Put on the back burner till around “2050”sounds about right.😆😆😂
.
Oh dear. Our poster has to be better informed. 😂
From Air Finance Jounal:
Nine Airbus A330-900s to be delivered from 2026;
four A330-800s from 2027.
Hehe conversion right is nothing exceptional. You should know better. It’s all about how much the buyer is willing to pay.
Qantas also has conversion rights in its Airbus order.
BTW, you forgot to mention it’s cancelation *with penalty*, which is pretty standard, isn’t it?
The article mentions only A330-800s subject to cancelation (with penalty). Our poster has to be more precise. 😒
Let me guess..
Your trying to be the new sheriff in town, policing my comments..
Just remember what happened to the last one trying to do so !!🚫
.
Here sheriff..
Another link proving otherwise, showing they have the right to covert the 330n to other variants or cancel them outright.!!
https://airinsight.com/singapore-airlines-and-garuda-to-extend-partnership/
We can only hope that in your case history repeats itself!
In regard to Garuda’s A330-900 order, it is true that the article says it has the right to replace them with the A350 and/or the A330F, and it has the right to cancel the A330-800s, but I don’t see anything in the order that says that they are going to!
Boeing Suffers Big Loss On Air France-KLM Blow
https://seekingalpha.com/article/4637736-boeing-suffers-big-loss-on-air-france-klm-blow
Airbus was aggressive on the price and could make delivery schedule. Boeing was not and could not meet AFKL delivery schedule. Congrats Airbus.
Waiting for the detailed financial analysis of what hometown discount Air France got.
‘Airbus was aggressive on the price’
Hardly what the financials have been telling us
https://www.bloomberg.com/news/videos/2023-09-26/airbus-beats-boeing-in-air-france-widebody-order-video
You forgot to add that word in ‘slightly’…which means what?
But once again, looking at the financials (when we had this whole discount against list price debate) it seems that one is discounting below what it’s costing them to build – while the other is building up a 10 billion Euro rainy day fund.
Hehe An airframer is infamous for its “proprietary” Partnering for Loss scheme.
When the third financials come out, I will look forward to you telling us how much the discount was for AFKL.
“Slightly” indeed.
West said both BCA and BDS are going to lose $$$ this quarter.
‘When the third financials come out, I will look forward to you telling us how much the discount was for AFKL.’
Sorry – my crystal ball isn’t that good.
OEM’s don’t detail how much they sold to individual carriers, at what price and so on. We get a time period snapshot:
X amount of aircraft delivered, Y amount of revenue obtained, Z was the cost that it took to build those airframes.
As well – AB & BA use different recording methods for revenue;
BA has the DPB where they can store away expenses to be pulled out in the future and recognize revenue when the aircraft is handed over, deposits and PDP’s put into an ‘unearned revenue’ liability account until that time.
AB has milestones set up as production progresses (% of completion method) , when revenue is recognized (revenue recognition means it falls onto the Income Statement, along with the matching expenses) and don’t hold huge amounts in unearned revenue.
Besides, the AFKL order is years out and runs for years, along with escalators in the contract. What could be a $10 billion contract today (just throwing out a number) might end up being $11 billion in revenue in 5 years.
@Williams
In addition to all that:
What we receive today in financial reporting are orders that have been negotiated and signed for years ago.
Specific to Airbus, let’s say from start to finish it takes 6 months to put together an aircraft, ready to hand over. Let’s also say (and I’m just throwing out numbers and different actions here, Scott C has a much better grasp on this than I do, but it’s just for illiustration:
Milestone#1) Finish barrel section and wing build – 10% revenue recognized
MS #2) Join wings to wing box – 10% again
MS #3) Empennage & landing gear join -10% again
MS #4) Electronics install & all wiring/plumbing – 10%
MS #5) Installation of all BFE – 10%
MS #6) Paint and first flight – 10%
MS #7) Customer acceptance & handover – balance 40%
———————————————
Now maybe this process cover multiple reporting periods (quarters), maybe it covers different years. Different planes are at different stages of production during any given time period.
From a financial 20,000 foot view, what’s important is what margin they make on all those deliveries, as partial revenues are recognized. There will always be partially produced aircraft sitting in the system, with part of their revenues and expenses reported.
——————————————————-
Then there is this (which falls onto the cash side of things), which is probably a good part of why it takes so long to negotiate these contracts.
OEM’s and airlines have different revenue streams and profiles. An airline, for instance, won’t want to make huge cash outlays to OEM’s when things are slow. Summer time (usually) the coffers are full – but after labour day, until the holidays (with Thankgiving thrown in) & post early Jan…it’s lean times.
As an OEM, you’re supposed to fully recognize revenues at handover, but maybe an airline needs 30 or 60 days extra so they don’t have to dip into a line of credit or break an investment, to make final payment. So you’re stuck adding the sale into A/R (receivables) while the amounts fall onto the Income Statement.
———————————————–
All that to say that you look at revenue/delivery/profitability trends over successive time periods to get picture of where an OEM stands.
So you are saying Airbus financials are not as clear to read? Bryce, you and all can discern the nth degree the amount of discount Boeing gives to customers but you can’t deciphers Airbus’s using the same methods. Not buying that at all. I keep that in mind when I read the numerous long posts dissecting Boeing 3rd quarter financial records for the third quarter.
@Williams
‘Bryce, you and all can discern the nth degree the amount of discount Boeing gives to customers but you can’t deciphers Airbus’s using the same methods.’
Incorrect.
If you would go back quite a few posts, I did exactly that for both OEM’s. It’s based on a function of deliveries and revenues. But if you go back and have a look, there is no detailed information based by carrier.
