Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
Update 1: Big loss for 2020 for Boeing; $6.5bn charge for 777X-delivery now late 2023; 737 MAX cleared by EASA
Updated
- Europe’s aviation regulator EASA clears Boeing 737 MAX for return to service with minor, additional requirements. Information is here.
- $6.5bn charge for 777X program. First delivery now late 2023, nearly 4 years late.
By Scott Hamilton
Jan. 27, 2021, © Leeham News: Boeing today announced a $11.941bn net loss for the full year 2020, as expected.
Boeing reported an operating loss of $12.767bn. The company’s cash flow was a negative $18.41bn last year. It ended the year with $25.6bn in cash and securities.
The press release is here. The webcast is at 10:30 Eastern time and may be accessed here. Calhoun message to employees is here. The earnings presentation is here.
Boeing took a $6.5bn forward loss on the 777X program. First delivery is now late 2023, nearly four years later than initially planned. Source: Boeing
737 MAX
Regulators in the US, Brazil, Mexico and Canada approved recertification of the 737 MAX before today. Europe’s EASA approved recertification minutes before Boeing announced its financial results today. Boeing delivered 40 MAXes last year and through today to five airlines.
777X
Boeing took a pre-tax charge of $6.5bn for the 777X program.
“We now anticipate that the first 777X delivery will occur in late 2023,” Calhoun said in a message to employees. “This schedule, and the associated financial impact, reflects a number of factors, including an updated assessment of global certification requirements, our latest assessment of COVID-19 impacts on market demand, and discussions with customers with respect to aircraft delivery timing. We remain confident in the 777X and the unmatched capabilities and value it will offer our customers.”
“Among the factors contributing to the revised first delivery schedule and reach-forward loss are an updated assessment of certification requirements based on ongoing communication with civil aviation authorities, an updated assessment of market demand based on continued dialogue with customers, resulting adjustments to production rates and the program accounting quantity, increased change incorporation costs, and associated customer and supply chain impacts. The production rate expectation for the combined 777/777X program remains at 2 per month in 2021,” Boeing said in a press release.
On Reuters:
“Deliveries of the 787s slumped nearly 70% to 53 planes in 2020 and are not expected to recover to 2019 levels until at least 2024, according to analysts.”
https://www.reuters.com/article/us-boeing-results/boeing-to-delay-777x-again-as-it-posts-record-annual-loss-idUSKBN29W1EY
That would mean that the 787 fuselage issues can be fixed.
It seems Boeing pushed the design limits so high that on a normal day they can’t meet the specs.
Boeing can’t easily change the design without a new cert. I think the FAA would let Boeing escape, but what would other regulators do.
CNBC is reporting an EPS loss of $15.25 per share.
https://www.cnbc.com/2021/01/27/boeing-ba-q4-2020-earnings.html
More financial details on Investors’ Business daily:
EPS loss was 8.5 times higher (!) than analysts had expected.
https://www.investors.com/news/boeing-stock-boeing-earnings-q4-2020-777x-delay-737-max/?src=A00220
REPOST:
AS & WN not going to make any PDPs in 2021.
Surprised that there’s no reach forward loss recorded for B787, kicking the can down the road for another quarter.
Do you even know what reach forward means, the 787 is likely to return to profit soon and deliver all the parked planes and get paid. Loss only for this year
One can only assume that you’re referring to “return to profit” on a *per-plane* basis. Possible, but not a done deal, seeing as margins are under significant pressure.
On a *program* basis, the 787 has never yielded a profit, and never will. It’s hard to pull $32B out of thin air, and on top of that there are now the additional costs for all the revision work going on in Everett.
fixing, storage and delayed delivery incl compensation to customers is definitely not “lossless” 🙂
I start to wonder, how many posters here, speaking with authority, really know what they’re talking about, eg. program accounting!!
