Pontifications: Boeing is fighting the last war instead of the present one

By Scott Hamilton

Nov. 7, 2022, © Leeham News: With the firm declaration that Boeing won’t launch a new airplane program until the next decade, CEO David Calhoun is signaling he’s content to see the company shrivel into a distant number two position after Airbus.

Amazingly, one Boeing executive told one of the attendees of the investors day event that he (the executive) was okay with that for now.

It’s a recipe for Boeing to follow the path of McDonnell Douglas Corp. (MDC) in its long decline into commercial oblivion. MDC merged into Boeing in 1997. Boeing hasn’t been the same since. Its legacy as an engineering company shifted into one focused on shareholder value. McDonnell Douglas had become a company where Derivatives-R-Us prevailed. Boeing long ago shifted to this mode as well.

Calhoun is a creature of Jack Welch’s GE mantra. Cut costs. Emphasize profits and shareholder value. And while Welch’s philosophy that GE should always be No. 1 or No. 2 in any industrial sector it played in, Welch’s vision of No. 2 was a close No. 2. Boeing’s decline into a distant No. 2, with only a 40% market share against Airbus (and less when looking only at the total single-aisle sector) began long before Calhoun became CEO in January 2020.

David Calhoun. Source: Boeing.

Calhoun told his audience of investors and aerospace analysts that he’d like nothing more than to return cash to shareholders. Knowing who your audience is is part of any speaker’s requirement, so in isolation, I’m not going to chop Calhoun up for this statement. The trick is to balance shareholder return against the future of the company.

As I’ve written in the past, returning 100% of free cash flow to shareholders isn’t necessary. Before suspending the dividends and stock buybacks after the MAX grounding, Boeing returned more than $62bn to shareholders over a decade. Using part of this for new airplanes would have been a good approach.

Calhoun declared that even if all the advanced design and manufacturing is ready this decade, he won’t support a new airplane until the next decade when a new engine that can reduce fuel consumption by at least 20% is ready. Any new airplane must hit this target to benefit airlines and the environment, he said.

Well, there are other ways to hit this target. LNA discusses this behind today’s paywall.

In the meantime, Boeing is content to rest on the past.

Fighting the last war

Three weeks before last week’s investors event, Boeing held another for “influencers.” This included advisors, consultants, and other people identified as key influencers. It was a small and select crowd. They got much of the same pitch that the investors received last week. (To clarify, this does not refer to financial information provided the investment community but rather non-financial data such as eco-aviation, product lines, etc.)

While both events focused on today’s Boeing, both events included statements by executives and displays that demonstrate Boeing continues to be rooted in the past. Absent a new airplane program, Boeing has little choice. But clearly, Boeing is fighting the last war with Airbus. And this combat is already lost.

The itinerary for the advisors event included a visit to the commercial airplanes Customer Experience Center in Renton. Among other things, the group was shown a display comparing the windows of the 777 vs the Airbus A330. This has been a display since the 1990s. For the most part, this comparison is no longer relevant. The 777 Classic is now produced only as the 777-200LRF. There are only 273 orders for the A330neo, rendering this a niche airplane with little future.

Parenthetically and unrelated to this meeting, an advisor who represents airlines in evaluating competing bids from Airbus and Boeing, told me months ago that Boeing still touts larger windows in its presentations. “I’ve never seen a buying decision made on the basis of who has the bigger windows,” he remarked.

Boeing officials also touted the development of the Boeing Sky Interior for the 737. This was developed for the 737 NG in 2009—13 years ago.

Indeed, Boeing has every reason to be proud of the Sky Interior. An offshoot of the cabin design for the 787, the Sky Interior was a real step change in passenger experience—from its changing lighting to enormous overhead bins to the swooping shape of these bins to give a spacious look and a new feel to the 1960s cabin of the 737.

Airbus redesigned its A320 cabin shortly before the rollout of the Sky Interior. While there were advances in the size of the overhead bin and offering a clean, crisp look, the lighting was the standard white and the enlarged bins were traditionally shaped. The Sky Interior, which had not yet been installed on production airplanes, would blow away the redesign of the A320’s new cabin. (Airbus officials were visibly annoyed when I shared this observation.)

An anecdotal story followed years later. Passengers were boarding a 737 with the Sky Interior. The lighting was set to rotate through its cycle. A lap-child baby was staring up, enthralled (it’s very cool to watch young children and babies discover the world). I’d never seen that reaction on an Airbus interior, nor a standard Boeing one.

A decade later, Virgin America had very cool interiors for its A319s and A320s. It’s too bad Alaska didn’t adopt this design for its fleet. The Virgin America cabin was cooler than the Sky Interior.

Value proposition

During the investors day social hour, an executive claimed Boeing will recapture market share with the 737-7 and 737-10. Given that the Airbus A321neo outsells the MAX 10 by four or five to one and the Airbus A220-300 so far outsells the 737-7 by about 2.5:1, the claim seems a stretch. The 737-7 is virtually a Southwest Airlines plane—it has 240 of the 274 orders. Southwest has 442 737-700s in its fleet, limiting the upside potential for the MAX 7.

The MAX 10 now has around 600 firm orders and other 300 or so announced orders which haven’t been converted to firm contracts. The 600 firm represents 14% of the 737 backlog (17% after ASC 606 accounting adjustments). The A321neo represents more than 60% of the A320 family backlog.

The distances between the MAX 7 to the A220-300 and the MAX 10 to the A321neo are steep hills to climb. How does Boeing see this happening? The “value proposition” of the -7 and -10 is how, it says.

All this assumes that the MAX 7 and MAX 10 will be certified next year and not canceled, as Boeing’s 3Q2022 10Q suggests may happen if the cockpit monitoring system EICAS is required. Boeing hasn’t released a cost estimate for installing EICAS. Officials told investors they don’t have an estimate; LNA has been told the cost is in the low billions of dollars, but this is a moving target.

The “value proposition” is a Boeing message that is now decades old. It’s out of date. Frankly, the customers—airlines and lessors—voted with their checkbooks long ago whether they see a better value proposition from Boeing or Airbus aircraft.

Air Wars, The Global Combat Between Airbus and Boeing

While Boeing remains in recovery mode, touting window size, a 13-year-old cabin design, and value proposition, Airbus is outselling Boeing by multiples and aggressively pursuing ecoAviation technology. My book, Air Wars, The Global Combat Between Airbus and Boeing, examines 35 years of intense competition between the two companies. It details how Airbus overcame Boeing’s dominance and the decline of Boeing into the abyss it’s in today.

Reviews and Recognition

Royal Aeronautical Society

Named to the Top 10 List of Aerospace Books for Christmas Choices, 2021

Puget Sound Business Journal

(Seattle area.) No. 1 on the Christmas list of aerospace books for 2021.


No. 1 on its list of Best New Aerospace eBooks to read in 2022.

Chris Sloan, The Airchive

“A worthy successor to ‘The Sporty Game,’” the 1982 book by John Newhouse, considered at the time to be the definitive book about the competition between Boeing, McDonnell Douglas and the emerging Airbus.

Jim Sheehan, Aviation Industry Consultant

There is so much model and OEM information that it is for sure going to become required reading for anyone who wants to understand the last fifty or so years of commercial aviation.

Loved all of the quotes and stories.

Dan Catchpole, Aviation Writer

Air Wars is a tour de force look behind the curtain of Boeing and Airbus’ global competition and, in part, a biography of Airbus’ head salesman, John Leahy, the man who forced Boeing’s hand to re-engine the 737. Longtime aerospace analyst and journalist Scott Hamilton takes readers through the twists and turns of the decades-long battle between the two companies.

Dan Reed, Aviation Writer

Using John Leahy’s long and monumental career as a vehicle for telling readers about the 51-year battle between Airbus and Boeing is both an interesting and inspired choice by the author.

Air Wars is available in paperback and eBook form at Amazon and in paperback at Barnes & Noble.

