Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing: Breaking Up is Hard to Do October 14, 2024
- Where and who will be laid off in Boeing reset? October 14, 2024
- Pontifications: Boeing needs massive reset, and not just with labor October 14, 2024
- How Boeing’s actions affect Products, Airbus: Analysis (Update) October 11, 2024
- Boeing Announces Preliminary Significant Q3 Loss: Cuts 767 Freighter Program, Delays 777X EIS, Major Layoffs October 11, 2024
David Calhoun’s first and last addresses to Boeing shareholders have common themes, four years apart
David Calhoun, president and CEO of The Boeing Co.
May 21, 2024, © Leeham News: David Calhoun was named CEO of The Boeing Co. in December 2019. He assumed office in January 2020. He had been on the Board of Directors since 2009. His first annual shareholders meeting as CEO was the 2020 AGM, for the financial year 2019.
When Calhoun was named CEO, the 737 MAX had been grounded for nine months, following the crashes in October 2018 and March 2019 of the Lion Air and Ethiopian Airlines MAX 8s. There was no end in sight for the grounding—which ultimately lasted 21 months.
Three months after Calhoun assumed office, the global COVID-19 pandemic erupted. Global passenger traffic collapsed and so did deliveries of the widebody aircraft prevalent on international routes. Boeing Commercial Airplanes (BCA) revenues and cash flow, already emasculated by the MAX grounding, was put under further strain. Then, in October 2020, Boeing suspended all deliveries of new 787s after finding production flaws. This suspension lasted 20 months.
Following the January 5, 2024, accident involving Alaska Airlines Flight 1282, a 737-9 MAX, Boeing’s safety record which came under fire in 2018-19 was again called into question. Calhoun announced his retirement effective the end of this year. Other Board-level and executive changes were also announced.
The May 17, 2024, Boeing AGM was Calhoun’s last as CEO. His prepared statement was reminiscent of his first as CEO. Some of the themes—notably about safety—expressed last week were eerily similar to those articulated in 2020 during his first address to shareholders.
LNA has assembled Calhoun’s first and last addresses to shareholders. We’ve highlighted common themes between the two addresses, made four years apart.
Interesting. A quick scan learns the 2020 speech was much longer, was during COVID and contained much more financial statements and expectations.
It is disappointing the MAX still isn’t back to full production and 737-10 and 777-9 certifications are still fluid four years later.
I think looking back, Calhoun was faced with urgency in handling the fall-out from 2012-2020 decisions made. Choices made with a lot of denial, greed, arrogance, unfounded optimism and free cash flow as #1 priority. Despite being warned all the time.
He inherited a cash drained company.
The cash being gone is the least of Boeing’s problems in terms of things that it once had and has no more. Vastly more impactful are the loss of talent in the technical ranks, the loss of ethics in the managerial ranks, and the loss of process control throughout. All of those can be replaced, but merely throwing cash at it will not make it happen. Replacing them will require leadership that understands what is missing, and a clue as to what is required to reinfuse the company with those three things. Oh, and getting the voting shares out of the way would be a good start.
Why on earth the United States permits the shareholders of a bankrupt company have any say in its leadership or direction, let alone an exclusive say, is something that boggles the mind. Let’s look at the math in that:
A -100% equity stake = 100% control.
Let’s face it, the “Delaware Process” is all about abetting criminal enterprises on a global scale – pure and simple. Boeing (the board and execs) is just the latest, albeit minor, crime syndicate to take advantage of that process. And what does Delaware get out of offering its corporate chartering services? A relatively minor reduction in the property and sales taxes its citizens would otherwise have to pay? We like to point at the corruption in places like Russia and Ukraine, but we have plenty of our own problems right here at home.
Remove the part about why the US allows a Boeing to happen, and its as solid as old Roman Concrete. Spot on. Direct. True.
Underpinning Delaware is the US system and its been bent severely that the rich and powerful have NO accountability and reaping the benefits.
We have become peasants. One step from slavery. We exist to serve the Corporations and the rich, the country is their play toy and to be liquidated as someone said.
