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HOTR: When will Boeing return 737 rates to pre-grounding level?

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By the Leeham News Team

March 5, 2022, © Leeham News: When will Boeing return the 737 production levels to the pre-grounding rate of 52/mo?

It’s a question that is of key interest to the industry, employees, and the always-looming investment community. Boeing hasn’t given any guidance beyond the 31/mo target sometime this year. The rate is currently in the low-to-mid 20s.

But if one carefully watches the Boeing supply chain, some of these publicly held companies give information to their own investors in public forums from which one can look at Boeing.

For example, Allegheny Technologies Inc., more commonly known as ATI, gave very specific guidance during its Feb. 17 investors’ day. Seaport Global, a boutique shop, covers ATI and was the first to report the guidance.

“ATI stated that, ‘in line with our customers’ forecasts…when we look at 2025, we see single-aisle going to 127/mo,’” Seaport wrote. In this context, ATI’s customers are Airbus, Boeing, and the three engine OEMs. Airbus is considering an A320 family rate 75/mo in 2025. Simple math says Boeing’s MAX rate will be 52/mo by then. In its note, Seaport was more conservative, predicting rate 47 by 2025.

Spirit Aerosystems

Spirit Aerosystems held its investors day March 2. Spirit is a huge Boeing supplier. It builds the fuselage for the 737 and the noses sections for the 787, the now-completed 747, the 767, and 777. The 737 is, by far, the most prolific of the Boeing work.

During its investors’ day, Spirit gave guidance to analysts about its work, which has obvious influence from Boeing. Bernstein Research, in its note of March 4, had this to say:

“[W]hile management did not reveal specific assumptions around longer-term production rates, the plan appeared to assume 47-52 monthly production on the 737 MAX (still most important driver of revenue, earnings, and cash, despite diversification actions), which is below where we expect 2025 production will go (57/month),” Bernstein wrote. Note that its conservative conclusion from Spirit also is 47/mo.

Before the MAX was grounded in March 2019, the production rate was 52/mo. Boeing planned to go to 57/mo by the end of that year.

Alaska Airlines orders 60 737-10s

Earlier this week, Alaska Airlines announced an order for 60 737-10 MAXes. Sixty were swapped from an existing MAX 9 order (another 15 were swapped from the MAX 9 to MAX 8s), so incrementally to Boeing, there are no new orders. But the 60 MAX 10s is a good boost for this subtype. According to the fleet database ch-aviation, there were 613 MAX 10 orders before Alaska’s decision. Alaska is now the carrier with the third-largest number of MAX 10 orders, behind United Airlines (251) and Vietjet (106).

The MAX 10 order is the death knell for the Airbus A321neo in the Alaska fleet. There are only 10, from its 2016 acquisition of Virgin Atlantic. Expanding this fleet depended entirely on whether Alaska would have international or long-haul Hawaii and Alaska (state) ambitions beyond the range and capabilities of the MAX 10. An insider explains that with its oneworld membership, entered into shortly before the COVID pandemic occurred, the airline can now rely on oneworld partners for these longer-haul operations. The MAX 10 can fill the airlines’ domestic needs at the expense of a small A321neo fleet type.

 

 Category: Alaska Airlines, Boeing, Heard on the Ramp

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183 Comments on “HOTR: When will Boeing return 737 rates to pre-grounding level?”

  1. It’s also a question of key interest to the regulator, which seems to always be overlooked from the media side of things. The FAA advised Boeing that any rate increase must come at their approval. This isn’t like the old days, things have changed. Used to be a carte Blanche …. No more.
    I know as I was in those meetings with the FAA.

    Reply

    • > It’s also a question of key interest to the regulator

      An interesting and important point, I think.

      Reply

    • Airdoc:

      What you miss is the real driver here is the current Ukrainian war and the price of fuel as well as impact on commerce. Price of fuel is more relevant and a major driver as it goes up above $100 a barrel.

      Economics depend on how it impacts the rest of the world economies for energy prices and other trade.

      No one knows right now. Incredible forces are in motion and lots of possible outcome.

      There is no reason the FAA won’t allow ramp up as long as Boeing maintains its production standards.

      One prediction is not hard and that is energy prices will stay high for some time regardless.

      Reply

      • -> There is no reason the FAA won’t allow ramp up as long as Boeing maintains its production standards.

        That’s a big “if” and that’s why FAA is closely watching as BA tries to *double* its production rate.

        Reply

      • -> No one knows right now. Incredible forces are in motion and lots of possible outcome.

        Haha. I have been telling you what’s coming for days, if not for weeks.

        Reply

  2. 47/127 = 37% market share for BA. Poor.
    And right now, it is less.

    Now let’s see what was can do about this titanium thing.

    Free Ukraine. Indict the Russian Agent.

    Reply

    • With the 12 A220, the math goes to 47/139=33%.

      At that point, suppliers do the math.

      Reply

    • What do the widebody numbers look like?

      BTW: Who is the Russian agent you want to indict?

      Reply

      • Former president Trump. That’s how he is known to non-partisan observer in the US. Am a Reagan guy.

        I saw the benefits of Communism in Angola and Kongo (Brazzaville) in the 1980’s. Never again. Though the current Soviets obviously think otherwise.

        Reply

        • “non-partisan” -> “low-information”

          Fixed that for you 🙂

          Reply

          • https://www.washingtonpost.com/world/national-security/trump-has-concealed-details-of-his-face-to-face-encounters-with-putin-from-senior-officials-in-administration/2019/01/12/65f6686c-1434-11e9-b6ad-9cfd62dbb0a8_story.html

            a.k.a the Russian Agent. Non partisan. Reagan’s legacy trampled by the so called ‘republicans’ of today. Unless of course you live in an alternate world fed by western enemies.

            As for the other question (forgot to answer): wide bodies orders/demand and OEM ratio. Right now i believe AB and BA ship the same number of airframes, or quite similar (military helps BA a lot). But the real question is when will wide body demand return for real? The A321 xxx is trouncing BA. They are really caught hard. It’s removing all that low end segment demand where BA had an advantage.