174 Comments on “Pontifications: Boeing is fighting the last war instead of the present one

  1. Scott, are absolutely right, in that Calhoun, with his rather arrogant posture on Boeing’s future new aircraft design/production, and still insisting on the shareholders Goals, has ultimately given The Boeing a “ Coup De Grace” STAB sealing its eventual down fall. and spelling disastrous results, including for their loyal shareholders. Time will Tell!!!

    • What Scott fails to say is Calhoun added that 25-30% is really desirable. As that is impossible, its just self spin fig leaf stuff.

      I don’t agree with the last war analogy, part of it clearly is trying to live in the past and that is different.

      Walsh built a Pyramid scheme and the remnants that were successful are the engines and medical imaging portions. The rest were sacrificial to that and we have seen where that goes (Calhoun living in the past or simply could care less, a real leader adjusts so take your choice, its one of the two – well 3, getting his money while the getting is still there)

      Calhoun won’t be around for it though. In the US they were called Carpet Baggers though that is for the sleaze aspect not the full operation.

      Defense will remain, the US is down to only 3 major defense contractors though even that begins to looks iffy without BCA to offset bad times.

      The way to judge people is what they do and not what they say. Calhoun actually gives insight into what he plans to do if you read the Spin and the totality of what is said. You just have to be a Missouri type, prove it and he has not proven anything, well he has but in a negative meaning.

    • I think that in the mind of Calhoun (and his GE minions) there has only ever been one war: to boost the stock price as much as possible as soon as possible.
      Nothing else matters, there is no other war.

  2. “Amazingly, one Boeing executive told one of the attendees of the investors day event that he (the executive) was okay with that for now.”

    He’ll just have to be okay with that, because he doesn’t have the funding — or the engineering talent — to be able to do anything about it.


    This (strangely melancholy) article is somewhat reminiscent of Downton Abbey: a once rich and privileged elite fails to move with the times, and pays little attention to finances — now, they cling desperately to vestiges of the past, and have difficulty grasping the fact that they have become impoverished and completely irrelevant.

    • I find this all very depressing.

      Boeing used to be a company that I as a kid and then as a professional engineer could only look up to as “amazing” (even as an east-Pondian). And then they, seemingly deliberately, chose to stop being amazing, then chose to build fatally flawed aircraft, and now seem to have chosen to go extinct.

      The melancoly of the article is fully justified. The poor condition of Boeing ultimately goes back to the policies and attitudes of politicians. The only reason why the poor business practises exist that have lead to the decline of Boeing is because policy makers have let them. One day they’re going to wake up to find there is no more Boeing, wonder why, and then start realising too late the strategic and geopolitical consequences that will result.

      The USA is of course far from unique in having ineffective politicians. Here in the UK we’ve just got rid of a prime minister whose entire premiership was outlasted and outperformed by a lettuce, and who apparently held the view that the UK doesn’t need a manufacturing sector at all…

      • I think you are missing the point Scott is making that GE-McD-Boeing management used all profits to buy back shares and boost the stock price rather than reinvesting in their product line and the future. Politicians had nothing to do with decision, generous CEO bonuses tied to share price no doubt did.

        • Except that the politicians allow such business practice to happen in the first place. That used to be illegal, if I recall correctly…

        • Well, politicians do have something to do with it, as regulations regarding stock buybacks and dividends, which previously would have prevented the amount of stock buybacks that Welch helped pioneer, were removed completely or significatly loosened during the Reagan administration.

          And this was of course never reversed even once the effects on the manufacturing sector and the gap between middle class and C-level became apparent.

  3. I think Boeing’s leadership is overly cautious. You can delay the program launch to eternity waiting for the “perfect” technology and business case.

  4. Has Boeing got the GE ( Welch ) illness .

    Time is telling a similar trajectory, unfortunately.

  5. It never fails to amaze me to see to which lengths human beings are willing to go and how much they lie to themselves only to avoid having been wrong, while that’s just what brings progress and success. It appears Mr Calhoun is on the other end of “wise” in this sense, being so incredibly clever as to shunning all those strategic and operative blunders he and his fellow managers have committed over the past two decades.
    Boeing needs to go through a total change in the company culture putting science, engineering and most of all customer happiness to the fore. As soon as they do that they will recognize that their current product line is more of a liability than an asset and that they have to re-invent it from the bottom up. Of course they will have to look seriously in all those “uncomfortable” corners like hydrogen for example, in their lack in engineering power, in their declining market position etc. Only then will they be able to assess the situation they are in correctly and to develop a strategy for product development and how to rebuild the company.
    The question for me is if that is feasible without going chapter 11 first.

    • Ford did it.

      But do not assume what Calhoun is doing is a blunder. He simply does not care. He wants to loot the company while the looting is still there. He just happens to be at the end of the line who did that not the beginning.

      Looting is the only playbook he knows so he tries it (and somewhat successfully in getting a huge bonus for doing his job, aka MAX) so unlike the brave Orchestra on the Titanic, Nero comes to mind.

      Can he get one last Golden Parachute out of Boeing? That is what it is all directed at.

      While I castigate Calhoun , it is also the board that is complicit. They too are part of the enabling.

      • @TW

        Spot on! They are all complicit.
        With Ford, remember who led them out of the darkness 👍

        The same would have been true if he had been promoted at Boeing.

      • Big difference!!!
        Ford’s BOD had the foresight to mortgage all its assets to raise fund ahead of coming crisis. OTOH BA is drowning in its $55 billion debt and cannot dig itself out! One is the polar opposite of the other. Sigh.

    • I only add what the character of Hans Landa said in a movie:
      “Because I’m aware what tremendous feats human beings are capable of once they abandon dignity.”
      Boeing abandoned dignity long time ago: Bribes, lies, people being killed.
      It is a tremendous feat to finish the legacy of Boeing!!!

  6. Today’s airplanes are commodities. If Boeing sells cheap 737s, they will be fielded. The tech that matters is being offered by others (internet/wifi/seats).

    Boeing and Airbus are not where the innovation action is. And that is OK – the innovation curve has flatlined.

    Biggest Boeing error in last 30 years was destroying the tooling for the 757. That aircraft, re-engined, would have made a dandy NMA. Lighter than the A321xlr, and more capable.

    • @iWe – Please be more precise in characterizing airplanes as “commodities.”

      That perception is widespread in the financial community. Commodity-like products are the hallmarks of a “mature” industry. Business doctrine says that cost cutting and investor-centric business models are appropriate for mature industries with commodity-like products.

      I concede that airplanes look commodity-like to airline customers, and that perception can captivate the imagination of financial analysts, whose life experience is all about buying and selling commodities.

      That said, the design, manufacturing, testing, and field support of airplanes are NOT commodity-like. This fact is abundantly clear in the delays, cost overruns, fleet groundings, late deliveries, and embarrassingly poor performance on the 787, 747-8, 737 MAX, and 777X programs. The performance-driven aspects of making airplanes are outside the life experience of most financial analysts, and contrary to their intuition.

      This is really the heart of Boeing’s leadership problem.

      • @Stan

        Bingo! You are directly over the target.
        I might add the same is for the defense and space programs.

      • Stan:

        Financial analysts are like weather forcasters, they use a lot of wing bang computer stuff to make themselves look good, but fail a lot (if a forecaster starts out as an optimist that is soon changed!) But a Financial Analysis is supposed to use numbers not intuition.

        But also keep in mind, each and every FA would be filthy rich if you could forecast stocks and they are not.

        And even an aircraft is not a commodity, if you Smart Phone fails, its one in hundreds of millions, a MAX crashes and the world sees it (there a huge number of tragedies all the time, they just are not page worthy)

        So, for the Aviation Industry avoiding crashes is a requirement and therefor safety is (should be) the top consideration. But as we have seen, with the loot and pillage mindset that gets gutted and then the inevitable happens. The 787 could easily have been in place of the MAX.
        It was just a roll of the dice it was not.