33 million? How many of us could live a life of luxury on that ?
Teddy Roosevelt was an inflection as was Franklyn D. People who recognized it was society as a whole that succeeds or fails.
This is why I think the Boeing situation presents the United States with a traffic opportunity. At some point Powell has to refuse additional direct “loans” from the Fed and Boeing’s leadership will have to ask Congress for a bailout similar to what GM did in 2009. The price should be quite simple – yank the charter away from Delaware and re-charter the company as U.S. Corp. with a new set or rules. Require all board members and execs (so-called employees who have personal services contracts) to be licensed professionals whose licensing requirements come with a code of ethics similar to what lawyers, doctors, and accountants have. Then setup a new branch of the SEC to oversee the licensing (granting and oversight).
We could debate here what the details of the licensing and ethics requirements should be, but those are really just details that need to be hammered out in a Congressional committee in a bipartisan way.
It took two collapses of the Quebec bridge to get licensing in place for engineers. The failure of two of America’s most important corporations should be enough prompting for something similar to happen again.
Oh, and once that is done and the new leadership team is in place, it should be ok to go around the Treasury and fund the bailout directly from the Fed. The funds would not be chasing any new goods and services except possibly what might turn out to be a shortage of the right kinds of engineering talent. So the inflationary impact should be negligible. Money is after all, just a made-up thing that the Fed creates as the economy needs it. They like to use the euphemism of “opening a new window” whenever they inject money into the economy directly instead of through the commercial banking system, and they have done it that way several times since the CDO crisis.
RTF:
I don’t see Boeing as being the turning point for the public.
I am not sure its going to be a turning point for Boeing. Calhoun kept on the board says a lot though I continue to not get what. Wall Street killed Costco for treating its emplyees well (and doing good) but then Boeing is off the hook and Calhoun is kept on the board. Makes my head hurt.
Sadly its going to take something like the great depression for the US to move against the rich and entitled.
The US system is that the stock owners thru the Chairman of the Board direct the CEO how to run it. If either fails the company is doomed and the stock value is gone. The idea is that competition will buy the residues and do better. If it is a major national security supplier it becomes more complicated like with Huges Aircraft where the government felt he was too risky and helped Ramo and Wooldridge to start what became TWR. Don’t know if the government feel the same about Boeing.
Claes:
I think Churchill put it well on Democracy, basically its the worst system but it better than the alternative (or some such)
The Dali hitting the Baltimore Bridge is a perfect example.
I am deep into how ships work so I have the sites to find out.
1. A ship of that class (and down to say 10,000 tons) has a huge engine (usualy one) that requires major pumps for coolant, oil and fuel. None of it is like a car with the built in stuff on the engine. Its all supported by the ships electrical power system for the pumps.
Loose electrical power, the propulsion engine shuts down and its a long recovery. You won’t get it back up and running in under 45 minutes. They know that, they have simulations and bascily they are going to be out of control during that time (rudder works poorly if no prop wash over it)
2. Ports set their own standards and Baltimore runs a cheap port so no tug escort though that narrow passage let alone tugs attached. So its a throw of the dice when out of control will occur, but wrong time and place is just that and they knew it.
3. Bridges can have pier protection added, it takes money but engineering wise you can do it. Like the run out on the end of a runway for an airplane, you provide a contained bank of mud for it to dissipate the energy on (and armor areas to allow a glance off).
All this is known and they took a major Bridge out in Tampa Florida due to out of control ship, no tugs, no pier protection.
Now its suddenly, oh wow, we are vulnerable.
A good chunk of the US Fleet can be blocked in San Diego as its on the wrong side of a similar bridge. Talk about Pearl Harbor syndrome.
So Boeing has to crash before the Government gets involved. An Democratic administration that tries to do something before, gets accused of Socialism which is now worse than communism here.
Republicans think things like Maconda are just part of doing business (sadly).
Yes you can sell off Boeing defense assets but BCA would not have a buyer. It would have to go into receivership and that requires Bankruptcy.
