Pontifications: The reshaped commercial aviation sector

By Scott Hamilton

July 12, 2021, © Leeham News: With Washington State and the US open for business following nearly 18 months of COVID-pandemic shut-down, there is a lot of optimism in commercial aviation.

In the US, airline passenger traffic headcounts are matching or exceeding pre-pandemic TSA screening numbers. Airlines are placing orders with Airbus, Boeing and even Embraer in slowly increasing frequency.

The supply chain to these three OEMs looks forward to a return to previous production rates.

It’s great to see and even feel this optimism. But the recovery will nevertheless be a slow if steady incline.

Returning production rates
Airbus

Airbus and its supply chain will recover quicker than Boeing and its suppliers. It’s not that market forces are different between the two. Boeing’s challenges are unique to Boeing.

Airbus hopes to return to the pre-pandemic production rate of 60/mo for the A320 family in about a year. Officials are studying increasing rates up to as many as 75/mo by 2025. One can’t help but wonder whether there is some market-share grabbing going on at Boeing’s expense. Is there truly enough demand among current A320 operators to support a higher production rate? Or is this more, or as much, a matter of taking advantage of Boeing’s weakness with the 737 MAX?

I don’t have enough information to answer these questions. But if I were Airbus looking at the realities of the MAX recovery, the weakness in the family and in Boeing’s overall product line, I’d be considering everything to boost production, too. There is a risk involved, but this will be discussed in a future article.

Airbus was in the early days of ramping up production for the A220 when the pandemic pause hit. Resuming these plans is a given. Officials announced plans to eventually take the production rate to 14/mo.

Production rates for the A330neo and A350 are a mere 2 and 5/mo, respectively. With international travel still anemic, and recovery forecast around 2025, the supply chain will have to wait for this return to normal. Or, maybe lower rates become the new normal. This will take a few years to play out.

Boeing

Assessing the recovery of production rates at Boeing and its suppliers is a matter of stating the obvious: this will be a long, slow process.

Boeing still has a sizable inventory of MAXes to deliver, suppressing production rates. Spirit Aerosystems, the maker of the 737 fuselages, also has a large inventory to deliver to Boeing. While clearing this inventory, which will take about two years, supports Boeing’s production rate, its existence suppresses Spirit’s own rate—and with it, the supply chain.

Boeing wants to achieve a MAX production rate of 31/mo next year. Any more than this depends in part on when China recertifies the MAX. LNA wrote July 7 that China needs Boeing as much as Boeing needs China. After holding MAX recertification hostage for political reasons, it now appears there is some movement toward returning the plane to the skies in China.

But Boeing’s ability to match Airbus’ A320 production rate will lag, giving Airbus an advantage. Also, the weakness of the MAX 9 and MAX 10 vs the A321LR/XLR gives Airbus an advantage.

Furthermore, Boeing’s continuing indecision about a new middle of the market aircraft gives Airbus more and more time to sell the XLR into this sector, reducing the demand for whatever Boeing offers.

As for the production of the 777X: certification now won’t come until 2023 at the earliest. LNA believes the market has moved to downsizing and fragmentation that reduces long-term demand for the X. Softness in the current order skyline also is an overhang. All this casts doubt on the 777X program and with it, the supply chain feeding it.

As for the 787, LNA believes this program is already on the downward side of the bell curve. We don’t believe production rates ever will recover to the 14/mo peak.

Embraer

The picture for Embraer is not bleak, but it is not robust, either.

Sales of the E2 have been disappointing. First, the proposed joint venture with Boeing stalled orders as customers waited for the outcome. By the time Boeing withdrew from the deal, the COVID-pandemic set in.

Development of the E175 E2 relied upon the US regional airline industry and relaxation of the labor Scope Clause that limited the airplane’s weight. The E175 E2 exceeds the Scope limit—and unions refused to relax the restriction. Sales of the aging E175 E1 continue. This model remains the cash cow.

The E190 E2 is a “tweener” model that attracted few sales. The E195 E2 is the most-ordered model, but it has strong competition from the A220-300, which has the backing and heft of Airbus behind it. Embraer has difficulty competing against Airbus, which was a driving factor in pursuing the Boeing JV.

Embraer officials hope to launch the “E3” turboprop program next year. But the market demand is small—about 2,100 airplanes over 20 years. This is an average of 105 airplanes a year (though sales certainly will be front-loaded) to be split with ATR, which is 50% owned by Airbus. The business case seems iffy at best.

Embraer’s biggest advantage is that with Mitsubishi getting cold feet about the development of the competing SpaceJet, effectively killing the program, Embraer now has a monopoly in the 76-90 seat sector. While Mitsubishi ponders restarting production of the CRJ, this is an uphill climb.

The reshaped commercial aviation sector

One can argue that the commercial aviation industry was already on a path to reshape itself. Airbus was gaining strength. Boeing’s product line was becoming weaker even before the MAX grounding. Bombardier withdrew from commercial aviation. Mitsubishi had a unique chance to replace Bombardier as a rival to Embraer, but this opportunity appears gone.

The COVID pandemic accelerated this trend. The reshaping of the aviation sector picked up speed. But there will be some challenging days ahead for the suppliers. There certainly will be for Airbus, Boeing, and Embraer.

 

120 Comments on “Pontifications: The reshaped commercial aviation sector

  1. This article from a Chinese site confirms the plan/desire to increase A220 production to 6/mo in early 2022 and 14/mo “mid decade”.

    And of interest to other recent discussions here on LNA:

    “All of the A220 aircraft flying around the world have their airframes made here. There are many reasons for Airbus to continue and expand cooperation with China, not only in quantity, but also in quality,” said Michel Tran Van, chief operating officer of Airbus China.

    “China is our key market and the hub of our supply chain, but it is far more than that. It’s an integral part of the global aviation industrial ecosystem, a country with talented people and innovation vitality, and good potentials,” said Tran Van.

    http://www.china.org.cn/business/2021-07/10/content_77618878.htm

    • Wheres the A220 orders from China ?
      has happened so often , get the production and technology transfer to go with it and then orders are minimal or dry up. McDonnel Douglas and Embraer had found this out previously for their planes. Bombardier also found this out and was ‘thinking’ about selling the whole program to Chinese interests ( what a surprise!)as Boeing and Airbus interest was minimal . Trudeau stepped in, likely at urging of Quebec government, and arranged the $1 sale to Airbus

      • Well, seeing as the MAX is still firmly on the ground in China, who knows what A220 orders will start to flow once Chinese carriers actively start to seek alternatives? The C919 fills the shoes of a MAX8/A320, the A321 is a size larger, and the A220 is a size smaller.