            The only risk i see is passengers rejecting 8-10h flights in such cramped A321 xxx space. For real: ie, they won’t buy these types of tickets again. History tells us the airlines win at the end. They get us to adapt/accept (to my dismay but have to accept the facts). Lower $$ wins.

            So BA’s historical rock solid lead there is somewhat at real at risk long term. They’ll fix their current issues i believe within 2-4 years. But the market may be quite different.

  3. The A220 should be at 14/mo in 2025. If the A320 is at 75/mo with single aisle production of 127/mo, this suggests the 737 will be at 38/mo.

    Reply

  4. I recall ALC’s chairman once said:

    -> The future of the Boeing 737 program could hinge on when (and whether) Russia and China re-certify the 737 Max.

    Reply

      • BA hasn’t delivered a single MAX to Chinese airlines yet.

        And we have yet to learn if BA has finalized any compensation agreement with its customers there. Good luck if the U.S. refuses engines for C919.

        Reply

        • -> “BA hasn’t delivered a single MAX to Chinese airlines yet [after the grounding].

          Reply

      • China hasn’t yet formally ungrounded the MAX: it’s not yet cleared to conduct passenger services in Chinese airspace.

        Reply

          • FYI

            BA has been pumping out the MAX for Russian airlines too.

            -> “Maybe they know things you dont”???

          • You don’t kit out aircraft for a specific buyer on hopes, money is put down first.

          • Money was put down, now that has changed.

            China has not changed, they are on a trajectory to re-cert.

            Can that change? Yep.

            Has it, no.

            If you can predict the future you should be in the stock market.

          • China has been “on a trajectory to re-cert” for years…

          • Thats a sudden change in status for Russian orders over the last week or so.
            China is a different situation- for those that follow the news

          • Even after the 737 MAX was grounded around the world, BA continued production of the jet for *over nine months*, with over 400 completed jets stored around the country.

            -> Maybe they know things you dont

            😂

          • -> You don’t kit out aircraft for a specific buyer on hopes, money is put down first.

            Where did those “white tails” come from? Grown from trees??

          • Duke:

            You assume there is a logic to some comments.

          • @DoU

            -> Thats a sudden change in status for Russian orders over the last week or so.

            Russia has yet to re-certify the 737 MAX since *March 2019*.

            Not exactly something “new” for those who have been following. 🤔

          • -> Maybe they know things you dont

            I’d assume similar motivation that drove the lawn dart arrangement for the early 787 frames. ( reworking the botched up frames must have been hideously expensive.)

            Boeing actions are more driven by projection requirements (to pamper share value) than “sensible evaluation”.
            (Toyota would have halted production until the issue is fixed.)

          • @Uwe

            With no supply of titanium parts from Russia’s Boeing VSMPO JV, won’t it be convenient for the airframer to announce a “short pause” of 787 production line?? No need to mention its inability to satisfy FAA’s requirement.

            Without new 787/777X, EK may have no choice but to fly its A380 a bit longer … longer and longer.

  5. -The development of the MC21 and C919 are to a significant extent in my view driven by the desire of the respective subsidising regimes of Russia and China to sanction proof their nations as both will face sanctions and even blockades over their desires to invade neighbours they believe they own.
    -At this point we know what is happening in Russia but I would imagine that China’s airlines are going slow on B737 MAX deliveries to give the C919 time to catch up.

    Reply

    • Currently, the C919 line only has the production capacity of 4 aircraft a month With continued certification delays and ramp up needs It will be another 10 years before the C919 will be a 12 aircraft a month (maybe) The real question in 10 years, will Boeing have a new clean sheet single aisle aircraft in revenue service One needs to wonder if that’s possible when you benchmark the 777x with only 12 airframes made with no engines attached (e.g. The 777X was launched in November 2013)

      Reply

    • The C919 is heavily reliant on Western technology for major sytems as well as the Leap-1C engine

      And looking at the Leap-1c in detail shows that it doesn’t share much with it’s A and B siblings which are different from each other as well)

      My guess is that 1C is just a tarted up CFM -56 which it shares a core architecture.

      GE seems to have not wanted to provide it’s best technolgies

      Reply

      • can you please provide a reference link? first I’d heard that Leap 1C was anything other than a lightly tailored Leap 1A.

        I can completely understand if the US said no to exporting Leap cores to the C919 manufacturer given how they reverse engineered the CFM56 for their military jet programs, but selling them a 737 max or allowing LEAP1As on china bound A320s would have the same effect… they’ll take a few off the wing for “maintenance” or order a few spares and feed them to the reverse engineering groups.

        Reply

          • exactly. plus I’m pretty sure they got a few Max-8s before the grounding, so I would expect they had 2 years to fully study those engines while they were sitting grounded.

          • China has the second largest 737 Max fleet before the suspension by CAAC.

          • Duke:

            Really? Tarted up CFM. Come on man, you are better than that.

            If you want to talk about Tarted up the Trent Series comes to mind (grin).

            The CFM and the Leap share nothing in common other than twin shaft jet engine.

          • TW then explain why the 1C is so much heavier than its close sibling the 1A. Much larger too inspite of being 1in less fan diameter.
            Have they swapped out the carbon fibre for the front blades and other down grades

          • “Weight difference Leap 1A/B vs 1C”

            potentially just the difference in what is included in “engine” ? TR or no TR, …

            I seem to remember other cases where the discussion was “up the wrong path”, explanation was banal?

        • The Leap-1C is only 1 in smaller in the fan diameter but is considerably heavier ( 1000kg)! and is quite a bit longer and wider that the Leap-1A

          Doesnt sound ‘lightly tailored to me ‘

          Reply

          • Its still not a CFM for crying out loud.

          • Its a tarted up CFM56, I never suggested it was ‘the same’. Much bigger fan and other changes. Its difficult to pin down the other differences
            CFM56-7B ( on the Boeing NG)
            1F, 3LP,9HP and turbine side 1HP,4LP

            Leap-1C 1F, 3LP, 10HP and 2HP, 7LP
            A bigger fan is easily driven by more LP turbine stages than 4 on the CFM56 ( which is why the smaller 1B is 5 LP turbine stages)

            Its certainly not much like the 1 in larger diameter fan leap-1A

          • Its still not a CFM for crying out loud.