For others, read the following and see how Boeing recorded a profit on every 787 they sold, but in fact they were losing money on the first couple hundreds.
https://www.bloomberg.com/opinion/articles/2016-04-14/boeing-s-32-billion-accounting-question
Regarding the re-cert of the 737MAX in Europe, the following passage from the EASA AD is noteworthy (emphasis added). It reads like part of the manual for controlling a steam engine. One can now full understand why Capt. Sullenberger considers that the 737MAX is “not up to modern standards” — maybe he was prompted to make that analysis based partly on pre-historic images of TWO-PILOT EFFORT being required to turn the MANUAL TRIM WHEEL.
Runaway Stabilizer (E) (Required by EASA AD 2021-0039)
If uncommanded stabilizer movement occurs continuously or in a manner not appropriate for flight conditions:
Recall:
Firmly hold control column. Disengage autopilot if engaged. Disengage auto-throttle if engaged. Use the control column and thrust levers to control airplane pitch attitude and airspeed. Use main electric stabilizer trim to reduce control column forces.
If the runaway stops after autopilot is disengaged, do not re-engage autopilot or auto-throttle; end of procedure.
If the runaway continues after autopilot is disengaged, place both STAB TRIM cut-out switches to CUTOUT.
If the runaway continues, *grasp and hold stabilizer trim wheel*.
Reference:
Trim the stabilizer manually.
Notes:
1. *A two-pilot effort may be used to correct an out of trim condition*.
2. *Reducing airspeed reduces air loads on the stabilizer which can reduce the effort needed to manually trim*. Anticipate trim requirements. Do not re-engage autopilot or auto-throttle.
In addition to the normal descent, approach and landing checklists, complete the following deferred item:
Establish landing configuration and in-trim condition early on final approach.
A two-pilot effort doesn’t meet regulations.
Regulation 25.143:
The airplane must be SAFELY controllable and maneuverable without exceptional piloting skill or STRENGTH.
For conventional wheel type controls, the maximum control forces permitted are 10 pounds for long term application.
Otherwise a pilot can’t visit the lavatory.
EASA who was babysitted by Boeing pilots.
Doubtless the local Representative of Boeing will chime in and tell us the usual waffle that this has all been “fully reviewed” and “found safe”, etc., but — apart from the fact that Ky was evidently asleep on the job — what’s fascinating is that it’s 2021 and yet Boeing’s only narrowbody offering is still using archaic and completely unacceptable 707 technology from the 50s! It’s like a TV manufacturer continuing to use CRTs instead of LCDs — it utterly defies belief! And then there are people who opine that COMAC products are sub-par?
Hence “two-pilot effort may be used”, not required
In practice this is quite straightforward, as evidenced by the pilot narrative in the AVGeekery training link I posted earlier. Hasn’t been an issue for 50 years. Also as demonstrated by pilots in on-line videos.
Two pilot effort may be required in overspeed or severe mis-trim situations. Reducing airspeed is the preferred response and is covered in the training.
Boeing’s next claim: MCAS hasn’t been a problem for XX years!!
That’s a *remarkable* burden to put on the two pilots.
Who flies the airplane while they do all those things?
It certainly is, isn’t it?
And it assumes there isn’t any other emergency going on at the same time.
No wonder Boeing always blames pilots for accidents: if your planes require consistent super-human input in an emergency, you’ll inevitably be shortchanged.
No relation to reality in the commentary above. Pilots have no difficulty in handling the trim wheels within the flight envelope, as demonstrated and certified by the regulators, confirmed by pilots. Basic airmanship.
Sure 😉
In the past, “basic soldiering skills” involved knowing how to use a sword and battle axe, how to load and use a catapult and battering ram, and how to deploy burning pitch.
The world (with the exception of Boeing) has moved on since then 😉
Again, no relation to reality or the topic at hand, Agenda is clear as a bell. Nothing more to be said.
Again, dodging the reality and the topic at hand, Agenda is clear as a bell. Nothing more to be said.
@Bryce: Remember that Boeing, conveniently assumes every 737 MAX pilot, without any sim training or even a hint of the existence of MCAS, can react properly within four seconds and FAA, in fulfilling its responsibility, accepted without questioning.
Now, after losing 346 lives, we all know how laughable it is, and how “no relation to reality” it is.
@ Pedro
Yes, I remember those points very well.
