HOTR: About those 737 MAXes in inventory….

By the Leeham News staff

July 29, 2021, © Leeham News: Boeing said yesterday that it delivered about 130 737 MAXes since the recertification of the aircraft last November.

It won’t reveal exactly how many came from the inventory of nearly 450 airplanes that were produced but which went straight into storage during the grounding.

Filings with the Securities and Exchange Commission paint a misleading picture.

At December 31, Boeing reported that there were about 425 MAXes in inventory. At March 31, this figure was 400. On June 30, the number was 390. The aggregate reduction is 60, suggesting 70 deliveries were new production airplanes.

Not so, as it turns out.

Adding to the inventory

The “lion’s share” of the deliveries came from the stored inventory, LNA is told. But as with other media, the precise number remains a secret—though why Boeing won’t tell is a mystery.

What’s happened is this: As stored airplane inventory is delivered, new production airplanes are added to the inventory, temporarily, until delivery. This aggregate number is what’s reported in the filings with the Securities and Exchange Commission. SEC filings are a snapshot in time, at the end of each quarter.

Thus, the inventory number constantly is changing.

For example, Boeing produced MAXes destined for China. But, since China’s regulator, CAAC, hasn’t recertified the MAX, the airplanes go into inventory. Other carriers may defer deliveries due to the continuing COVID impacts.

Inventory bumped up from mid-April for a month when deliveries were paused for another issue with the MAX, this one dealing with an electronic issue.

Boeing resumed production at a single-digit rate, and it increased slowly to today’s 16/mo. By early next year, the production rate should be 31/mo. The company still expects to deliver most of the remaining inventory by the end of next year.

787 deferred costs

Given the above, one must wonder whether the following language in the June 30 10Q accurately reflects the 787’s deferred costs. The numbers represent millions of dollars.

At June 30, 2021 and December 31, 2020, commercial aircraft programs inventory included the following amounts related to the 787 program: deferred production costs of $14,927 and $14,976, $1,732 and $1,865 of supplier advances, and $1,812 and $1,863 of unamortized tooling and other non-recurring costs. At June 30, 2021, $12,131 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $4,608 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

The 787 assumptions are getting aggressive though, reports LNA’s Vincent Valerie, our financial expert. “The 787 had 1,423 firm orders out of a 1,500 accounting block. So, Boeing would amortize the $4.6bn on 77 aircraft, or almost $60m per aircraft. Sounds a little optimistic, doesn’t it?”

Condor opts for A330neo over 787

Condor Airlines announced an order and lease deal for 19 Airbus A330neos as it restructures and re-fleets. The long-haul operation today is supported by the Boeing 767-300ER. Condor opted for the A330neo in lieu of leasing in either very cheap A330ceos, some of which are pretty young, or Boeing 787s. There’s a big surplus of each due to COVID-induced parking of both types of aircraft. Lessors are looking to place these aircraft for nearly any price or lease rate.

Some in the media concluded this was a slap in the face to Boeing. However, consider this: The European Union concurrently approved a German government bailout for Condor, a German airline. Germany still owns shares in a certain European airplane manufacturer whose certain production line has some very soft customers in the skyline.

A cynic might conclude that German money going to save German jobs at a German airline might find it useful to have a wink and a nod agreement (or a sharp jab to the ribs) to support a company in which German governments still have a financial interest. Even though the A330 is assembled in France, there are German jobs associated with the airplane.

But maybe HOTR is being too cynical.

106 Comments on “HOTR: About those 737 MAXes in inventory….

  1. Price, financing, guaranteed maintenance cost per cycle up to 7000-10 000 cy, warranties, pilot training, tooling and spares pool cost might influence Condors choice as well. What MTOW version did they buy?

    • Ahh, I noted the same previously.

      No I don’t think HOTR is too cynical but I also do not blame Germany for doing so. Its their money and economy so you might as well get as much as you can out of it.

      With Delta operating the A330NEO at least you have someplace to go get it fixed and maintained!

  2. Not a good idea to produce MAX for China if the grounding continues. As if Boeing wants to increase their whitetails. I’m sure there could be better solutions.

    I thought it were only 16 A330neo.
    It’s always more expensive to do deals with lessors. I would like to see Condor’s comparison between new A339 and used A332.
    They could have ordered A339 for a later delivery and first lease A332 for 5 years.

    • What would be the monthly production rate without producing MAX for China? Impact on program accounting / unit cash cost etc??

      The show must go on … in Potemkin village.

      • Or, you go to the trouble to get certified and have no MAX to deliver to a Chinese market you made a commitment to.

        Right or wrong Boeing has to make an assessment of what the market is going to be and do as well as China.

        If they can deliver to China as contracted, then the future is a lot brighter.