All governments have their problems and failures and this is the US in a nutshell. Nothing done until the crash, then all hands on deck.
Important to remember that Calhoun has been on the board of directors since 2009. If he inherited a “cash drained company” when he became CEO in 2020 it is because he helped drain it from 2009 – 2020. He, along with his ex-GE buddy McNerny, were two of the principal architects of the long term strategy to suck all cash out of the company and give it to the shareholders, even though this required reckless, ill-considered cost cuts.
These people were always going to ruin the company. The application of their management philosophy to commercial aviation is prescription for death, of some unfortunate passenger and the business itself.
+1
Calhoun has been on the board for many years, and will remain on the board- though you wouldn’t know it from all the media coverage of his “leaving” as CEO.
I’m not sure there’s a single factoid that’s more depressing about that company than Mister Calhoun still being around to muck things up. “He’s “ex” Blackstone, remember.. PE vultures awaiting.
“Rigorously testing the airplane ahead of our first delivery into next year “-for the 777X stands out.Remarkably little information about why this still hasn’t happened,any ideas?
Should we crowdfund poor old Embraer to produce a 737 replacement?
I think many people still believe this has to do with the testing instead of FAA not accepting the certification strategy adopted (& approved by FAA) in 2014 (the year the A350 was smoothly certified).
Basically short cuts using 77W certification for essentially the all new aircraft design 777-9. Grandfathering of design and requirements, that was revived after being “banned” 10 years before.
https://www.flightglobal.com/the-faa-needs-to-stop-endless-grandfathering-of-old-systems/83924.article
https://www.frequentbusinesstraveler.com/2014/05/faa-to-fast-track-boeing-777x-certification/
Yeah, but what’s the actual problem?
Seems hard to believe it’s just paperwork.There was some sort of control problem,new hardware,new software needed? Structural issues?It must be be serious and it must be very expensive to deal with
I have also been wondering about the complete silence around the 777-X the last few years. I saw it fly during the Paris Air Show last summer but there has been no program updates for years. Are they having a serious problem?
Maybe an update from someone in the know, is called for. I think he’s around here somewhere. Last he let us in, there is a high alpha issue caused by those huge engines and small(ish) tail.
Was apparently to be another software kludge fix.
Oh-no. Big engines, small tail… Sounds MD-11-like. Could they cut that corner, too…
Some info:
https://www.pprune.org/rumours-news/641296-777x-woes.html
There is a stability issue with the tail section…in reality, the 777 already had this, hence the infamous “flutter” “fix” which makes the rear pax and crew seasick…
Rather that redesign the tail, which would have taken the ac out of rapid approval, BA chose the usual software fix…last test fight was what 8 months ago, and yet still no idea from BA what went wrong.
the results from several tests, as well as test flights, have been hidden, until this latest FAA report…
cert maybe by mid 2024?
Emirates was supposed to get the ac delivered in 2020….and they are not happy…now they must be livid.
—————————-
Frank P,
Why are you repeating unsubstantiated BS by some random person, “turbidus”, on pprune. It’s obvious to me from the quote that this person doesn’t understand what they are talking about. They’re claiming that the 777X tail wasn’t redesigned, when it obviously has been. Then they deride the “usual software fix”. Come on, the 777 is an FBW aircraft. By definition, any fix of the aerodynamics will involve software changes.
The fact is that the cause of the “control problem” during a 777X is not widely known, AFAIK. Let’s not cause rumors and stir controversy based on lack of knowledge and understanding.
I’ll agree there are a few very knowledgeable people that post on pprune, like “tdracer”, for example. I would pay more attention to those people. Unless, of course, there is a narrative that is looking for support.
Its a shame that the aerodynamics are not understood at least on a general level.
People commenting do not seem to be aware that without the Airbus computers working, an Airbus aircraft is virtually uncontrollable.
Airbus spends huge efforts to ensure you do not loose all computers and therefore computer control. I know of two incidents that happened for different reasons and it resulted in a crash landing.
Boeing clearly is running 3 discreet major operations. Renton, Charleston and Everett. Each has their own system.