            TW, you are uneccesarily hard on everyone.

            CFM is the 50:50 coop between Safran and GE

            _CFM56_ in various formes is their longtime product from the getogo.
            _Leap_ is the “new” product to compete with GTF ( typesheet says IAE 🙂

          • Explain how the 1 in smaller fan diameter ( 10 mm each side so is barely noticeable) leads to 1000 kg greater weight , a much longer engine and slight larger overall diameter.
            The differences are so large so as to be not explained by other ‘differences’
            It should really be an in identical twin to the Leap-1A as far as size and weight goes with power ratings the only differences

          • We already have history of a GE engine that had a different name but was still based closely on CFM56 architecture ( often a big weight increase is the main clue)

            The GE CF34-10 had very little in common with its older and lower thrust CF34 stable mates

    • Nobody without China’s big government pointed at their head is waiting for the C919

      Reply

      • Plenty of countries in the world are more aligned to China than to “the west”.

        Reply

        • And all those countries fly to places that mandate a recognized certification’s which China does not have.

          Shoot, China can’t even certify the 919 internally. In the modern era only the Mitsubishi MRJ comes close to failing cert (787 had different issues)

          Reply

          • Poster keeps forgetting the large *domestic* markets in countries like China, India, Indonesia and Brazil.

            Poster also forgets that Indonesia, for example, is unconcerned by the lack of FAA apprival for the ARJ21.

            Poster also forgets that BA “can’t even certify the 777X internally”.

            How selective…

          • India and Brazil , well they aren’t going to go for the Chinese derivatives of DC-9 and A320, even if they are an interesting offering for airlines. That leaves Indonesia where a dormant airline has a sudden new partner, a Chinese leasing company, who has management control and a close association with the maker of the ARJ_21 and have signed up for leases in quantity. We all wish them well in their endeavours

  6. With so many undelivered 737 MAX, some which have been in storage for four years, I think it is interesting to look at the delivery rate (production rate + deliveries from inventory rate), as this is the number of new aircraft going into service in a recovering post-pandemic market.

    Reply

  7. Those 10 A321NEOs should be able to pay for a dozen MAXes on trade-in. They might even already have a buyer.

    Reply

    • The A321neos are all leased from GECAS (now AerCap). Leases extend to 2030.

      Reply

    • Alaska has no choice but picks the MAX 8 for airports with runways “too short” for the MAX 9 & 10.

      Reply

      • Pedro:

        You are aware that a short runway also means its short on population ?

        They probably need a few -7s though the Embraer can fill in.

        Reply

          • And also topology-constricted airports, such as London City and Gibralter.

          • Pedro:

            No. We have no such think in AK

            We do have SHORT runways though, which is what you said.

            Now I hear rumors of hot and high in the lower 48 and they have LONG runways (or at least with any large city)

            For the rest there is Mastercard

          • @TW

            AS serves outside AK too.

            In 2017 summer, American Airlines  canceled Phoenix flights because of high temperatures.

            -> A 2017 study in the journal Climatic Change found that up to 30% of flights departing at the hottest part of the day may face weight restrictions in the coming decades

            Seattle Times:

            Although Boeing extended the MAX 10 landing gear, pilots still cannot rotate the nose up too sharply on takeoff or the jet will scrape its tail on the runway.

            For the MAX 10 to take off from short runways or at airports that are hot and high, which reduces engine power, an airline may have to lower the jet’s weight by blocking out some seats to carry fewer passengers.

            “For Denver to L.A. on a hot summer day, the A321 is definitely the better airplane,” said Fehrm.

            ========

            -> One airline tells us that runway performance for the -8 MAX and -9 MAX is longer than the -800 and -900. (The airline is not considering the -7 MAX and doesn’t have the -700.) This, the airline tells us, makes the airplanes problematic at some airports it serves.

            https://leehamnews.com/2012/07/10/but-what-of-the-runway-performance/

            =======

            https://www.google.com/amp/s/www.latimes.com/business/la-fi-boeing-max-8-airports-20190411-story.html%3f_amp=true

            -> Before last month’s crash of a flight that began in Ethiopia, Boeing Co. said in a legal document that large, upgraded 737s “cannot be used at what are referred to as ‘high/hot’ airports.”

            -> Boeing stated in a brief filed in the trade case that the “737 Max 7 has greater performance capabilities at challenging airports. In particular, the 737 Max 7 can serve certain ‘high/hot’ airports and has a greater range operating out of constrained airfields.” The brief then cites a number of such airports — the names of which are redacted — that the Max 7 can fly that “the 8, 9 and 10 cannot.”

            -> Even airlines operating from Orange County, which is nearly at sea level, occasionally have to reduce weight on their planes because of high temperatures.

            -> “Larger 737 variants cannot be used at what are referred to has ‘high/hot’ airports,” the brief stated. Certain U.S. airports are unsuitable for the Max 8 “due to a combination of short runway lengths, elevation, temperature, humidity and other environmental conditions.”

            -> Documents in the trade case referred to at least 16 U.S. airports considered “high and hot” and therefore unsuitable for the Max 8, though the names of those facilities weren’t made public. Asked during a trade commission hearing to specify which airports, an expert witness for Boeing replied that “sometimes Denver would qualify as that.”

    • It’s not only about the best wing. It’s also about the ability of the aircraft to fly paying passengers. Superjet made a hell of bad publicity about spare part supplies.

      Btw. Ukraine – maybe North Korea or Eritrea would buy some – f… even Cuba didn’t vote for Russia.

      Reply

      • Ask airlines such as Norwegian, LOT and Air New Zealand how happy they are with BA’s after sales service / customer support…

        China, India and many ME countries are still chummy with Russia — that’s a big chunk of the aviation market.

        Reply

        • Nope, if it ain’t got world recognized certification it ain’t going to sell.

          India does not buy ANY Russian Commercial Jets

          Now you do have NK and Zimbabwe, all hot growth countries of course.

          Next up the 929 goes down the rat-hole.