        Note that Airbus cannot deliver anywhere near enough to China and China can’t deliver to itself.

        • As soon as AB ramps up its production (they ramps up to open up more slots i.e. they are going for more orders), how can BA respond? More fire sale?? Haha. How well had MD done? The writing is on the wall .. can’t u see???

        • I think China will boost production of the C919 once certified, similar to what they did with high speed trains. If they are smart they learn from this one and develop a successor C919NG after delivering 150-250 ea. in a few years time as money seems to not be a problem.

          • The original COMAC C919 was to have a CFRP spar. This was abandoned in order to mitigate the risk of time delays in certifying. These is nothing to stop them developing a CFRP spar or wing.

        • @TW

          BA didn’t halt production of the MAX (until it’s too late, saddling itself with billions of debt) hoping RTS soooon. How well did that end??

        • AIRBUS HAS A PLANT IN CHINA SO IN ACTUALTY THEY CAN DELIVER TO THEMSELVES

    • I’m not convinced, dealing directly with airbus as a small customer and having to finance the aquisition cost is neccesarily cheaper than dealing with a large lessor that got a muge huger discount by airbus than they would offer you . Picking up a firesale deal for whitetails maybe beeing the exception.
      Looking at the probable remaining life of the current 787 and A330-Neo iteration, deferring the switch would only move you farther down the timeline. Might be better timing in the long run to switch now and having used the best part of the shelf life of your new jets when the next generation is on the horizon.

  3. Condor has a new majority owner.

    Wikipedia:
    On 20 May 2021, Attestor Captial acquired 51% of the airline. It announced that it would provide 200 million euros of equity capital and will provide a further 250 million euros to modernise Condor’s long-haul fleet.

    • What’s in going to be like to be de facto ruled by ‘PE’?
      Not a lot of fun for most of us, I’m guessing.

      😉

  4. Why shouldn’t Condor go for Airbus? Alaska and Southwest went for Boeing.
    With its low production rate, large inventory and increased program costs (inspections, open heart surgery, compensation payments) Boeing can no longer offer sharp discounts on 787s without further worsening the balance sheet; Airbus, on the other hand, can offer attractive pricing and still make a profit.

    And there’s certainly the possibility of an increased “buy European” sentiment — just like the “buy American” sentiment at Alaska and Southwest. The Chinese will probably also increasingly have a “buy Chinese” sentiment — choosing the C919 where possible, and otherwise Airbus (because of the FALs in Tianjin).

    • Phew, on a roll today with Whataboutism.

      Sure goes good with the rain and tea.

      • Do you get a free cookie for every vacuous comment that you post?

        Maybe you should consider chamomile tea…it tends to have a calming effect ☕

      • > on a roll today with Whataboutism. <

        Should only one point of view be presented; and could there possibly be merit in other POVs that some
        parties (esp powerful, interested ones..) would prefer not be heard?

        • Bill7:

          If we are discussing technical terms (vs do you like Caribou meat vs Moose) then there should be a basis of facts.

          I can make a statement such as A Meteor Is going to hit earth and wipe us all out.

          In that case I might as well eat drink and be merry in the time I have left.

          But that of course is not known to be about to occur.

          There is a huge amount of uncertainty going forward such as China letting the MAX back in the air (or not).

          Leeham has presented excellent facts that China needs the MAX to fulfill its travel needs. That does not mean they would let it back in the air for that reason.

          But if Boeing has satisfied whatever hesitancy China has on the MAX, they can carve it out from the rest of the issues and buy them.

          That leads to a logical path forward for MAX in China and if so Boeing moving to 33 a month next year.

          I too wonder about the 777X market, but I have no crystal glass ball that tells me its not going to sell longer term.

          Ergo, I frame it in terms of, stay tuned.

          • > But if Boeing has satisfied whatever hesitancy China has on the MAX, they can carve it out from the rest of the issues and buy them.
            That leads to a logical path forward for MAX in China and if so Boeing moving to 33 a month next year.
            That leads to a logical path forward for MAX in China and if so Boeing moving to 33 a month next year. <

            Yes, I'll be watching that particular situation with interest. My take is that
            China will want something in exchange for a possible 737MAX
            recertification.

            Re-reading 'The Prince' right now..

          • “China needs the MAX to fulfill its travel needs.”

            How many months has passed without 737 MAX flying in Singapore, India, China etc.?

            I heard there’s only one co. flying 737 MAX in Asia.

            Singaporeans, Indians and Chinese are soooo eager for MAX RTS to meet their travel needs!!

          • “””But if Boeing has satisfied whatever hesitancy China has on the MAX, they can carve it out from the rest of the issues and buy them.”””