I can’t understand how you would expect me to determine revenues based on deliveries that will occur from 2026 to 2030.
The financial results are a picture of a previous time period. Not a future one.
———————————————————
Full Disclosure:
I have previously posted upon the sales price of one carrier – SouthWest. I did it only because I found irrefutable evidence buried away in their financials:
https://seekingalpha.com/filing/5206107
Sale-Leaseback of Aircraft
In second quarter 2020, the Company entered into transactions with third parties, involving ten of the Company’s Boeing 737-800 aircraft and ten of the Company’s Boeing 737 MAX 8 aircraft that qualified as sale-leaseback arrangements under applicable accounting guidance. The Company sold the ten 737-800 aircraft to a third party for $405 million, then immediately leased the aircraft back for approximately ten years. The Company sold the ten 737 MAX 8 aircraft to a third party for $410 million, then immediately leased the aircraft back for approximately 13 years. As such, the aircraft were de-recognized from Property and equipment at their remaining net book values. All of the leases from the sale-leasebacks are accounted for as operating leases, and thus are now reflected as part of the Company’s Operating lease right-of-use assets and operating lease liabilities in the accompanying unaudited Condensed Consolidated Balance Sheet. The 737-800 and 737 MAX 8 sale-leaseback transactions resulted in a recognized gain of $153 million and $69 million, respectively, reflected within Other operating expenses, net in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income.
————————————————-
Now what does all this financial fine print say:
LUV needed cash during the pandemic. They sold 10 Max 8’s for $410 million, or $41 million a pop.
When they sold those aircraft, they declared a gain of $69 million or ~$7 million an aircraft.
Which means that those aircraft were sitting on their books, valued at $34 million a plane. Assets are recorded at historical cost (if you have a company and let’s say you buy a car and pay $40k for it. That’s the amount that is put in the assets account called ‘Vehicle’)
Those Max’s were fairly new, so even if you throw in a couple million for depreciation, you can make a fair judgement that LUV paid no more than $36, maybe $37 million for them.
—————————————-
So, if a Max 8 lists at $122 million, you can figure out what the discount is.
If you go back and read what was posted, it had to do with the discount given as an average, for all deliveries, for a time period.
A quick example for you:
In Q2, BCA got $8.84 billion in revenues
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q2/2023-06-Jun-30-8K-PR-Ex-99-1.pdf
They delivered 136 aircraft, to MANY airlines.
737 103
747 —
767 8
777 5
787 20
Total 136
So you take the list price of each model and get an amount of revenue that would have been generated, if the aircraft was sold at full list. For example:
101 Max’s delivered @ $122 million = $12.322 billion
You do that for each model, then add up what the EXPECTED revenue would have been at full list, divide it against what the REPORTED revenue was and you get a percentage off of discount:
For all aircraft
For all airlines
Delivered during the period
Airlines and OEM’s don’t disclose what was paid.
A little bit of humour:
https://www.youtube.com/shorts/JAAO8hKtmAw
If airlines were people
Excellent !
Emirates Airlines President on Boeing 787 Order
-> Has A350s coming next summer
https://m.youtube.com/watch?v=O_d7HImCznM
Reuters: GE must face shareholder lawsuit over accounting, disclosures
-> “Shareholders led by two pension funds said the power unit grew increasingly reliant on factoring, or the sale of future revenue for cash, to boost reported revenue while sacrificing future cash flows.
They said the unit did not have enough contracts to factor, and GE “blindsided” investors with billions of dollars of unexpected exposure, causing its stock price to fall.
In a 47-page decision, [Judge] Furman said the evidence showed a “clear awareness” among management that GE Power’s use of factoring was contributing to a cash flow problem. He also said a reasonable jury could find that GE intended to mislead, including in January 2017 when then-Chief Financial Officer Jeffrey Bornstein said factoring had “very little to do” with GE Power’s “very good underlying performance.”
https://twitter.com/AirlineFlyer/status/1707369995611636212
Dubai’s Emirates orders 200 Airbus A350 aircraft
https://www.tradingview.com/news/reuters.com,2023-09-28:newsml_Zaw2nS0GC:0-news-dubai-s-emirates-orders-200-airbus-a350-aircraft/
Per Anet, bad reporting. Pertains to a present order.
I thought it seemed odd, a big order not long before the Dubai Air Show? Highly unlikely! If we are going to see a big order from EK this year that’s where it will happen!
https://www.marketscreener.com/quote/stock/AIRBUS-SE-4637/news/INTERVIEW-Tim-Clark-Emirates-Airlines-Company-prefers-Airbus-to-Boeing-for-the-time-being-44930237/
“Emirates will consider the 777-9 in a few years”
?
Fact is Clark has warned Boeing for years and years.
If you are a big airline having to replace your big 777-300ER fleet.
What are the alternatives to the (excellent, proven, ULH) A350-1000 next to your A350-900s?
Payload range limitted 787-10s, heavy, continued uncertified 777-9s ?
Realism is finally kicking in..
Airlines don’t like to have limitted choice, they actually hate it.
But need slots > 2030. You can’t build a network on hope and denial.
After BA, AF/KL, JAL, airlines like ANA, SQ and UA are likely to follow.
Highly doubtful…
UA had many opportunities to acquire The A350 .. obviously they’re quite happy with their current decision,
The 787 fills all their needs ,and in case you haven’t noticed , the underperforming 787-10 is starting to see a resurgence in orders. .
With a relatively small 777 3ER fleet..
I wouldn’t expect anything to change anytime soon..
