Pontifications: Earnings previews Airbus, Boeing; Watching Mitsubishi

By Scott Hamilton

Oct. 26, 2020, © Leeham News: It’s earnings call week for Boeing and Airbus.

And Mitsubishi Heavy Industries is said to plan an announcement “freezing” development of the SpaceJet.

Let’s preview these events.

Boeing

Boeing’s earnings call Wednesday at 10:30 am Eastern time will be the most watched of the day, if not the week.

With recertification of the 737 MAX appearing on track for next month, an update on the program and delivery schedule certainly will be watched for.

Boeing’s cash burn, exacerbated by COVID, is another.

Boeing may get a question about potential development of a new airplane.

The Wall Street Journal reported last week in an “exclusive” that Boeing is talking to the market about a new, single-aisle airplane in the 200-250 seat sector.

Well, it really was not so exclusive.

Aviation Week reported in February from the Singapore Air Show that Boeing refocused on the A321XLR.

LNA reported April 2 that Pratt & Whitney and Avolon, a lessor, that they saw Boeing’s NBA as a single-aisle airplane.

And last year after the MAX grounding, LNA heard from the leasing and airline communities that Boeing was talking about such an airplane.

The long and the short of it is, Boeing talks to everybody about every possibility. Including, for a long, long time, a new, single-aisle airplane.

But that doesn’t mean Boeing is ready to jump off the multi-billion-dollar cliff and launch an airplane program any time soon.

Bernstein Research, responding to the WSJ article, called the idea “absurd.”

“We doubt Boeing would launch such an airplane.” Bernstein wrote, in bold face. “This looks absurd, although Boeing is always discussing concepts like this with different constituencies.

“Why is this absurd? First, Boeing is in the process of bringing the 737MAX back. A 200-seat airplane would cannibalize the MAX-10 and kill residual values for customers on the MAX. Second, it would lack commonality with the 737, which would be a barrier for 737 operators. Third, there is no technology jump to act as a catalyst. At this size airplane, composites would give limited weight savings and likely be more expensive to manufacture. There is not a next generation engine on the horizon and engine OEMs are so cash-constrained that they would hardly prioritize developing one. Any aerodynamic improvements are likely to be minimal.”

Seaport Global sees “things…moving in the right direction. MAX is on track for

re-certification close to year-end, some signs of improving air travel, and we think its

likely that the worst of the COVID-19 financial impact may be behind Boeing.”

MAX deliveries should start in 1Q2021, Seaport believes.

Airbus

Airbus’ earnings call is 08:15 Wednesday morning Paris time.

Reports emerged last week that Airbus already is talking with its supply chain about increasing the A320 production from 40/mo to 47/mo, in the second half of next year.

This seems ambitious. As the London firm MainFirst dryly writes, this will be a “key topic of interest” on the earnings call, “given recent media reports of more deferral requests.” Current production rates are 40/mo for the A320, 2/mo for the A330 and 5/mo for the A350.

MainFirst also says cash flow, “and in particular, the extent to which customers are making Pre-Delivery Payments on schedule and any comments on the pace of clearing the inventory build of completed but undelivered aircraft (144 as of Oct. 1, according to FlightGlobal)” will be another key topic of interest.

“The appetite of the financing market to support new aircraft deliveries, particularly activity in the Export Credit Agency guarantee and sale-and-leaseback markets,” will also be a point of discussion, MainFirst believes.

Mitsubishi

Following the eruption of the global coronavirus pandemic, MHI “suspended” development of the SpaceJet. Now, according to Japanese media picked up by Western wire services, including Reuters, MHI will announce as early as Friday it is freezing the program. MHI hedged on the word “freeze.”

Reuters wrote, “Mitsubishi Heavy said in a statement it was considering various options for the SpaceJet but that it had not decided to freeze development. It will announce plans for the SpaceJet along with its group business plan on Oct. 30, the company said.”

Those steeped in the Japanese culture say MHI is taking steps that will ultimately lead to canceling the SpaceJet, to avoid deciding outright.

However, LNA spoke with a customer who participated in recent communication with MHI. Certification of the M90 SpaceJet (formerly the MRJ90, which the customer ordered) will continued. Once certification is obtained, then MHI will decide what to do about the M100 SpaceJet, the customer said.

This fits with one internal debate that happened at MHI: whether to sequentially do the M90 and M100, which was preferred by one faction, or to do the programs in parallel. Sequential appears to have won out, at least on paper. (The betting is MHI will ultimately kill the M100.)

 

87 Comments on “Pontifications: Earnings previews Airbus, Boeing; Watching Mitsubishi

  1. I wonder about the MHI jet. Remember Airbus did their due diligence on the CSeries, concluded is was a solid design, supply chain, certification and paperwork were ok, making it feasible for investment.

    Does the MRJ, Superjet, M90, M100, however they’ll name it, provide a solid starting point for investment by a third party? Marketing wise there seems be room for a lean platform 70-100 seats, under the E2 190, with a US scope compliant version.

    If e.g. MHI creates a JV with Airbus & AVIC, with final assembly in Alabama and Shanghai, things might look different. It does bite the A220s or ATR’s..

    But it has to be a feasible, solid design.

    • “”under the E2 190, with a US scope compliant version””

      Put less seats in the E175-E2 and there are no scope problems. It will have more range and could replace bigger planes, same what Alaska is doing now using the E175 instead of 737.

      It’s the same with SW and their MAX-7 order. The -7 is two rows longer than the -700 but SW doesn’t need the size since they are using single class and still SW ordered MAX-7. With an additional fuel tank it will reach 4000nm.

      • Hawaii here they come? 😉

        (Takes extra reserves, allowing for worst of engine failure, pressurization loss, and waiting for wx to clear. (PW’s 707 operation used to use 2 hours hold for wx based on weather history, more conservative might be root-sum-square addition, different number of engines of course.)
        People are flying 737s to HI from North America, perhaps from Vancouver BC and Seattle which is =much further than from SoCal.)

        Well, SWA has been moving into Latin America?

    • To me this sounds more like Boeing buying the MRJ. After the Embraer-deal failed and this tends to be a bargain? Including some left-over bits and pieces from Bombardier and desperately needed engineers? And the possibility to outsource development and production? To China, to Japan?