            Wouldn’t China first renegoiate the price?
            Boeing will have to pay that MAX fly in China and will give the MAX away for nothing when the 737 should be the model where Boeing earns its money.

          • Is surprising that Boeing is producing at such a high rate despite having so many MAX stored.

            But as I’ve noted, many of the stored airplanes are actually paid for in substantial part.

        • Good question, Bill7.

          Persons of a certain base ideology try to censor by pressure.

          They are not interested in integration (considering all factors).

    • There are no doubt the interlocking boards of directors in German business, banking, finance, government could make this happen if they wanted to but I question that they would do this. They tend to coordinate to avoid hostile foreign takeovers. The other is is its EU tax money and its purpose is to save EU jobs and France has an interest as well (isn’t final assembly in Toulouse?)

      However I think the A330-900 may have however been best for the job.

      The German and Nth European leisure market is interesting in that they are not just 20 year olds heading for raves in Ibitha or Split Croatia. They have business class and premium economy up front and cater to fairly well to do folks. A wealthy Homeopathic dentist and his wife is one customer I know.

      The target is holidays in Southern Europe to escape the winter, Morocco, Egypt and the Caribbean and perhaps parts of Sth America. I’ve seen them turn up at Halifax Airport Nova Scotia probably on the way to Vegas or the Rocky mountains.

      Condors current widebody the B767 surely must have been the most comfortable widebody ever built with its 2/3/2 seating and would be nice to holiday on. The B787 with 3/3/3 is unappealing to me and surely others of big middle age European stature. Whereas the A330-900 with 2/4/2 is still comfortable due to aisle access. The A330 is a pleasant aircraft to sit in and the flights aren’t too long for the B787 better pressure altitude to be really attractive.

      Because of of the A330-900’s higher aspect ratio wing it is competitive with the up to 3500-4000 nautical miles with the B787 at which point due to fuel burn the lighter CFRP and slippery aerodynamics give the B787 an big advantage.

      However 4000 nautical miles hits most destinations. It’s not Singapore London or Sydney to LA or Santiago where only the B787 will do. The Dominican Republic, Cuba, Miami are all perfect at 4000 nautical miles.
      Canary Islands, Morocco much less distance.

      I’m also thinking Condor maybe doesn’t want to learn about CFRP fuselage maintenance.

      • I agree that 2-X-2 is bliss compared to 3-X-3.
        Where German clients are concerned, don’t discount environmental considerations…there’s a very big green movement in Germany.

        • Everyone spins Green, business decision are made on economics.

          • > Everyone spins Green, business decision are made on economics. <

            Agreed. "Green" is another angle of that, though- most often a duplicitious one.

            "Beware of strangers bearing gifts."

          • Passengers avoiding your flights because they don’t consider your planes to be green enough, is very much an “economics” issue; after all, we all know that low load factors are bad for earnings.

          • …so blind ..

            Dunning and Kruger based their work on observing Americans?

          • @ Uwe
            I think it’s brilliant of Condor to tout their new “two-liter aircraft”.
            All airlines should publish the fuel consumption per seat per 100km for each of their aircraft types / routes: it allows people to see how fuel-efficient flying is compared to the typical family sedan with an IC engine. Sure, buses/trains are more fuel-efficient again, but most people still use cars to get around.

          • “TransWorld
            July 29, 2021
            Everyone spins Green, business decision are made on economics.”

            But not politicians.

            Look at Germany’s:
            – utter botch of known risk of flooding in a particular area with a long history of floods (they’ll blame it on ‘climate change’ which is a euphemism for runaway warming that is not and cannot happen).
            – shutting down the best electricity generating technology for base load (nuclear)
            – replacing that with fossil fuel generation such as natural gas (wind being unreliable)

            Voters are fools.

            (Keep in mind that Airbus and Condor need to kowtow to politicians to get greenie points.)

        • I remember when the activist band U2 turned up in Australia on tour in a private B757-200 configured to carry all of their stage gear, tour members, roadies and themselves. All entirely sensible of course given the resources and equipment it takes. Somehow the hypocrisy of them preaching green ended up a narrative spin in the press. Being able to say they were in a state of art aircraft that had minimal emissions, that used SAF fuel and paid for a few offsets probably could have changed their experience.

          • Well, William, it would for suckers such as media types.

            Eco-activists would not give them any points, they want them to stay home, live poor, die young, ….

      • “I’ve seen them turn up at Halifax Airport Nova Scotia probably on the way to Vegas or the Rocky mountains.”

        Very doubtful!

        • Pedro said:
          “I’ve seen them turn up at Halifax Airport Nova Scotia probably on the way to Vegas or the Rocky mountains.”

          Very doubtful!”

          Huh?

          Condor is a charter airline, may go around the world for tour groups.