BA will have nearly 50 787’s after all is said and done .!!
So what do they re-up their order books with;
The A350 .??..nope . More 787 10’s .
Realism is kicking in !!!! Highly unlikely .
Like there are other options other than the almighty A350 !!
Unlike you, the airlines seem to recognise the concept of “horses for courses”. BA chose the 787-10 because it is well suited to shorter routes. AF/KLM chose the A350 for its range capability. The 787 isn’t necessarily ideal for all airline’s purposes, in some cases the A350 meets their needs better. Get over it!
The AB fanboyism is astonishing here!!
Say anything remotely positive about Boeing, and the proverbial barrage of verbal assaults soon to follow.!!
Did you ever come to terms “ROGER”, that many carriers do not require the full range or capacity the A350 offers.
We all know the 787 is an enigma to everyone here,.
When your the dominate leader in the small to mid widebody market..
Naturally ,the detractors are going to be envious of your dominance..
SO what part of this domination do you not understand .
By comfortably outselling all your competitors widebody offerings combined!!!
Okay ..your right , I understand now !!
I suggest you get over it ROGER !!
“Say anything remotely positive about Boeing, ”
It is mostly reurgitated PR efluences that get the cold shoulder of the audience here.
Keesje is not entirely wrong.
The 777-X lost face because it was not available.
The effects of slow certification have been harmful
I wish it did, then we can stop with the Boeing death march posts.
Large hole ripped on A330 fuselage after ground vehicle collision, causing substantial damage.
Assessing whether or not is repairable!!
I thought only the 787 was fragile ..😅
Shades of earlier comments !
https://simpleflying.com/condor-airbus-a330neo-damaged-frankfurt-ground-handling-equipment/
What you write, suggest, is not in the article at all. Just one in many incidents $5B damage like this every year.
‘Assessing whether or not is repairable!!’
Funny, that’s not what the article says:
‘Condor’s newest Airbus A330neo, D-ANRB, has been grounded for repairs after it was damaged by a loading vehicle at Frankfurt Airport. One of Condor’s new Airbus A330neos has been pulled for service for repairs after being damaged by a loading vehicle at Frankfurt Airport (FRA) on Wednesday.’
‘Incident details
Having joined the carrier’s fleet earlier this month, D-ANRB will head to maintenance following a ground incident, which saw an airport high-loading vehicle tear a hole in its fuselage while parked at the gate.’
It is unclear how long the aircraft will remain out of service, with it remaining on the ground at Frankfurt Airport for an examination. In a statement shared with Simple Flying, a spokesperson for the carrier explained,
“We can confirm that there was an incident with the Condor A330neo D-ANRB aircraft at Frankfurt Airport caused by an airport vehicle on Wednesday morning… The damage at the aircraft is now being thoroughly inspected and technically examined on site by experts. Condor is working closely with all relevant authorities and other parties involved. Further investigations are currently ongoing.”
—————————————————
But hey – don’t let that get in the way of you pushing your narrative. Perhaps a few more exclamation marks might help….
I can kill two birds with one stone with this post 0 firstly in response to the question of “getting it” I think the post that triggered yours shows exactly that I understand that not all airlines will come to the same conclusion when assessing the question of whether the b787 or A350 meets their needs. Unlike you though, I don’t think that any not choosing the 787 is making a disastrous choice. And sales figures per se only tell a partial story.
Secondly, as others have pointed out, your most recent post illustrates how easy it is to twist a story to fit a narrative. Some of have wondered whether the durability of a composite fuselage is questionable, and I feel that there’s no clear answer to that yet, so it’s a fair question. Yes the Ethopian fire-damaged example was repaired but it would have been a PR disaster if an almost brand-new had been written off, following the lithium battery controversy, so it had to be done regardless of cost. But the A330 incident you refer to is irrelevant, and any suggestion that the aircraft in question is irrepairable seems to exist almost entirely in your imagination – there seems to be no doubt from the article that it will be repaired and the repair will not be over complex or technically challenging – it’s just another example of what might be termed ramp rash.
Most of us on here make reasonable comments or pose serious questions based on facts and reality. Please, please try to do the same yourself if you want to be taken seriously.
While I do think sales numbers have relevance, the A350 indeed is a success and will continue to be one.
Granted those engines wearing out too soon has to hurt (grin)
You gotta take into account the financial success (or failure) and the 787 is way behind on the money end (granted it was management issues, but still behind and costing huge is an aspect)
The A380 was a tech success but not a financial one. The 787 should have been a huge success financially and in the end it may just break even.
(I know I shouldn’t, but….)
‘The 787 should have been a huge success financially and in the end it may just break even.’
How do you figure, with almost $7 billion in losses on the program written off, through the first 1000+ deliveries?
Frank P:
Using my somewhat cloudy crystal ball, I believe Boeing will make 2500 of the 787s.
That should get them to break even.
Happy to let you run your numbers and see if I am correct.
Obviously how many 787 will be built is ????????????????
I`m worried that you are not wrong.
The write offs are written off – they did eat profits from the B77W and B737NG. It was not only the one time write off, it`s also the development cost.
Boeing has 1750 orders now. Even if they sold them cheap, that`s over the planed accounting block. So the deferred cost are not longer a problem.
The B787 was cash flow positive before the production problems caused the halt.
Now the production is unified in South Carolina which should increase efficiency and reduce cost.
Boeing is not done selling it, and they are not done developing it. A freighter will come, a HGW version also.
United has 100 options, they will use some. AA is not done and will take more, JAL, ANA, BA, LH are most likely to add more.
That should bring it to 2000.