The 787 issues played out, Boeing simply did not want to accept they had to back up their end with documentation. It took 2 years to get an in production aircraft moving again.
The FAA has stated that the 777-X group does not get it. They try to schmooze through the way it used to work and when they hit the wall they stagger back, recover and do it again.
The culture is so messed up they don’t know how to respond to a different situation.
And now you have the FAA focused on the MAX and still (in theory) addressing the 787 and the -7/-10 MAX was supposed to be the turned over leaf of addressing changes.
The 777X is on the back burner because Boeing has messed up all 3 programs, clearly the FAA is not staffed to deal with one let alone 3 problem programs.
Certification is about proof and the FAA now requires in depth proof.
That said, the FAA also is a paperwork entity. They claimed to have put scrutiny on the MAX (and the 787). But it was paper audits not people on the floor.
So everything is delayed, -7/-10 and the 777X.
Boeing has no one to blame but itself. Calhoun had no contact with the field divisions and spoke from on high with the lofty wave of the Scepter and the High Mucky Mucks all bowed and said it was good, when the fields went un-planted.
Consistently using computers to smoothly and reliably preserve flight envelope (as in FBW) is not the same as haphazardly trying to clean up aerodynamic shortcomings (such as flutter) using sub-optimal control loops in combination with control surfaces intended for other tasks…
I heard there are “two good programs, even three …”
People commenting do not seem to be aware that without the Airbus computers working, an Airbus aircraft is virtually uncontrollable.
That’s a myth that doesn’t become any truer by simply repeating it. Although in fairness it’s one I haven’t read in a long time. More or less since Boeing adopted FBW on all of their planes as well (except on the 737 in order to preserve history and tradition, of course).
Using FBW and envelope protection in the way Airbus and Boeing do (and I know Boeing’s approach especially to envelope protection is different to Airbus’) isn’t the same as trying to fix aerodynamic issues using software rather than reengineering physical parts of the plane, as Abalone already pointed out.
anfromme:
Well you can accept it from Bjorn or not. His comment was the A320 out of Moscow they turned the entire computer systems off. No computer and it crash landed.
The other one I know of was a training flight (Norway I think, A319 I believe) that had a computer problem fault that kept showing up and the Pilot/Instructor kept resetting it as they had a number of trainees to get their takeoffs and landings in.
He finally drove the system insane and it shutdown. They to did a crash landing.
Don’t believe me, look it up in Mentour Pilot (I can’t think of two more admired and respected people in the tech end of aviation than Bjorn and Peter)
But you got to be a techie to get it.
Yes Boeing products now are the same (that should make you fear flying!)
The MAX is not. Fun to fly without a computer no but not a crash lander either.
But people dis computers on MAX but don’t on an Airbus? Have you heard of speed trim? Yea, a computer resetting control responses based on speed.
But an Airbus can fly fine without computers and a MAX can’t? Pull the other one.
Airbus never figured out what caused the system to loose its mind on the training flight though they changed things (hmmmm). Kind of hard to trace faults when the air frame is a mess (they lived).
I’ve yet to see an Airbus FBW induced crash/accident brought up by TransWorld where his narrative is backed up by some official crash investigation findings.
Another case of “alternative truth” some entities are so fond of.
Unfortunately these unfounded statements are repeated over and over again here.
AFAIK Airbus A320 has incorporated backup for its flight computers, unlike you know who. What you said sounds like someone not that familiar with Airbus flight control systems.
Abalone,
anfromme,
What aircraft are you talking about here? The 737MAX? AFAICT this sub-thread is about the 777X.
The EASA did not like the GE Avionics warmed over 787 software as it did not comply with some software standards it sounded like, then EASA/Boeing/GE and FAA got to an agreement what needed to be done. https://aviationweek.com/aerospace/aircraft-propulsion/easa-boeing-compromise-positive-move-777x
Trans wrote….
on MAX but don’t on an Airbus? Have you heard of speed trim? Yea, a computer resetting control responses based on speed.