          The Alberta Motor Association chartered a Pacific Western Airlines B707 for a month-long itinerary around the word.

          Why would you think a charter from Europe airline would not come to North America?

          Las Vegas is an obvious destination. Many Europeans like to see scenery, hike, and canoe in North America = Rocky Mountains.

          In the other direction, Pacific Western took groups to Scandinavia from western Canada, and to the Mediterranean. (Typically PW flew them there and picked them up two weeks later.)

          Wardair Canada went all over the place to, such as Edmonton to Spain.

          • Another round-the-world charter flight reported in https://jonproctor.net/wp-content/uploads/2020/04/JonProctor-Obituary.pdf., by TWA years ago.

            BTW, someone’s post mentioned ‘fifth freedom’ flying rights, but that needs explanation of what that is.

            It does not cover flying betwene two countries, which simple charters are. (Note there are freedoms 1 through 4, and possibly ones above 5.

            I read that it allows picking traffic up in a second country to deliver to a third, as part of an itinerary orginating or ending in the first country.

            My memory is that Pacific Western Airlines had fifth freedom rights in the US from way back, somehow that facilitated basing 737s in MSP on weekends to fly pax from there to sun destinations. (I don’t know where, 737-200s could do YYZ-Yucatan Peninsula or Dominican Republic, or YVR-Puerto Vallarta. Closer were Las Vegas and Reno but that would be flying within the US. One Sunday PW had 12 flights into Nevada.)

      • EU top court ruled on narrow technical ground. What a waste of time and effort, Mike/Ryanair have nothing better to do/waste??

        • I suspect that Ryanair is positioning itself for potential future assistance if one of its European subsidiaries suffers economically.

          It’s also letting other airlines know they better do their paperwork carefully. Mike’s a little more affable than Lufthansa’s moralising Carsten Sphor who is accusing Ryan Air of being ‘environmentally irresponsible’ for offering a few promotional 10 Euro airfares on some of their flights.

          Ryanair operates at 86% capacity factors instead of Lufthansa 74% so Sphor would rather burn fuel flying empty seats around than give a working class person a cheap seat and a chance of a holiday, seeing family or working at good job far away.

          • Apparently it’s far from the truth. 🙄

            Ryanair June load factor: 72% only.

      • I think Morocco is usually served using A320s.
        Condor’s current business class is still a recliner seat, no flatbed. So not much space today. But then again Lufthansa’s Eurowings is the main competitor on long haul, which is offereing a modern flat bed business class product on the A330 CEO.
        Green movement in germany? Yeah the kids are eager, but they dont buy expensive package holidays. For the older blokes there’s a marketing saying that has been almost burned into their minds: “Geiz ist geil”.

      • “””Because of the A330-900’s higher aspect ratio wing it is competitive with the up to 3500-4000 nautical miles with the B787 at which point due to fuel burn the lighter CFRP and slippery aerodynamics give the B787 an big advantage.”””

        The A339 is competitive even beyond 4000nm.
        The A339 has its highest MZFW with the 247t MTOW variant, so the 247t A339 should be compared with the 254t 789. The 789 can’t beat it because of this disadvantage, or do you think the 789 has 7t less OEW.
        Also the A330 trims with weight, the 787 trims with elevators and additional drag.
        The EASA carbon emmission certs should show this.

  5. Regarding the Condor order, it appears that environmental considerations may have played a significant role in this order. Condor is touting the A330-900 as “the 2-liter aircraft”, a label which is elucidated in the following comment:
    “Ralf Teckentrup, Condor CEO, added: “We are proud to be the German launch customer for the A330neo. Thanks to the latest technology and maximum efficiency of the aircraft, we will be taking off with our new plane from Autumn 2022 with fuel consumption of just 2.1 litres per passenger per 100 kilometres. With this value, we are the front-runner in Germany and, as the most popular leisure airline, we will consistently continue to interweave the themes of sustainability and holidays.””

    https://www.key.aero/article/condor-selects-a330neo-fleet-modernisation

    In the second link below:
    “The A330neo has special aerodynamics through improved wing design and is equipped with state-of-the-art engines from the manufacturer Rolls Royce. The Trent 7000 engines incorporate the latest technology, deliver exceptional efficiency and are capable of operating on Sustainable Aviation Fuels (SAF). Thus, the A330neo sets new standards with 20 per cent lower CO2 emissions and significant fuel savings. Noise- and CO2-efficient approach and departure procedures are thus possible even at particularly high-altitude airports – but noise pollution is also reduced by up to 60 per cent at German airports.”

    https://aeronewsglobal.com/video-condor-orders-16-airbus-a330neo/

    • What’s missed by LNA: “[t]he *bulk of the bailout is not new and already won authorization from the EU’s antitrust regulators last year*; however, the General Court of the EU annulled the decision in June following a complaint by Ryanair.”