      A chinese-japanese deal seems to be a no-go. Embraer surely has no no interest as Airbus does not – in my understanding. India and Russia seems to be a “no” as well.

  2. It should be normal to adjust the A320 family production rate. Vaccines are on the horizon, second half 2021 is far. The last three months Airbus delivered 125 A320 family planes.
    Many older NB getting retired and Boeing can’t deliver new ones. IIRC Collins even stopped MAX production.
    Airbus has talked with many customers and should know how to schedule production. This is good news.
    I wonder if the XLR will be mentioned on Wednesday.

    • If anything, I would posit that the whole CoViD situation has served to further strengthen the expected success of the A321XLR. The idea of a versatile plane that can be used both for volume shorthaul and thin longhaul must be increasingly attractive to the post-CoViD operating model of airlines. No wonder Boeing is fantasizing about getting a slice of that cake.

      • Reality is no one knows as there will be travel shifts, b0th short term (pent up demand) and long term, ala the Business travel segment.

        Due to our specific non business activity, remote conference type has proven to work in an area I thought it would not.

        Some of that business travel is going to go down, how much? Another coin flip. An intense engineering meeting is difference than a general strategy or get a group on board with a plan (at a guess)

        I have been in both type and any general meeting type would be easily handled by remote. Frankly you could do it more often (and they should have moved there a long time ago).

        But if I was a supplier it would be, how much are you going to offer up front? I can’t ramp up and take the loss of ramping down again.

        Airbus may be looking ahead and probing what is possible and you would go with the MAX (pun) possible and then have benchmarks to keep what the current and short term looks like and be ready to adjust.

  3. I don’t know if I’d describe the tentatively planned Airbus production hike as overly-ambitious. It’s true that the airline industry as a whole will take years to return to its previous volumes — but that’s logical, in view of the large number of planes that have been retired in the past few months. However, for the fleet that remains, I suspect that there will be a huge passenger demand as soon as the CoViD situation improves/changes sufficiently to allow (semi-)normal air travel again. And I wouldn’t be surprised if that demand is so large and sustained as to prompt an accelerated production/delivery of new aircraft to cater to it, once the existing surplus fleet at lessors/receivers has been gobbled up.

    Boeing could potentially predict a similar hike were it not that it’s currently preoccupied with multiple existential threats.

    • @Bryce

      https://www.nakedcapitalism.com/2020/10/hubert-horan-the-airline-industry-collapse-part-5-the-battle-to-protect-airline-investors-from-economic-reality-enters-a-new-phase.html

      Perhaps this link might interest you, with regards to US airlines predictions as to pax demand – they are very optimistic

      “United CEO Scott Kirby said cash burn had seemed like an important metric at the start of the pandemic. “But that’s not at issue anymore. We have enough liquidity to get through the crisis” and we are now refocused on “winning the recovery.” Delta CEO Ed Bastian said the money it had raised gave it a “good line of sight to positive cashflow by the spring.” [12] ”

      The author is gloomy about the airlines’ current attitudes – the end result likely to result in more ‘financialisation’ of the industry

      • @Gerrard White
        Thanks for the link…that’s a long article!
        I have no doubt that several other airlines are going to go bankrupt before things start to pick up again. But, even if an airline is bankrupt, its aircraft are still available (hence my reference above to “receivers”), and can be acquired (at bargain prices) by someone with enough cash…or credit. There are always opportunities for the opportunistic, e.g. as evidenced by WizzAir’s current expansion in Norway.

        I suspect that, in the long run, Qatar and Emirates will be net beneficiaries from CoViD — since they are funded by a bottomless purse, and offer an unmatched network and service. They can simply step in to acquire the passengers (and maybe aircraft) that would once have used other (bankrupt) carriers.

        I still think that international demand is going to pick up relatively quickly once some more green lights appear. There are already tentative signs of this: Emirates is slowly putting some (more) of it’s A380s to use, KLM has just re-started flights to Beijing (stopped in March), and Xiamen airlines has started a new service to Helsinki.

        But first we have the explosive “end game” that CoViD has currently entered…let’s see how long it will take for that to end. Even China today announced a cluster of 137 completely asymptomatic cases discovered during a spot check in the province of Xinjiang.

        • @Bryce

          The ME airlines undoubtedly will be winners given their central position in their respective well capitalised city states

          I think the author of the report was hinting that it would take PE relatively small amounts of capital to mop up the airlines in the US – as also suggested recently by a representative of the leasing business

          In which case OEMs especially Boeing would be in a far worse position than currently anticipated

          • @ Gerrard White
            Thanks for that one! I’ve added it to my bookmarks.
            Here’s one in return…from last Thursday. For some reason, it stayed under the radar…despite (or perhaps because of) its very frank content.
            Note the very forthcoming statements made by Dr. David Heymann, who led the WHO’s infectious disease unit during the SARS epidemic in 2002-2003.
            https://www.cnbc.com/2020/10/22/coronavirus-physicians-warn-virus-may-become-endemic-despite-vaccine.html

            Not entirely off topic here: more realism like this may help kick-start the revival of international air traffic in some form, e.g. by starting a realistic study of limited-validity immunity passports. If a fraction of the effort and infrastructure that is currently being devoted to active infection testing were to be spent on antibody testing and issuance of standardized immunity papers, more than a billion people worldwide could contribute to economic and social activity in an unimpeded manner…and that includes taking flights!

          • @Gerrard
            The problem with immunity passports is it’s yet unclear if those antibodys in your blood caused by a past SARS-2 infection can prevent you from becoming a spreader.Besides it’s even unclear if it can prevent an infection completly or lesen the impact on yourself.

          • @Bryce

            Thanks for the link – this is eminently sensible and reflects the opinion I quoted recently from a WHO official’s statement (in April I think, I can no longer find the link) regarding the ultimate futility
            of the eradication in NZ

            As well as taking a overview of the history of such viral transfers from wild animals to man via a process of domestication

            As for passports – at the moment every country is everyman for himself, as far as I know even the EU has surrendered any serious attempt at EU wide regulation

            Once the complexity of vaccine choice and logistics begin to become apparent there may be increased pressure to think more like Dr Heymann and like Professor Finn, who said

            ““It is a paradox. If we get a vaccine that works, but not very well, it’s almost worse than not having one at all because it gets in the way of getting a better vaccine. We need to be thinking about it to avoid that situation urgently.””