But an Airbus can fly fine without computers and a MAX can’t? Pull the other one.
FWIW….Speed trim is a subroutine that moves the elevator trim in response to reynolds number changes. Mach trim does the ssme thing to ameleoriate the effects of compressability on pitch. Both are programmed into the FCU. Airbus has programming to do the same thing as it is a requirement to manage center of pressure changes with velocity changes in all swept wing aircraft. Boeings 737 is flyable with manual reversion with the loss of BOTH FCUs. A loss of all computing in an Airbus renders the aircraft unflyable. Aitbus recognises this and putting a shitload of computers in the airplane, but still managed to lose 447 to a bad sensor cascade failure as well as a lack of crew awareness of what was the path forward to correct it….. When you get to the very low probability failures, expectng the crew to arrive at the answer is unreasonable…. The argument over automation being better than airmanship in a mechanical airplane has no clear cut winner other than the FBW aircraft can be trimmed by the computer more consistantly than a human can trim by feel, but neither is at a particular advantage over the other…….
Thanks for those links re the 777-X.
Embraer has to do something different, like a 200-250 pax short range light narrowbody jet that can use the new engines like RISE. Just making a new A321neo is doomed. But if you can make it much cheaper and limit its MTOW/range to reduce cost for wings, structures, landing gears, brakes, engine thrust and avoid a big nacelle with thrust reversers you have a cost advantage. you still need the same avionics, pax compartment, air conditioning, emergency equipment, galley, toilets, cargo container handling, anti-ice, communication, internet… You need to max out the carbon wing for max glide ratio and automation in manufacturing. The body in Al-Li need 3+3 seating and LD45 containers. If you get orders for +600 at once you need several factories and FAL’s to snap them together.
How many times can one say “confident” in one speech?
Sounds like a drinking game, to me!
“Commitment”
The 737-9max was not involved in an accident. The door plug did fall off the airplane during flight (yikes) but the plane was not involved in an accident in the traditional sense of the word. No one was killed and the injuries were few and minor. Not so good for Boeing & Spirit Aero-Systems, not tragic either.
Dave, is that you?
Welcome to Leeham News. How are things in New England? Boating weather, huh?
The aircraft was involved in an accident. Many rows of seats were bent, floor beams and seat tracks damaged. The repairs are significant
^^^^Expert opinion
There for the grace of the powers that be, it was what is known in the mechanical world as toggle action.
This time the toggle did not kill anyone. Two previous MAX crashes killed all on board.
We will never know how close that was when the Plug departed going past the Tailplane.
So no it was not an accident, those are virtually unheard of. Criminal Negligence yes .
The people on that MAX flight were incredibly fortunate.
AV herald classes it as an accident and he should know,having been involved in countless arguments about the definition
In a way
the door blow out killed any residue of Boeing’s standing as a reliable and safe manufacturer of transport aircraft.
The exposed failures now touch on the full range of Boeing activities.
No PAX life taken was luck.
What I’d like to know:
what is the certification fallout from the blown 777X fuselage?
( looks like a hush shield has been placed on that project region )
MC-21 update
https://www.youtube.com/watch?v=mDo9LuxhgBk
Overweight & Late: Russia’s MC-21 Expected To Be 6 Tons Heavier
Less than 2800km range.
Update: The Dali is out of the channel. NTSB has released the Preliminary Report and great discussion on Steam Man and Chief Makoi on details of the Electrical System on Dali (as well as applicable to large ships in general).
Update: The Sun will Rise in the East Tomorrow.
Less than 2800km at same previously announced max payload (20 tons).
They will have to cut weight, and the project is delayed to 2026 at least.
As they are fighting a war and have a lot of other things to do, I bet the project will be further delayed, like 2027-2028.
Make that 2030 at the earliest, if ever. I used to be upbeat about Soviet/Russian aviation, as I have a lot of respect for what they managed throughout the years despite an adverse environment. They finally seemed to be getting somewhere with the SSJ, and… sort of didn’t execute the introduction and support very well. And then it got all political, and then it got even more political and they have to build their own non-Western systems for areas where they initially very wisely went with proven designs from Western OEMs. And they’re back to the old Soviet tricks of claiming they can do all of this in the space of a year, when five years would have been an incredible achievement even without a war going on.