          I can see Soviet certification recognition being yanked. China ain’t going to buy an MC-21 (see the ever late C919)

          USSR market is getting more limited all the time. Notice they fly Western Jets (or did)

          Reply

          • Define “world recognized certification”.
            Each country is free to recognize whatever certifications it wants.

          • @Bryce

            Like MOM, FSA, NMA, just meaningless alphabets from the soup.

      • “Superjet made a hell of bad publicity about spare part supplies. ”

        Probably egged on by attentive help for the West.

        Remember Airbus had a similar issue early on with
        US professional maintenance people giving some sabotage(like) help. “sorry that can’t fly” .

        Reply

      • The follow on version of the SSJ is designated RRJ-95NEW-100 with SaM146 standard fit. The PD-8 is offered as an option but not before 2024. Under current sanctions the SSJ can fly only for as long as they can “christmas tree” parts from other aircraft.

        The MC-21 300 programme is no more. EIS was scheduled for October this year but cannot now take place. The bulk of the 175 orders were accounted for by Sberbank (20) which went bust last week, VEB (60) and Ilyushin Finance (50), the latter two sanctioned entities. Thus UAC will never receive funds for these orders and the end users will have lost funds and receive no aircraft.

        The MS-21-310 can’t be certified before 2024 at the earliest.

        Weakened by two years of GMT imposed COVID sanctions, faced with new exogenous sanctions, $150 oil a given and $300 a distinct possibility the Russian Airline industry is also no more. It has gone back 40 years to the days of Aeroflot State Airlines. Most flights within Russia will now be on ~50 year old Antonov 24’s.

        Reply

        • Sberbank hasn’t gone bust — it has merely ceased operations for 3 of its European daughters. It posted a record profit in 2021.
          Further: how do the current sanctions prevent a Russian airline from paying a Russian bank/lessor for a Russian product?
          When US credit card companies ceased operations in Russia this week, Russian banks merely started to switch to the Chinese alternative system (UnionPay), which works in 180 countries worldwide.

          Reply

          • No, Sberbank is insolvent.

            As to you second point, they don’t. But with regard to the two types under discussion, to all intents & purposes, they no longer exist.

          • No, Sberbank is insolvent. They have gone.

            As to you second point, they don’t. But with regard to the two types under discussion, to all intents & purposes, they no longer exist.

          • The whole USSR is insolvent now.

            Lets see, Rubble is now ruble.

          • The USSR hasn’t existed since 1991.
            It seems some people are in a time warp.

          • @Bryce

            More like living in the past (just an observation)!! 😄

          • @Bryce Tell that to Putin..l

            New boss same as the old boss.

  9. Time to say goodbye to BA’s plan of returning production rate of the MAX
    to pre-grounding level [by 2025]

    -> For the first time in eight years, the U.S. average gasoline retail price has surged above the $4 per gallon barrier, according to data from the @AAAnews motoring club

    https://mobile.twitter.com/JavierBlas/status/1500473923753885700?cxt=HHwWiICywa7F4NIpAAAA

    -> US / Europe bought pre-war ~50% of total Russian petroleum (crude oil and refined products) exports of about 7.85m b/d. Banning that, even in small increments, would create a huge challenge for the global supply and demand balances

    https://mobile.twitter.com/JavierBlas/status/1500484666809327625

    Reply

    • An oil deal with Venezuela including free elections and free press would make everybody in the country well off and the west getting plenty of oil. Normally you would have a political party for the rich, poor, farmers/foresters, teachers/white collar staff, industrial workers, environmentalists and those against all others teaming up in different constellations after each election to form a government.

      Reply

  11. It remains to be seen whether China will ever unground the MAX…and, even if it does, it’s not clear that many MAX deliveries to Chinese carriers will ever materialize.
    The world has become much more polarized in the past 2 weeks. The “other side” has become even more incentivized to have as little dependency as possible on “the west”.
    If BA loses the Chinese market, it’s doubtful that production rates will be climbing much any time soon. A similar (if slower) fate probably awaits Airbus.

    Reply

    • If ands and buts were candy and nuts we would all have a merry Christmas.

      Reply

  12. On the subject of planned MAX production hikes:

    “In late January, Chief Financial Officer Brian West said the 737 program was producing at a rate of 27 jets per month and was on track to reach 31 per month “fairly soon”.

    “Two of the people said the 31-jet monthly stride would come during the second half of the year, though a third person said it could happen sooner.

    “Beyond that, Boeing aims to increase to around 38 narrowbody jets monthly during the first half of 2023, and reach about 47 jets per month in the second half of 2023, two people said.”

    https://www.brecorder.com/news/40158830

    Reply

  13. Boeing is currently piling out new Max’s in Chinese schemes, they must see a future for them

    Reply

      • Well, presumably the USAF cares.
        And BA stockholders might care, since it’s never a good idea to annoy a major customer.
        Not that such things interest BA, of course 😉

        Reply

    • -> CHART OF THE DAY: The Brent crude oil market, since the launch of futures in June 1988 to today (nominal prices). The high today was $139.13 a barrel, still below the all-time high of $147.50 a barrel set in July 2008

      https://mobile.twitter.com/JavierBlas/status/1500618020288450560?cxt=HHwWgMC-rfGIotMpAAAA

      => 10$ on oil price gives Russia ~ $20 bn of current account inflows per year. With imports collapsing Russia’s 2022 current account could exceed $200 bn. Despite ~ 40% of $640 bn @bank_of_russia reserves arrested, Russia could rebuild buffers from the current account surplus.

      https://mobile.twitter.com/elinaribakova/status/1500615240505085952?cxt=HHwWgMC-rYrnoNMpAAAA

      -> In a day when what’s needed is a rally for action, the White House decides it’s better to score political points. Rather than proactive, defensive. Puzzling.

      https://mobile.twitter.com/JavierBlas/status/1500606345866846217?cxt=HHwWkoC5kazhnNMpAAAA

      Reply

    • @ Pedro
      Perhaps the aviation industry isn’t YET all that concerned about oil prices because (some) airlines have done fuel hedging, and aren’t yet feeling the pain.
      However, there’s a worse oil-related cloud looming over our heads, because high oil prices tend to have a throttling effect on economic growth. If the current growth turns into stagnation — or, even worse, recession — then, in combination with the current high inflation (caused by broad supply chain constraints), we get the dreaded phenomenon of “stagflation”…for which central banks have very few curative measures.