    • The 757 is signficantly heavier than the A321XLR. It was just too much aircraft for most needs which is why it stopped selling.

      • Yes. It had a bigger wing ( span and area) so its capability over long range was better and could store more fuel ( not like the XLR and LR which use the fuselage)
        The idea that tooling for 20 years back could be resuscitated and the highly manual build methods of the time used again is just barmy. Nor is there an engine for them to use in the right thrust capacity.

  7. “All this assumes that the MAX 7 and MAX 10 will be certified next year and not canceled, as Boeing’s 3Q2022 10Q suggests may happen if the cockpit monitoring system EICAS is required.”

    With the anticipated Republican victory in midterm elections, I think Boeing can be reasonably sure that any safety requirements they find onerous will be waived.

    • @JS: I agree that an exemption should be forthcoming, but until it is, it isn’t.

      • If an exception does come, there’s no guarantee that other countries will follow suit.
        Since most present orders for the -7 and -10 are from US carriers, this doesn’t necessarily have to lead to issues — unless those carriers want to fly across US borders. It will, however, put a dent in the future order book.

        • Bryce:

          Its a US LEGISLATIVE requirement not an EASA and other AHJ Regulation.

          No one else tried to impose it no thought it had any merit (nor does it). Kind of like an appendix, its there but does not do anything other than cause problems for some.

          EASA did feel the third AOA system was needed and that indeed did become a factor but as the third AOA is based on -10 cert, how now brown cow?

          • EASA and other regulators can make their own rules — we’ve seen this in the case of China.
            There is a legal concept called “the Principle of Legitimate Expectation”: a regulator can invoke it to say that there was a legitimate expectation that there would be no new EICAS-less certs in the US as of 2023 — and, just because the US has backtracked, doesn’t mean that it has to follow suit. Voilà.
            Besides that, EASA did say in its re-cert AD that it would be re-visiting the 737 CAS, and that BA had agreed to come with proposals to improve it.

            This issue is far from settled.

      • Only a few months ago Calhoun was quoted as saying, “we’re not out of the development business yet….”
        Now they ARE out of the development business.

    • “With the anticipated Republican victory in midterm elections, I think Boeing can be reasonably sure that any safety requirements they find onerous will be waived.”

      Well, the first part doesn’t seem to have happened. The exception can still happen, of course, but it just shows, what passes as strategy with Boeing these days: Politics instead of engineering.
      Problem is: Boeing would have the wherewithal to do stellar engineering if they so wished. They would absolutely be able to do EICAS. But they don’t want to. Instead, they’re pinning their hopes on election results and putting their bets on the right horses there. Try to take a short cut.
      And worse: They seem to have put all their eggs in one basket. Lobbying only, and actually working on getting EICAS implemented in case lobbying fails does not seem to be on the agenda. They’d rather kill the -10, which is their best bet of at least staying in the game against the NEO series.
      And yet worse: It looks like they’re trying the same approach with the 767F.

      Reminds me of another time when instead of innovating, Boeing chose to try and kill a competing product not in the marketplace, but by leveraging courts and politics. Which in the end handed Airbus the A220 at next to no cost, exacerbating Boeing’s issues.

      I think that’s the sad thing about where Boeing is headed – they’ve started down their current path with the MDD merger. There was a brief period of “we learned a lesson” after MAX (although even that only happened after a *lot* of pushing), and as soon as it came to making any decisions, absolutely no change was evident. Still hoping for the policy exceptions for the 737 AND 767 instead of doing engineering homework, relocating their HQ to be closer to political/government spending, consolidating 787 in the place with the bigger quality issues (but no unions), planning to ride out the current portfolio another 8 years at least. I’m sure the list isn’t complete. A sad list it is, too.

  8. So Boeing will go 25 years without a new development? B787 started in 04 and was flying in 09.

    I understand the B777x is a major development with the new wing.
    But how about the workforce, the tech, the knowledge of developing huge new programs? Will that preserve over 2 decades?

    Especially in this situation, where Boeing is the clear No. 2 now in civil aviation. The Max is no match for the Neo and in SA Airbus outsells Boeing 2 : 1 (A220 + Neo) vs. Max. In WBs, it looks better, but the B787 has had so many flaws and issues that it propably will never earn any money. While the B777x is a 6,5 bn. write off with 300 orders. Airbus has a winner with the A350 that they are still improving, and their 300 orders A330 derivate did only cost 2 bn. and might still get the one or other sale.

    The fact that every development Boeing did in recent history had major flaws is hard to argue against. B787 was a disaster with the grounding, delays and cost overrun. B748 did miss the market, was late and too expensive. The Max was propably murder and had 2 hull losses with 346 lives that Boeing did cost.
    The Kc46 is causing issue after issue and will not make any money.
    The B777x did cost them loads of money and will take 10 years. For a derivate.

    Boeing needs to do a new program, only for the sake of proofing to itself and the world it still can build good airplanes.
    This is a major factor.

    They need an NMA, but what they need more is a step forward in their culture, in their ability and in their belive to still build great airplanes.
    Nothing worse than a management that has given up on their own company.
    Boeing, stand up and show it to the world.
    Show that you can still develop great planes.

    • Sash:

      Basic fact is Calhoun does not care, he is gone in a few years unless they can him.

  9. United Airlines chose the DC-8 over the 707 partly because it had larger windows, reminiscent of portholes on a cruise ship, as well as because the plane was a tad wider, allowing for slightly wider seats.

    That was a Pat Patterson thing when CEO’s could make decisions.

    • It was in an era that fares were fully regulated

      Features drove the decisions not economics as you just passed the costs on via a request for a fare increase

    • The history gives different reasons
      By 1955 the Boeing 367 Dash 80/Kc135 was only 5 abreast and flew in 1954 and Boeing had to redesign the fuselage to go to 6 seating to match Douglas ( they had proposed a jump from 132 in to 144in and finally to 148 in)
      The original 367 model was the KC-97 Tanker and they retained the upper fuselage diameter

      ‘United proudly highlights that in 1955, it became the first carrier in the US to order jetliners amid an order for 30 DC-8s. In fact, the operator played a vital part in the development of the plane. The company told Douglas exactly what it was looking for..’

  10. The critical change Boeing has made since McDonnell Douglas “took over” is that they listen to customers now, instead of having the coolest planes engineers can dream up and assume airlines will buy them because they are the coolest planes engineers can dream up.

    Airbus has absolutely nothing new in the pipeline. They may have some luck with the A220-300, a plane that will be almost as big as a 737-8, with less range, but better gas mileage and will be the absolute last and biggest variant. Otherwise, US airlines aren’t tripping over themselves to buy 100-125 seat planes. Everything is about seat/mile costs.

    It’s no shock that Airbus scored with the A321neo and A321XLR. Being able to use the larger diameter engine gave them an opportunity to fill a market niche Boeing couldn’t. They offered a plane that was “good enough” while Boeing and its customers couldn’t find a consensus about what the “797” was going to be all about.

    It’s probably just as well as, according to UA’s Scott Kirby, everything has changed after Covid.

    There is no more “betting the company.” That’s idiotic.

    Narrow body customers are extremely cost conscious and risk averse.

    Widebody customers live in a different universe.

    Everything is different when catering to Ryanair vs. Singapore Airlines.

    • I agree, Airbus pipeline looks pretty empty too.

      But they have the A220-500 coming, which attacks Max 8 and A320neo.
      They have a potential stretch of the A350-1000 in hand, once they see demand and RR can get more out of the Trent XWB.
      Also, it might be an idea to upgrade the A350 engine once the RR Ultrafan will be available near the end of the decade.
      On top, there might be further investment in the A321neo, as new wing was discussed.

      And Airbus has a huge point in A321neo production, if they can scale that up they will humilate Boeing.