      • @DoU

        Well, what do you expect

        This is what happens when a new manufacturing and trading nation or bloc takes over from a decadent and failing at both nation/bloc

        Remember Slater?

    • “All of the A220 aircraft flying around the world have their airframes made here.”

      Sloppy communication.

      Only significant parts of the airframe are made in Mainland China. IIRC wings are made in Ireland. Airplanes are assembled in Montreal and a US plant.

  2. @Bryce

    Great link and confirmation of the very strong lead AB have over BA in China

    Partly due to US foolishness in applying sanctions to crucial China companies and industries – the Chinese have not un naturally begun to retaliate

    BA is especially vulnerable to China mx take up hesitancy, because there is the AB alternative, as well as the home grown mx to foster

    But also because BA, foolish ideology & hubris, have shown themselves less aware of the benefits of collaboration than AB

  3. « Airbus hopes to return to the pre-pandemic production rate of 60/mo for the A320 family in about a year. »

    One may admire their optimism but doubt their realism, unless the China market booms even bigger than others think

    Very likely the pandemic is set to continue to kill and h’pitalise many millions, and further disrupt travel over the next few years, at least, before it settles into a milder endemic form of vx

    It looks very unlikely, meanwhile, that various crucial countries will sort out compatible and effective vx systems and allied vx passports certificates and test protocols that will allow any significant uptake in international airtravel

    And that delta plus plus through omega variants may well defeat the feeble vx and ‘health measures’ within the USEU – this once again impacting domestic

    • I think the impact of Delta could be massive. A very infectious virus in an enclosed space is a potential super spreader event.

      Early on, Bjorn posted an article about research done by, IIRC, Boeing and DOD where they sprayed particles throughout an aircraft cabin and measured up take at simulated passenger heads. The particles were quickly taken up by the HEPA filters in the AC vent system. However, their end point was 10,000 particles as considered infectious. Why 10,000? Not 1000? A million? ANS: No one knows, so they made an assumption.

      Also, that was when we were in CoronaClassic. The UK Kent variety is more infectious than Classic, and Delta much more so. At least double the household attack rate of UK Alpha.

      And, experience from Israel shows that the combo of Delta and waning immunity from vaccines (immunity looks to be down significantly at 6 months) makes the idea of a vaccine passport rather iffy. Will they need an expiration date?

      Sum up: I don’t think this virus is done with us yet.

      • @marku52

        It’s not only incabin it’s everywhere that the deltaplusplus spreads at supersonic speeds

        https://www.reuters.com/world/asia-pacific/sydney-braces-extended-lockdown-amid-covid-19-outbreak-2021-07-12/

        Viz Sydney outbreak – lockdown escape looks near : Aus trying to figure out plan b

        It’s not only the types of vx let loose in the EUUS that may not meet with approval or certification by Asian or other countries, it’s also vice versa

        Notwithstanding very limited use by dates, various vx promise various but unknown transmission infection rates

        Tests are also very unreliable

        The jumbled worldwide IATA Gates WHO certifications have not/are not going to fly

        Mandating vx certs for anything is probably open to umpteen legal challenge, since all vx so far are issued merely under emergency authorisation and are not certified, themselves

        They bit off more than they could chew

        • “various vx promise various but unknown transmission infection rates”

          Pretty scary stuff out of Singapore, where they do real contact tracing. Give this a minute to load, and click on “Vaccination status” 2 doses is green. There are a huge number of green to green dots on that map.

          This is playing out as some predicted. The Vx protects from severe disease, but does not stop the spread.
          https://covid.viz.sg/

          • Cash rich Singapore Air ?
            They had a monster loss of US$3.2 bill for last year and they dont really have a domestic market to fall back on , so the losses will continue his year.
            Their ‘strong position’ is only in relation to say Air Asia X

          • @Marku52 @Bryce

            Please find link which describes/ explains Singapore’s status as the regional hub for SE Asia, especially for China IT investments and expansions, let alone S other international hub industries, finance, seaport, trade

            It may be inferred that this context explains the need for S to ‘open up’, together with the large scale cash injection into the national airline : one may also infer that the S gvmt (with regard to opening) is acting with some tacit China approval, given the large scale and major China IT company investments

            The nature of business travel in Asia is such that special arrangements are on offer – and if S leads the way in opening up further both domestically and international travel and investment wise, then other countries will find the courage to follow

            As often in Asia it is a long term strategic ‘game’ that is being played, ignore the short termism fashionable in US and in some commentors here

            https://asiatimes.com/2021/07/chinese-flock-to-new-tech-boom-town-singapore/

          • Reuters: Cash-rich Singapore Airlines positioned for Regional dominance July 2021

            SIA raised $16 billion thanks to help from state investor and SWF. Haha

          • SIA is just being propped up by the Government sovereign wealth fund who owns it. Only minuscule interest by outside investors in its bonds
            ‘SIA deferred S$4 billion of spending on new planes over three years after reaching agreements with manufacturers Airbus SE AIR. and Boeing Co.’
            looks like most of the money is just to keep them above water, and still has to be paid back of course

            Unlike Boeing with its $25 bill bond issues which was well supported in the market…thats what you call ‘cash rich’ amigo

          • @DoU

            Once again you display ignorance as to how Asian state entities operate, perhaps you do this on purpose

            You say Singapore Airlines has to pay back the money- to whom?

            Both the Sovereign Fund and the Airline are owned by the State of Singapore, so you are in a left hand right hand situation, just as is Boeing with Wall Street, only this Asian version works efficiently

            Both are used to further State Interests, national prosperity and well being

            To compare BA to SIA (double entendre intended) in terms of ownership and debt and efficient use of capital is to observe the gulf between a broken down wreck of a company and system with one which may be compared to the very best

            Ignorance with a sneer

          • @Gerrard: You live in Africa. DoU lives in New Zealand. He understands Asia more than you do. Back off.