How attractive would a B78T HGW / ER version be? For all airlines that fly transatlantic or inner Asia?
The B787 sells so well, that Boeing will somehow magically make it profitable.
@Sash
No.
‘The write offs are written off ‘
They are still on the balance sheet. They’re just called something different; Long Term Debt (with annual interest expense)
———————————————–
‘So the deferred cost are not longer a problem.’
Boeing currently doesn’t have enough orders to cover the DPB. They say so right in their financials. They’ll need another 300 or so, to do the job. The rate at which they are pulling expenses out of the DPB looks like $16 million a delivery. So 2,000 deliveries to cover the DPB.
The DPB is some $12+ billion
—————————————————-
‘The B787 was cash flow positive before the production problems caused the halt.’
That is because BA uses program accounting which allows them to squirrel away expenses in Inventory, to be allocated on future deliveries. About $7 billion written off on the first ~1,000 deliveries shows it is not cash positive. Never has been.
If you sell me an aircraft for $135 million and it costs you$142 million, losing an average ~$7 million – the program is not cash positive.
———————————————-
Let me expand on that Cash thing;
You are an OEM. I order 100 aircraft from you. Total value of the deal (not list prices) is $13.5 billion. I give you the standard 10% down at signing, or $1.35 billion. Deliveries to start in 2 years, for 3 years.
You turn around and trumpet:
“Hey, look at this $1.35 billion in FCF. We’re rich. Dividends and buybacks for everyone!”
Fast forward 5 years and it has cost you $14.2 billion to make and deliver those aircraft, a $700 million shortfall. All you’ve really done is spend $14.2 billion on something and gotten back $13.5 billion and now you’re short. So you go to the lenders and borrow $700 million, which is costing you ~ $3.5 million per year (5%).
Cash was great, back in the day – but that money wasn’t yours, was it? It was UNEANED REVENUE…which is a liability. That is why it sits in the Liability section of the balance sheet.
Do you know how much Unearned Revenue BA has?
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q2/2023-06-Jun-30-8K-PR-Ex-99-1.pdf
Advances and progress billings 55,310
$55 billion.
That’s money that customers gave them, that they spent, that they have to return to customers in product.
They only get to keep the excess of what they sell the aircraft for, less the money they have spent to build it.
But Wall St and Investors just love FCF….
———————————————————–
‘Boeing is not done selling it, and they are not done developing it. A freighter will come, a HGW version also.’
BA needs to sell it. They need another 300 or so deliveries, problem free – to cover the overages incurred in previous years.
So tell me, A freighter, A HGW version; they’re going to develop that for nothing? It’ll cost them zero?
Nope.
That’ll be another couple of billion in added costs, that need to be recovered.
————————————————
‘The B787 sells so well, that Boeing will somehow magically make it profitable.’
If you look at the program as a whole – it’s a loss. Not counting the R&D money, which BA doesn’t break out by program:
Research and development expense, net:
Commercial Airplanes $915
Defense, Space & Security 420
Global Services 54
Other 149
Total research and development expense, net $1,538
They’ve already written off ~$7 billion. If it was recoverable, they would have kept that amount in the DPB.
The program, is a loss. No smoke and mirrors moves will help it…
@TW/@Sash
“Boeing has 1750 orders now. Even if they sold them cheap, that`s over the planed accounting block. So the deferred cost are not longer a problem.”
Sigh. Spirit had a reach forward loss of $1.4b on its 787 program. It lost over $200m in the first half on major programs. Its CEO openly complained their current contract work with airframers is not sustainable. All these are not reflected in BA’s 787 program accounting estimates.
You believe these issues can be wished away simply by selling more 787 *cheaply*?
Oh! Mine. I have a bridge to sell!!
https://www.msn.com/en-us/money/companies/spirit-aerosystems-ceo-says-cost-pressures-on-boeing-airbus-programs-not-sustainable/ar-AA1gozaj
I wish I share you two’s no-limits optimism.
Spirit needs a bail-out, one way or another, and it won’t be cheap. Don’t wait til xxxx hits the fan.
Spirit’s CEO is out.
@TransWorld
If Boeing shared your rosy assessment that they would build and sell 2,500 Dreamliners and that amount would cover all the monies spent, especially those amounts sitting in the DPB…
…why did they write off $3.5 billion and why did they not just put the other $2.8 billion of ‘abnormal costs’ into the DPB?
Why write it off? Do you know why?
Because Program Accounting relies heavily on the the use of estimates – and when their own estimates showed that those amounts, no matter how optimistic the projection, would not be recovered with future sales, they were forced to declare a loss.
You think that the C-suite boys (who I know you don’t shed a tear over) WANT to do anything that will drive the share price down?
———————————————————-
Boeing says as much in their financials – and I have quoted them to you before:
‘At June 30, 2023, $11,823 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $1,970 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.’
They need MORE orders, to cover another $1.97 billion.
Their words, not mine.
——————————————————-
Frank P:
2500 does not seem unreasonable to me. I would even venture to 3000 with some confidence.
My hat is off to you on the accounting acumen. But once you write something off you can take it off your taxes, no?
And in this case I am just looking at the 787 not all of BCA offerings.
No disagreement that Calhoun and his ilk would spend it all on stock buy backs. But he will be gone in the next 5 years and we don’t know what is going on behind the scenes at the board level.
The Chairman of the Board and the CEO are split apart, and nothing like competing power centers to throw in the mix. Kellner does not make headlines but you can bet he is no patsy.