            Until rational thought gains the upper hand, and is widely applied by gvmts and WHO, produces the political and administrative will to institute standards or definitions which can be elaborated/ co ordinated world wide, for vaccines, for ‘immunity’ and for the duration of any certificate/passport

          • @nofly

            I agree – the nature of this virus is not well known, testing does not furnish conclusive results, it is said that there are or may well be quite significant levels of immunity from previous corona outbreaks, and from common colds

            Plus many vaccines are being developed, some of which will, presumably, be more or less effective

            Yet comparison testing between vaccines is going to prove difficult/impossible, and it may be foreseen that countries will use the first available, regardless, without the establishment of any form of worldwide standards or logistics which would allow the best vaccine to be the one chosen for widest distribution

            In these circumstances a global passport requires a severe reduction in current nationalism, in which mortality rates are bragged, and a much more reasoned and ‘open source’ collaboration, this will take time – given still high levels of panick and adding in pharma commercial competition

          • @nofly
            There are lots of problems with lots of things, but those problems won’t be solved by just twisting thumbs. The CDC is satisfied that post-CoViD immunity lasts at least 3 months, and probably at least 5-8. There’s currently no cogent reason to believe that the immunity imparted by a vaccine will be any better/different. The topic urgently deserves more extensive research.

          • Here are two medical studies published in the Lancet, documenting the data, causes, and success that has resulted from New Zealand COVID strategies (Taiwan as well). These are based on researched fact and not opinion.

            Notably NZ ranked first on the scale established by WHO, for effectiveness of government responses to COVID. This view has been sustained by surveys of medical professionals around the world.

            Further NZ was ranked first in surveys of business leaders around the world, in terms of their policies in support of the domestic economy, which has largely recovered while many other countries remain suppressed.

            Claims to the contrary, or that the NZ story is not a success, but instead a delayed failure, are at best extreme and unwarranted negativity. There is no evidence whatever to support those views, and the evidence against them grows with every day the virus resurges elsewhere.

            https://www.thelancet.com/journals/lanwpc/article/PIIS2666-6065(20)30044-4/fulltext

            https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30237-1/fulltext

          • I wanted to share the vaccine tracking sites maintained by NYT and RAPS, which are based on factual data and not opinion. These contain descriptions of each vaccine functional mode, progress and current status.

            https://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html

            https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-vaccine-tracker

            Note that there are 5 Western vaccines in Phase 3 trials, with 3 expecting to be complete before the end of 2020. Their results will be published and become eligible for government review and approval, which requires several months. The viable timeline for availability would be first or second quarter of 2021. The other two should be ready later in 2021.

            These trials involve around 200,000 people worldwide. They all exceed the FDA requirements for vaccine testing duration and enrollment numbers. They have been paused when adverse effects are discovered, then restarted when the causes are understood.

            There are also 6 vaccines in Phase 3 trials from Russia, China and India, which also have limited government approval, before their trials are complete. That practice is not followed in the West.

            Overall there are 50 to 60 vaccines under study, in various phases, around the world. This means that many other vaccines likely will be entering Phase 3 trials at some point.

            The pace of the vaccine development has bean very quick, but at least in the West, the trials are being conducted by normal standards of care. There is concern on all sides that any emerging vaccines be effective and safe.

          • Rob:

            The pauses I believe were not adverse affects but due to non related deaths (you are going to have people dying in any trial of anything)

            And if the lead vaccines are not long term, the latter ones may be.

            Even if we could hold our own for now and get a vaccine every 6 months we are ahead.

            Unfortunately we have a political oar that has created distrust.

            There is also distrust because researches in areas like contact spread did not put their work in context and that is being revised (downwards and massively)

            Like air infection, you need a significant transfer load, so even some exposure is not an issue if its below the infection threshold .

            Distribution is an issue as the current types require very low temps.

            That takes national support that can’t be on individual states.

          • @TW
            The CEO of AstraZeneca already indicated in June that its candidate vaccine will probably impart immunity “for about a year”. It revealed today that the candidate vaccine produces “a robust immune response” in seniors, but gave no details as to duration. And that’s currently one of the most promising candidates!

          • Many of the vaccines require two doses, given about a month apart. The protection is estimated at a year, there is no actual data at that time scale yet. It depends on the individual and how much the virus changes in that time.

            An annual booster would be feasible. As the world becomes progressively protected, the virus will have fewer hosts and infections will become both less numerous and less severe over time. Our immune systems will learn & adapt more quickly and thoroughly with the help of the vaccine.

          • @Bryce

            I appreciate what you say about sitting around thumb twisting

            However we have seen the virus has the ability to massively disrupt normal course of life in the west, has placed many countries and their people in panick mode, and has prevented the kind of administrative political co operation between states that is required for the travel agreements you mention

            To be reassured as to the effectiveness or not of vaccines will take a considerable period of time and recession of fear in both ruling élites and the masses – so with the initiation of this kind of international co operation, with standardisation and health treaties

            Aus and NZ failed to agree of this subject, I think HK and Singapore are putting an agreement in place now – but even between birds of a feather this is still very tricky touchy

          • @ Gerrard White
            I’m not expecting any miracles any time soon. But it’s an example of how there are potential “plan B” possibilities that are currently sitting on a plate but are simply not being explored. However, as commented in other posts, Singapore realizes that it’s facing an existential threat if it can’t get the borders open again, so it has a strong incentive to get creative…and that may then act as a catalyst for others. On the other hand, NZ has indicated that it won’t be opening its borders until 2022, even though it is in its worst recession ever.

            Most authorities in the world are currently stuck in a monotone rut — like a deer paralyzed in the middle of a road and staring into the headlights of an oncoming car. Not surprising: this “war” is being run by a handful of completely inexperienced virologists rather than a group of weathered generals…although the SARS experience in 2003 did, at least, give the virologists in Asia valuable experience that they put to good use.