            Hamilton

          • @Scott

            With respect it’s not a question of geography but of understanding

            I may be African, but of Asian origin, and frequent both cultures/structures with intelligence, or not

            BA may be American, AB may be European, this does not mean that they both may not be understood or analysed by either

          • Attention “low level” investors:

            JP Morgan: Boeing burned $3.7bn of cash in Q1. This is worse than our forecast and consensus for a ~$3.1bn outflow. BCA earnings were well below our forecast …

            https://leehamnews.com/2021/04/28/boeing-cites-us-china-relations-as-business-watch-item-in-1q-earnings/

            How does Q2 look like with 787 delivery “paused” again in less than a year?? How much of the $25 billion BA raised last year still on hand??

            BTW most of SIA raised are equity and convertible debt, unlike BA which has to start repay by May 1, 2023.

          • @Pedro

            Exactly

            BA cashburn will be accelerating in Q2 through year end, and will eat up the rest of the 25$ next year

            Plus interest payable this year is something like 3B on their debt?

            Plus it was said at the time of the last issue that any more paper and BA would be marked to junk, with negative consequences for any further efforts to raise money

            On the other hand the Singapore Sovereign Wealth Fund has approx 880B$ to manage, split between Temesek and GIC

            The long term commitments of both these entities to long term infrastructure investments and developments is well known

        • The virus is doing what one would expect of any bacterial or viral disease that has its transmission moderated down by hygiene and isolation measures: it is becoming more contagious but less sickening and deadly. The virus strains are evolving to keep its host mobile and fit to spread. To an extent it’s a good sign.

          The Australian Delta strain was traced to a limousine driver who caught it from a US flight crew he took to their quarantine hotel. By his behaviour he spread it around Sydney. The Australian authorities had been fairly good in controlling the spread via quarantine, lock downs and interstate travel bans.

          Clearly the Australian Authorities were too silly to not organise a more specialised vehicle to transport flight crews and passengers to quarantine hotels.

          Out of a population of 25 million nearly 5 million have been vaccinated with vaccines. Mainly elderly with Astra Zeneca and some frontline workers such as police with Pfizer.

          Unfortunately politicians have become afraid of sensational headlines which might blame them for a loss of life by that might be caused by clotting by the AZ vaccine which is mainly confined to young women.

          The rollout of this common and effective vaccine has slowed. It could easily be given to anyone over 50 and likely 40 with little risk.

          The Vaccines do stop a high proportion of people getting the infection and spreading it. This will mean heard immunity will develop much more rapidly in a vaccinated population.

        • NHS data from last week shows that in England that 38 million of the 56 million population have had at least one vaccine dose administered. and 30 million have had two. Much of it AZ. That’s 68% of the population. There have been nearly 6 million confirmed COVID-19 (10% of population) cases but modelling suggests 20% have been infected so of the unvaccinated 32% 20% have immunity from actually having had the disease. IE about 75% of the UK population have some kind of immunity.

          In Australia not even 5 million out of 20 million have been vaccinated so that’s 20%. It’s very poor.

          The mostly readily available vaccine is Astra Zenica’s Vaccine which uses a genetically modified and killed monkey virus as a vector. This has been associated with blood clots in people with certain illnesses and younger women.

          In Australia the politicians have pooped their pants (they have a sensation media to deal with) and the AZ rollout has been slowed. It was going into anyone over 50 but this has now be raised to 60. Older people seem to be safe from the blood clot side effect.

          Clearly vaccinating 80% of a population is possible and works fairly well.

          The issue is getting enough of the population vaccinated.

  4. So ‘the B787 is on the downside of the bell curve’. What does that mean? Is the suggestion that the volume of sales will never recover beyond current numbers? The question must be how does this impact on the unit costs and whether at this volume whether the product is sufficiently unit profitable to recoup all the initial costs.

    Further and linked to the above where does BA generate its free cashflow? All commercial programs seem to be in a near cash neutral or cash hungry position. Not good

    • @Sowerbob

      BA accounting is complicated to unravel, Dhierin Bechai seems to do the best job

      He’s cautiously optimistic that the 787 program will not collapse on it’s face like the Max the 777 the dud DoD plane etc – but at the same time he gives enough figures for his readers to assess the situation for themselves

      https://seekingalpha.com/article/4419420-boeing-787-path-of-risk-remains

      https://seekingalpha.com/article/4421270-boeing-787-improvement-on-the-horizon

      Notwithstanding it does’nt look much like, to an outsider observer, BA is making any much margin on the sales of any of it’s aircarts

    • @Sowerbob: 787 production may improve beyond 5/mo, but we don’t believe it will ever reach the peak of 14/mo (or even 12/mo).

      • When the 777 was selling like hot cakes 7 a month as I recall was its peak.

        Putting things into some historical context, wide body saw a gold rush for a while (bubble) and now its reverted to below norm but norm is still 7-8 a month (my opinion of course)

        Boeing tried to cash in on the 787 at 14 a month, short term gain at best and we see the mess they have now. All driven by the position they put themselves into.

        5 a month is not a bad rate, even smaller wide body I don’t see anything more than 8.

        Airbus has to decide at some point if the A330 is worth it, sustained on the MRT program for now (assume new MRT and not used A330 per Spains plan)

        If Boeing gets its 787 act together then the A330 segment is seriously contested down the road.

        While the A330 is good, the big opening was Boeing failure on the 787 when mid wide body and 777 were selling like hot cakes.

        Airbus other dilemma is the A220. The A320 series is a big profit maker (only profit maker) and the A220 is hindered by the outsource and long term contracts BBD made and Airbus is obligated to.

        Ironic the C series would have fit Boeing better as the 737 should have been retired two generations ago.

        • @TW: “When the 777 was selling like hotcakes 7 a month as I recall was its peak.”

          at the peak, the production rate was 8/mo.

        • “5 a month is not a bad rate”

          According a credit rating agency, Boeing barely breaks even at 5 a month.

      • Equally 5 a month for the A350 is really not that bad though it may be more than needed right now.

        Long term for that size 6 a month is a good rate.