      But Airbus doesn`t have to do anything.
      It`s enough for them to produce and sell Neos and A350s.
      Neos outperform Max, and A350 sells en par with the B787.
      Only family Airbus has and doesn`t run well is the A330neo. But 300 sales for an engine update that did cost 2 bn. isn`t too bad, especially if you see that it has a state of the art all composite competitor.

      Airbus is winning, Boeing is whining. Why on earth would Airbus mind if it doesn`t change till 2035?

      • I would add the A330NEO is also pretty useful to reduce Boeing profit margin on the 787 by forcing the latter steeper discount to win orders.

    • This. I think they simply need to jump into the cold water with a new product, even if the business case isn’t 100% guaranteed, but likely.

      I think Calhouns statement relates to EIS during mid-30s, which means a new airplane program would have to start around 2029. Still 15 years after the 787.
      To be fair, it is not really clear what Airbus is doing atm. except for roduction ramp up amd the A350F and A321XLR certification.
      Has there ever been such a long time with Airbus having no new clean sheet aircraft or significant upgrade under developement as now (A350F doesn’t count, an A350NEO would)?

      • WF:

        Airbus has no need for a “program”. They can now outlast Boeing and with only one mfg in the business? (yea yea yea I know how China and Russia are going to compete, truly an Oxymoron)

        Boeing has two program gaps and maybe three with the 777X (note how Calhoun is cutting everything he can while pulling wool)

        The only reason Boeing has those gaps is failure to bring in a modern single aisle that matched (did not have to exceed) the A320 series.

        Unless TBW is a game changer, incremental improvements is all we get.

        Aviation is a 100+ year old industry and the magic bullets were implemented some time ago. Even CRF took new engines to make any kind of a jump. And the engine tech with GTF is now known.

      • Airbus is working on its Wing of Tomorrow; unlike BA, there’s no need for them to falter over a decade of a project that never stands on its own.

        • Furthermore the “value” proposition would only mean more cost cutting, less R&D etc. No doubt vultures are circling above, Calhoun’s statement illuminates the wind down mode has begun.

          • Well when we have Boeing management of yesterday as a competitor (management) who needs a new wing?

        • AIRBUS has also been working for years on a new generation of composite CWB Center Wing Boxes for the SA range

          “The aim of the TP124 CWB project is to develop a thermoset composite center wing box compliant with high production rate. The main principal is to use a high level of parts integration thus: Integrate hot debulked stiffeners into a male tool and lay-up the skin above. Then all elements are Co – cured in a ‘one shot’ process. The objective being to develop low cost, innovative, composite CWB manufacturing processes which are compliant with high production rate.”
          benefits will be very significant: fuel capacity, weight cost…..

  11. WAY back in the day of DC-6 and 8 piston planes- Douglas claim to fame was a top notch AOG ( Airplane On Ground ) organization. One could get ‘ service’ and ” parts ” almost anywhere in the world. Boeing Stratocruiser was like the friendly used car lot- You flew it off the field, it was yours. Boeing Service started with ‘ check please ‘ attitude.
    But when the 707 – Convair 880- and jet DC-8 came along, Boeing woke up and organized the best AOG organization ever. ‘ we service what we sell ‘ was a fitting description. As power point rangers came to the fore, that attitude changed.

    • I think Boeing still services what it sells well.

      I never heard any complaints about Boeing and the 777F support (in fact the 777F got accolades from management and the mechanics)

      While management liked the Airbus A300/310Fs, the mechanics did not.

      Having worked on European designed and even European designed and built in the US equipment, I got that. None of it was repair or maint based.

      IEEC was a joke and you went NEMA if you wanted it to last. I had to get cardboard to shade the displays on the GPU (and the mechanics giving me weird looks, like I was eating a little bird under the hood)

  12. Channeling Jack Welch and 90’s business leaders, the solution is obvious. Transfer all IP and manufacturing to COMAC and resell the aircraft under the Boeing brand. My consulting fee is $9mn, thanks.

    • Neuton:

      Sounds like Strategic Source Initiative at FedEx.

      It only cost them 7 million last I heard and if you wanted to get a dirty look or annoy management, just mention SSI. The gift that kept on giving.

  13. Won’t “launch” another program for ten years? So the next EIS would be twenty years? Except the 787, everything will be so long in the tooth it will be out of production well before this. Odd strategy.

    • Ted:

      They have one trick left with the 787 and that is a new engine. They can copy Airbus example. It would work for the 787 vs the A330!

  14. Outstanding piece Scott! Thank you.

    The MCD/GE methodology at Boeing has doomed this company. Reading all these other comments it’s clear we are all just shaking our heads at Calhoun’s thinking, the BOD.

    The 787 program is now 20 years old, yes it was groundbreaking technology and it continues to offer airline customers exceptional economic benefits. But this program, as others have commented, is a disaster and frankly Boeing isn’t really making any money on anything including defense programs.

    I want to see this company thrive and compete but the current people running this company don’t think the same.

    The breakup is forthcoming. But who’s going to step up 🤔
    The Northrop’s and Lockheed’s bailed out of commercial decades ago.

    • Who’d want BCA?
      – An antique NB product line, featuring an order book with (very) limited margin. The total margin on the current order book is not much more than BCA’s share of the present debt mountain.
      – A WB product that is nearing the end of its order book (only 300 units to go).
      – A braindrain-eroded workforce.
      – Exclusion from the fastest-growing aviation market on the planet.

      Any bids?

      • @Bryce

        Agreed. I’ve commented the same in other posts.

        The airlines buying the mad max and 787’s are at huge future risk when Boeing files Chapter 11. Their suppliers are going to get financially destroyed and getting engineering support and parts will become very difficult.
        They will follow previous bankruptcies, wipe out all the debt and pensions, then start over…. Possibly.

        Their total debt load including pension liabilities are overwhelming now.
        Will the US government bail them out as they did GM in 2009?

        • There is big bucks in support.

          Mitsubishi is still carrying the dead BBD regional jet business. Longview bought out the twin otter and is back in production with it as it is with the CL415 (upgraded to the CL515) as well as the Dash 8

          Just not enough lucre for the likes of Calhoun

          • Sigh. Mitsubishi didn’t buy BBD’s CRJ program to make a buck or two from the support op. Apparently a lack of perspective!

        • >Will the US government bail them out

          Well at least then we won’t have to hear about unfair subsidies to Airbus anymore.

          • Actually, we don’t have to hear about such unfair subsidies even today: BA has clocked up more than $75B in state and federal subsidies since 1994.
            There’s a dedicated “subsidy tracker” website that keeps tabs on this.

          • That subsidy tracker is complete nonsense, well it would be if you follow it
            Apparently selling its product to the government, sometimes at a loss is a subsidy

            or the use of normal tax credits available for most companies is a subsidy
            too funny

  15. While not confronting headon all the Calhoun negatives expressed by most, I don’t see any real challenge to his analysis that untill and unless there is a leap forward in engine offerings providing real ROI on Boeing airframe future investment going forward on a new project is highly unadviseable and speculative. Boeing is reaping the results of not having come out with a clean sheet vs the MAX decision. Now it’s too late. No point crying over spilt milk. It’s done. Now live with it. See you in 2035.