          • @Bryce

            You are correct – both Aus and NZ have a long history of being isolated, an appeal to this seems to have gotten half a pass from the populace, for now

            Besides NZ has long sold itself as ultra safe bolt hole for billionaires, and will do nothing to upset this status

            I do not know if this is true for NZ but from Aus I understand that one major reason for the isolation is to prevent a brain drain –

            But HK Singapore Dubai, & other city states have their raison d’être as hubs, so are correspondingly inventive – offshore works

            As for the politics – in the west it’s a mess – but while the financialisation of everything is still possible the rich are getting a lot richer and the poor, in the west, are not yet suffering too badly – although the MD of the IMF recently stated « In low-income countries, the shocks are so profound that we face the risk of a “lost generation’ »

            https://www.imf.org/en/News/Articles/2020/10/06/sp100620-the-long-ascent-overcoming-the-crisis-and-building-a-more-resilient-economy

            and Oxfam has predicted 500 million reduced to even worse levels of poverty, ‘extreme poverty’, the direct result of lockdowns

            https://thehill.com/policy/finance/491970-coronavirus-could-push-half-a-billion-people-into-poverty-report

            Pressure for international co ordination such as you mention will grow when the first vaccines herald the possibility to ‘establish the new normal’ and allows (in the west) the pols and the viros to cry Victory ‘now it’s time to move on’

          • @Bryce

            You are correct – both Aus and NZ have a long history of being isolated, an appeal to this seems to have gotten a pass from the populace, for now

            Besides NZ has long sold itself as ultra safe bolt hole for billionaires, and will do nothing to upset this status

            I do not know if this is true for NZ but from Aus I understand that one major reason for the isolation is to prevent a brain drain –

            But HK Singapore Dubai, other city states have their raison d’être as hubs, so are correspondingly inventive – offshore works

            As for the politics – in the west it’s a mess – but while the financialisation of everything is still possible the rich are getting a lot richer and the poor, in the west, are not yet suffering too badly – although the MD of the IMF recently stated « In low-income countries, the shocks are so profound that we face the risk of a “lost generation’ »

            https://www.imf.org/en/News/Articles/2020/10/06/sp100620-the-long-ascent-overcoming-the-crisis-and-building-a-more-resilient-economy

            and Oxfam has predicted 500 million reduced to even worse levels of poverty, ‘extreme poverty’, the direct result of lockdowns

            https://thehill.com/policy/finance/491970-coronavirus-could-push-half-a-billion-people-into-poverty-report

            Pressure for international co ordination such as you mention will grow when the first vaccines herald the possibility to ‘establish the new normal’ and allows (in the west) the pols and the viros to cry Victory ‘now it’s time to move on’

          • @Bryce

            A new report confirms doubts about the efficacy of corona vaccines

            https://www.imperial.ac.uk/medicine/research-and-impact/groups/react-study/real-time-assessment-of-community-transmission-findings/

            ““The fact that people get reinfected regularly throughout their lives with seasonal coronaviruses [that cause common colds] suggests that the immunity, whether or not it is antibody mediated and/or T-cell mediated, probably isn’t very long-lasting,” said Barclay, who added that the team suspect the body reacts to infection with the new coronavirus in a similar way….”

          • It’s important not to take scientific results out of context. The study authors acknowledge that the absence of antibodies is not the only indicator of long-term resistance to the virus.

            First, the vaccine problem for some versions of the coronavirus is due to evolution of the virus, and the large number of variations that exist.

            While that makes vaccination more difficult, it also diminishes the severity of the disease. The common cold is common because it’s generally not a health theat. There is a correlation between these aspects of disease. The more deadly, the more unique they are, and vice-versa.

            Second, the body’s resistance depends on more than just antibodies, which do diminish over time because they aren’t needed. But the body retains a memory of the response and can produce them more quickly for subsequent infections.

            Third, while a small percentage of the population can become re-infected, the infections are less severe, or even asymptomatic, which is consistent with an improved immune response. That is another of the benefits of a vaccine.

            We are still only 10 months into the virus, but as of yet there are not large numbers of re-infections. We will learn more with time and after a vaccine is available.

          • @Gerrard White
            There was a related article on Reuters this morning, which cites studies in the UK and Germany:
            https://www.reuters.com/article/us-health-coronavirus-britain-antibody/uk-study-finds-evidence-of-waning-antibody-immunity-to-covid-19-over-time-idUSKBN27C009

            VERY interesting:
            “There was no change in the levels of antibodies seen in healthcare workers, possibly due to repeated exposure to the virus.”
            If this is indeed the case, then it’s an advantageous side effect in countries in which the virus is being allowed to run its course (whether or not in a controlled manner). And it corroborates nicely with what we’ve known for centuries vis-à-vis some other illnesses: the greater / more frequent your exposure to (a mixed bag of) non-lethal pathogens, the greater your immunity.

          • @Bryce

            Good link

            This refers to the same Imperial College study – it is interesting that the reuters article draws special attention to the advantage of repeated exposure

            This chimes with reports on why Africa has survived so well – after the experts overcame their shocked surprise that poverty and poor healthcare (western style) did not result in the predicted apocalypse –

            first mentioned reason is the lack of the very aged, second is the stronger immune systems built up by repeated exposure to all kinds of pathogens, third is general much higher levels of health than is encountered in obese/cardiac etc ‘west’

            Instead Africans will die of the poverty related issues brought about by lockdowns in the ‘west’

          • It’s advantageous for those who survive the disease Not so advantageous for those who don’t.

            The true purpose of the vaccine is to level the playing field, to make the disease survivable, either by not getting infected or by lessening the severity of the infection.

            The not getting infected part has two components, one in direct protection of the vaccine to an individual, and second by reducing the odds of being infected by having protection throughout the population (herd immunity).

            There is a study in the NYT today listing 2,000 healthcare workers who have died in the US from COVID. Although that is a small fraction of the 4 million workforce, it’s still a lot of unnecessary death. Those losses are real and meaningful, people who probably cared for other COVID patients and died from that exposure.

          • @Gerrard White
            In view of the news that has surfaced regarding immunity and vaccines, it makes you wonder if the authorities in NZ, Taiwan and China have given any cogent thought at all as to how they’re going to open up again. For example:
            – Will their whole populations have to get regular CoViD vaccines, ad infinitum?
            – Will entry to their countries be limited ad infinitum to those who can demonstrate that they have been recently vaccinated?
            Like an isolated clump of matter in a sea of antimatter, will they have to carefully orchestrate their every move so as not to disturb their precarious equilibrium? I hope for them that someone is giving serious thought to this problem, because it’s not going to just go away.