I fully agree.
Pretty normal in most big projects: Late, over weight, over budget, customers angry and quality problems besides late deliveries from suppliers. This is when the real leaders step forward.
I think test results (fuselage rupture , stability) but also 737Max investigation led to route cause analyses. There the chosen, non-holistic certification approach popped up. Fixing system by system, issue by issue, creating a new aircraft as a variant of an old one. Approved by delegated Boeing employees, as forced in by congress after 2012.
https://www.faa.gov/regulations_policies/rulemaking/committees/documents/index.cfm/committee/browse/committeeID/137
A trainwreck everyone tries to ignore / forget, because all actors are still around.
Lufthansa Cargo expected a new 777F in February but is still waiting for the aircraft due to “quality escapes”.
https://www.aero.de/news-47467/Lufthansa-Cargo-muss-laenger-auf-zwoelfte-777F-warten.html
So, Boeing has now also lost the ability to reliably manufacture its legacy aircraft models.
And, yet, Calhoun expects us to believe that Boeing is focused on quality.
What a joke.
Sadly its gone well beyond a joke.
Wall Street still love Boeing. Go figure keeping an inept though long respected U.S. innovator on life support.
“Boeing doesn’t know when it will ever launch the Starliner.
The spacecraft was hit with another delay, this one indefinite”
“Boeing has hit another delay with its CST-100 Starliner spacecraft. This one is indefinite. The cause is the same as the last couple of delays: a leak of helium from the craft’s service module.”
https://qz.com/boeing-starliner-delay-indefinite-1851493277
The biggest question to me is, why did the shareholders reelect Dave “Cash-Flow” Calhoun?
What does it take to not get reelected? A couple of convictions for murder? Kiddie porn on the company computer????
The Kiddie Porn would be covered up.
The stupidity here is there is no cash flow even if Boeing recovers for 5-8 years.
Why would you not dump that Bozo?
Keep him on the board so he can influence Boeing into a worse situation?
John wrote
The biggest question to me is, why did the shareholders reelect Dave “Cash-Flow” Calhoun?
Your question shows your lack of understanding of institutional investors vs retail investors. The bulk of boeing stock is institutionally held. Even the employee stock is voted by proxy by an institutional operator. Institutional investors drive stock buybacks as a cash generation opportunity that also boosts stock price setting up the next buyback…. At some point, it ceases to be about the actual operation of the company
I think @John’s question is valid, and doesn’t show a lack of understanding.
Large US shareholders regularly rebel at meetings, for example:
“Exxon faces shareholder uprising over climate policies, legal tactics”
https://www.eenews.net/articles/exxon-faces-shareholder-uprising-over-climate-policies-legal-tactics/
“Nearly half of Smith & Nephew investors revolt against CEO pay rise”
https://www.theguardian.com/business/2024/may/01/nearly-half-of-smith-nephew-investors-revolt-against-chief-executive-pay-increase
In Boeing’s case, I suspect that large shareholders aren’t fully aware of the true extent/nature of the company’s predicament.
And/or they continue to tell themselves that a big blue chip like Boeing can’t possibly go down the drain.
And of course, Musky wants 58 Billion for decisions like the Cyber Truck, loss of market share, lack of new models, etc… I have posted many times – Why don’t Boeing shareholders protest? As noted, the majority of shareholders are passive institutions. But recently CalPERS was in the news for stepping into action.
And you will not see any return for many years even under a completely revised Boeing that saves the company.
Boeing should be a sell on all investors institutions or not.
Stunning, its exactly opposite of what they did to help drive Boeing into it and they keep the stock when the ship is holed?
A follow up question is, consider the timing of today’s announcement that cash flow will be much worse than expected for the remainder of 2024.
Did management only become aware of this today a few days AFTER reelection of those losers on the board? How convenient.