    • Good point. Let me add some background information here.
      Historically, advancements in engine technology, of the order of what Calhoun is looking for, didn’t happen in isolation at the engine companies. There used to be armies of propulsion R&D engineers at aircraft OEMs who would come up with new concepts for how an engine can become 25% more efficient, (or faster, or quieter), then they would figure out if such an engine would fit with an intended airframe. Once they have figured out the integration and secured IP, they would engage their counterparts at the engine companies via an RFI to see if the materials and build technology can be pushed to that level over a given time frame, working toward a demonstrator engine. This would then spool up additional R&D work by the engine companies to resolve the issues discovered in testing and lead to a production model being certified as a commercial airplane program was launched in parallel. For the past 2 decades, under the mantra of ‘Derivatives R Us’, this has been largely a one-way street: i.e. marketing/product strategy declares they need a derivative engine with 5-10% improvement and the engine companies would come back with a (mostly) derivative engine. This worked since smaller engines & airframe were largely decoupled. The industry has arrived at a hard limit recently: now the airframe is the limiting factor for fitting the new engines that feature much larger fans (both the MAX and 777X are the extreme cases illustrating that), and IMO without a new way of installing an engine, no easy significant advancement is possible, as there are other thermodynamic and environmental limits that prevent engines, for example, to operate at hotter turbine inlet temperatures.
      I think if Callcoun’s words means that at present no serious effort is underway to figure out what it would take to get to the next airplane. It seems that BCA’s top brass is counting on the engine companies to deliver a package to get them to 20-25% improved fuel efficiency, with minimal airframe OEM involvement and investment upfront, business as usual. For various technical reasons, I think they will be disappointed and will learn it’s not as easy as just waiting. Engine programs such as RISE have demonstrated one way a turbine engine performance may get there within a decade, but that would require serious design research on the aircraft OEM side to actually be realizable. I don’t think Calhoun and co can really afford to look for a way forward, and under financial pressure, they really don’t have a choice but to sit & wait as they push out more legacy models.

      • The article for subscribers ( which wasnt closed for about the first half hour) says that Boeing believes it can get a good % from the airframe and they specifically talked about folding wings. The normal airframe improvements are order of 3%.

        This should gladden your heart that the Boeing/Airbus airframe OEM are back in work looking at what ‘they’ can do.

        • In other words a more throughly modified max11 that meets all the new FAA standards. New sets of wings perhaps with longer landing gears. But likely to also cost a bomb for boeing.
          But the same trick can also be applied by airbus. At the end of the day, this additional iteration will just further push the clean shee design further down the road. The new derivative may only give 10-15% improvements like what we see on the max vs NG. And then that will set the new baseline for the clean sheet in the future. It is just never ending of kicking the can down the road.

    • What about a 5-10% engine combined with innovation of the airframe? It must be evaluated in detail of course, but there are a number of technologies which could give significant improvements:
      1) Alternative wing forms: Truss braced, blended wing body, box wing.
      2) Boundary layer suction.
      3) Windowless fuselage.
      4) High composite share even for volume models (narrowbodies)

  16. Many people are aviation romantics… and nothing wrong with that, I am one. However, the finance sector has changed beyond what the majority of people can imagine. More than ever, a dollar in hand today is worth more than 2 tomorrow (in commercial air framer new-program speak, more like a loss… and not just tomorrow but for many years).

    • Josep:

      While the first part is true, the other part is a form of Piracy and that is a dead end street.

      Granted if you only get while the getting is good that can work.

      As Scott said, there is a balance and Calhoun etc are tipping the scales into oblivion.

    • @ Josep
      I think you’re right: a lot of commenters seemingly don’t grasp — or just don’t want to admit — how dire the financial situation is. Some food for thought:
      – BA is spending more on loan interest than it is on R&D.
      – BA is spending almost $2.5B per year on loan interest –that’s $2.5B of EBIT that evaporates every year.
      – The cumulative nominal margin on BA’s entire MAX backlog is not enough to repay its debt of $57.2B.

      • @Bryce

        “The cumulative nominal margin on BA’s entire MAX backlog is not enough to repay its debt of $57.2B.”

        Max backlog? You are being very generous.

        Everyone! To the financials!!!


        Most recent Q3/2022:

        “Commercial Airplanes delivered 112 airplanes during the quarter and backlog included over 4,300 airplanes valued at $307 billion.”

        So, what does $307 billion in sales, get you in margin? Well, let’s be the most generous, most positive we can be for Boeing and use 2018 as the benchmark, their record year:


        BCA margin from Table 4, page 3 was 13%.

        On sales of $307 billion, the Earnings they would get, is $40 billion (rounded up).

        For everything.

        • Calhoun tells everyone that BA is going to produce the MAX at a rate of 50/mth; implying BA has to receive give or take ~600 order year after year after year … 😁 I’m a bit skeptical considering dark clouds over the horizon.

        • The 737 has higher margins than the newer programs. as well exclude defence
          Back in 2019 it was ‘profit’ on each 737 of about $12-15 mill, gross margin over cost of production will be higher again
          Say 3400 737 in backlog of orders
          That comes to gross margin of say $68 bill if they dont sell another plane on top of the backlog…for 737 only

          • Oh Duke….sigh

            So in 2018 BCA delivered 580 – 737’s. At $12 million profit per, that gives you $7 billion. At $15 million, that gives you $8.7 billion.

            The ENTIRE margin for 2018 was $7.879 billion.
            (Do you see something wrong, yet?)

            Then they delivered 48 – 777’s. Not ‘newer’ ones, as you put it.

            27 – 767’s. Hardly new.

            145 – 787’s.

            6 – 747’s.

            Margin’s on widebodies are higher, dollar value speaking. By your numbers, they made a dollar value average margin from a high of $4.3 million to a loss of $3.5 million on each widebody they delivered in 2018 (from your range of $12-15 million on each 737).

            Does that sound right to you?


            Well, don’t believe me – here is what BA had to say about it, in their notes:

            “Commercial Airplanes fourth-quarter revenue increased to $17.3 billion reflecting higher deliveries and favorable mix (Table 4). Fourth-quarter operating margin increased to 15.6 percent, driven by higher 737 volume and strong operating performance on production programs, including higher 787 margins.”

            Higher 787 margins. Does that sound like they were booking a profit of only $4.3 million on a ~$150 million sale? Or on the 777’s?


            Again from the report:

            “The 737 program delivered 111 MAX airplanes in the fourth
            quarter, including the first MAX delivery from the China Completion Center, and delivered 256 MAX airplanes in

            So out of the 580 – 737’s they delivered, 256 were the ‘newer’ (as you put it) Max’s.


            $40 billion to $51 million, btw – is the range for 3400 Max’s delivered at between a fantastical $12-15 million margin.

            BTW – you got any proof to back up those numbers?

            In addition to all the above, I’d love to see how BCA makes that margin on the 700-800 jets it sells to SWA at about $35 million a pop. I’m guessing Ryanair get’s theirs at about the same level.

            (and yes, to refresh your memory, I have already provided proof that SWA pays around that, for it’s 737’s).

          • “Back in 2019 it was ‘profit’ on each 737 of about $12-15 mill”

            No doubt the alternate fact crowd didn’t disappoint!! 🙄

          • The 2019 claim was based on the 2018 financial year figures , a $10.5 bill profit which came in 2019

            2019 financial year numbers didn’t come out till 2020

            Clearly you don’t know a FY from a calendar year

          • @ DoU
            “Clearly you don’t know a FY from a calendar year”

            BA doesn’t have a broken fiscal year — its FY corresponds to a calendar year.
            It seems that your assertion above is more applicable to you than to Frank 😉

          • @Duke

            “Losses on other lines and projects reduced the total Boeing profit.”


            In 2018, the year which we are talking about, the best year ever – all divisions; Commercial, Defense, Space & Security & Global Services were profitable. $7,879 billion, $1,592 & $2,522 billion respectively.

            Stop trying to bring in 2019. This is about 2018.

            Stop trying to bring in other division, this is only about Boeing Commercial and the margins there.

            Boeing commercial had Revenues of $60,715 billion, had Earnings of $7,879 billion and delivered 806 aircraft. Full stop.

            You claim they made between a $12-15 million margin (you used the word ‘profit’ then said gross margin is even higher).

            Your numbers don’t add up. You’ve offered nothing as evidence, except a red herring about the groundings which happened after 2019.

            And then you try to run me down. Typical.

            BTW: Net earnings from continuing operations is an AFTER TAX number, that $10.5 billion number you pulled out of thin air.