            On a related note: the horrendous surge of cases in the Czech Republic is currently so bad because that country basically never had a first wave: consequently, the low-hanging fruit that was plucked by the virus in the rest of Europe in March/April is still on the tree in the Czech Republic, and is now being plucked with extra gusto. A similar fate hangs above the head of other countries that had insignificant first waves.

          • @Bryce

            I do not think this issue of opening up after having quickly or eventually contained or eradicated the virus has been much addressed

            I assume China, however, is intent on perfecting universal constant testing and t&t – the others commit to double down without much thought for Plan B, except for a vaccine

            However studies like the Imperial College study seems to indicate that, as reliable sources recently have indicated, that the virus is here to stay – that it closely resembles other known & common colds, so that a vaccine will have limited scope and effect, and will have to be regular and repeated in application

            (As per Czech experience) This is the understanding regarding the NZ experiment in isolation : the longer this lasts the greater the disjunct with the rest of the world, the lesser the exposure to all pathogens consequent on the masking distancing curfewing the greater the weakening of the immune systems of the population, the harsher the eventual outcome

            Countries like Sweden offer, as per the South Korean article, a middle way which may prove not only to be the most democratic, but the most agreeable and sustainable – in the long term – the most successful

            Otherwise as you suggest the west can look forward to a nightmare of isolation quarantine temporary certifications of immunity and a bureaucratic imbroglio of a panaché of various municipal regional and other authorities pell mell claiming command in the issuance of ever more confused and ever less reasonable and respected orders, such as currently on display in the US, UK, and….well you name it

            I’m still delighted by the NYC Metro authority’s desire to enforce a no talking ban on their system – this – I think – would be a world premier and a significant pointer to future generations –‘It started here, this is Ground Zero’

          • “There is a study in the NYT today listing 2,000 healthcare workers who have died in the US from COVID.”

            That’s strange. The Netherlands has had only 11 CoViD-related deaths of healthcare workers since March. Since the USA has a population that is 20 times greater than NL, that Dutch figure would correspond to 220 in the USA…and, yet, the figure quoted in the NYT is 9 times higher than that. It looks as if there’s something very wrong with US healthcare.

            Further, on any given day at the moment, 60,000 healthcare workers in NL are on sick leave — either because they have CoViD, or are in precautionary quarantine. That’s out of a total of 1 million healthcare workers. And yet, with the improved PPE available since March, none of them are dying of late.

          • Bryce, this is just a guess, but your death total may be hospital nursing staff. The equivalent number in the US for that group is 213.

            The 2,000 number includes healthcare workers of all kinds: nursing homes, home care, clinic care, etc. Also it was reported by the National Nurses United association, who have complained that the true rate is under-reported.

            The Netherlands has the third highest healthcare worker infection rate in Europe, after Spain and Italy. I could not find any other mortality figure than the one you quoted. Those results seem inconsistent, so again as a guess, the infection rate may include all healthcare and the death rate may be from hospital staff.

            In any case, the point remains that the value of the vaccine is in lives saved from the group that is not immune.

          • @Rob
            Tbe Dutch figure is for all healthcare workers: nurses, doctors and specialists.
            The youngest was 45, the oldest was 69. 7 had underlying conditions.

            For context: that total figure of 11 is equal to the number of people that die every day in NL from the effects of a fall.

          • @Rob
            A little further research reveals a feasible explanation for the huge difference in healthcare mortality rates between the US and NL, namely:
            – The average age of healthcare workers in the US is 10 years higher than that of healthcare workers here in NL.
            – From a survey in Texas: 78% of healthcare workers in the US are overweight or obese, 65% live a “sedentary lifestyle with zero days of vigorous physical activity”, and 48% “do not partake in moderate physical activity”.
            So there you go: all the factors that increase the risk of CoViD mortality, grouped together in an alarming bunch.

          • Bryce, you can’t blame COVID deaths on fat people. It’s a form of victim blaming, and you have to keep in mind these people are on the front lines, helping others. It’s true that underlying conditions affect survival, as much for these workers as the general population.

            I confirmed that the Netherlands count was among doctors and nurses, did not include other caregivers. The total number of infections in that group was about 14,000, with mortality at 11. That number seems very low, far lower than would be expected statistically for the infection rate.

            The NL COVID site does not have the same HCP reporting tools as the CDC. The official CDC count is 190,000 infections and 770 deaths in the US, for healthcare workers.

            The US healthcare deaths are also concentrated in people of color (about 50%), who work in areas with lesser facilities and protection, with greater exposure. So that may be a factor in the increased number of deaths in the US.

            The healthcare workers association I quoted has been upset about under-reporting within healthcare, so has looked beyond that to include US caregivers of any kind, which has resulted in the much higher 1,700 to 2,000 figure. That is based on their own research, including social media, so it can’t be confirmed but is only an estimate. I could not find any similar tracking effort in NL.

            Stats released this week by RIVM show that out of 300,000 positive cases in NL, only 14,600 people have been admitted to hospital, only 4,200 admitted to ICU, in total. So possibly there is lesser exposure to healthcare workers than in the US.

            Reports this week that NL health workers with COVID are being asked to work with mild symptoms. Also new reports of ICU patients air-lifted to Germany. So possibly that is related to staffing more than facilities.

          • @Rob
            If this weren’t such a serious topic, your comment would be hilarious.
            I’m not “fat blaming” anyone: I’m pointing out the well-known statistic that an obese population suffers more CoViD-related complications and mortality than a non-obese population. Obesity in the US is a factor three more prevalent than in the EU, so that’s naturally going to increase mortality in any random group.
            https://www.foxnews.com/health/is-americas-high-obesity-levels-leading-to-more-coronavirus-deaths

            Still only 2 Dutch ICU patients moved to Germany, with only 544 of NL’s 1400 ICU beds occupied by CoViD patients. Only 2800 of 37,500 regular hospital beds are occupied by CoViD patients. Authorities here are investigating the *rumor* that healthcare workers with mild symptoms are being asked to continue work.