No question Boeing has problems, 50 billion in debt is serious but I have seen Corporation recover from that. Defense is a mixed back with some heavy losses there as well. Kellner will be reminding Calhoun of that every meeting (it took place on your watch, live with it)
I suspect Kellner is responsible for the shift to looking at new product, he is aware of the implications of a one supplier issue for an airline.
So run the numbers and assume 10 million profit per 787, 3 million for MAX (using numbers sold as of now) and where does that leave us?
Spirit delivered about 1,165 Dreamliners, it *lost over $1 million per unit*. Learning curve on ppt or in BA’s program accounting is one thing, the one in reality is different.
Ultimately for how long can Spirit bear with these money losing programs?
@TW
‘2500 does not seem unreasonable to me. I would even venture to 3000 with some confidence.’
Well then, I suggest you get on the telephone, call up Boeing and tell them what you think their estimates should be and that they should correct their numbers.
————————————————-
‘But once you write something off you can take it off your taxes, no?’
There we go – the Donald Trump school of business; In that case I guess BA will have plenty to celebrate with 5 continuous years of write-offs, huh? What a success story.
‘And in this case I am just looking at the 787 not all of BCA offerings.’
Filings don’t break down what losses are attributable to which program. But a loss, is a loss.
———————————————–
‘Kellner does not make headlines but you can bet he is no patsy.’
Not sure how this means anything relevant. A quick search on him however, reveals:
“Kellner retired as the airline’s chief executive at the end of December 2009. During his career at Continental, he previously served as a vice president, chief financial officer and chief operating officer.[1] Kellner currently serves as President of Emerald Creek Group, LLC – a Texas-based private equity firm primarily focused on real estate and also as Chairman of the board of directors of The Boeing Company as well as serving on the board of directors at ExxonMobil.’
So he was the CFO at Continental (remember how much you love numbers guys?), oversaw the merger than moved into private equity and is on the BoD of Exxon. Can you say ‘c-suite insider’ boys and girls?
He could care less, IMO, whether you consider him a patsy or not, he wants to get paid.
——————————————–
’50 billion in debt is serious but I have seen Corporation recover from that.’
Funny – the Retired guy who is also a CPA was looking around for just that kinda thing and couldn’t find one.
So, please – post away, with sources – as to who you’ve seen.
———————————————————
‘So run the numbers and assume 10 million profit per 787, 3 million for MAX (using numbers sold as of now) and where does that leave us?’
Ah….finally some actual numbers. But you’ve forgotten some things, haven’t you?
You’d like nothing more than to say “OK – we’re starting from zero right now, how much are we making?” But the program isn’t at zero, is it? There are still more ‘abnormal production costs’ to be charged on the program. Boeing has said so – once again, in their filings.
Boeing has had four and a half years (which will be five in Dec) of negative margins at BCA. These are the 4 previous years earnings:
2022 -2370
2021 -6475
2020 -13847
2019 -6657
That’s in millions. Over $29.3 billion in losses at BCA.
Then there are OTHER expenses squirrelled away in Inventory in the DPB that will be expensed against future deliveries, which once again – Boeing has declared in their financials.
The ZERO mark starts, when those amounts are completely removed from Inventory. Then you can say “OK, assume $10 million for a 787 and $3 million for a Max”
(BTW – as I have been trying to tell you, Boeing currently does not have enough orders in the backlog, to zero out the balances on either the 787 or 737…once again, they say so in their financials)
—————————————————-
Now that you’ve reached the zero mark and want to estimate a margin for each aircraft delivered, you need to calculate how many aircraft it will take to cover the ~$7 billion written off on the Dreamliner. $6.5 billion on the 777X program.
Do you understand the story that is being told in the financial?
1) Boeing has negative margins on current deliveries – as in ‘not profitable’
2) Boeing has added expenses stored away in Inventory, which will count against future delivery margins
3) Boeing has written off in chunks, amounts relating to each program, which were determined to be ‘non-recoverable’
—————————————-
I’ve also posted this before, but just so you can recall, I’m gonna post it again:
‘At June 30, 2023 and December 31, 2022, commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of $4,739 and $2,955’
So in 6 months, over $1.7 billion in expenses were stored away on the 737 program in Inventory, to be pulled out against future deliveries.
———————————————
But hey – you go ahead with your predictions of 2,500 to 3,000 orders, breaking even, knights in shining armour that aren’t ‘patsies’, corporate saves that supposedly happened from $50 billion down and phantom profit margins…
…I’ll keep checking the financials to see what they say.
Hello LHN Team, it`s 3 years and a pandemic later – how good you can simply repost the article as issues are still existing.
And your work was so advanced that it`s still valid years later.
Keep up the good work!
Thanks for the kind words, Sash. We try to be ahead of the curve….
Scott
Aren’t you supposed to be somewhere with your feet up, fruity alcoholic libation in hand, sun roasting your forehead and the late, great Jimmy Buffet’s music wafting quietly in the background? Not a care in the world?
Yes but when you own a business you’re never totally on vacation.
The reason I never wanted to work for myself, I have seen the tole .
I admire those who can do it but worker bees are needed and I was happy to be one of them.
Thank you for what you do. I am sorry I am not in a position to get a subscription. If I had the money it would be worth it.
Aviationweek
Opinion: The Decline of Major Aerostructures Suppliers Is Worrisome
https://t.co/O7V0PWEMIl
Aerostructures 1st/ 2nd tier companies I see are overloaded, have supply chain & workforce shortages. But full orderbooks & are profitable. Maybe it really depends in who’s supply chain you are most.
The traditional A/B duopoly seems really f.cked up at this moment. Worse than people (want to) see. Not all orders can be compared and all commitments are the same.. Both A &B have their own reasons to play this down.