            It’s right here on page 18 of their 10-Q

            Earnings from operations 11,987
            Operating margins 11.9%
            Effective income tax rate 9.9%
            Net earnings $10,460
            Diluted earnings per share $17.85


            Let me also quote why margins from BCA were so good in 2018:

            “Earnings from operations in 2018 increased by $2,427 million compared with 2017. The increase in operating earnings reflects higher revenues and improved operating margins. The increase in operating margins is primarily due to higher 787 margins, improved cost performance and favorable delivery mix.”

            But yah, you’re going to tell us that 737’s make a higher margin than widebodies do.

        • @ Frank
          Yes, I was being generous — but for a specific reason.
          We’ve both calculated the same thing from different directions.
          You took total margins on all commercial aircraft sales from good years in the past, and derived a “real” margin per unit.
          In contrast, I used a “nominal” margin value calculated by JP Morgan for the MAX 8, which assumes a “standard” industry discount of about 45-55% and arrives at a figure of $10M. I then took the number of units in the MAX backlog and multiplied it by that — nominal — $10M.

          Of course, we both know that the “nominal” JP Morgan margin is very rosy compared to the “real” margin on MANY recent MAX sales, and that actual margin on inventory is very low / zero / negative.
          A similar consideration applies to the 787.

          One way or another, isn’t it very informative to show that BCA just won’t have enough income stream to match its debt? And that’s not even considering the erosive effects of interest payments in the meantime.

          • @ Frank
            Here’s another interesting statistic for you.

            BA is currently paying $2.5B per year in loan interest.
            Using a nominal margin per MAX-8 of $10M, that corresponds to 250 MAX-8 planes…or 20.88 per month.
            Just think about that: 21 line-produced MAXs per month are needed just to pay the current interest bill…

          • @Bryce

            Yes, the old Interest Expense.

            Well – since BA spent their cash on buybacks and stuff like that, they had to go out and borrow money for all that Inventory that is sitting there. You’ve heard me say this before, but every day that goes by and a built aircraft doesn’t get delivered, the interest expense on that plane increases and the margin decreases.

            Let’s say that they sold a 787 for $150 million and they were going to be able to make it for $125 million, for a tidy $25 million profit. They had to borrow that $125 million. 5% now?

            Having it sit there for a year cost them $6.25 million. Margin reduced to $18.75 million.

            100 Dreamliners probably cost them upwards of $625 million to keep around for a year.

            We won’t even go into the re-work to get it fixed. No need to pile on, here.

          • Warning:
            The inventory sitting on BA’s B/S is also financed by predelivery payments. Many analysts forgot to account for that. Quite likely loans + PDP > undelivered inventory.

    • “…A dollar in hand is worth more than 2 tomorrow….”
      You are missing a few points:
      1. Calhoun has never said that the decision to kill the NMA was due to finances, ie lack of means. He has always said the decision whether or not to launch hinges on the business case, ie can a new plane achieve 20% greater efficiency? Until a few months ago he said the decision would hinge on whether or not the new digital development tools are up and running.
      2. Before the Max and Covid hit, Boeing was returning greater than 100% of Free Casf flow to investors. It was essentially borrowing money to give it to investors. The number that Scott provided here was $62 billion. At any time they could have saved $12-$15 billion for a new plane. This was choice freely made by the GE cash extraction execs running Boeing.
      3. It would make absolutely zero difference if Boeing were swimming in cash at the moment. They would simply give it all to the shareholders rather than invest in a new plane.

      • 1. Confirmation that BA has entered the later stage of winding down which began from the 2010s

        2. I also question how much one should take words from guys like Calhoun at face value, he no doubt has shown repeatedly put WS and his financial interest ahead of the L.T. survival of the co. and the Co. habitually painted a better picture i.e. doling out pacifiers to watchers/listeners. Does he have a good grasp of the reality? Is he always honest and truthful??
        a) he and the board continued to declare and pay out dividend in 2020 despite the writing on the wall
        b) after being forced to dial back production of 787 to 10/mth the Co. predicted a quick rebound to 12/mth in 2023

        3. BA certainly has more or less painted itself into this MoM dilemma (a consequence of placing S.T. financial interest: a quick reaction to Airbus’s probe, above all else L.T. strategic planning.

        4. In recent years, the repeated delays of the 777X, and the MAX7/10 didn’t give much confidence the R&D was working properly.

  17. Calhoun will be retired long before 2030; his “guidance” of long term strategy now is meaningless.

    As long as Boeing managers circle up while telling each other that they are great leaders (or simply leaders), the company will never fix the drag or improve the engine efficiency.

  18. “Given that the Airbus A321neo outsells the MAX 10 by four or five to one ”

    Which is true but doesnt tell the context . Boeing also sells the Max 9 which doesnt have an Airbus competitor.

    As the Max 9 and Max 10 are the counter to A321 shouldnt it be the orders for both versions be compared to the Airbus larger model

    The A320 is compared to the Max 8 – which is longer ranged and higher seating capacity
    ‘The 737 MAX 8 is 1.5m (5 feet) longer than A320 with a 2.5m (8.2 feet) longer cabin. This brings a 12 seat higher capacity, everything else being equal. ”

    The 12 seats is the same difference between Max9 and Max 10 ( which almost exactly matches the A321)

    The Boeing double – Max9 and Max 10 sales should be compared to the standard A321 . The A321XLR is quite different and is out on its own.

    • With 8500 orders for A320neo fam., who carse about 200 Max 9 orders?

      Or for real: The Max 9 was massacred by the A321neo, that Boeing had to go for a desperation 1,7m stretch to at least loose not all customers.
      And then they couldn`t even get it certified before the deadline.

      Max 9 & 10 have together about 1200 orders.
      A321neo has 4525.
      At least 4 times as much.

      And Airbus would have sold more – if it could produce them.
      Airbus has 8500 orders for the Neo + 800 for the A220.
      Boeing has about 5000 for the Max.
      SA is a clear win for Airbus.
      I don`t see you have a point there at all.

      • The comparison was the standard A321 sub type, not ‘all A320’

        You could compare with all 737 ever made , that will be 11,154 plus the number on back order maybe another 3-4000. Case closed on that
        Lest stick to the future orders for A321 and Max9/10 shall we.

        • I read that BA is losing to AB even in the SA in-service number. Nothing to brag about esp BA historically had a leading position. 😂

        • @Duke

          Yes, at it’s not even close:

          Since 1966 Boeing has made 11,154 – 737’s of all different variants:

          737 Original (100/200)
          737 Classic (300/400/500)
          737 NG
          737 Max

          Since 1986 Airbus has produced 10,516 – A320Ceo family aircraft.

          Since 2016 Airbus has produced 2,416 A320Neo family aircraft. That’s ~13,000.

          Boeing had a 20 year head start and they have been outproduced and outsold.

          • The 10,000 planes produced is up to recent times.
            You can’t double count another 2400 since 2016.

            Anyway the single aisle sales boom didn’t start till the eighties so Boeing didn’t have a head start

        • @Frank
          AB currently is outproducing BA almost two to one. It’s getting further and further ahead.

          Time to get away from your yesteryear looking rear view mirror. 🤣

        • @Duke

          You are absolutely right. I grabbed the number off the two wiki pages from the A320 and the A320Neo families, thinking they were independent.


          A320Ceo family: 8100

          A320Neo family: 2416

          Total: 10,516

          638 more 737’s made with a 20 year head start. About another year and it’ll be even.

          What I also find interesting is the competition over time periods. Over the life of the A320Ceo (more or less) Boeing had produced the 737 Classic and the 737 NG – 1,988 & 7,096 for ~9,100. Airbus produced 8,100. Boeing held about a 53-47% advantage, over the life of the jets.

  19. @DoU
    The MAX 9 is a sales dud! Hardly worth mentioning. Alternate fact crowd insist otherwise.

  20. @DoU

    From @Sash:
    The A320neo family has total order of 8,500, of which over 4,000 are A321neo. Tell me, in whose right mind would believe the A320neo is a sales dud??