            Here’s a link (in Dutch) that indicates that the number of CoViD mortalities among Dutch healthcare professionals now stands at 14 (3 were added in September). This encompasses the entire healthcare population (1,000,000)…not just hospital staff.
            https://www.telegraaf.nl/nieuws/1865711663/aantal-overleden-zorgmedewerkers-opgelopen

            I’m sorry if you feel aggrieved that the healthcare system in the US is not up to scratch, but trying to scapegoat the Dutch healthcare system isn’t going to alleviate your situation.

          • Bryce, this discussion started with the notion that exposure was advantageous, but as I pointed out, not for those who don’t survive. So I stand by that point.

            Then it descended into the usual argument about statistics, but that doesn’t change the main point.

            The NL CBS has estimated that deaths in NL have been under-reported by at least 30%. If the HCP deaths are correct, then NL has the lowest rate by an order of magnitude than any other country. The total reported for Europe is estimated around 1,500 nurses alone, and they have complained the reporting is very sparse, so it may be much higher for all HCP.

            If the Netherlands have truly achieved an HCP mortality rate far lower then the general population, and any other country that has reported that information, then that’s really wonderful, kudos to them.

          • @Bryce

            Regarding obesity – it seems clearly established that the fat are especially at risk from this virus, as in general it is held that obesity is both signifier and outcome of poor health

            Quite apart from the consideration than in the US, at least, a lot of the obesity stems from the poor meat they eat, which animals are pumped with antibiotics, hormones,and other drugs – all typical of their noxious ind ag practices

            I suppose you saw the Reuters report this morning about EU vaccine buying – purchases are being made from 7 pharmas as no one pharma can supply at the scale required, and – not that the article states this – it must be that the EU are hedging their bets

            It would appear inevitable that the vaccines will be of various quality: If one or more vaccines are lesser than effective, or much less effective than the rest, or if one is outstanding ..what then? Will there be a pecking order? Does the EU get it’s money back?

            As far as I can see comparison testing between vaccines will not occur before they are used on the general public, and by then any possibility of ‘science’, of a strictly objective control nature will be passed by in the panick to get the vaccines out to market asap

          • Comparison testing will not be needed since there will be extensive statistical data from the trials. That’s why so many people are involved in the trials.

            Vaccines no doubt will have different efficacies and risks in different groups, and that can be used to help decide how to distribute them.

            If we end up with several good vaccines, that’s a very positive thing, not negative. Implying otherwise is what’s wrong with the whole critical argument. It’s just about looking for reasons to criticize, instead of basing the criticism on what is known. There isn’t much to factually criticize at present.

        • Bryce – are you able, please, to substantiate your suggestion that Emirates is “…funded by a bottomless purse”? While Dubai acknowledged the need for a capital injection in the current industry crisis, historically the airline has always been required to ‘wash its face’ financially. Indeed, I think the carrier filed a loss only in its second year of operations (in the late 1980s). Please correct me if I am mistaken (of course, even Dubai’s purse — ultimately, like that of Qatar — is not bottomless).

          • @Pundit
            I suspect that every national carrier is expected to “wash its face” financially…with the possible exception of Alitalia 😉
            However, if I were a national carrier, I think I’d prefer to be shored up by the wealth of a nation (or Emirate) such as Dubai rather than that of most other nations — particularly when Dubai regards Emirates as a prestige project, and as an essential mechanism to allow Dubai to function as a world city (how else are you supposed to get there?).

        • The plan of New Zealand is the same as any other country, to open up to those countries that get their infection rates under control. In the meantime there will be quarantine requirements, as is rational. This will start with other Pacific nations that also have low rates.

          If the vaccines are successful in reducing those rates, that will accelerate the ability to open, as with other countries.

          In the meantime, the New Zealand economy shrank by 12% in the second quarter, but has recovered about 5% of that in the third quarter. With the current rate of growth, it’s on track to have returned to the black by the second quarter of 2021.

          The remaining loss will be tourism, but they are working to stimulate domestic tourism, since people can travel freely within New Zealand, without restriction and with restaurants and attractions open.

          Those results are as good or better than anywhere else in the world. New Zealand is correct to protect that, it’s a strength rather than a weakness.

  4. I hope the MRJ makes it. IMHO it’s a beautiful airplane and speaking as an ex-Mitsubishi pilot, I feel their engineering and production talents are among the best there are.

  5. Boeing’s philosophy of reiterations has sure left their products similar to Studebaker and the rest of the automotive industry. They should be able to hang in there due to Defense and Space. Possibly in 5 to 10 years a blended wing with the Ultra Fan might be developed. But that technology jump would be bigger than going from prop jobs to jet propulsion.

    • You don’t need the Ultrafan. P&W has designs ready to go for the GTF.

      And they are based on in service engines and experience not a prototype.

      • Transworld – UltraFan is/will be needed, simply to provide customer choice if a suitable PW1000G-JM variant will be, indeed, available. The in-service consideration is, of course, valid.

  6. Here’s my two cents for a winning scenario for Boeing Next Generation Single Aisle aircraft with Thermoplastic fuselage and wings and 3D printed complex parts. So Boeing should team up with Electroimpact for technology development for the next three years and launches in 2024 and first entry into revenue service 2030. Boeing will have several FALs around the globe (none in Washington State)

    https://www.youtube.com/watch?v=xaoIzGJAO28
    https://knowledge.ulprospector.com/10700/pe-electroimpact-unveils-continuous-fiber-reinforced-3d-printing-system/

    • I’m a great fan of innovation going tick – tock, like Intel introduced in 2007, but something you can find in many industries for much longer. What it means is you alternate in evolving the design (architecture) and the manufacturing process (or materials). So instead of changing everything, you focus on one innovation/improvement at a time. If you look at planes, engines can be such a step, as seen on the A320neo for example. It can also be the introduction of a new cockpit with 2 instead of 3 crew like going from the A300 to the A310. Then there can be a radical change in the way you develop a plane like going from the drawing board to 3D-CAD as happened with the 777.

      Making 2 or even 3 such big changes in one product development can and often will go terribly wrong, as seen on the A380 and the 787.

      Looking at Boeings SA/NB product strategy, it appears to me that they have some catch up to do with FBW, but that should hardly pose much of an issue as they cab simply use the 787 cockpit. Then they also need to make the best use of the last generation of engines, without restrictions in the fan diameter. Again, no problem, just give the plane long enough legs and you are fine. In creasing the fuselage diameter so that you can use containers for freight is also no big deal. So there is still room for THE innovation. I would plead for a CFRP wing, elevator and rudder. Here the engineers and manufacturing geniuses could really prove their worth by developing a system that allows to build those parts highly automated and efficient.