      By the way: interesting to note how quickly “last week’s principles” have gone out the window, because a certain western country is all-of-a-sudden trying to get chummy again with Venezuela and Iran, as alternative sources for Russian oil. However, Venezuela and Iran currently supply China with oil so, if some of that oil instead starts to flow west, guess where China will be buying more oil? That’s right: Russia. This whole thing is reminiscent of a cat chasing its tail: lots of posturing and expenditure of effort, but no net effect.

      Reply

  16. No, Sberbank is insolvent.

    As to you second point, they don’t. But with regard to the two types under discussion, to all intents & purposes, they no longer exist.

    Reply

  17. You would think that this would be Boeing’s #1 priority at this time, given that it is their #1 seller and a/c with the biggest backlog. 777s are limited to the -300ER and freighters right now, which don’t have a big backlog. 787s on hold. 767s now only in freight and tanker editions, with pretty low monthly rates. If Boeing is to generate any significant cash flow this year, they need to bump up the 737Max production rates ASAP!

    Reply

    • Biggest backlog…but also biggest source of cancellations / ASC606 deletions.
      Even more cancellations now (Russian airlines), and China still out of reach.
      If an economic downturn comes (likely), then most MAX orders can still be dumped without penalty.
      Not a very sound situation.

      Reply

    • GS/PDX:

      The 767F is making money hand over fist. MAX is returning money.

      No Ti? Then 767 ramps up and 777-200/300ER continue.

      Or maybe it all comes to screeching halt. Stay Tuned.

      In the meantime Boeing has (20?) 777X made and lots of 787s to deliver.

      Reply

      • There’s a big difference between having inventory and being able to deliver it.
        Still no sign of a TIA for the 777X, and still no sign of an FAA green light for the 787.

        Reply

      • Hey TW,

        I know the current hot topic is the Ti issue, but please keep in mind – inventory that doesn’t move is not where you want to be.

        Boeing is paying interest expense daily on having those aircraft sit there, plus maintenance to keep them from seizing up – and each tick of the calendar is another day that lowers the margin they will make on those planes.

        It’s why they had to go into the piggy bank last year, to make the cash flow look good.

        Reply

        • Say, @ over $100m each, with 105 or so undelivered, that’s over $10 billion depreciating assets that’s worth less day by day, and compensations to customers growing … day by day, month by month.

          @TW

          That’s your definition of “money in the bank”?? 🙄

          Reply

          • Pedro’s access to comments is paused until he replies to my email to him.

            Hamilton

    • It’s largely a balancing act between:

      how many BA can deliver (subjects to FAA’s pace),
      how many customers want (timing and size of backlog),
      how many can BA’s supply chain sustain.

      Regarding the unfilled backlog, there is about 3,441 according to BA’s latest order and delivery # on its web site.
      However, there are roughly 350 737 MAX built but undelivered. So there is say 3,100 MAX to build.

      AB never halted its 320 family production even in 2020 and 2021. However, BA stopped its MAX production in 2019/2020 and only restarted at much lower rate. Therefore, it appears that AB’s supply chain is less stressed and ready for higher production rate, unlike BA’s.

      Reply

  18. BA says no to Russian Ti.

    Still where’s the plan for replacement?? Nope.

    Reply

    • And Putin said Ukraine could loose its Sovereignty (really!)

      The Soviets can nationalize away. But they can’t fly anywhere but inside the USSR and when they run out of parts?

      Can you say, Park Em Danno!

      Reply

      • Russian carriers can also fly to China and India, aswell as to a host of other countries in central and SE Asia.

        The country has an aerospace industry that can provide creative solutions to parts issues.

        Reply

        • In fact the Soviets don’t make a lot of the solid state stuff and it takes a long long time to reverse engineer and doing that when your stuff is getting blown up? Figures of 5% equipment losses.

          Rubble is in the toilet.

          Any country but China can seize an aircraft, possibly in China as well.

          Reply

    • “It’s fascinating to watch “the west” increasingly shooting itself in the foot in the past few days.”

      I respectfully beg to differ.

      The west is a whole lot bigger, than Russia is. There’s an interesting video on Real Life Lore as to why they are in there (money being a major part):

      https://www.youtube.com/watch?v=If61baWF4GE

      I think it comes down to how much financial pain the west can bear, in order to inflict as much pain on Russia.

      Remember – they are other angles in play here, too. What happens if the west backs down and let’s Putin have his way? Would that encourage, say – China, to make a move against Taiwan?

      (I know you’re going to love that one, Scott H!)

      I think the west is far more interlocked with China, than Russia and it’s oil and titanium.

      Interesting times…

      Reply

      • @Frank

        I respectfully disagree. Russia wants a negotiation, like among adults, that’s IIRC was how the Cuban Crisis was resolved. Now we are run by a bunch of kids (and blinds following another blind down this sanction theater dead-end alley). This is how we got to the current situation, thousands if not tens of thousand are dying. Americans’ “Midas touch” (see John Mearsheimer) continues, from Afghanistan, Iraq, Libya … and Ukraine.

        Reply

        • Respectful disagreement is a great thing.

          “Now we are run by a bunch of kids ”

          The US was run by a bunch of kids. Greedy kids who didn’t want to let go. Greedy kids who didn’t care where they got their money from and who led a bunch of people into supporting (or at the very least soft peddling) the invasion? Joe McCarthy is doing turns in his grave! lol
          (not that I’m a fan of his, but…)

          What are the current admin’s options? Go into Ukraine and defend them, head to head – against Russia? It’s obvious NATO would kick the crap out of them, but what if…

          Reply

          • I have to keep it as brief as possible. It’s off topic. Anyway, as I posted previously: Talk with Russia like an adult w/ another adult. That’s how the Cuban Crisis was “resolved” IIRC. The U.S *withdrew their missiles from Turkey*. What had happened? Drew a “redline”, and dared the counter-party to start a fist fight. I recall that in July 1940, U.S. cut off export of steel and aviation fuel to Japan, then in July 1941, U.S. froze Japanese assets in U.S., effectively cut off their access to U.S oil. Less than five months later, Dec 7th 1941 (Dec 8th 1941 in Asia time).