The brain drain must have been intense at these suppliers, or they cut too deep and are still trying to climb out. We are two years roughly removed from the worst of COVID and suppliers still struggling to hire? Sure, how much of this is management “right sizing” the work force and has no incentive to increase employment for low margin work for either OEM.
Herald.net
https://t.co/K580b7T7jt
-> Decades ago, a top Boeing doctor warned of chemical exposure and its effects on reproduction. Now more workers’ children with lifelong disabilities are coming forward.
https://twitter.com/GoldsteinStreet/status/1708175240055095632
Wow another 767 buckled fuselage hard landing
“Beirut Airport reported the [DHL] aircraft suffered a hard landing on Sep 18th 2023 causing substantial damage to the aircraft’s structure and causing minor injuries to the crew.
http://avherald.com/h?article=50eeb399&opt=0
Spirit stock recently hit its lowest price per share since 2013.
maybe Airbus should buy the Airbus A350
facility from Spirit (central section panels are built in Kinston, North Carolina) along with Spirit Belfast operation for the A220 wing and wing leading/ trailing edge parts of all the A320 family of aircraft at the Spirit Aero Prestwick, Scotland to safeguard in case Spirit Aero needs a major financial restructuring (aka bankruptcy Chapter 11)
They should have bought the A220 manufacturing facility when they had the chance – and expanded it to take over production of the other parts made by Spirit that they rely on. It makes far more sense to be in control of your own destiny!
philosophies chanage.
Usually in step with what is thought to allow for the biggest profits
More losses are coming/ another kitchen-sink quarter??
-> Boeing leaders don’t talk like this unless the entire program is on the verge of cancellation — either by NASA or Boeing itself.
https://twitter.com/jonostrower/status/1708867808510226654
-> ‘Boeing VP of space exploration: “Probably the biggest challenge I have is defining how do I make this into a positive business case, given the market conditions as we see them right now.”
https://twitter.com/dominicgates/status/1708867384826798346
Seattle Times:
https://t.co/XFEe6Okzgn
Boeing should have dumped the Starliner a long time ago, its a waste of company resources for no gain.
You need to know when to cut your losses.
Jeez,
Is this the guy who draws the conclusion that others are saying ‘they should shut it down’, when it was never said, saying…
…they should shut it down?
“lack of gain” is intrinsic.
BA’s space program can only work under a cost-plus model. Moreover BA’s execution was a mess, can blame no one else but itself and its top management. A good reflection of the symptoms BA is suffering from, is it too late to save the patient?
Once seen as the future, Boeing struggles to make a case for Starliner
https://www.washingtonpost.com/technology/2023/10/02/boeing-starliner-capsule-commercial-crew/
Onboard an 11-hour A321XLR Test Flight to Nowhere!
https://www.youtube.com/watch?v=p2nIFen4UFA
Not sure if anyone saw or posted this, but relevant to our conversations about the A321XLR. FlightRadar was on the plane
-> Gentile’s firing reflects a crisis at Spirit AeroSystems that deeply affects Boeing.
https://twitter.com/dominicgates/status/1708992919561191632
Seattle Times:
https://t.co/FJ6z5ngFPx
What a hot mess. There’s no good solution, I believe BA would dole out more bandaid and try to kick the can down the road.
“The relationship with Boeing grew strained as the jetmaker squeezed all its suppliers on pricing over the years. It worsened when Spirit’s finances were devastated by the prolonged stoppage to 737 production after the MAX crashes in 2018 and early 2019 and then the slowdowns in all jet programs due to the pandemic.
“Already burdened by its existing contract terms that mean it is losing money on Boeing programs — Spirit has seen a cumulative loss on the 787 program since its inception of $1.4 billion, which Gentile last month declared “not sustainable” — it has struggled to cope with the additional costs of the repair work on all these defects.
“This year, Boeing propped up Spirit with an advance payment of $180 million, half of which is to be repaid in February and the rest a year later.
“Still, some fix for Spirit has to be found.
“The clock is running on Spirit. It is adding debt. It is burning cash,” Hamilton said. “At a time in the not too distant future, Spirit will need an injection of cash to continue operating.”
Boeing’s Partnering for Success.
A brilliant plan to improve short term free cash flow and related buy backs / exec. bonusses. Wallstreet truly loved it & the stock soared & everybody was cheering. Because, as we learned quickly, free cash flow was really the best, most realistic way to value a company and its ability to create value for its shareholders. (forget HR, capabilities, competitive position, portfolio, QA & long term reserves).
2014: https://www.fool.com/investing/general/2014/03/23/why-is-boeing-partnering-for-success-with-its-supp.aspx
2018: https://www.bloomberg.com/news/features/2018-02-14/boeing-is-killing-it-by-squeezing-its-suppliers#xj4y7vzkg
Chickens .. home .. roost. Thing is the roosters who came up with P4S are now having quality time with their grandkits near the pool.
Worst case scenario now would be taking a hard line against Spirit and more good people leaving the company.
Spirit liked it too:
‘Spirit AeroSystems has also traditionally returned capital to shareholders through share repurchases….From 2015 to 2019, the firm repurchased $2.3 billion (44% of current market cap).’
– Forbes
Like Boeing with their $43 billion, wouldn’t Spirit like to have their $2.3 billion back, right now….
Reuters:
“Sources said Gentile’s position had looked increasingly vulnerable for weeks as support ebbed away from investors and, most critically, the major customer Boeing.”
