By the Leeham News Staff
June 4, 2020, © Leeham News: A lawsuit filed by cargo specialist Volga Dnepr against Boeing claims Boeing is running out the clock on the 747-8F.
The report by The Seattle Times makes for interesting reading. Key of HOTR is the reference that Boeing plans to end 747 production within three years. This is longer than LNA believes. Regardless, the three-year timeline fits with information LNA about the 777-8F.
LNA is told Boeing sales floated the possibility of launching the 777-8F around 2023-24. This would bring forward the launch by about two years from plans when the X program was launched in 2013.
Then, the entry into service for the 777-9 was targeted for 2019-2020. This was to be followed by the 777-8 passenger model in two years and then the 8F two years after that.
During the fallout of the MAX grounding, the 777-8 was deferred indefinitely. Now, with COVID upending demand, customers are deferring and talking about canceling 777X orders. Boeing is reducing 777 production from five to three per month. The 777-9 production will go to one per month.
The 777 Classic line is sustained by the 777-200LRF. The 777-8F concept is a couple of frames longer than the -8P but shorter than the 777-9.
Having spent more than $1bn for the advanced Composite Wing Center to build 777X wings and having produced about a dozen 777-9s so far, Boeing needs to boost the X sales prospects.
Bringing forward the -8F is the way to do so.
The extent of the impact of the COVID crisis on aftermarket services is only beginning to emerge.
In its 1Q2020 earnings call, Boeing said its Global Services unit revenue was flat at $4.6bn. There was more Government Services volume. But this was “largely offset by lower Commercial Services” due to the virus.
“We only saw the beginning of the impact of COVID-19 on our Commercial Services demand for the first quarter,” said CFO Greg Smith. “We expect COVID-19 to have a significantly larger impact on the BGS business in future periods.”
Greg Hayes, the CEO of Raytheon Technologies (RTX), said the aftermarket business at its Collins Aerospace subsidiary was off sharply. CFO Toby O’Brien said RTX believes the current, second quarter will be worst quarter this year.
Aftermarket was down 60% for Pratt & Whitney and down 50%-60% for the Collins aftermarket business unit. The unit accounts for 35% of Aerospace’s revenue.
O’Brien doesn’t see a full recovery until sometime in 2022.
Wizz Air, the low-cost airline in Europe, will slow fleet modernization as it recovers from the COVID crisis.
Indigo Airlines of India will, instead, retire older aircraft and take delivery of new ones.
SMBC Aviation Capital will defer 68 Boeing 737 MAXes from 2021-2022 to 2025-2027. Some suggest this “threatens” the comeback of the Boeing 737 MAX.
LNA disagrees. It delays the comeback, but this already was the case. Delivery dates for deferrals already were shifted as several customers rejigged the schedule. Since most predict recovery to 2019 traffic levels will take 3-5 years, customers are shifting schedules accordingly.