            -> “Each [nation] stepped through a series of escalating moves that provoked but failed to restrain the other, all the while lifting the level of confrontation to ever-riskier heights.”

            David M. Kennedy

            Additional background:
            -> A series of events led to the attack on Pearl Harbor. War between Japan and the United States had been a possibility that each nation’s military forces planned for in the 1920s. The expansion of American territories in the Pacific had been a threat to Japan since the 1890s, though the real tension did not begin until the invasion of Manchuria by Japan in 1931.

            -> In addition, a series of racist laws fanned further resentment in Japan. These laws enforced segregation and barring Japanese (and often Chinese) from citizenship, land ownership and immigration

            -> To a certain extent, the conflict between the United States and Japan stemmed from their competing interests in Chinese markets and Asian natural resources. While the United States and Japan jockeyed peaceably for influence in eastern Asia for many years, the situation changed in 1931. That year Japan took its first step toward building a Japanese empire in eastern Asia by invading Manchuria, a fertile, resource-rich province in northern China. Japan installed a puppet government in Manchuria, renaming it Manchukuo. But the United States refused to recognize the new regime or any other forced upon China under the Stimson Doctrine.

            -> The ineffectual Stimson Doctrine guided US policy in Asia for the next decade. On the one hand, the doctrine took a principled stand in support of Chinese sovereignty and against an increasingly militaristic Japanese regime. On the other hand, however, it failed to bolster that stand with either material consequences for Japan or meaningful support for China. In fact, US companies continued to supply Japan with the steel and petroleum it needed for its fight against China long after the conflict between the countries escalated into a full-scale war in 1937. But a powerful isolationist movement in the United States countered that the nation had no business at all in the international conflicts developing around the world. Even the Japanese military’s murder of between 100,000 and 200,000 helpless Chinese military prisoners and civilians and the rape of tens of thousands of Chinese women during the 1937 Rape of Nanking failed to immediately shift US policy.

    • @Bryce

      “Mission catastrophic”!!

      -> There are growing fears within the Irish aircraft leasing industry that Russia’s government will move to seize ownership of aircraft leased from overseas to protect Aeroflot from the sanctions. This raises the prospect of billions of dollars in potential losses for Irish leasing companies and subsequent insurance claims and litigation should insurers challenge the claims. One source said that the crisis had left the industry in “no man’s land” while another aviation industry executive has described the predicament as “mission catastrophic”.

      https://www.irishtimes.com/business/russian-state-airlines-not-helping-irish-lessors-recover-aircraft-1.4820685

      Reply

      • Not surprising at all: a case of “you screw us, we screw you right back”.
        Covert supplies of parts via all sorts of aligned countries, as well as homemade parts, will probably keep those planes flying for a long time.
        An unintended gift from the US and EU.

        Reply

        • Frank’s comments hint at a / the bigger picture,
          though in my opinion there’s a bigger one yet still in play.

          Reply

        • The Times:

          Problems stack up for owners of ‘lost’ aircraft

          Reuters:

          But the loss of a market representing 5-6% of global traffic has shocked a sector that owns more than half the world’s airliner fleet. The resulting flood of claims and potential writedowns could trigger a lengthy contest over liability.

          Even if conflict eases, Russia’s near-isolation may permanently damage valuations by interrupting the continuity of maintenance records or encouraging airlines to swap parts.

          Indirect effects might go wider still, forcing Airbus and Boeing to remarket dozens of jets …

          Also in the spotlight are asset-backed securities used by lessors to ease financing and now containing high Russian risk. All this, while soaring oil prices threaten to punch a new hole in airline balance sheets and damage the creditworthiness of all carriers.

          “There was a perception that Russia was a good risk and capable of absorbing significant capacity that others could not take because of the COVID-19 crisis,” Grabowski said. “For people who had surplus planes on their hands Russia was a venue of last resort. Most of the market also thought Aeroflot was an impeccable credit but forgot the political risk.” 

          Ainonline

          Sanctions announced last week by the EU gave lessors until March 28 to repossess aircraft. However, the fact that EU, U.S., and Canadian sanctions have effectively prevented Russian-controlled aircraft from flying in European and North American airspace has severely complicated the task. On March 3, before the latest guidance from the CAA in Moscow, an executive with a leading leasing group speaking with AIN on condition of anonymity said that companies face serious legal and logistical challenges in recovering their assets. Some have looked for ways to get aircraft flown to countries such as Kazakhstan, where they could repossess the assets in a process that could involve hastily switching the jets to new registries. The executive added that about 12 months ago, his company started reducing its exposure to the Russian market in anticipation of political instability. However, he conceded that no one in the industry had anticipated the extent to which the Putin administration would violate international legal conventions.

          Boeing’s 2021-40 Commercial Market Outlook estimated a total of 1,260 aircraft based in Russia and Central Asia in 2019, including 770 single-aisle, 140 widebody, 190 regional-jet, and 160 freight aircraft.

          Reply

        • Bloomberg:

          -> … at the annual ISTAT Americas convention in San Diego, […] elation over the fading omicron wave of coronavirus — the bane of aviation for the past two years — gave way to talk of spiking oil prices and doomsday scenarios for the stranded jets.

          => Aercap shares have lost about a quarter of their value since the EU banned companies from supplying Russia with aircraft, parts or services in response to the invasion of Ukraine. Kroll Bond Ratings said it may downgrade nine aviation asset-backed securitizations exposed to planes in Russia and Ukraine.

          https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/maps-2021-1-trust-moodys-203705692.html

          Reply

    • @Bryce

      -> “The [U.S.] oil and gas industries have millions of acres leased. They have 9,000 permits to drill onshore that are already approved. They are not using them for production now

      Reply

  20. Demand Destruction!!! Told u so.

    -> The oil market remains in **denial** of the magnitude of the problem now that the sanctions and self-sanctions are rolling, and refineries are starting to ration wholesale supplies. We need very urgently energy conservation programs. Europe is extremely short of energy.

    https://mobile.twitter.com/JavierBlas/status/1501196472309661696?cxt=HHwWgICy4ZyPqdUpAAAA

    -> Shell also announces it stops buying spot Russian oil and over weeks will cut long-term contracts, which could lead to refinery runs cuts

    https://mobile.twitter.com/JavierBlas/status/1501163909901950979?cxt=HHwWhoC99eunmtUpAAAA

    ->

    Reply

  21. The comments from @Pedro and @Bryce are getting ever more nauseating. Separating signal from noise from these usual suspects is not worth the time.