Did the BA guys (and gals if any) help to push Gentile out because he wants to renegotiate the contracts??
reply to Seattle Times article
“Scott Hamilton, Bainbridge Island-based founder of industry analysis firm Leeham.net, speculated Monday that Boeing might consider various options to secure its parts supply, including a possible buyout of Spirit or setting up a new 737 MAX fuselage production line in Everett to supplement Spirit.”
Setting up new 737 fuselage production in Everett….then Boeing would have to buy and duplicate the sub assembly panel production of Spirit…Boeing would buy more Brotje and Gemcor machines for 737 panel fastening systems (e.g. lead time at least 18-30 months) and tooling for Everett? or ship 737 panels to Everett? If you “drill down” many issues, its the 737 subcontractors that ship to Spirit that are the problem, not Spirit. Boeing should send out quality control to Tier 2 and 3 suppliers to fix the problems, not relocate the sub assembly for the 737 fuselage
David.
The current machines on the floor in Wichita are owned by Boeing. They are not close to fully utilized at the current build rate and a significant number of them can move tomorrow. Also, the panel assy’s are hand riveted old school. You don’t use gemcors on 737 fuselage panels and all the wing tools in Renton are good for rates into the mid to high 50s.
I don’t disagree that BA needs to help them get to a place where quality meets the spec, This is already happening.
At Spirit, Gemcor G2000 produces 1/2 fuselage super panels Spirit uses Brotje and Gemcor for 737 panel see video at 45 second mark..automatic fastening systems in the background https://www.youtube.com/watch?v=U7vojbkrFfY
The 737 center wing boxes are automatic fastened by Gemcor. Expensive foundations are needed for monument style machines
As for Renton and WRS, the Gemcor’s (which have been modified by Renton they are not really Gemcor configurations anymore, the 1960 and 1970’s Gemcor WRS are in the process of being replaced by another mfg. in the next two years.
I was speaking to the final assembly where the minions shoot all the laps. You’re right that the panels are machine shot, but that’s not what I had in my mind when I typed this out. Thanks for the video. In any case, much of the overcapacity tooling can be moved starting today. The older automation is movable as long as suitable foundations are installed somewhere. If you were looking at new tools, 18 to 24 months might be a bit sporty, but transplanting stuff has a shorter flow time. There are lots of moving parts……
-> Gentile’s firing reflects a crisis at Spirit AeroSystems that deeply affects Boeing.”
That is strongly recursive, isn’t it?
Is dipping into the box of issues and setting up shanahan to fix things a productive solution?
Is that Shanahan the Donald Trump loyalist?
Better yet, a box of tissues. I’ll let myself out now.
https://air-cosmos.com/article/rtx-selectionne-par-boeing-pour-le-projet-de-demonstration-de-vol-durable-x-66a-de-la-nasa-66359
-> Boeing selects Pratt & Whitney GTF power for X-66A
https://twitter.com/dominicgates/status/1709214332062433602
You know, I just had a look at the artists concept for the TBW in this photo this image that The Phoenix posted above and a few thigs struck me:
1) You’re going to have continual hot engine exhaust flowing over that truss during flight. Not an engineer, but that structure better be strong and durable (read; heavy) to withstand that.
2) Isn’t everything aft of the engine in a ‘kick-up’ zone on landings and takeoffs? All the debris that the engine/wings/landing gear disturb will head that way, no?
3) Ramp rash. You’ve just limited the area that crew have to work in around the aircraft, with baggage loaders, carts, etc. Crews will have to be extra careful. I wonder how that will work at a turnaround window with a few hundred planes at the gates and everyone running around trying to get everything loaded and out in as little time as possible?
4) Fuel. I didn’t pay to much attention to the fuelers and their trucks when I worked in ops, but if memory serves, that truss is exactly where they would park their trucks as the plane was refueled. Where is the fueling port going to be now? Seems like that port will be high off the ground, ladder needed – more time to gas.
5) Baggage. Jetbridge is on the left, fore of the wing. So everything from the truss to the nose on that side is a no go area. Likewise on the right hand side, which is usually reserved for service trucks from the catering companies. Can’t have a hatch or park a loader there, as they need access. So all bags/cargo have to go in from the rear, aft of the truss. Not sure if a loader can be under a door with a slide in case of evac needs, but you wouldn’t want it that close to the truss structure, anyways.
————————————-
Seems to me that with a structure like that, you are really limiting yourself with the amount of workspace (and I’ll use the term gently here) that individuals not having the highest level of education, have to work in and are used to working in.
Everyone will have to keep in mind;
“Oh – gotta remember, there’s a truss over there behind me. This isn’t a 737/A320/every other NB aircraft I’ve pretty much worked with.”
As the boss is yelling at you over the walkie talkie to finish up and get over to the next gate to service the plane that just pulled in.
The Q400 didn’t have the problems you are delineating Its a high wing airplane and has high wing differences, but none of them are unknown nor insurmountable.
You’re not wrong, but the Q400 is a regional aircraft, usually run by regional airlines. At the ops where I was stationed, they had gates specifically made for regionals. There were no jetways, people walked out to the plane. No tugs, the aircraft were guided into a U-turn when coming in, so they could just start and go.
Barriers were erected around the path that people would walk out to the plane, so the self loading freight wouldn’t walk somewhere they shouldn’t have.
At the mainline, we didn’t get involved with the puddle jumpers. Those guys got paid less for handling the toy planes.
But that’s what THEY got used to, working around props and loading bags exclusively by hand. Nary a ULD to be seen around them, but plenty of carts pulled by a tug.
Mainlines (and here I’m assuming that the TBW would be a NB aircraft that competes with the likes of the A320 family) don’t want to pay their ops guys, pilots and stews mainline money for flying these aircraft.