      Furthermore, “Attestor has committed to inject €200 million of equity and to *provide a further €250 million for the renewal of the Condor fleet*. The commission noted that replacing Condor’s aging fleet with new, efficient aircraft will lead to reductions in fossil fuel consumption and CO2 emissions and thus will contribute to reaching the targets of the European Green Deal.”

      • Yeah, yeah, yeah, they all say that. Nice PR spin for the Green group but its all BS.

        They do what they do for economical reasons or to return the payoff.

        I don’t have a problem with the payoff, I do with the spin

      • Ryan Airs appeal dropped the aid from 560 million Euro to 530 million Euro, a minor victory. Basically Ryan air sees it as competition in that often now folks rather than taking package tours with Condor or Thomas Cook have been taking LCC like Ryan Air and booking their own accommodation on line often AirBNB type. While they do have a point Having said that unless Ryan Air have 5th freedom flights to the Caribbean they are still in significantly different markets. Certainly it does raise an issue.

        • Ryanair itself received $825 million loan from Bank of England. Typical fat cat!

    • Air Asia will take the whole order anytime now. Just ask them.

      • Just like Emirates will take the whole 777X order…right? 😏
        Except that Emirates won’t be getting their planes “anytime now”, will they?

        • Now that is factual. The world may change by the time the 777X is certified and Emirates won’t take any.

          A330NEO has been certified for how many years?

          Right now we know its not selling and its biggest cheerleader was shaky (per Leeham, not me) before the Covd collapse.

          Airbus feels there is a large A330CEO replacement market down the road and they could be right.

          None of which we know or can predict until it happens.

          We do know the 787 continued to fly far more than other aircraft (wide body long range) during the worst of the Covd drops.

          Its sold very well and it looks to sell well into the future. Not at rate 14 which was nuts but 5-7. In 10 years you have another 1000.

          • @TWA

            I think the A330Neo is serving a very important purpose; keeping BA honest on pricing. By offering a competing product, airlines can at least play one off against the other. No, the A330Neo probably isn’t as efficient as a Dreamliner, but it’s close enough for airlines to say “Well, we can get this for X amount less on capex – so you better sharpen your pencil”

            You have made reference a few times to an additional 500 orders, beyond the current 1400 and change, that BA has for the 787. The accounting block currently stands at 1500 – down from 1600, when they reduced it a few months ago.

            The 787 is a mature product now. Another 500 orders is a pretty big ask. Who do you think would order them, unless Boeing would make a 787Max?

          • @Frank The 787 will only be reengined if airbus forces their hand. There are no signs of that happening anytime soon. Airbus would probably wait at least for the next gen of engines.

          • I can’t wait for EASA to certify 787 carbon emissions.
            787 will have to pay more carbon tax in the future. What???

          • @Frank

            Once again – ta ever so much for your explanations

            Whenever I read another befuddled and confused account of BA program messings, I look to your comments to clear the head

          • Neo the 787-10 and A350-1000. I think it will happen with the RR Ultrafan eventually. Can RR keep cost and engine part count reasonable it really improves those 2 aircrafts and forces GE to PIP the GEnX with GE9X technology or try to get the GE9X onto the A350-1100. A few frames stretch + wing improvement just to get around the RR monopoly (1 extra LD3 fwd and aft the wingbox is enough of a stretch). Some customers stuck in RR Care would like to see the competition for new orders (Tim Clark?).

          • @ Frank
            I subscribe entirely to your reasoning.
            However, an overlooked point is that, if the 777X program dies (either before or after certification), then for the foreseeable future any carrier/lessor seeking to replace an old A330 and/or B777 will have to choose from the A350, B787 and/or A330neo. So it’s certainly possible that that will lead to more 787 orders. However, the figure of 500 seems to be just randomly plucked.

            Where the A330neo is concerned: it’s certified and flying, and is bagging new orders — and all that for relatively low development costs ($2B?). So it’s not a burden for AB to hold on to it. And because the line is already (long) amortized, AB can offer sharp pricing: you get a lot of plane for your buck!

            The 777X on the other hand has already cost $7.5B, won’t be certified until 2023/2024 (if at all), has a weak and shrinking order book, and is of a size and weight that are no longer “fashionable”. It’s not looking like a success story. Sure, people like to point out that the legacy 777 also initially had a thin order book which subsequently increased…but they forget that, for the 747-8, the initially thin order book never increased.

          • @Bryce

            In reference to the 777X cancellation – I just don’t see that happening and for the following reasons;

            1) Ego: BA is not noted for being humble.