    Of course, Putinverstehers are typically glossing over what’s actually transpiring in Ukraine.

    –

    https://mobile.twitter.com/Militarylandnet

    Scroll down

    Feb 28, Russian BMP-2 attacked a civilian car near Makariv. Speechless..

    –

    https://mobile.twitter.com/EliotHiggins/status/1501165544757772294?cxt=HHwWjIC-xYCHm9UpAAAA

    Reply

    • 1:
      case of “kettle calling the pot black” ?

      2:
      Mr Higgins is the fount of invented and/or fantastic information.
      Usually what a certain British service would like to see made public. adherence to reality is tenuous 🙂
      ( same vein is Bellingcat’s activity.)

      Reply

      • NB: Sorry for the off-topic post

        @Uwe

        1: Nice try, but the fact of the matter is that the comment section of this blog seems to have been hijacked by some new arrivals. What they — and @Uwe — appear to have in common is a belief that somehow:

        a) Boeing: Bad
        b) United States: Bad
        c) NATO: Bad
        d) Airbus: Mostly good
        e) EU: Mostly good, but bad when it comes to relations with Russia
        e) Putin: Shrewd operator
        f) Sanctions against Russia: Doomed to fail
        g) Etc.

        –

        2: Link used because of the graphic content warning of the video showing the result of what transpired in another video shown on: https://twitter.com/Militarylandnet

        Scroll down to:

        📽️ Feb 28, Russian BMP-2 attacked a civilian car near Makariv.

        –

        No need, therefore, to go on a rant about Mr Higgins and/or Bellingcat.

        BTW, you’re not suggesting that the video is a fake, do you?

        Reply

        • I’ve never seen a single comment here that in any way intimated that Putin is a “shrewd operator”.

          The “United States = bad” reflex is a tired narrative from a handful of commenters here who can’t tolerate criticism of US policy.

          As regards Boeing: the broader aviation press regularly points out what a dysfunctional mess the company is, so don’t try to pin that on a few commenters here.

          Reply

          • A) Putin as a “Shrewd operator”: Metaphorically speaking.

            B) Note: “Bad” was also used for Boeing and NATO — nothing to do with “anti-Americanism”.

            C) Nothing wrong with being critical of Boeing. The problem is the relentless barrage of criticism directed at Boeing from the same suspects, on a daily basis.

          • Presumably, item (c) is a reference to people like Dominic Gates and Jon Ostrower…

          • Well, neither of whom is going after Boeing on a daily basis.

            Again, the problem is that the comment section of this blog seems to have been hijacked by a couple of commenters. Their relentless barrage of criticism directed at Boeing, on a daily basis, is nauseating.

          • You seem to suffer a lot from nausea.
            Dramamine might be more effective than attempted censorship.

          • @Bryce

            I’m good, thanks.

            Fyi, censorship is typically a top-down approach used by governments to stifle criticism and not a bottoms-up approach; meaning that commenters, who call it as one sees it, have no power to censor something (e.g. a blog) that is not theirs to begin with. One would think that is self-evident, but that’s just me.

    • Perhaps “@Pedro and @Bryce” have somewhat more economic acumen than some others here, and/or perhaps they’re more inclined to make rational analyses rather than emotional ones.
      What’s “nauseating” is when commenters resort to using cheap labels to refer to those with a dissonant — but well-founded — opinion. Reading some financial sources (FT, CNBC, Bloomberg) might serve to provide some illuminating education on the ins-and-outs of sanctions in the current situation.

      Reply

      • @Bryce

        With all due respect, but @Pedro and @Bryce sounds more like day traders than investors interested in buying and selling stocks for the long-term returns.

        Also, what seems to be ignored is the fact that more and more Europeans are now appearing to accept experiencing temporary hardship for the prospect of Pan-European stability and prosperity in the medium- and long-term.

        –

        I sometimes think that we are too much impressed by the clamor of daily events. The newspaper headlines and the television screens give us a short view. They so flood us with the stop-press details of daily stories that we lose sight of one of the great movements of history. Yet it is the profound tendencies of history and not the passing excitements that will shape our future.

        The short view gives us the impression as a nation being shoved and harried, everywhere on the defense. But this impression is surely an optical illusion. From the perspective of Moscow, the world today may seem ever more troublesome, more intractable, more frustrating than it does to us. The leaders of the Communist world are confronted not only by acute internal problems in each Communist country–the failure of agriculture, the rising discontent of the youth and the intellectuals, the demands of technical and managerial groups for status and security. They are confronted in addition by profound divisions within the Communist world itself–divisions which have already shattered the image of Communism as a universal system guaranteed to abolish all social and international conflicts–the most valuable asset the Communists had for many years.

        Wisdom requires the long view. And the long view shows us that the revolution of national independence is a fundamental fact of our era. This revolution will not be stopped. As new nations emerge from the oblivion of centuries, their first aspiration is to affirm their national identity. Their deepest hope is for a world where, within a framework of international cooperation, every country can solve its own problems according to its own traditions and ideals.

        It is in the interests of the pursuit of knowledge–and it is in our own national interest–that this revolution of national independence succeed. For the Communists rest everything on the idea of a monolithic world–a world where all knowledge has a single pattern, all societies move toward a single model, and all problems and roads have a single solution and a single destination. The pursuit of knowledge, on the other hand, rests everything on the opposite idea–on the idea of a world based on diversity, self-determination, freedom. And that is the kind of world to which we Americans, as a nation, are committed by the principles upon which the great Republic was founded.

        https://www.jfklibrary.org/archives/other-resources/john-f-kennedy-speeches/university-of-california-berkeley-19620323

        Reply

  22. @Pedro, @Byrce, others: This post is not about the Ukraine war. Get back on topic.