    • It was irony , based on some absurd claim that conversions to a larger model indicate a sales dud….. Who would say such a silly thing

        • You said because of some conversions ( in last year or so) means the previous model is a “dud’

          I just used the A320 neo situation ( that little plane smaller than a Max 8 ) is doing OK despite the A321 neo leaving it behind.

          Tell us how the A319 neo is doing… why its 84 orders or so only and the largest customer is Spirit who may well…convert

          hehehehe. We have a definition of sales ‘dud’

        • The launch of the MAX 10 means the MAX 9 has passed its prime.

          “It is difficult to get a man to understand something when his salary depends on his not understanding it.” So true.

  21. On the subject of MAX delivery rates, we have this gem today:

    “Ryanair gives spare parts to Boeing to help Max jets order”

    “Ryanair has resorted to supplying Boeing with some of its own spare parts in an effort to speed up delivery of its backlogged Max jet order, according to the airline’s group chief executive, Michael O’Leary.

    “He described relations with the plane maker as still “fraught”.”

    “Mr O’Leary said that Boeing is “continuously failing to meet” its delivery obligations.

    ““We recognise we have to work with Boeing as best we can,” said Mr O’Leary. “We have to help them get those aircraft delivered to us. In some cases we’re going to provide them with some of our spares so they can deliver some of our aircraft.

    ““We are receiving some modest compensation from Boeing for the delivery delays, but really, compensation is not that attractive to us,” said Mr O’Leary. “We would much prefer to take the aircraft and be able to deliver headline growth in scheduled revenues and ancillary revenues.””


    • Ryanair carries ‘spare parts’ ? hes having the mickey

      They outsource all their heavy maintenance ( done during winter months) in places like Jordan, Czechia and so on.

      • And they do “regular” maintenance at a variety of their bases, particularly Dublin and Stansted.

  22. Boeing Commercial is like a big furniture store in the midst of a 40 year going-out-of-business sale.

  23. Calhoun and his cash extraction bro’s at the top have a strong confirmation bias against launching new programs, meaning they are always looking for a reason to say ‘no’.
    If that is what you look for, that is what you find.

  24. Like probably all or most here, we’ve been hands on involved with BA and AB. Many through all the OEMs. The GE/MBA/McAir philosophy has taken over the industry and other industries. I question if these business leaders have the resolve to do the type of engineering that was aerospace industry wide from its inception to about, let’s say 1995? These fine fellows can only Outsource to LCCs (low cost countries) and jigger and wait for the World to change rather than be a part of that change. But the stock is up – so for now – life is good.

  25. “Calhoun declared that even if all the advanced design and manufacturing is ready this decade, he won’t support a new airplane until the next decade when a new engine that can reduce fuel consumption by at least 20% is ready. Any new airplane must hit this target to benefit airlines and the environment, he said.”

    A sign Bullcrap can start looking like Silver, when you tell people so repeatedly for decades.

    The NEO’s aren’t 20% more efficient than CEO’s, the 777x won’t 20% more efficient than the 77W. It’s been ages since aircraft engines became 20% more fuel efficient than their enhanced predecessors.

    It’s been a decoy for not investing / boosting free cash flow for decades. I remember Boeing didn’t even want to re-engine the 737. The NEO was just catching up & new engines weren’t good enough. Many sang along at that time.


    Looking back this strategic miss calculation forced Boeing to rush the MAX for AA shortly after. While Airbus sold 1000+ NEO’s in a few weeks.

    I’m afraid we might see the same with the A350-1000. Steep denial, anecdotes & historical evidence until SQ, EK, AF, LH and KA order a few hundred 🙁

    • From your link:

      “The only alternative to this scenario is if Boeing gets a new CEO. Or if Boeing Commercial is spun off as its own company, or as part of a different company, and actually able to create a future for itself.”

      p.s. A new CEO won’t solve the debt problem.

      • @Bryce

        I’d like to discuss this ‘spinning off’ thing, as many have said that BA should be broken up. Some have said they should keep Defense and spin off Commercial. Some have said the other way around.

        Defense isn’t looking so great, is it? Contract overruns and losses all around.

        IMO they can’t break it up. They have to soldier on and maybe Ch 11 is a possibility.

        • @ Frank
          Regarding Defense: the US is entering “full paranoia mode” with respect to China, and there’s a growing sentiment that “all measures are justified” to counter the “imminent red attack” (cough). Under such circumstances, no matter how weak Boeing Defense is (number 7 in a Defense list that you recently compiled), can you see it being allowed to disappear? I think not. I do, however, think that its programs would be in much better hands if transferred to (at least) one of LM, NG, etc. And I suspect that the Pentagon may also think that.

          BCA: perhaps a similar argument that commercial aviation is a “vital industry”, and that it would “compromise national independence” to allow it to disappear from US soil. But who’d want to buy it? Musk? Bezos?

          It’s difficult to predict a route when rational analysis is clouded by such “emotional” considerations.

          Remember this, at least: if BCA receives mass cancellations — for whatever reason (recession, another crash, war, pandemic) — it won’t be able to pay back deposits, and Ch. 11 will become inevitable.

          • As I’ve said before, to merge BCA with Embraer. If not, sells off the remains for $1 in 2030s.

            Actually I now believe plan A is Calhoun’s exit plan and why he’s so eager to pump the stock so hard.

  26. Productivity at Boeing is severely impacted by the crowded, noisy, distracting conditions in the offices where engineers, software developers, and other technical staff work.

    In such an environment, where people can’t concentrate, the risk of mistakes increases, and it becomes more difficult for Boeing to attract and to retain the best people.

    It is easy to measure the cost of office space, and it is more difficult to measure the loss of productivity that is a function of a poor work environment.

    A workplace that is conducive to both collaboration and concentration is essential.

    • Engine supply is a problem

      Its only producing around 30 new planes per month, the extra 20 or so are from those in storage. That depends on the airline getting their stored planes when they want – maybe its going into winter and lower demand for newer planes

    • BA has been talking up about clearing its 737 MAX inventory for like two years. Aren’t there like 150 or so with airlines eagerly waiting?? Is there a lack of urgency on BA’s part??? 🙄

      • Apparently there’s a lack of media coverage

        -> The manufacturer said a flaw in 737 Max fuselages hurt deliveries last month.

        If I were FAA, I would want to get to the bottom of it.

  27. Congrats to Comac…might want to connect the dots going forward for narrowbody aircraft for China Airlines…Airbus and Comac

    “Chinese planemaker Commercial Aircraft Corporation of China (COMAC) secured orders from multiple leasing firms to supply a total of 330 planes,

    COMAC said at China’s biggest airshow in Zhuhai on Tuesday that 300 of the planes are narrowbody jetliner C919s and 30 are ARJ21 regional jets.”


    • State owned plane maker selling to state owned leasers for their state owned client airlines
      Awesome! We wish them all the best with their “leninst- party- state” business model.

      • Reminds me Boeing’s early life: selling to airlines controlled by a common holding company.

        • The first shoe dropped..no China 737 deliveries or orders for the next 3-4 years Next, the second shoe drop…if China doesn’t need Boeing then the Chinese government could up the retaliation with closing the 737 completion center and close the production of the 737 tail sections in Shenyang

          • Boeing/Spirit Aero could have issue with finding another low cost supplier for 737 tail sections…the double curvature in single aisles does not lend well to automatic fastening (hence high manual labor in China) Airbus with TAI has some level of automation for A320

            Lead time for automatic fastening systems from order to BOD is at least 20 months…more like 24 months for a new user

          • The Boeing Company in 80’s and 90’s would already have second set of duplicate tooling (manual) ready to go to start production at Everett or Spirit I doubt todays Boeing has even thought of a back up plan

            One might say Spirit has excess capacity available with their 737 automatic fastening systems but the equipment probably can’t handle double curative panels (compared to large flat fuselage panels) The long term solution could be Tata in India…but that’s five year project to get qualified and up and running

            One might say Shenyang would be in breach of contract? Well not if the Chinese put a export restrictions 737 tail section

            It comes down to the US stopping or making it very difficult for the Comac C919 to get western engines and sub systems for the C919 production (C919 is part of Chinese National Policy for industrial development) So no parts for C919, no tail sections for 737…tit for tat

          • Tata Boeing Aerospace in Hyderabad made the vertical fin surfaces of the 737 NG.
            They may do the 737 Max as well ( its the same)

            Good guess , they are
            “Boeing said Friday it has added a new production line at Tata Boeing Aerospace Limited, its joint venture in Hyderabad, India, to manufacture complex vertical fin structures for 737 Max single-aisle jets.”