      • Thank you for the clarification Scott, it did seem a tad deterministic.

    • @ sowerbob
      This analysis from investor site Motley Fool is fully commensurate with what Scott states above:

      “In short, the replacement market can only support today’s depressed level of 787 production. And with airlines likely to grow their wide-body fleets at a modest pace over the next decade, that leaves Boeing virtually no chance of sustaining a 14-per-month 787 production rate anytime in the coming decade.”

      https://www.fool.com/investing/2021/06/14/boeing-ceos-dreamliner-recovery-prediction-is-a-pi/

  5. I’ve taken after Boeing a great deal for leadership, the B737 and the B787. I still don’t think they are doing all the right stuff, but they have a lot of orders for the MAX. And before the 737 is no longer produce, I do think they will deliver over 5000 of them in the 4 models. Ultimately, this should help them in the long term. It’s important to remember airplane manufacturing is a Duopoly, and for some airlines the MAX and the Dreamliner are very important.

    • I would add to that Boeing leadership in general with the possible exception of the T-7A (wing rock solved the week reported) and MQ-25 and the move to full Digital Design.

      Clearly the 737 can and will sell. The single aisle market is coming back fastest. China looks to have examined its long term interests and I think Leeham is right on the numbers China needs Airbus or them cannot supply.

      The biggest question is where Boeing goes next and do they have the leadership to do it right?

      The KC-46 is prime example that did not take brilliance but competence and they blew it. Not just one area, multiple aspects. FOD in a plane is a pathetic thing to occur.

        • Good point in that link
          “a staggering 34,863 Boeing 787 Dreamliner flights are scheduled for July. This equates to 9,567,906 seats and is only around 10,000 flights down from the July 2019 figure of 15,066′

          Its the plane those long haul carriers still like to fly even during covid , as even the cargo capacity is important. Plus for those that are on finance leases its bringing revenue in to pay the bills…. an actual cash cost the airline must meet compared to a bookeeping entry.

          • How many B787 were delivered since July 2019?? Production rate at the time was 14 a month!!

            Another case of miss the forest for the trees

          • No, clearly the FAA has stopped deliveries while they look at Boeing screw ups on fits on the 787.

            Frankly I find that comforting that they are doing the job the way they are supposed to.

            Also interesting is Boeing is not squaking about it. I don’t believe its a whole new Boeing Management attitude, but it is realistic. They are not going to get anywhere with current administration other than Dickson fired (which may happen anyway).

            And who knows, maybe Boeing management will come to realize doing it right works out better!

            Regardless the 787 is going to be a long lived aircraft and it will get through the current issues its been saddled with.

            The Sky is not always falling nor is each issue the end of the world.

          • @TW: Nope. FAA didn’t step in until fall 2020. That’s over a year’s worth of delivery! Amnesia is spreading like virus here. 🙂

          • @TW: How about the eight 787 Boeing grounded because of potential structural defects? Some have been in service *for years*!!

          • Not so Pedro
            “The first defect was first discovered in August 2019 and involves the joint for two composite-material sections at the rear of the 787 fuselage, which were welded together at the South Carolina complex. The problem concerns “shims” that are custom-formed by the robotic welding system to fill any gaps where two, barrel-shaped sections are joined — to avoid any structural weaknesses. Some of these gaps were improperly filled.”
            and the second problem – Aug 2020
            “A second error was discovered last month and concerns the inner surface of the fuselage at the joint that was insufficiently smooth to ensure a reliable joint.
            The two flaws in combination could create out-of-tolerance gaps at that fuselage joint, according to Boeing.
            So it was the two issues together which let to the grounding ‘the 8-Air Canada, Singapore Airlines, and United Airlines’

            It wasnt till Aug 2020 the second issue was discovered , so your timeline is wronghttps://www.americanmachinist.com/news/article/21141245/faa-investigating-787-structural-defects-boeing

          • 1) Boeing continued delivery of 787 despite discovery of two manufacturing issues with structural weakness potentials. Why didn’t Boeing pause delivery immediately??

            2) Since then, it’s been widely reported Boeing/FAA expanded their search for structural defects.

            3) Today, it is reported Boeing lowers its 787 delivery target thanks to a manufacturing issue in another area.

            4) FAA and Boeing are working on inspection of 787 already in service.

            5) Skeletons are in the closet. It’s a matter of time when they come out.

          • According to public data available, two of the eight B787 grounded by Boeing in 2020 were delivered in 2017 and 2018 respectively.

          • Pedro , the detail from my link says the last ( intermittent) problem wasnt discovered till late 2020. For a small number with both problems together the issue is a bit more serious , but still cautionary.
            This is how the aerospace production system works and issues , sometimes for longer periods back arise all. the. time.
            China is learning the hard way that copying doesnt give you sucess, ask them how there quality control is working, or is those ‘questions’ not on your talking points

          • Back in Sept 2020, Seattle Times reported:

            – FAA said in a statement that it is investigating 787 manufacturing flaws, adding that **”it is too early to_speculate_about the nature or extent of any proposed Airworthiness Directives that might arise”**

            – according to an unnamed “FAA engineer, who works on commercial airplane safety issues” said “although planes have been grounded in the past when in-service accidents revealed design flaws, **’grounding airplanes for manufacturing flaws is unprecedented and unbelievable’** ”

            New Robs are desperate for positive spins

            Furthermore, according to Airbus, components from China are found on *all production Airbus commercial jetliner types*.

            According to a post above, China continues to supply airframes for A220 in contrary to our poster here who dismissed such idea.

            Aircraft manufacturing is highly international, even the B737, one-third of its suppliers are foreigners, including an est. 1% from China.

            ^^ Any manufacturing issues in China that grounded Airbus’s A320? Not any I am aware of.

          • @DoU The article you linked was from Sept 2020. Subsequently, FAA/Boeing expanded their search for structural defects as reported in December 2020. Clearly, it is more wide-spread than you fasely and repeatedly asserted.

          • From Reuters:

            “In February [2021], Reuters reported Boeing was beginning painstaking repairs and forensic inspections to fix structural integrity flaws embedded deep inside at least 88 parked 787s.

          • Agreed. Its serving and serving very well since it got over its management imposed handi-caps.