    Hamilton

    Reply

    • Sorry about that, Scott.
      My posts were intended to be purely commodity/oil-related, seeing as that relates to aviation and general economic conjuncture. Unfortunately, in the current circumstances, it seems that commodity discussions are inseparable from the war situation.
      I’ll avoid the subject unless it’s explicitly mentioned in the LNA article itself.

      Reply

    • Whoops – sorry, I’ll drop it. Answered Pedro before I saw this.

      Reply

  23. Back on-topic, as regards production/delivery targets — the last of the sweet grapes before we have to contend with the sour ones:
    “Airbus Handed Over 50 Jets Last Month Before Ukraine War Hit”

    “Airline industry prospects for a strong rebound in profit from the Covid-19 crisis have faded since Airbus set that target last month, with the Russian invasion of Ukraine triggering higher fuel prices, flight cancellations and costly detours that are set to eat into margins.”

    https://www.bnnbloomberg.ca/airbus-handed-over-50-jets-last-month-before-ukraine-war-hit-1.1734232

    It will be interesting to see to what extent the current uncertainty will manifest itself in near-term delivery numbers.

    Reply

  24. And then the Boeing figures for February:
    “Boeing delivered 22 jetliners to customers in February, its fewest since August, as a pause in Dreamliner handovers continues to weigh on the company.
    “Twenty of those aircraft were 737 Max planes. Deliveries of jets are crucial for Boeing and other manufacturers because that’s when customers pay the bulk of the plane’s price.”

    https://www.cnbc.com/2022/03/08/boeing-airplane-deliveries-slipped-in-february-dreamliner-problem-lingers.html

    Reply

    • -> Boeing has 85 airplanes on order by Russian airlines or by lessors that are slated to go to Russian airlines, while Airbus has 66, according to aviation data and consulting firm Cirium.

      -> Air Lease ** debooked ** four Dreamliners. 🤣

      Reply

    • OTOH

      -> The European planemaker will have delivered about 80 aircraft in January and February as it targets 720 over the course of 2022.

      Reply

    • 20 Max’s – if they’re making 28 a month, they’ve just added another 8 to the inventory pile…

      Reply

      • Indeed.
        Somehow, I think that the “additions to the pile” will be higher in March, and higher again after that.
        In the current uncertain situation, I can imagine that there are various airlines that might be tempted to defer. Same for lessors, who will take a financial hit if Russia confiscates its leased airframes and stops lease payments.

        Reply

        • BTW – I’m guessing you heard that Avianca ordered 88 A320Neo’s and optioned another 50? Delivery from 2025-31.

          I guess that’s the time frame you can get some, now…

          Reply

  26. Interesting:
    “Airbus, Boeing Aircraft Delayed by Supply Chain Woes: Udvar-Hazy”

    “Air Lease Corp.’s Executive Chairman Steven Udvar-Hazy is frustrated with Airbus and Boeing. The lessor faces delivery delays for “every one of our single-aisle” aircraft from the two major airframers as supply chain issues mount.

    ““The supply chain, starting with the engine manufacturers, the people that make landing gear … the people that make bits and pieces, are not equipped today to meet the production goals,” Udvar-Hazy said in a wide-ranging conversation at the ISTAT Americas conference on Tuesday. He added that he only found out “this morning” — March 8 — that all of ALC’s 2022 Max deliveries are delayed. The delays average a month.”

    https://airlineweekly.com/2022/03/airbus-boeing-aircraft-delayed-by-supply-chain-woes-udvar-hazy/

    Reply

    • Udvar-Hazy’s comments remind me of a line from ‘Full Metal Jacket’ c. 1987 when Sgt Joker says to his Commanding Officer, in response to news of the overwhelming Tet Offensive, “Sir, does this mean Ann-Margret is *not* coming?”

      There’s a bigger picture now, too.

      Reply

  27. Did self-appointed hall monitor OV-999 get that late other dude’s vacated contract?

    Scott H. does a good, even-handed job moderating *his* blog. By the way- I’m sure glad ‘Air Wars’ has that
    cast of characters at the front.. I refer to it over and over.

    Reply

    • Did self-appointed hall monitor OV-999 get that late other dude’s vacated contract?

      ?

      Scott H. does a good, even-handed job moderating *his* blog.

      You got that one right. It’s his blog!

      Reply

      • Surely got overtaken by poster posting “exhaustive” quotes.

        Reply

        • Pedro: I sent you an email. Read it and reply to it.

          Hamilton

          Reply

  28. Boeing is looking for an exemption / deadline extension that will avoid having to provide the MAX 10 with a (legally mandated) EICAS safety system.

    “…Those accidents and the failures of oversight of the MAX spurred Congress to pass the Aircraft Safety and Certification Reform Act in late 2020 to reform the FAA oversight process.

    “That law requires any airplane certified after Dec. 31 this year to comply with the latest FAA crew alerting regulation. The 737 is the only Boeing jet that doesn’t meet the standard.

    “Every other current Boeing airplane has what’s called an Engine Indicating and Crew Alerting System, or EICAS, that complies with the FAA regulation.

    “…The Boeing insider, who requested anonymity to keep his job, said there’s “no way” the company will certify the MAX 10 by the deadline.”

    https://www.seattletimes.com/business/boeing-aerospace/boeing-seeks-exemption-from-safety-rule-extended-for-max-10/

    Reply

    • From Dominic Gates

      -> Despite Boeing woes, executives get big paychecks

      There’s so much about BA, but hard to think about anything positive to say =/= bashing BA on a daily basis!

      Reply

    • That’s something, but what’s something else, is the Russians refusing to haul American Astronauts back from the ISS!

      Reply

      • ROFL.
        “Wie man in den Wald ruft so schallt es heraus.”
        ~~ The chickens have come home to roost.
        or
        Blowback.
        🙂

        Reply

    • There are 3 AN-124 sitting on the Tarmac at Halle-Leipzig Airport ( Antonov Airlines EU base ). Been traveling there, looked on Saturday.

      Reply

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