I also remember the strong objections that a single pilot might not have the physical strength to use the trim wheel. Rather than demanding a change to the trim wheel set-up, Ky is instead now allowing/advising that two pilots pool their strength to turn the trim wheel. As you pointed out, who’s supposed to fly the plane while this is going on?
A disgraceful example of “take the easy way out”. Ky should be booted.
@Bryce Forgot to add:
After Boeing’s mirage look alike program accounting, and its CEOs’ (from Muilenburg to the current one) repeated claims that a big order from the East is coming (remember the boy who cried wolf?), how would anyone associate Boeing with “reality”??!
According to Ky:
Firmly hold control column.
Use the control column and thrust levers to control airplane pitch attitude and airspeed.
If the runaway continues, *grasp and hold stabilizer trim wheel*.
Trim the stabilizer manually. A two-pilot effort may be used
I wonder how Ky can turn the trim wheel with his foot, because one hand is on the control column and the other hand on the thrust levers.
The only way might be if Ky bites the trim wheel.
EU politicians should have asked Ky to show it.
Imagine, Ky is responsible for saftey.
Safety is completely different.
Perhaps the intention is for the flight crew to urgently request 2 members of cabin crew to come to the cockpit to supply extra limbs for all the actions going on? Or perhaps Ky thought that octopuses would be in the pilot seats?
The LionAir MAX would have crashed the evening before its fatal accident were it not for the fact that a third (ferry) pilot was present in the cockpit to help deal with the MCAS chaos that occurred.
Remember: Capt. Sullenberger has declared that the MAX is “not up to modern standards”!
“”We remain confident in the 777X and the unmatched capabilities and value it will offer our customers””
A nice way to lie to shareholders, Boeing language.
The 777-8 is really unmatched, nobody wants it.
If the 777X had value it would be ordered more.
End of 2023 means 2024. I thought it was 2022 few weeks ago.
Same as the board has confidence in CEO until the day it doesn’t.
10 years from launch to EIS for an upgraded 777
“On May 1, 2013, Boeing’s board of directors approved selling the 353-seat 777-8LX to replace the 777-300ER from 2021, after the larger 406-seat -9X”
The 747 was 1 year from first flight to EIS. The 777-9 will be 4 years. If they build 12 a year, that is 48 aircraft on hold.
Time for freighters to fill the gap … production must go on no matter what!
https://www.ainonline.com/aviation-news/air-transport/2021-01-13/dhl-orders-eight-boeing-777-freighters
Dave, have you ever heard of the old business adage;
Cheap, fast, good. Pick two of the three.
(mind you $200 million ain’t cheap, is it?)
Just think if Boeing’s BOD made the “right” decision back in 2012…launch a new clean sheet single aisle aircraft and not upgrade the 777 …how Boeing’s world would be so much better Should have, could have but didn’t
It would be interesting to find out what the write off cost would be to cancel the 777x program Boeing didn’t learn from their own lesson with 787…its point to point not hub to hub (e.g. A380)
new clean sheet big plane? that would not be ready now but require another 5 years of development to get ready for the post-COVID time? with 10 bn US$ more sunk?
I think that decision would have been “even wronger”
I think their biggest mistake was to assume that Toulouse behaves the same way as them: no new programmes after the 380 disaster and teething problems of the 350 and continue producing the 320 till orders dry out. They were sure they had 5 years to slowly start the NMA or even NSA. Then Airbus put Boeing on the spot with the NEO. NMA and NSA were no option. From now on they only could react.
> Then Airbus put Boeing on the spot with the NEO.
1) Could a reasonable person not have seen the NEO coming?
2) In either case, would a reasonable person’s response be yet another hot-rodding of the 737?
@Bill7 The board and the CEO were laser focused on one thing that’s truly imp. to them: stock price.
Update
Boeing stock off 4.38% at 10.06
Update
“Several Boeing suppliers, including Spirit AeroSystems (SPR -4%), General Electric (GE -3.7%), Triumph Group (TGI -3.7%) and Howmet Aerospace (HWM -4.8%) trade sharply lower.”
https://seekingalpha.com/news/3654997-boeing-drags-down-suppliers-after-huge-q4-loss-777x-delay
Some in Toulouse might start thinking at which point Spirit becomes a buy.