            I don’t ever think we will see more than rate 8 which is what I thought it should have been the target and held all along.

            While it was state of the art it was no moonshot. More management speak for covering up (or trying to) their screw ups.

          • But today, Tuesday, Boeing annouces the B787 line halted again for more fuselage problems near the nose. My gosh, I hope McNerny enjoys his boat, he earned every penny of it. This is why I mention leadership from time to time.

  6. Imagine how much much worse things could have been for Boeing,
    Covid-19 is a lottery winning lucky break.
    Up to it’s neck with the MAX, 777 and 787.Massive increase in cargo demand helps out 767 and 747. The increased scrutiny from the FAA also works in its favour, imagine if the Ethiopian crash had happened later, far more MAX delivered and lots of 787 and 777X would have been produced without the appropriate scrutiny.

    • Air France is Boeing for long haul, they have been burnt twice with the A340 and the A380. ( shorthaul is Airbus) Air France was the lead customer for the 777-300ER but didnt want the publicity. The A350 is in service alongside the 787 in equal numbers

        • Way more long haul Boeings than the few A330 for medium long haul. As I said they got burnt on the A340 and unlike Lufthansa who stuck with them, they couldnt wait to get the 777s of which they have used 59. The numbers agree with me rather than guesswork.

          • Duke:

            How dare you bring facts to this discussion!

            Keep in mind on the A340 that Airbus had deals that the losses would be recouped if they did not serve X number of years (reportedly they did not)

            So what Airbus offered to Lufthansa to keep them going in services or parts is a good question.

          • I always liked the A340, we used to see them a lot where I lived. I never could quite understand how the fuel costs were so much greater for a bib big twin. The market spoke and Airbus upped the gross weight of the A330 to fill most of the range. They were to be congratulated also for modernising the A300 with a new wing and FBW. Boeing took the lazy option of doing nothing with 767 and its come back to bite them now with a clean sheet replacement for a 250 seater.

    • Hard to say if it will be split or not. 737 MAX is a damaged brand & Europe has a longer memory than the US. I wonder though whether Airbus might already have this in the bag given their A320 ramp up plans.

      • So far no credible reports on MAX refusal.

        Equally KLM would get MAX sooner (if that is what they want) and better pricing.

        The only split will occur if they have routes that the A321 pax and range offer above and beyond what MAX -10 can realistically deliver.

        Europe tends to Airbus as the US has tended to Boeing, certainly makes sense.

        • European market works differently to the US market.

          Worth noting that more changes are in line for the 737’s flight control systems, meaning more unknowns. Some outlets are expecting these orders to be heavy on the 737-10, certification unknown.

          Wondering on what basis Airbus is studying 75 per month, it’s more than they were planning pre-COVID. It sounds like they have discussions going on which have a good chance of success, so I was wondering if this is part of it or something else is coming.

          • A geopolitical move to annex the China market from Boeing longer term? Production of the C919 will be low enough for long enough to make this work.

        • “So far no credible reports on MAX refusal.”

          Weren’t several hundred (at least) MAX orders were cancelled?

  7. “””Is there truly enough demand among current A320 operators to support a higher production rate?”””

    Most airlines asked for delayed deliveries. That alone needs a higher rate in the future.
    Then there is the possibility that the MAX will crash again. Even fools would avoid the MAX then. Good if Airbus has something better available on the market.

    • Leon:

      Airbus will also have crashes in the future. Its the sad aspect of aviation.

      Usually its bad pilots not a bad system on an aircraft.

      Its a shame you keep looking for crashes to prove your angst against the MAX. So if a pilot does something stupid on an approach its the MAX fault?

      The issue never was the aircraft, it was the management that lead to those two disasters.

      • “The issue never was the aircraft”
        MCAS 1.0 was one of the most poorly conceived and executed systems in aviation/engineering history. It precipitated the longest grounding in aviation history, and its bandaid fix is still not according to international best practice. The FAA is still concerned that there may be a “latent failure” lurking in the MAX’s flight management software.

        The issue is very much the aircraft.

      • TW,

        sure pilots can make mistakes.
        But the 737 has many memory items and pilots need to turn how many pages to get help and then the help is in fineprint and stupid language (AD after JT610). The 737 can have many fake alarms which confuse pilots. The auto throttle system is a booby trap (TK1953).
        After ET302, many pilots tried the MadMAX in a sim, they knew exactly what will happen and still crashed.

        After the next MAX crash you might say the same, that Boeing management led to the crash because most self-certs are still unchecked. It’s a shame Dickson allows this.
        There might be many more problems. Can’t be that pilots choose a setting but the MAX doesn’t respect it. This must be US culture because it’s the same with microsoft windows.

        • > But the 737 has many memory items and pilots need to turn how many pages <

          There were no "memory items" or pages in the manual
          for MCAS. Ask Boing why..

          (I know you know this, but others like to pretend not to).

          #shouldbeFine

      • TW said: “..The issue never was the aircraft, it was the management that lead to those two disasters.”

        That’s not borne out by facts, to say the least. You’re saying single-sensor MCAS was an acceptable system, on any planet?
        Still can’t believe no one went to jail over that, but such
        is late-stage capitalism in the US.. impunity.

        • Further on that topic:

          “It felt as if Boeing had been hijacked by corporate thugs,” Kevin Sanders, a 30-year employee of the company, told Al Jazeera reporter Will Jordan in a documentary that aired in 2014. Sanders was not alone. For the last 20 years, Boeing employees have fought a bitter, losing battle to defend the technological integrity of the planes they build. The many employees who have put their jobs on the line include quality inspectors Gerald Eastman (in 2002) and John Woods (in 2010), and Curtis Ewbank, a specialist in flight-deck systems (in 2020). Yet the company management has repeatedly failed to invest in innovation and employees, instead siphoning cash from manufacturing in order to make the company’s stock price rise. Two decades of executives taking money out of manufacturing has had the predictable and tragic consequence of undermining the quality of Boeing planes, despite the long hours put in by its workforce. Hundreds of passengers died in crashes in 2018 and 2019. Then, on February 22, 2021, the engine of a Boeing 777 flying from Denver to Honolulu disintegrated in midair. While there weren’t any fatalities, the FAA and Japan’s civil aviation bureau grounded over a hundred 777s worldwide.

