July 25, 2022, © Leeham News: Boeing announced last week during the Farnborough Air Show orders and commitments for 278 737 MAXes, nine 787s, and two 777-8Fs.
Now, Boeing must deliver. Some of the 737 delivery positions in earlier orders were promised to begin in 2023. Some in the Farnborough orders are promised from 2025. These early delivery positions are one of the reasons (but not the only, to be sure) that Boeing has won some 1,000 MAX orders since the plane was recertified in November 2020.
But Boeing struggles to bump its MAX production rate. Officials hoped to hit a rate of 31/mo early this year. Boeing hasn’t confirmed a report that it hit rate 31 only this month. Confirmation may come during the Boeing 2Q2022 earnings call on Wednesday. Delays from the supply chain hurt Boeing’s ability to ramp up. With a projected production ramp up to 52/mo by 2025 (the pre-grounding level in March 2019), the question is whether the supply chain will be able to meet Boeing’s schedule.
Among the supply chain delays is a delay of up to six weeks in the delivery of the CFM LEAP 1B engines. A similar delay from CFM and Pratt & Whitney effect Airbus’ ability to deliver aircraft. Airbus has about two dozen A320s stored without engines. Stan Deal, the CEO of Boeing Commercial Airplanes, said during the air show he won’t build “gliders.”
At the end of the first quarter, Boeing had 320 MAXes in inventory. More than 250 were “legacy” stored aircraft produced during the MAX grounding, with the balance of new production aircraft not yet delivered. Of the 250, about 140 were built for Chinese airlines. Boeing awaits Chinese government approval to begin delivering these to airlines and lessors. The regulator recertified the MAX in December, but because of domestic COVID policies and political pressures between Beijing and Washington, deliveries remain stalled.
Delivering stored aircraft has gone more slowly than originally anticipated. Each airplane must be thoroughly checked after long-term storage. All the systems and engines must be confirmed as operational, without flaws. Software must be updated, from the Maneuvering Characteristic Augmentation System (MCAS) to any other updates that were implemented in the new-production aircraft since the recertification. Personnel shortages needed to “wake up” the airplanes contributed to the slower-than-forecast deliveries.
Also, MAXes that were built for airlines that either went out of business or canceled orders due to delays must be reconfigured for new buyers.
“You have a couple of things that happen,” Mike Fleming told LNA during Boeing’s pre-air show briefing. Fleming is senior vice president of 737 MAX Return to Service, Commercial Customer Support, and Commercial Derivative Programs. “Number one is, when you have an airplane come through production, you don’t have to wake it up. Turn it on when you get to a certain point in the production and then you move through. As it came through production, it’s got all the latest changes on it.
“On the stored airplanes, you do have to turn those airplanes back on. There are changes that have come together. Since we built that airplane, there are additional changes that we have to put onto those airplanes as opposed to bringing them back up to speed with the current production configurations. Those additional steps take longer than if you have one come off the line. It’s just because you have additional work to do,” Fleming said.
Boeing also faces uncertainty over the certification of the MAX 10. As part of the US Congressional investigation into the Lion Air and Ethiopian Airlines MAX accidents, Congress adopted a law, the Aircraft Certification and Safety Accountability Act, that among other things have manufacturers (in this case, Boeing) two years to put certain pilot warning systems into the cockpit. It was anticipated that the MAX 10 would be certified by the deadline, which is December 31 this year.
Certification of the MAX 10, however, has been very slow. But the US regulator, the Federal Aviation Administration, stung by criticism over its role in certifying the MAX in the first place, has been meticulously slow in processing certification of the MAX 10 (and the MAX 7, discussed below).
“We’re putting the [MAX 10] through our paces out in the flight test program. We’re nearly complete with all the engineering test points we have to do,” Fleming said. “We’ve flown over 500 flight hours, over 600 flights on that airplane. We recently wrapped up performance testing of the airplane. We’ve tested the new main landing gear. We’ve been going for brake testing, which is a consequence of the heavier weight and then the gear as well.
“We’ve also been testing the enhanced angle of attack system that we put onto the airplane. It’s been flown by our crews. We’ve had customer pilots looking at the enhanced Angle of Attack indicator.”
Fleming said that now it’s just working through with the regulators, providing all the documentation in the order that they’d like.
David Calhoun, CEO of The Boeing Co., told Aviation Week magazine that if the MAX 10 wasn’t certified by year-end, and if Congress doesn’t extend the MAX 10’s exemption from installing the additional pilot warning system which will make the MAX 10 cockpit not common with the MAX 7, 8 and 9, he might cancel the program.
There are now about 800 orders for the MAX 10. Despite placing a firm order for 100 MAX 10s and options for 30 more, announced at the air show, Delta said it might cancel the order if the cockpits aren’t common with other 737s. Delta has a large fleet of 737NGs. Alaska Airlines, which previously ordered 60 MAX 10s, previously said the same thing.
The handwriting was on the wall that certification wouldn’t come this year. The key question then becomes whether Congress will act to exempt the MAX 10 from the December 31 deadline. At least through the start of the air show, Boeing says it hadn’t asked for an exemption. (An update might be coming on that July 27 earnings call.) Some expect Congress to grant an exemption, perhaps as early as the first quarter.
Certification of the MAX 7 also is taking much longer than expected. Flight testing was completed last year, Fleming said.
“We’re in the process of working through all of the documentation requirements to provide the FAA. The one that is with us along has to do with the Aircraft Certification and Safety Accountability Act. We’re working through all that. We’re nearing the completion of that,” Fleming said. “The service-ready activity is already underway. By virtue of the fact that it’s nearly identical to the -8 and 9, we expect it to go into service and perform just like the 737-8/9 airplanes as well. That is just us working through all of the documentation.”
It’s unclear if the MAX 7 will be certified by year-end or whether this, too, slips to next year.
Then on top of these challenges, Boeing had 115 787s in inventory on March 31, a figure that should not have changed much in the intervening three months. Deal, the BCA CEO, said at Farnborough that he believes deliveries will resume soon. The production rate was slowed to about 0.5 airplanes a month. Bringing the 787 production rate back to 5/mo or higher also may be supply-chain constrained.
Despite the boost in orders at the air show, Boeing has a long road back to pre-ground, pre-pandemic levels. But I believe the company has bottomed out.