What’s the timeline for the 777-8F? Will the current 777F still be in production in 2030? Looking at the 767-300F’s longevity, I would say that is a distinct possibility.
That’s the problem, the 777x isn’t an upgraded 77W, but Boeing had the FAA say so.
New wing+ new engines+ new landing gear+ new fuselage+ new cockpit+ new tail = new aircraft. Not a combination of minor changes to a certified aircraft.
What’s new about the 777X fuselage?
Length, door locations, window sizes and locations, wing and tail loads.
Root cause analyses by FAA into the the fuselage rupture during testing might have revealed some ambitious assumptions. Launching customers LH works with EASA. https://www.businessinsider.nl/boeing-777x-certification-review-faa-europe-uae-737-max-2019-11?international=true&r=US
Thanks for that on the 777-X fuselage, keesje.
Regarding the 737MAX, I’m wondering if Mr. Pierson’s
memo is something like a marker, just in case.
PDF link:
https://img1.wsimg.com/blobby/go/ec12e28d-4844-4df3-a140-ca706a04c0f7/downloads/737%20MAX%20-%20Still%20Not%20Fixed.pdf?ver=1611597399852
This is speculation that has been refuted. The 777X ultimate load test passed, and the fuselage rupture was not a concern due to the pressurization of the aircraft. That doesn’t change with repetition.
Boeing hardly communicates anything. Using that to dismiss all makes their investors, the bigger public and customers run into surprises all the time.
Nothing is officially confirmed, but that nothing is causing a 4 years delay. Not Covid-19, the engines or market demand.
Calhoun says so. Some have now to slowly digest what they denied for years, hiding behind info Boeing / FAA were never going to release.
On 737 the CAAC pulled the plug. Looking back, they were 100% right. Not the FAA, not Boeing, waiting for the investigation reports, proof. Maybe we should broaden our sources a bit. Lots of echo rooms, groupthink and patriotism around.
> This is speculation that has been refuted.
I’d be interested in hearing more about that claim; as
well as that commenter’s previous, flexible use of the word “refuted”, WRT the 737’s faulty Boeing-designed rudder PCUs (as determined- finally- by the NTSB).
In both cases my question is: what, exactly, has been “refuted”? Purely for clarity’s sake..
Keesje, the commenters here would be the last group in the world to talk about an echo chamber. You are echoing your own beliefs, without foundation or evidence. Note that was my original point.
You are using the lack of positive assertion to project the worst possible negative case, which agrees with your agenda. As also occurred with the MAX. As also occurred for the DoJ investigation. Neither was ever realistic.
It was reported that the 777X test reached 99% of ultimate load. It’s common for those tests to be accepted with additional computational model results. The test serves to validate the model. Boeing is not building a new test article. There are no plans for additional tests. The idea of failure is kept alive in your mind, by repetition, because that’s what you hope and want to happen. But again, not representative of reality.
To do this, you also must reject the reasons that are given. Everyone is in denial, or there is a conspiracy to conceal the truth. No matter how many confirming indicators there are.
And so we are destined to go through another cycle of this with the 777X. When it does eventually become certified, there will be matching outrage, as there was for the MAX and the DoJ. But no lesson learned, unfortunately.
Bill, refuted was the claim that Boeing blamed the pilots, and was forced by the NTSB to make the rudder system changes. That did not occur, as explained previously.
For the 737 rudder PCU issue Boeing did say the pilots could use the aeilerons to overcome the fault, the NTSB said differently
https://www.flightglobal.com/ntsb-urges-accelerated-737-rudder-programme/5.article
In this article, Boeing responded that they had already agreed with the NTSB recommendations and the changes were already in progress.
Which is consistent with what actually happened, Boeing worked with the NTSB and the valve manufacturer to both identify and resolve the initial issue. Then they participated in the ETEB safety board effort which developed additional design changes to the rudder system. Which Boeing then implemented across the fleet.