          and

          The mismanagement of Boeing—and the struggle of its employees to stem the decline—is not simply the story of one company gone terribly wrong. It is the story of incentives for all publicly held corporations in the United States gone horribly wrong. And it is also the story of many in lower levels of the hierarchy inside the firm putting their jobs on the line in a struggle to retain a focus on quality. These corporations with a ticker symbol are getting signals from the particular market economy in which we live to siphon profits away from new equipment and away from the experienced workforce—which means away from innovation. The result across the economy as a whole is a decline in U.S. productivity and innovation. Figure 1 shows the growth rate of U.S. manufacturing productivity between one year and the next—or in this case, the rate of decline, since output per hour of U.S. manufacturing actually dropped into negative territory from 2015 to 2019, meaning U.S. manufacturing workers produced less per hour in 2019 than they did in 2015. Productivity depends largely on the quality of equipment that workers are given to work with, as well as on the level of worker education and experience. The graph shows the five-year moving average, a way to smooth out annual ups and downs and see the general direction in which we are headed—which is down. Sure, our small start-ups are innovative—but large, publicly-held corporations dominate our industrial base, and they have the incentive to stop upgrading production in order to free up funds to prop up share price. In this “new normal,” management undermines the skills and dedication of the workforce while maximizing insiders’ incomes (even when the firm is losing money) and making less innovative—and in this case deadly—products..”

          http://dollarsandsense.org/archives/2021/0721duggan.html

      • Sooner or later, another crash is inevitable, very true. However, the catch with statistics is that even if you had a pilot error crash today, the odds of one tomorrow remain the same. The 4-500?MAXs in service today have just as much risk each individual aircraft of a non MCAS crash as they’ve ever had, and that total risk increases with every one which gets delivered. Boeing need to get lucky and not have any serious events for a year or two. Could be different once a thousand or more are in service, delivery delays might even be a long term advantage!!

  8. Mr. Leon did the A320 not crash in Pakistan since the max crash. The A320neo series and the max will crash in the future so long as they are the most aircraft in service. I will like to remind you the 737NG was slightly safer than the A320 if we go by the records.

    • Daveo,

      sure, both A320neo-family and MAX might crash because they are the most ordered planes. But there is a big difference. The A320neo-family went through a professional certification process, we know the MAX did NOT.

      There is also a big difference in EU and US government fines. For the MAX disaster Boeing was fined $2.5b which was mostly compensations Boeing already paid. VW alone was fined €500m because it avoided competition when nobody died.

    • According to Boeing they where neck in neck despite the A320 being almost a decade older.

      Search for ‘boeing air safety report statsum’ to get the source.

  9. More bad PR for the 787/BA:
    “FAA says new Boeing production problem found in undelivered 787 Dreamliners”

    “WASHINGTON/SEATTLE (Reuters) -The Federal Aviation Administration (FAA) said late on Monday that some undelivered Boeing 787 Dreamliners have a new manufacturing quality issue that the largest U.S. planemaker will fix before the planes will be delivered.

    The FAA said the issue is “near the nose on certain 787 Dreamliners in the company’s inventory of undelivered airplanes. This issue was discovered as part of the ongoing system-wide inspection of Boeing’s 787 shimming processes required by the FAA.”

    The FAA added that “although the issue poses no immediate threat to flight safety, Boeing has committed to fix these airplanes before resuming deliveries.” The air regulators added after a review of data it “will determine whether similar modifications should be made on 787s already in commercial service.”

    Boeing declined to comment. Reuters first reported the new production issue to hit Boeing’s troubled 787 Dreamliner. The company has about 100 undelivered 787s in inventory.”

    https://finance.yahoo.com/news/faa-says-boeing-production-problem-020833687.html

    https://www.aerotime.aero/28358-boeing-787-dreamliners-quality-issues

    • CNBC’s “Halftime Report” just had a report on — and discussion of — this topic.
      There was general exasperation, fatigue and disbelief that yet another manufacturing quality issue has been unearthed at BA.
      Investment manager Jim Lebenthal said that Calhoun has now used up all his strikes: one more negative issue and Calhoun has to go. Lebenthal also “expected” Calhoun to be able to give *exact* 787 delivery projections for 2021 during the upcoming earnings call on July 28.
      Credit Suisse has issued an investor note asking why — when the 787 has been flying for 10 years — issues such as the present one are only been discovered now.

      A stark contrast to the feelgood “all will turn out just fine” sentiment demonstrated by some commenters here.

    • Well-known financial commentator Jim Cramer weighs in on this issue:

      “- Boeing to slash production and delay deliveries of its 787 Dreamliners.
      – Jim Cramer lashes out on the aeroplane manufacturer’s management.
      – Boeing shares opened 2% down and slipped another 1.5% later on”

      “They’re so lucky that it’s just Airbus, they’re blessed by the duopoly. If this was Morgan Stanley versus Goldman Sachs versus JPMorgan, they’d be losing share left and right. What I can’t believe is the endless stream of bad news. I’d like to see Mr Calhoun spent a little more time on the factory floor and a little less elsewhere. The question is, do they have the money right now to be able to do fine or do they need to do an equity offer.”

      https://invezz.com/news/2021/07/13/jim-cramer-on-boeing-im-sick-of-whats-happening/

      • I think Mr. Kramer makes some good points, but his last sentence gives me (extreme) pause. Talking and working his book..

        “equity offer”[s] are what got US industry to their bleak state.
        Maybe Boeing could look at what the competition do and learn (treat workforce and suppliers decently, just for starters).

        Prediction: there will be no NBA/ NMA /family any time soon; or likely ever from mcBoeing.

      • Without self-certification, BA’s skeleton coming out of the closet.

  10. “..One can argue that the commercial aviation industry was already on a path to reshape itself. Airbus was gaining strength. Boeing’s product line was becoming weaker even before the MAX grounding. Bombardier withdrew from commercial aviation. Mitsubishi had a unique chance to replace Bombardier as a rival to Embraer, but this opportunity appears gone.”

    Thanks for this fine state-of-affairs piece, and the above para
    in particular. Still love to know the backstory on Mitsubishi and
    the SpaceJet- there must be one.