            2) Finances: How do you turn around to WS and say. “Well, we just blew $6.5 billion (plus whatever they have expended since the Dec 2020 charge on the program) on the 777X. But trust us, we know what we are doing…

            3) Market: Canning the 777X leaves Boeing with just 2 products (one retread and one newer) against the 4 Airbus offerings. How many more niche’s do they get out of?

            4) New products: So the current mgmt wasted $6.5 billion+ on the program and now need to go to market for ~$20 billion to roll out a new jet. How do you explain that to shareholders? How do you accomplish that without falling into junk status? How does anyone feel comfortable with the current C-suite, if that happens.

            5) Perception: The bosses want to keep their jobs and stay on the gravy train. Cleaning up a mess you were part of is a very humbling experience. Not to mention their compensation, which is linked to share price (options) and will take a hit. I’m guessing their thinking is better to go through with the program, let the sales peter out, deliver the few you can and then turn around and say, “Well look, Airbus had a great aircraft in the A380, but then the market changed and it didn’t sell so well. The 777X is also a wonderful aircraft but then covid happened, the market changed and we too, got caught out. It’s not our fault…”

            Just look at how they dealt with the 737 Max. You think anyone wants to step up and say, “We made a mistake with this plane. Sorry.”

            THE ONLY WAY

            As I see it, the only way that the 777X gets 86’ed is if there is a huge cleaning at the top and a whole new crop of people take over. They can blame the previous guys, take the hit and say, “It’s gonna cost to fix THEIR fcuk up, but we’re on the right path…”

          • @ Frank
            That’s a very thorough and astute sum-up of the situation 👍

          • Boeing is trying hard and we know they lost much Know How. If they can’t certify the 777-9 soon, customers will cancel the orders because they can, at least customers will renegociate the price, so Boeing will have to give the 777-9 away and will earn nothing.
            We know there are software problems and there might be folding wing problems and for sure there are self-cert problems. Boeing will have to re-work nearly everything again. How long will that take?
            Customers can never be sure that everything 777X is ok, but they can trust Airbus much more.

          • @ Leon
            The more I think about it, the more I think that Tim Clark may have had a hand in the A350F intro. I can envisage a scenario whereby he may well have said to Airbus: “Add a freighter to the A350 line-up and I’ll jump ship”. Does he really want the many uncertainties of the 777X hanging over his head? Look at the prolonged headache that was suffered by 787 operators with Trent engines: every new program brings with it the possibility of nasty teething problems — particularly a program that is already beset with technical issues (let’s not forget the fuselage rupture, as well as the current pitch/software issues).

            Incidentally, operators such as Cathay and Lufthansa may well have said the same thing to Airbus: Cathay (China trade war) may now be under pressure to avoid BA, whereas Lufthansa (state aid) may be under pressure to favor AB.

            Interesting weeks/months ahead.

          • “””Tim Clark may have had a hand in the A350F intro. I can envisage a scenario whereby he may well have said to Airbus: “Add a freighter to the A350 line-up and I’ll jump ship”.”””

            Bryce,

            that’s a good point.
            Emirates could become an all-Airbus customer one day.

  6. According to aero.de they are buying some aircraft using finanzing, and leasing the rest. I’m sure Airbus has sweetened the deal to get rid of the whitetails.
    As Leeham noted previously residential values for used A330 have plummetted as low as 20 Mio $. The leasing prices for new A330Neo cant leave such kind of pricing massacre unscathed.
    The interesting thing about that fleeting decision is they are both increasing capacity per aircraft and number of long haul jets. Quite optimistic given that Lufthansa is trying to get rid of their feeder deal. Unsuccessful so far thanks to antitrust interferenance, but who knows how long that’ll last.

    • “””values for used A330 have plummetted as low as 20 Mio $”””

      Remarkable is that used A330 have higher values than same old 777 which are much bigger than A330 and therefore should have more value.
      Summary: 777 are losing worth much faster than A330.

      Soon it will be the same for the 787, losing worth fast
      and of course it must be the same for the MAX, can’t be that a used MAX is more expensive than a new one.
      Quality is not a Boeing strength.

    • Early A330 are now 25+ years old.
      you have to match the age bracket to the price bracket.

    • Zero relevance to the MAX discussion.

      More the sky is falling.

      • And you think your tea drinking rituals are relevant to the discussion…?

        • @Bryce

          Ignore the white noise, there’s no arguing with the True Believer

          Like those others before, and those yet to come

          Let’s have some China tea and read those tealeaves…

          • Actually, where tea is concerned, I prefer Assam 😉

            On the subject of Chinese aviation, Pedro/Leon (at least one of them) raised the interesting possibility yesterday that China can just use cheap and plentiful second-hand A330s for domestic use if it falls short of new narrowbodies (e.g. due to a continued hiatus on Boeing). China certainly has the passenger volume, and a larger plane would solve slot scarcity at larger airports. Many routes in Asia already use widebodies on relatively short flights, so this wouldn’t be anything drastically new.
            An intriguing possibility.