            Other advanced airframe structures with other Tata subsidaries

          • Why would they close the completion centre? It earns dollars and trains aerospace workers.

        • Dont recall the 1920s holding company United Aircraft and Transport being state owned .It was of course broken up in the mid 30s by government intervention.
          lasted about 5 yrs. So no real comparison with a ‘party-state’ system from the very earliest days of the passenger airliner business

          • The British Aircraft Corporation (BAC) was a British aircraft manufacturer formed from the government-pressured merger of English Electric Aviation Ltd., Vickers-Armstrongs (Aircraft), the Bristol Aeroplane Company and Hunting Aircraft in 1960; British Overseas Airways Corporation (BOAC) was the British state-owned airline created in 1939; Rolls Royce was created in 1971 to takeover the business that ran into financial difficulties.

  28. –> Orange to apple comparison.
    The A321neo launched in 2010, thé 737MAX10 in 2017. The 737 has been in an exclusive position since the MAX10 offer with ~1000 orders

    –> Boeing is coming out of a disaster that the MCAS case cost ~45 billion USD. Launching a 737 replacement when cash flow needs to be brought back to the table is simply nonsense. The eggs are broken, it’s time to make an omelet

    –> Nothing predicts that Boeing will do nothing and leave the commercial market through BCA. There’s a good portfolio there. MAX family complete if MAX10 certified, the 787 loved by the market. The 777-9/-F seem to be pretty good. Far from the position of Mc Donnel Douglas. Wizz project, EcoDemonstrator, is not canceled and is looking ahead for future developments.
    No negative signs

    • That is not what Calhoun said. He did not say that they won’t launch a new plane till cash flow is restored. He said cash flow will be restored in two years, but no new airplane will be launched for 10-12 years. That gives him ten years to devote 100% of Free casf flow to dividends and stock buybacks.
      The reason Boeing is not sitting on cash now is cause in recent years they shoveled $62 billion at the shareholders by buying stock and reducing the number of shares outstanding. Boeing could take some of that $62 billion back tomorrow if it wanted to simply by issuing new shares, effectively reversing some of the recent buybacks.
      Calhoun’s statement that there will be no new planes for the next year seem be prudent when considered in isolation, but market share has fallen from 60% to 40% and is still falling, R&D has been cut over the years, all management has done is extract cash from legacy programs without investing in the product line and it’s own people. It’s a 40-year going out of business sale.

    • The 2017 late comer is not able to trounce its closest competitor. Admit it.

    • Whatever.
      it`s a nice perspective to take it. If i were Boeing, i would tell that story.
      Sounds like Trump: It`s great, it`s America!

      Max 9 has been so bad vs. A321neo Boeing had to do a desperation stretch to not loose all business to the A321neo.
      Max 10 is not certified and not at the customer, almost 900 A321neos are. That`s as many as Max 10 are ordered, with almost 4000 A321neos in backlog.

      B787 is loved by the market at the hillarious cheap price Boeing sells it. To bad it couldn`t be delivered for almost 2 years. And even worse, it didn`t make any money.

      B779 seems to be pretty late and very expensive. About 300 orders doesn`t seem to be a lot for a concept 9 years on the market already. When – or if – it`s finally delivered in 2025, it`s a 12 year old concept.

      It seems pretty desasterous, but the truth might be between yours and mine.

      • The 787 will continue to outsell both the a330neo and a350 combined , we all know that . You may want to take away credit from the 787,s versatility and capability by claiming it sells only because its cheap , but you and me both know that is not true . The 787 hits the sweet spot , and with the 787HGW that could eat into a350 sales AND and a potential 787F on the way , the 787 has the widebody segment in the bag.

        As for the 777X, its surely outsells the cheaper a350-1000 and seems to have a brighter future than the a330neo. You say its late , I say its not .

        Thousands of airplanes were grounded during the pandemic and it was worse for larger airplanes like the 380 and 747 , even if the 777X arrived sooner it would have most likely gone straight to storage , for most carriers. You know that lol.

        Air travel will get back to pre-pandemic levels by 2024/25 the same year the 777X enters into service , so if you think it is late you have clearly not been paying attention.

        As for the a321neo , I admit boeing is a bit shorthanded in that segment , but is still believe the MAX 10 could be a feirce competitor , more especially if it could get longer range (ER) versions after the base MAX 10 is certified

        • ” … especially if it could get longer range (ER) versions after the base MAX 10 is certified”



  29. I completely agree with your analysis John. And are fully convinced of the mistakes of Boeing executives for almost two decades However where Calhoun seems to be right is to wait for a propitious moment which is 3-4 years of cash flow on the table and that launch a brand new aircraft immediately would involve enormous risks both in the execution of the program and in terms of costs with the risk of delays and additional costs. Boeing is still too fragile for that, because of the bad acquisitions of the past that we know. To be honest the NMA as they presented it with the failed closing of the business case, may not be “a good idea”. The “next development effort”, can only be the replacement for the 737 and this is what Calhoun seems to be saying for an EIS in 2035-2036 with the CFM Rise engine (-25%) They will certainly want to take advantage of this window shoot for the future. its launch could take place around 2027-2028. At the moment Boeing can only wait for cash flow and certify the 737MAX10, the 777-9/-XF, and the upcoming 787HGW. This is already a huge challenge until at least the end of the decade.

    • If these people were running the show years ago Boeing never would have dominated commercial aviation. No business case ever closes for these people because the strong confirmation bias they have against launching anything larger than a spitwad.
      Richard Aboulafia has already pointed out that whatever magic technology Calhoun is waiting for will be mostly “platform neutral “, meaning Airbus will just install it on their planes too.
      For example, Calhoun says he needs an engine that is 25% more efficient. The minute this becomes available Airbus puts it on their planes too. What does Calhoun say then: “”Well, now there is no point designing a new plane cause it won’t be any better than latest Airbus planes.”
      All this is from Calhoun is just a justification for doing what he was planning to do all along: Return 100% of Free cash flow to investors.
      After Calhoun announced Boeing will never design a new plane he bought 25,000 shares.

  30. Pedro,

    Who said otherwise? The point is that the 737MAX10 was (finally?) a real decent answer for the market and the historical position of the 737 is now better than ever with this one. On the only condition that it is certified of course

    • What?

      You call the B737 better than ever while losing 5:1 vs. A321neo?

      What are you smoking? Must be the best stuff ever.

      Just for your info, the B737NG was slightly winning vs. the A320, making a bit more than 50% of the market.

      • It will be interesting to actually know the economic comparison between the two models. Obviously the 21 has much better legs, but surprisingly they’re getting a fair amount of orders for the -10. I also think the -10 can hold a couple more rows of mooches… So like has been noted the -800 was CASM on par with the 320-CEO. But of course, BA needs a NSA…

    • Easy to understand: Calhoun wants everything as cheaply done as possible, including research. Not saying I agree, just saying this is all that matters to Calhoun – the cheaper the better.

  31. That should ease the tension. This is a good initiative from Boeing. Let’s wait to see the fruits if this one works…

  32. I see Mr Hamilton has another article titled, “How Boeing can Design a New Airplane Before the Decade of 2030”.
    It’s behind the wall so I haven’t read it.
    Unless the article shows how a new program could be financed without reducing free cash flow and stock buybacks, I fear it misses the point that executive management has no interest in new programs, only in cash flow.

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