    • Just my guess but I think Mitsubishi talked themselves into the Spacejet with encouragement of the government (I don’t believe there was any specific financial support)

      Honda talked themselves into doing their Honda Jet, maybe a envy thing or we are building things for Boeing and we should build airplanes.

      In reality, scope or no scope, regional is a small market, they also clearly did not want to go up against Boeing and Airbus (BBD did and it was not a success)

      Some of it I think was to keep Mitsubishi aeronautical engineers at work – usually they build license aircraft on defense contracts. The wing on the 787 was a huge step up and then no follow up as they were not going to do a fuselage down the road.

      Then group speak kicked in where Mitsubishi and Embraer convinced themselves that scope was going away. No one seems to have bothered to talk go the unions.

      While Mitsubishi could throw money at it they did not work out an organization to implement it and only at the end were they getting those kinks out. Might well be internally people not interested in the Spacejet as not going to be a major entity withing Mitsubishi anyway.

      Still can’t figure out why they are messing with CRJ remnants. Mitsubishi now has a full fledged indigenous fighter program to work on that gets them (or so they think) competitive expertise (they make good stuff but not remotely competitive in the defense world) – all to expensive to export.

  11. Assembly progress is continuing on the A321XLR:
    “Airbus Starts the Assembly of its 1st A321XLR Front Fuselage”

    “Less than two months after the start of structural assembly of the rear & centre fuselages in Germany, Airbus teams are taking another significant production step with the structural assembly and system equipment of the nose and front fuselages at its Saint-Nazaire facility in Western France.”

    https://www.asdnews.com/news/aerospace/2021/07/13/airbus-starts-assembly-its-1st-a321xlr-front-fuselage

    • Thanks for that link, and for the ones above on the latest 787
      fuselage issues.

      It’s looking to me like the A321XLR is going to be the right aircraft at the right time (still on for late 2023, it seems).
      How will BCA counter it?

  12. What is Europe equivalent of Microsoft, Google, Facebook, Apple and Amazon. Leon your hatred of the US and their products knows no bound. Your beloved Airbus product is 40-50 percent U.S. content. The US aerospace industry is 3 times the size of Europe. EASA regulations was 90 percent lifted from the FAA. If you think the EASA is more technically superior to the FAA you do not know anything about aviation.

    • That’s an example of “shoot the messenger because you don’t like the message”.

    • hey Daveo … haha you made me laugh.

      I don’t bash only US companies. But you are spot on, I hate facebook, never bought from amazon … and Boeing is EPIC when I respected them before and flew Boeing many times.
      Sometimes I bash LNA too 🙂

      Why can’t people do a good job. If they would, nobody would complain. Sad that there is so much to complain.

      To stay on topic, I’m really excited about the new Airbus wings.

    • and Daveo,
      I bashed EASA many times.
      At least EASA seems to do a better job on the 777X.

  13. @More Bad News 787

    BA out of control

    From respected analyst Dhierin Bechai – previously cautiously optimistic, as in two links previously posted in this thread, now stating it is likely the 787 will a reach forward loss

    https://seekingalpha.com/article/4439005-boeing-787-fails-again?mail_subject=ba-boeing-787-fails-again&utm_campaign=rta-stock-article&utm_content=link-

    One could look at the new issues in two ways. The first way is that Boeing detected the issue and took action accordingly halting deliveries. That is a positive and shows the system works. The other way to look at it is more negative and I am inclined to lean to the more negative side on this one and that is that Boeing no longer needs to demonstrate that the system works, but it needs to get the quality of assembly and manufacturing within the company and its suppliers to a level that meets the requirements from the start.

    I normally, put Neutral tags on reports for Boeing as I strongly believe that companies such as Boeing have so many products, timelines, outlooks and ways to look at things that giving a certain tag to an individual piece is not always helpful

    However, for this piece, I am giving a Bearish tag, because while I do see positives in terms of demand and higher confidence and delivery rates for the Boeing 737 MAX, the new issue on the Boeing 787 is one out of many and once again demonstrates that Boeing is not in full control of things which negatively impacts the company’s full year delivery target, revenues and cash flow. In the worst-case scenario, an accounting charge could be triggered but Boeing does not provide quantitative data on that to draw certain or final conclusions.

    I am currently not terminating my position, because I have a low cost basis and invest in jet makers for the long term, but the recent developments on the Boeing 787 are disappointing to say the least.

    • “From respected analyst Dhierin Bechai”
      Who has never worked for an aerospace firm
      from his linkedin profile of work experience in Netherlands
      ‘Texture Artist”…. ‘Executive Manager McPhat TV’
      Doesnt indicate he has an actual engineering degree from his time at TU Delft, just a period of 10 years that he attended. ( surely a PhD in that time )
      Its nice that he can write well for low level investor websites, but no way does he have the contacts inside the industry or actual engineering experience to inform his ‘analysis’

      • Bechai has frequent contacts/closely working with BA’s investor services to let out “good news” (during better days??)

        • So he subscribes to aviation newsletters and reads the majors press releases and rewrites a lot of that stuff as his own.
          has he broken any news stories , or is it just what ‘everyone is saying’
          Maybe he should stick to being a texture artist for backgrounds in computer flight apps or community TV station producer

          • Or you could- alternatively- look at what Mr. Bechai *has to say* about the topic in question, and decide on its merit from there (especially over a bit of time)..

            oh dear no

      • Does David Calhoun have *”actual engineering experience” in his work life??

        Calhoun graduated from Virginia Tech with a degree in accounting, “worked at GE for 26 years, overseeing transportation, aircraft engines, reinsurance, lighting and other GE units”.

      • BTW don’t forget Boeing’s former CEO who was fired in 2019 is an engineer, how many posters here think he made Boeing a successful company??

    • If Calhoun takes the trouble to read/watch comments like this on Seeking Alpha, and also those on CNBC, it might start to become clear to him that the world *HAS HAD IT* with the endless stream of sub-standard fumbling at BA.