          • @Bryce

            Who does not

            But Leon/Pedro are not wrong : they, China, also have the train : they say Beijing Shanghai, for example, is already faster than the plane, plus a lot cheaper, factor in the city centre train advantage and cost, plus they have a very large number per day, so you do not have wait long in the in between dead zone, plus they have sleepers, plus they are more punctual, plus the food is better, plus they are more comfortable, plus….er that’ll do for today… oh yes plus they crash less, spêcifically much less than the max, that’s got to be an advantage right

            Like the French are saying you have to take the train if the distance, sorry you can not fly the plane if the distance is under ( ?) I forget 200k ?

            Pity US can not build trains no more

          • @ Gerrard
            Yes, rail picks up a lot of the air traffic between the big urban centers (just as in Japan). For longer journeys, air starts to get an edge — though, as you point out, one has to take all the airport time overhead into account when making comparisons. For leisure, flying only really starts to become attractive for land journeys longer than 5-6 hours, or when crossing barriers such as water or mountains.

            One way or another, it’s hard to subscribe to Cal’s argument that China will need the MAX in order to deal with the increased passenger volumes associated with the 2022 winter Olympics in Beijing. Apart from the intrinsic absurdity of such an argument, I personally don’t think that those Olympics will be going ahead as planned: the CoViD situation probably won’t allow it, particularly in view of China’s “zero virus” policy.

    • Have I stepped into the Looking Glass where backward is forward, old is new?? And the new is ahh … obsolete (LCS).

    • Bryce, what does ‘obsolete’ mean?

      In the article it means ‘not as stealthy as the F-35’.

      You have to consider use – the article focusses on penetrating air defenses.

      That is not the case of all missions, intercepting aircraft penetrating own airspace comes to mind as another use case. (Likely the role of the F-22 in Alaska. I think that needs a hot airplane to meet the intruder further out.)

      I read that the US military is trying to save F-35s for uses they are best for, because of their cost.

      A retired Canadian general pointed to inter-airplane datalink of threat information, giving the example of the Beaufort Sea. With ability of a Canadian fighter to exchange data with US F-22s, each force would have to launch only one as the Allied fighter would back it up. At that time several years ago only the F-35 had that capability, he was urging purchase of it.

    • Lot of interesting information in that.

      Boeing was the one that found the shim issues and reported it. That is new.

      How it plays out is interesting.

      Spirit says the bulkhead fit problem was not where it interfaced with the hull but attached parts. How critical those are and do they need fixed is the $64 question we will see answered fairly soon I believe.

      • “””Boeing was the one that found the shim issues and reported it”””

        After Muilenburg left, engineers complained about the issues because Boeing wanted to sweep it under the rug. They complained so much that Boeing had no other choice.

        Remarkable is that Boeing then replaced shims which were bigger than allowed, but now Boeing is argueing that bigger shims are a means to compensate skin flatness. So Boeing doesn’t want to fix the skin flatness into specs. For this Boeing would need another new cert 🙂 Soon Boeing is busy with this for 18 months 🙂 and airlines are happy too because they can cancel 787 orders.

      • Who found the MCAS problem?? Not FAA, not EASA.

        It laughable that Boeing would take credit for its own wrong doing.

    • @Bryce

      Good link but curious that Chair Cal is smiley that after so many years in production BA finally figured out one of the problems with the 787

      You’d a thunk that he’d a been a mite downcast it took him so long to figure out where the catch was and look under the bonnet

      He also said he was leaving to the FAA the decision whether to ground the in service carts – rather than taking the walk on the safe side himself – again all happyfeely that he knew there was a choice, thanks but no thanks


      Calhoun also stressed that while Boeing is working with the FAA on verification methodologies for 787 fuselages, the identification of the manufacturing flaw and decision to stop deliveries was internally driven by safety protocols and some of the identified components not meeting the company’s design tolerances.”

      • Exactly.
        BA is patting itself on the back because it “discovered” that the door to the stable was open long after the horse had left.
        And now it’s just sitting around passively while a repair man takes forever to analyze the door and the proposed repair method.
        Meanwhile, the prospect of retrieving the horse is becoming more expensive and difficult as every day passes.
        But Cal seems to be very content with this state of affairs.

        • @Bryce

          Chair Cal -No mention of supply chain problems?

          Chip shortages have been acknowledged by such well organised titans such as Apple Samsung Otis Tesla, even DoD tho’ they’ll not put out a Perfect Press Release

          BA in their last minute falling over itself to check out the 787, have they looked into the storehouse to check the chips?