      Especially when you look at trans-Atlantic flights, such a CFRP wing would give such a plane a significant advantage over the A321XLR.

      • “”Especially when you look at trans-Atlantic flights, such a CFRP wing would give such a plane a significant advantage over the A321XLR.””

        If a CFRP wing can be produced with robots then it could be cheap and production rate might not be an issue, but I guess we aren’t there yet.
        All the carbon fiber didn’t do much for the 787-9 vs A330-900. The NEO has a so much bigger wing surface and has still less MTOW, the trim system with elevator tanks helps too.
        That’s what the XLR needs too, much bigger wings, then it would be hard for a new Boeing to compete. Without a new wing an A320XLR would make more sense.

      • While I am a believer in incremental, I don’t think the A380 would be considered a too many things issue.

        Its nothing more tech wise than current tech and bigger 747.

        The 787 is a a good example. If you are going to jump tech, keep your current mfg setup (other than the tech driven end aka autoclaves)

        The the flip is if you are going to change the mfg, do it on current tech (777 and 737 are clear cases of it working well as they did not flip the whole thing at once)

        While there is no follow up right now, the T-7 is a case of a all digital approach based on current tech and only the shifts in digital aspect to management.

        How well that works out is still be seen. Boeing severely undercut the contract to ensure they got it. It did not work out well on the KC-46 and that was a same o same o.

        • Boeing will do ok on the KC-46. Not great, maybe. Initial loss but a fleet of 180 with 40 year life span and renewing maintenance and support every 5 years. That’s before life extensions that are likely.

          The KC-Y program, if not cancelled, and if the KC-46 proves reliable, could result in further orders. Verdict is still out on that. KC-Z will be entirely new.

          In Congressional testimony this month, the Pentagon acquisitions director said that the KC-46 fixed-cost contract may have been too rigid, allowing for penalties & compensation but no incentives or leverage for the Air Force to support any changes that would increase costs. This limited costs but also progress, in some cases.

          Boeing must pay for most design changes and also compensation for schedule delays, which was too great a share of the development burden. She said they had learned from the KC-46 and would build in more flexibility for future contracts.

          • Boeing keeps saying they learned and they keep doing self inflicted wounds.

            After the second excuse, people don’t buy it.

            We are well into excuse (32?)

            While it was smart of Boeing to get into the tanker stealth for the Navy, they still have to execute. Same on the T-7 (which was hugely underbid)

            Interesting in taking huge losses in military programs but not willing to put the money needed into BAC.

            Ironically long term payback on the KC-46 does not allow Boeing to do share buy back or dividends. There might be a silver lining there!

      • Gundolf – why stop at longitudinal and directional control surfaces? Why not use CFRP for the horizontal and vertical stabilizers as well as the wing?

  7. China sanctions Boeing because of weapon deliveries to Taiwan.
    Seems the MAX won’t be certified in China.

      • Boeing is a small part of those specific arms under discussion. It may not matter but they are not a big player in at least the current proposed sales.

        Raytheon has picked up P&W in the UTC acquisition (ahem, merger)

        LM has no non defense.

        Have to see.

    • China hasn’t specified the extent of the sanctions or what they will cover. Boeing is still doing business with their airlines for support of existing aircraft, and that is unlikely to change. This could affect future sales of the MAX. We’ll have to see what happens after the election as well.

      All arms sales are conducted through the US government. China has had no success with the US administration so they are pushing beyond that to the manufacturers. But that could change with a new administration that is more willing to engage in diplomacy.

      • Engaging China in diplomacy is a bit like the deer engaging the Tiger in discussion to be going vegetarian.

        China will violate any agreement as soon as it suits them.

        Either we agree to supply arms to Taiwan and defend them or we give it to China.

        • China is angry at Trump because he undid years of diplomacy by recognizing Taiwan as an independent country.

          We had reached a form of détente with China over Taiwan, it was explicitly a claimed territory of China, but implicitly under Western protection. This was meant to be a step toward eventual reunification, but only if voluntary, if China provided some degree of autonomy, and if they cleaned up their act in general. So not happening anytime soon, but still an incentive to China.

          Trump blew that up, along with the Iran treaty and the Paris accords. I don’t know what Biden would do now, Taiwan would not willingly go back, so maybe the negotiating process will have to start over again, and occur gradually as it did before.

          The Chinese are firm in their desires but generally have preferred negotiation to conflict. Trump is the opposite, he relishes conflict. So the relationship may improve under Biden, we’ll have to see.

          • Transworld/Rob — “China will violate any agreement as soon as it suits them,” while “China is angry at Trump because he undid years of diplomacy…” Discuss.
            Speculation about potential Biden action is hypothetical and certainly speculative.

          • Pundit, complete speculation on my part about Biden, I agree. As far the Chinese upset with Trump, that began at his election:

            https://en.wikipedia.org/wiki/Trump–Tsai_call

            He informally recognized the President of Taiwan, which was a violation of the “One-China” policy dating back to Nixon’s overtures to China in the 70’s, formalized by Carter in 1979, and respected by presidents ever since. The US does not have formal diplomatic relations with Taiwan.

            The call itself was ok, but then he tweeted about it and that raised some eyebrows. Trump has since thrown parts of that policy out the window, increasingly dealing directly with Taiwan, as the conflict with China has grown. Some have speculated that he might formally establish diplomatic relations. He has not done so yet, but it’s a major sore spot with China.

          • Rob:

            What is’s a sore spot with China?

            Tibet, they want India, they want to own the South China Sea, they are running a gulag and they want Siberia (well that would work in nicely)

            Lets not forget the third Island Chain (Hawaii)

            Oh, and a thousand years ago they had a fleet sail to Africa so they have claims on Pakistan, Africa, the Middle East (and Alaska and the US/Canada West Coast)

          • Pundit:

            China took over Tibet based on claims though Tibet clearly is not a Chinese population. All the time ranting about Imperialism (no issue with their history in that regard). But to do the same while doing so?