      • @Bryce

        The problem with Boeing is not the low level quality of their critics detractors or analysts

        But the low level quality of their management planes and PR team

      • Theres an old saying in Sport about coaches : When you start listening to the fans its time to sit with the fans ( quit).
        Calhoun isnt going to be listening to a community TV producer in the Netherlands, whos only rated by people even more ‘qualification challenged’

        • @DoU

          You should pay less attention to the wide range of worldwide critics of BA and more to the very poor quality of BA management actions and repetitive failures, their effect on a once functional company workforce and country

          If BA ignores all criticism, from all quarters, starting from Congress on down, it is due to their own foolish hubris, stupidity and failure of ability to reform

          There is no need, they have no need, of such ignorant defence and blind encouragement that would encourage them in such failure

          Chairman CAL and Boeing management, for many years, have listened to no one and understood nothing : hence disaster after disaster inflicted not only on passengers but on the company, their suppliers and their workforce

          Oh…..except perhaps their bank account

        • “Calhoun isn’t going to be listening…”

          Calhoun had certainly better be listening on the July 28 earnings call, when he’ll get his ass grilled by exasperated analysts.

    • Well its been long said if you want to loose money invest in Airplanes or Boats!

      In the short term its more bad news on the 787.

      The flip is its an execution issue not a flaw (unlike MCAS 1.0, that was horribly flawed)

      Short term it cost Boeing money.

      As noted, Boeing found it, FAA took the action they should. Equally Boeing is not squaking or PR spinning which is a change (more than one interpretation but at least its a change to where it should be, fix the problem don’t PR it)

      Not previou7sly noted was Spirit found they had a shimming issue on the 787 nose gear (for those not aware, Spirit makes the entire nose for the 787, gear, electronics etc) . Good question as to why that occurred. Long term issue as its not immediate that has to be corrected.

      While I am not a huge fan of Simply Flying, their article was revealing in how popular the 787 is (or how well it fits the current travel situation). Over 1000 in service now.

      Its a shame that so much bad management has been inflicted on the 787 (and the rest of Boeing). The basic design is good and I have been amazed at how reliable it is with the more electric approach.

      Is a big part of the issue Charleston? That forward bulkhead would be and the rear fuselage shim issue would be.

      Ironically the 787 line in Everett keeps going fixing 787 issues, guys are making a career of it (said tongue in cheek)

      I would dearly love to see Boeing get its management act together and become the competitor it should be.

      Airbus has its issues but its got a good product line.

  14. Delta is avoiding the MAX (for now, at least), going instead for 29 used 737-900s (and 7 used A350s from LATAM):

    “Delta has entered into agreements to add 29 used Boeing 737-900ERs and lease seven used Airbus A350-900s as it continues to streamline and modernize its fleet. The 36 additional aircraft will improve fuel efficiency and enhance the customer experience, while supporting Delta’s fleet renewal strategy focused on simplification, scale, size and sustainability.

    Delta will lease the A350s through AerCap and purchase 27 of the 737-900ERs from funds managed by Castlelake, L.P., while the remaining two 737-900ERs will be financed from funds also managed by Castlelake, L.P. Both transactions are subject to closing conditions. Deliveries of the aircraft will be completed by the first quarter of 2022, and they will enter service after modifications are completed.”

    https://news.delta.com/delta-add-airbus-boeing-aircraft-fleet-amid-travel-demand-recovery

    • Delta hasnt ordered a new Boeing for a long long time, and it got runout pricing on the 737-900 of which the last new one arrived 2 years ago.
      Old news that that they are getting some more used airplanes to top up their existing fleets.

      • Yea, ho hum. For whatever reasons the -900 worked for Delta and its just ensuring that they have enough to maintain the area.

        Delta is different in that they operated the 717 as well as working in the A220 arena to replace them when both are out of scope.

        The -900 is still an efficient aircraft and they have the infrastructure in place for it. While its sometimes referred to as a A321 competitor its really an -800 up-sized that gives it that much better than an -800 in face of with the A320.

        • The reason why the A350 worked for Delta is easy..it had a number of 777-200s including the LR and they are now all retired. The A350 is an exact replacement for that model, it ties in with IGW A330s it flies as well. Easy Peasy

      • Despite the bargain basement pricing being offered on MAXs — particularly on whitetails — Delta wasn’t tempted.
        That says a lot.

  15. You can sit on a boat, and relax. Not for long maybe, but for
    a little while.. almost nothing like it.

  16. More Good News – More Perfect than Perfect

    Re the 787 recent breakdowns, some may have missed Chairman HAL’s eulogies of BA’s manufacturing skills, which have passed over into the Sublime

    Last month at a conference, the company’s chief executive Dave Calhoun said the 787s were “performing beautifully”.

    However, he said “the FAA rightfully wants to know more about the analytics and process controls that we put in place, which are different than the ones that we had previously, so that we could be more perfect”.

    Mr Calhoun said he hoped the FAA’s review of Boeing’s approach was “measured in months and not longer than the calendar year”.

    CC is certainly a very unique Great Chairman in the Sky

  17. With Jet A fuel in short supply in the western US.

    https://katu.com/news/local/a-scary-thought-fuel-shortage-could-ground-firefighting-aircraft?fbclid=IwAR3xYe043XhxZf6IS_EuVSp1ieoo6uir2E9dCHZUBSvt25ZNJzW1o2bSjj8

    ‘Worst problem is getting it to points of need that are not near pipelines. Today some fire tankers are big, like Hercs and MD-87 plus some big helicopters like the Skycrane and several operated by Coulson and partners. The big iron knocks down big fires so they do not spread embers, and spread fires lines of retardant. (Big fires are fierce, creating their own weather.)

    Article claims shortage of refining capacity in the west. I know the Vancouver BC-Seattle area is short of refining capacity, then this early summer one refinery broke down and some had to shut down in the heat wave. Jet fuel for those cities and Portland OR comes from refineries in northwest WA state.

    The article says the supply change lost ability during the panicdemic.

  18. And I caution against pontificating as I sometimes do.

    Some of the claims in the vaccine diversion in another thread are questionable.

    Many claims out there, worse than about airplanes and companies producing and operating them. Talk is cheap.

    A common problem is a snatch of information blown into something broad, for vaccines ‘research’ is often shallow ,and researchers blather to get more funding. Some of the same in economic analysis of airliners, including plain errors and omissions.

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