…and don’t get me wrong. I’m not saying that any of these items are insurmountable. What there are is….. different.
Difference matters when you’re a junior guy working the ramp who got forced to work an extra 4 hours (or god forbid an 8 hour double) and it’s hour 11 (or 17) and all you want to do is get out of the elements, get into your shower, eat some food and go to sleep. You focus less, you care less, all the planes blur together and you don’t recall what kind of aircraft you’re on.
Difference matters when the caterer is a 3rd party, non unionized supplier – along with the fuelers and for some airlines, the ground handlers. In my experience non-union guys care less about their jobs, as they don’t make as much as the other guys and are worked to the bone, for doing the same job – at the aircraft right next to them.
I’ve seen people whack airplanes, I’ve seen close calls from reckless idiots, who don’t learn their lesson, only to finally hit a plane a month later and get fired on the spot. Most people are terminated right away, but if you’re a hard worker and mgmt likes you, you get a 3 or 7 day unpaid vacation and a stern warning.
Difference means someone is going to whack their head on the truss while looking down at a clipboard, as they try to figure out where that damn loader went to and why it isn’t where it’s supposed to be.
Difference is some driver saying “S–t!, I didn’t see it, my vision was blocked. I forgot it was the TBW” after hitting the truss while backing up out of the way.
I really wonder how high and where the fueling port is going to be on the aircraft. IIRC those guys didn’t like the BAE 146 with it’s high wing. Windy winter time, in an open exposed area like an airport, 10 feet up on a ladder which is on a slippery surface, wrestling with equipment – is not a fun place to be.
All I am saying is that sometimes keeping everything the same, what people are used to and deal with every day – has some benefit.
https://en.wikipedia.org/wiki/Patrick_M._Shanahan
Yes.
A bit of a surprise..
United will order another 50 787’s , giving them a substantial number of units..
The spending splurge continues, with another 60 a321’s to boot ..
https://viewfromthewing.com/united-airlines-will-announce-order-for-50-more-boeing-787s-60-airbus-narrowbodies/
Definitely unexpected on both fronts…
Looks like United will settle on the 787 only to satisfy there long haul requirements ..
Almost 230 dreamliners truly is astonishing …
I think United will make the same choice replacing their 777 fleets for Asian flights as most carriers.
Barron’s:
-> Boeing Needs a New Plane Model or Risks Losing Market Share
Boeing (BA) leads in twin-aisle, widebody jets, but below-average market share in any segment is a risk for Boeing. It can lead to lower pricing and profitability, impacting the ability to design new jets, which require tens of billions of dollars.
Can the politicians find a new speaker in 40 days or less?
216-210: In a historic vote, Rep. Kevin McCarthy (R-CA) has been ousted from his role as House Speaker. 8 Republicans joined all Democrats present in voting “Yes.” McCarthy is the first Speaker to be removed by such a vote in American history.
https://twitter.com/therecount/status/1709309905968971904
😂😂
GOP learns the hard way: Turning the base up too high blows out your Speaker
https://twitter.com/leedrutman/status/1709317868255363278
Then you’re left with nothing but your tweeters
https://twitter.com/richparr79/status/1709320993850659196
Something, something
https://pbs.twimg.com/media/F7cg85EXcAAUHUx?format=jpg&name=small
https://twitter.com/Fritschner/status/1709559909488976279
I see a glut coming …
For those wondering how things got so out of whack at Spirit, I offer you this, from Forbes in 2019:
‘Spirit AeroSystems has also traditionally returned capital to shareholders through share repurchases. However, the firm suspended repurchases in response to the 737 MAX grounding and COVID- pandemic. From 2015 to 2019, the firm repurchased $2.3 billion (44% of current market cap). Spirit AeroSystems has $925 million remaining for future repurchases under its current authorization. Once the firm recovers from the disruption to its business, shareholders should expect repurchases buybacks to resume.’
https://www.forbes.com/sites/greatspeculations/2021/04/20/spirit-aerosystems-ready-to-soar/?sh=346f7f6c285e
Everyone is screaming about how they are being squeezed on margin, how they have to renegotiate rates – let me repost the highlights:
“From 2015 to 2019, the firm repurchased $2.3 billion (44% of current market cap). ”
Anyone see a pattern here?
Partying out free cash flow to boost share prices was sold as “creating value for share holders” by not so independent neckties. Never overestimate the knowledge / insight of the average investor and related parrots..
On the A321XLR, from Aviation Week:
LONDON—Air Lease Corp. (ALC) expects the Airbus A321XLR to only marginally fall short of its advertised range despite late design changes requested by the European Union Aviation Safety Agency (EASA).
ALC President and CEO John Plueger said at the International Society of Transport Aircraft Trading (ISTAT) Europe Middle East and Africa conference in London Oct. 2. “I think Airbus will get 99% there, it is not a huge impact, maybe 150 miles and there is a weight reduction program going on.”
https://aviationweek.com/air-transport/airlines-lessors/air-lease-confident-airbus-a321xlr-cautious-a220-stretch
Reuters:
-> Fan blades, engine parts go missing from Go First jets, lessor says
[…] From fan blades to escape slides, critical parts are missing from at least two planes of India’s bankrupt Go First airline, its Ireland-based lessor ACG Aircraft Leasing has told a court as it seeks to recover aircraft. […]
Bankruptcy froze its assets and has prohibited the recovery of more than 50 grounded Airbus planes.
https://aviationweek.com/air-transport/safety-ops-regulation/single-pilot-operations-are-under-increased-scrutiny
Single-Pilot Operations Are Under Increased Scrutiny