The aileron issue was the lack of authority to counter a rudder hard-over event, below the crossover speed. That was known to Boeing and it wasn’t used as criticism of the pilots. The ETEB board established that above the crossover speed, it was possible to recover, but as with the MAX, it was found in simulator testing that some pilots could not.
The 777X met the conditions for amended type. Repeating claims that it didn’t, doesn’t change that fact.
Look at the decision framework.
That “habet” was gained on a heavily doctored path.
Guess what the MAX crashes ( and previously the 787 “issues” ) had exposed : a fully broken certification environment.
The 777X cert environment will get a revisit.
If the FAA can’t be bothered other cert authorities will take a closer look.
No discussion of changing the 777X certification type outside of these comments. Not likely to happen in reality.
Plenty of discussion of changing the 777X certification type outside of these comments. Quite likely to happen in reality.
@ keesje
Great point. Change that many body parts and the pony becomes a donkey…which is an entirely different animal.
Looks like the FAA may be putting its foot down on this, pursuant to its many recent humiliations. Poor Boeing if it can no longer rely on having the FAA in its pocket.
Windows are only slightly higher , 2.5 in and 15% larger- from 142 sq in to 165 sq in .
Exactly what grandfathering should be for – minor changes.
Same goes for a small stretch, new cockpit desgn is likely to meet modern requirements not get around them. The new engines aren’t really a grandfather issue as they are certified to latest modern standards…so a bit of absurdity to claim otherwise
Hi DuO, EASA and FAA don’t think so (anymore).
Maybe you should read the observation & recommendations from the JATR committee of international experts on Boeings certification process.
https://www.faa.gov/news/media/attachments/Final_JATR_Submittal_to_FAA_Oct_2019.pdf
This is again a keep-alive negative projection. This issue has not been raised or discussed, and there is no indication of a change of certification type. The 777X is not mentioned in this report. It’s not a realistic view.
@ Keesje
Indeed! Winds of change are blowing! And some people have great difficulty facing up to that…
The problem with the 777-X is simple. It’s a bigger, harder to fill, aircraft than the A350 with same seat mile costs. After the A380 lost out to the 77W, despite being more comfortable, it should have been evident to BA that the “X” wasn’t likely to be a hit.
On CNBC: “American, Southwest post record annual losses as recovery remains elusive”
I sense approaching order cancellations/deferrals…
https://www.cnbc.com/2021/01/28/american-airlines-aal-and-southwest-luv-results-q4-2020.html
@Bryce
Thanks for link-
AAL has been targeted today by a subreddit group causing havoc in certain vulnerable stocks in a form of wilding which has emphasised and exaggerated the fundamental instability and disconnect in US stockmarket
Some say this RHood group is merely cover for classic WS pump and dump
BA….next?
@ Gerrard
Yes, I saw that…the stock soared 55% in wild pre-trading.
It was the most shorted of the airline stocks (25% vs. 6% voor Southwest). As you correctly point out, Reddit “activists” have in recent days been blindly pouring into stocks — such as GameStop — in order to force loses upon traders with large short positions in the stock. Trading has been halted several times. Part of yesterday’s declines on Wall Street were due to the affected short sellers having to liquidate other positions in order to cover the short call.
I don’t know how shorted Boeing is: if it’s a substantial percentage, then it’s also a potential target. That would be an interesting spectacle.
https://mobile.twitter.com/skift/status/1354475215036669956
U.S. Airlines Fear ‘Crushing’ Blow From Possible Domestic Travel Testing Requirements
WN CEO looks nervous, it would be a big blow. Not sure if they are still going to take the MAX off Boeing’s hand.
Furthermore early 2022 737 MAX production at 31 per month (together with clearing 440 on hand before end of 2022) looks extremely aggressive.
Does the paint shop know something that we don’t know? N919AK, a 737 MAX 9 destined for Alaska Airlines, has the following painted under the cockpit window: “Proudly All Boeing”. See the picture at the link below. Alaska’s first 737 MAX 9, N913AK, was delivered on 1-24-21.
https://twitter.com/BDFphotography/status/1353291131715342336/photo/4