By Scott Hamilton
Feb. 23, 2023, © Leeham News: Many, outside of Wall Street analysts and stockholders, are critical of the decision by Boeing CEO David Calhoun to suspend the development of a new airplane. It will be the middle of the next decade before the company “introduces” a new one.
The view from this month’s Pacific Northwest Aerospace Alliance (PNAA) Conference is split. Speakers like Kevin Michaels and Richard Aboulafia, both from the consultancy AeroDynamics Advisory, favor launching a new airplane program sooner than later. So does aerospace analyst Ron Epstein of Bank of America. He’s a rarity among Wall Street analysts.
While Calhoun pointed to the lack of step-change engine technology as the reason to suspend any development today, LNA previously pointed out that Boeing simply may not be ready internally. Production of the 737 MAX remains challenging and somewhat erratic. The 787 is ticking along at a mere one-half airplane a month. Certification of the 737-7, 737-10, and 777X have yet to be achieved. Boeing’s debt remains in the tens of billions of dollars; about $5bn in due this year alone.
And then there is the supply chain. It’s simply not ready, either. It’s struggling with materials and labor shortages. Some laborers are new and inexperienced. Even Airbus continues to struggle to make its delivery targets. It fell short last year by a wide margin and in January delivered only 20 airplanes.
Calhoun would have had better messaging on these points rather than simply saying technology isn’t advanced enough yet (which is only partly true). Critics may have been more easily persuaded.