            Now its Hong Kong. They are violating an agreement that they would only have to let time go by on.

            South China Sea: They built some artificial Island and claim the entire area. That is pure insanity but regardless of Intentional n Laws and agreements on economic zones as well as continental shelf, they just go claim it.

            As mentioned, Gulags ala concentration camps now being used.

            Different locale, same MO as Europe Circa 1939.

        • Taiwan made a lot of friends at the start of the Corona crisis, because of the vital information and assistance that it provided to countries outside of Asia. In addition, it’s the semiconductor capital of the world, and we all know how vital that industry is. So, for those reasons alone, there’s no way that the outside world is going to allow China to annex Taiwan…apart altogether from the fact that the Taiwanese don’t want that to happen. If China nevertheless makes an attempt to do so, it will trigger a major conflict.
          This is a very different situation to the annexation of the Crimea by Russia. It’s also very different to the situation in Hong Kong, which was leased to the British by China for 99 years — and was always destined to returned. Any claim that China thinks that it has to Taiwan has long lapsed on the legal basis of laches alone.

          China has made a lot of enemies and cast a lot of bad blood in the past few months. That’s not a situation that’s going to just go away. Nor will the current tension between China and the USA…no matter who is in the White House. Even the ever-diplomatic EU has soured on China.

          • Most of Kowloon and new territories were leased for 99 years . HK Island and a small patch of Kowloon were ceded to the UK under an earlier ‘agreement’. There were other ports on the coast under european control as well as the international quarter of Shanghai and Tianjin and Beijing
            https://en.wikipedia.org/wiki/Concessions_in_China

  8. Scott, hope to read your follow-up analysis on the Boeing and Airbus Earnings Call this coming Wednesday.

  9. MHI was a strange venture as it had no vision and in a small market.

    Not a clue what they were thinking.

    Someone has woke up and realized its all money down the drain. BBD had the right idea if not the pocket book to make it happen with the C series.

    Be interesting to see what happens to the Remanent of BBD they bought.

  10. Hopefully the M90/M100 and E175E2 will get some sales and deliveries. It would be nice to see what the gains are on the geared turbofan, in the form of the 56″ diameter fan models on these aircraft.

    • MH100 Bird can’t be delivered as its not even certified yet.

      Why would anyone put any money down on an iffy aircraft when there are perfectly good alternatives

      Equally , why would you put max tech into regional? BBD looked at it and there was no possible return (deficit almost certain)

      Regional sales outside the US are pretty small and in US scope allows neither option. A220 works because its 110 to 130 seats or so (normal seating not jam packed and 200/200)

      As the book said, Go Big or go home.

      • It was a national project for Japan Inc, they wanted to move up the value ladder than making structures for others mostly Boeing (various models) and Bombardier (global express).
        Mitsubishi Aero engines is the production site for the PW1200G.
        Notice a pattern?

        • I would call it a huge stumble DOWN the value chain.

          Of course there is a pattern, it does not work many times and this is a glaring one.

          China is stumbling around in the next tier up and its not going to work either.

          Like surfing, its all in timing and the timing is not working in this case.

          Airbus has both the latitude, Boeing arrogance and the good timing going for it.

          They failed the fist time (A300) but not so badly that they did not get it, the A320 was spot on and even the first failure was the platform for future success (granted aided and abetted by Boeing again)

          But the tech was stable and there was an opening.

          Not at all true now.

      • How many E175 E1 will sell from 2020 t0 2040, while their is GTF efficiency ready and waiting to be harvested?

  11. I’m surprised that Mitsubishi doesn’t seem to have the stomach to go head-to-head with Embraer. I would have thought the Spacejet 100 could be an Embraer (175) killer since it would meet scope clause.

    • The market is small even with the US,

      MHI has to start over with the M100 and that is 5 years at best.

      The E170/175 has the rest taken already. I just don’t see where a whiz bang MRJ has an opening and its not a sellers market.

      • Boeing says the 95 seat and under market in its CMO is 2400 over 20 years.
        A share of that is worth having

        • Duker – how big a share of 10/month would BCA settle for, do you think?

          • Boeing likely isnt interested in that market anymore.

  12. > Current production rates are 40/mo for the A320, 2/mo for the A330 and 5/mo for the A350

    Like Rodney Dangerfield the A220 is still not getting any respect :). I think it is at about 5-6/mo right now. 4/mo in Maribel and 1, possibly 2/mo in Mobile.

  13. Bryce — your suspicion “that every national carrier is expected to ‘wash its face’ financially” would, if true, challenge your preference “if [you] were a national carrier … to be shored up by the wealth of a nation (or Emirate) such as Dubai rather than that of most other nations.”
    That notwithstanding, you do not indicate how Dubai, which “regards Emirates as a prestige project, and as an essential mechanism to allow [it] to function as a world city” has, before present circumstances, acted as “…a bottomless purse” for the carrier. You have chapter and verse, please?
    Qatar Dubai is not.

    I suspect that every national carrier is expected to “wash its face” financially…with the possible exception of Alitalia 😉
    However, if I were a national carrier, I think I’d prefer to be shored up by the wealth of a nation (or Emirate) such as Dubai rather than that of most other nations — particularly when Dubai regards Emirates as a prestige project, and as an essential mechanism to allow Dubai to function as a world city (how else are you supposed to get there?).

    • It should not be dismissed, but it also seems to be very very rare.

      Sans some kind of in flight monitor system, how to sort that one out is tough.

      That said, I am not traveling short of an emergency until we see results on vaccines and actually get it.

    • I read this study, they could not identify the source (patient zero) and there was no involvement of the flight attendants. The main evidence is that 5 of the 13 infections have the same genetic structure, implying origination from the same source. 11 passengers could not be tested. 25 passengers were not infected.

      4 of the infected passengers sat in an isolated group within the aircraft and had no social interaction with the other passengers, so it’s not clear how they would have been exposed. That is part of the conclusion that being on the same aircraft is enough to cause infection. The study does not say if these were among the 5 genomic tests.

      I think at the least this means that the transmission rate risk is low but not zero. But still not evidence of widespread transmission occurring on aircraft. Notably, the study does not recommend that air travel be reconsidered or restricted, only that precautions be rigorously observed on flights, and that thorough contact tracing be done for any emerging cases after flights.

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