Or did they know about this before last Friday’s shareholders meeting and merely withheld that information till this week?
Another highly relevant question!
I sense that shareholders / bondholders will soon be filing multiple lawsuits on this very issue.
Tells you everything you need to know, West said Boeing still expects* 777-9 to be certified by the end of 2025. (Don’t tell me it’s not another watermelon!)
That’s how Boeing’s executives lost their credibility in the eyes of customers.
Correct. Although you failed to mention the part about how the stock buybacks also increase the share price on the stock options that most of the executives and BOD members hold as part of their compensation packages.
Exclusive: Boeing deliveries to China delayed by state regulator review, source says
“Boeing’s plane deliveries to China have been delayed in recent weeks due to a Chinese regulatory review of batteries powering the cockpit voice recorder, a source familiar with the matter told Reuters.”
“In a year-end 2023 filing, Boeing said it had about 140 737 MAX 8 aircraft in inventory, including 85 aircraft for customers in China. Boeing has delivered 22 aircraft to China in 2024 through the end of April but in recent weeks the company has not delivered any new planes to Chinese customers pending the review, which had not been previously reported.”
https://www.reuters.com/business/aerospace-defense/boeing-deliveries-china-delayed-by-state-regulator-review-source-says-2024-05-22/
It extends to 777 & 787.
Airbus continues to innovate, while its competitor sinks further into irrelevance:
“Airbus developing 2MW superconducting powertrain demonstrator for hydrogen aircraft”
https://www.flightglobal.com/aerospace/airbus-developing-2mw-superconducting-powertrain-demonstrator-for-hydrogen-aircraft/158418.article
You recognize that hydrogen as a power source for large commercial aircraft is a joke right?
No, I don’t recognize that at all.
Do enlighten us.
Bear in mind that Leeham did a whole series on the subject, so we’re already quite familiar with the matter.
We know that it’s not viable for widebodies/longhaul…but it seems to be perfectly viable for narrowbodies/shorthaul. Speed has to be sacrificed, but zero emissions are enough of a carrot to make up for that.
And my conclusion was that Hydrogen has no viability as an aircraft fuel.
4 times the cost for half the range. It might fly in Europe under a mandate but no where else.
Some guys had the same conclusion about electric car years ago.
Boeing stock currently down 5% today. Why?
“Boeing expects negative free cash flow, slow recovery in aircraft deliveries, CFO says”
“Boeing will burn through cash this year and deliveries of new planes won’t improve in the second quarter from the first, as the manufacturer deals with a host of production challenges tied to its best-selling planes, the company’s CFO Brian West said Thursday.
“A month ago, West forecast Boeing would generate free cash flow “in the low single-digit billions.” The new forecast shows the mounting costs of the planemaker’s latest crises.”
https://www.cnbc.com/2024/05/23/boeing-cfo-deliveries-cash-flow-max-crisis.html
***
WSJ:
“Boeing Says Cash Flow Is Worse Than It Thought”
“Company will burn through another $4 billion in current quarter and likely be cash-flow negative for the full year, CFO says”
https://www.wsj.com/business/airlines/boeing-says-cash-flow-is-worse-than-it-thought-0f2c954d
***
So, the CFO didn’t realize until recently how dire the cash situation is?
That says a lot about his competence level, doesn’t it?
Word is he’s leaving in November.
He’s been CFO at Boeing for less than 3 years…
I wonder will there be any cash left in the kitty to pay out his golden parachute when he leaves?
There always is
I remember “inventory is as good as cash” repeated like a thousand times here.
👇
West: “The company still expects to win certification for its 777X widebody model in 2025”.
Boing can “expect” whatever they want. 😉
“Two good programs, maybe three.”
Read that a giant comm. real estate fund is “bleeding cash and running out of options”. If a crisis materialize, credit conditions will snap.
Are they getting close to designating a successor? Shanahan?
“A month ago.. ”
What an outfit. Will West’s replacement be better, or just more of the same? (rhetorical)
Thanks for the link.
Yes, indeed…just “a month ago”. Not really “on the ball”, is he?