          I guess since they’re not building any aircarts anyway….

          Cal’s plans are to plunder the company, asset strip whatever remains, dumpster sale the rump

          • > Cal’s plans are to plunder the company, asset strip whatever remains, dumpster sale the rump <

            Ahh, the Sears treatment.. not sure you're wrong.

        • Legally, in general, self-disclosure helps.

          That is specifically the case with the legal process called ‘deferred prosecution’ in the US, as a key consideration by prosecutors in deciding whether or not to offer that process.

          Typically:
          – a fine, or repayment of ill gotten gains.
          – a probation period
          – when all conditions are satisfied prosecutors do not pursue the case

          (Called something else in Canada, UK probably has similar law, as do some states of the US – specifics probably vary, for example the Canadian process is not available to people who broke its law against bribing foreign officials as SNC-Lavalin did.)

          The FAA does fine manufacturers and operators for violating rules, SWA had a big whack for something in maintenance that went on for a long time with the retroactive fine calculated on number of violating flights.

  7. “A cynic might conclude that German money going to save German jobs at a German airline might find it useful to have a wink and a nod agreement (or a sharp jab to the ribs) to support a company in which German governments still have a financial interest”

    I would put it a little differently. A person with common sense would conclude that. And if the airline had tried to do otherwise, arm twisting would be involved.

    • Many a good airline has been ruined by political interference in fleet decisions.

    • @ Gerrard

      Very interesting link.
      The de-coupling is now starting to manifest itself in earnest.
      After the NASDAQ’s recent tightening of IPO rules for Chinese companies, it was inevitable that the action would extend into banking.
      China has also been working for some time on a digital yuan, to replace the dollar in international (trade) transactions.

      Singapore will benefit nicely from this new Chinese move.

  8. “A cynic might conclude that German money going to save German jobs at a German airline might find it useful to have a wink and a nod agreement ………..
    there are German jobs associated with the airplane.
    But maybe HOTR is being too cynical.”

    There’s nothing worse than the smell of socialism first thing in the morning.

    • You probably no longer notice the all permeating stink of those unleashed capitalistic failures.

  9. July 1

    “Our @cirium fleets data … shows that Boeing still have 317 ‘pre-built’ Max in inventory including 23 whitetails. 131 dels since restart include 110 ‘pre-built’. Long way to go still to clear the problem, including 101 for China”

    https://mobile.twitter.com/HertsRoyal/status/1410492342746890240

    July 14

    “@cir132 data shows @BoeingAirplanes has delivered 132 #737Max since ungrounding 7 months ago, the majority (61%) to North America where Southwest has highest tally (34). Europe took 20% of deliveries, but just 2 have gone to operators in APAC, where type remains largely grounded”

    https://mobile.twitter.com/MaxK_J/status/1415343183962181632

    SCAT are the only airline in Asia to have returned Max to service

  10. Not at all surprising that the owner/bailoutor of an airline would push it to buy from the manufacturer it has a big stake in.

    Easy to do if the competing products are close in utility for the airline.

    And you hint at discounts, in my speculation.

    I recall that Air Canada was pressured to buy Airbus, perhaps I speculate as a sop to the many voters in Quebec where it is headquartered and much pseudo-French is spoken.

    And of course Bouncing Biden is trying to outdo The Donald on protectionism. Recall the reason the A220 is being made in the US not just in Canada. (Of course blame Boeing’s scumminess for that, it deserved the unexpected result.)

  11. There will be at any time a few airplanes that have rolled out of the factory/paint shop but are not yet delivered to the customer, they need production flight testing and snag rectification and perhaps a bit of unexpected last-minute work for Boeing or the customer. Shouldn’t sit for long, but at high production rates there could be a noticeable number. I wouldn’t count those in ‘inventory’, they are still in the production process.

    What you are suggesting, in my words, is that there are airplanes built for mainland Chinese customers that have substantial progress payments and/or can’t easily be switched to another customer’s configuration, or Boeing is betting the mainland Chinese hangup will not last long. Can that quantity be estimated from sales announcements?

    (And some others that customers cannot take yet, number not known.)

    In all cases there would have been progress payments I believe, thus one should be very careful calculating Boeing’s finances. ‘Inventory’ is a confusing term in this case IMO.

    A half century ago Boeing had a big effort to handle customization with its Omnibus method – on paper a basic airplane plus a separate package of custom features, took both to fly. Reason was production planning IIRC.

    There were features in the 767 cabin to make reconfiguration easier, and in the 787 features that were standard despite not all customers wanting them, like HUD. Purpose was to ease shifting to another customer in the lease/used market.

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