Then again: Boeing’s “cashflow” for many quarters has essentially been comprised of deposits/advancements on orders. So, now that the order flow has dried up (just 7 BCA orders in April), the cashflow has evaporated.
Give him a break, its not easy to figure out when working from home!
Me thinks he is playing on the Internet, Calhoun working is an oxymoron.
It is now mainstream in Germany that Boeing aircraft are unsafe:
“Is it still safe to board a Boeing aircraft?” – Not really.
https://www.spiegel.de/wirtschaft/boeing-ist-es-noch-sicher-in-einflugzeug-von-boeing-zu-steigen-a-48a5527a-b07a-49e6-9546-e9e6fae945a7
So, Wall Street just closed, with BA stock down 7.55% on today’s news.
Well done, Brian 🙈
CFO West is probably incommunicado right now, out on a pleasant afternoon sail. Wonder what *his* severance package will look like. Same question applies to Mister Deal, for that matter.
“Mission Accomplished, Gentlemen!”
Boeing goes begging (for a 6-plane order) in Bangladesh:
“The Boeing officials told media that the US-made aircraft cost less than Airbus, and offered a more financially viable proposal which would benefit Biman.”
“Mr Weir added that the US Export-Import Bank – sometimes known as the lender of last resort – provided loans to Biman last time it bought planes from Boeing. The bank has shown interest again in supporting Biman’s plans, he said.”
https://theloadstar.com/boeing-pitches-bangladesh-with-cheaper-freighter-offer/
***
“We offer better pricing…because we sell at a loss. Sign now, because we need your deposits. Whatever delivery timeline we gave you…just add 5 years. FOD included, free of charge”
😂
So Airbus has no sales team?
Airbus has a sales team that sells at a profit.
It also has a sales team that doesn’t sell FOD-ridden, defective junk.
Then again, the company behind the Airbus sales team isn’t drowning in debt and controversy…that tends to help.
Sure they do. Some guy wrote a book about it.
‘Air Wars: The Global Combat Between Airbus and Boeing. Untold Stories Reveal the Man and the Strategies that Changed Aviation’
https://books.google.ca/books/about/Air_Wars.html?id=lquczgEACAAJ&source=kp_book_description&redir_esc=y
Talks about Leahy, the head of commercial sales. It seems to me that the author knows what he’s talking about.
ROF(LMAO)!!
SCNR?
:-)))
Best quote was Boeing sending more money than aircraft out the door.
Bond holders not amused by today’s surprise epiphany by Brian West:
Morningstar: “Boeing’s cash flow-woes hit company’s bonds, raising fears of a debt downgrade”
“CreditSights analyst Matt Woodruff said he has fielded a few queries about the new cash-flow information from upset bondholders. The general feeling was one of frustration, Woodruff said.
“When companies issue bonds, and particularly a bond deal of Boeing’s size, bondholders assume that it’s all there in the open, the analyst said.
“”It’s just bad form to come back three weeks later and say, by the way, this year is going to be worse than we thought,” Woodruff said. “You have the bondholders wondering” why Boeing wasn’t clearer sooner.”
“By afternoon, however, a new trade had emerged with bondholders selling off longer-term debt and piling into the new 10-year bonds, which were issued with built-in coupon step features.
“Those add 25 basis points in coupon for each notch of a potential downgrade. If Moody’s and S&P Global Ratings downgrade the credit, holders of those bonds would get an extra 50 basis points of coupon.
“However, the coupon step is capped at 1.00% per agency and 2.00% in total, as Bloomberg reported at the time.”
https://www.morningstar.com/news/marketwatch/20240523384/boeings-cash-flow-woes-hit-companys-bonds-raising-fears-of-a-debt-downgrade
***
Credit rating downgrades and lawsuits coming…
TBTF, and more sweetheart deals for Boing a-comin’, methinks. I’d be pleased to be wrong.
Wonder what will happen about their noncompliant DPA on 7 July, for instance..
Saudia Group Shows Inclination Towards C919, Offers China’s Comac To Set Up Jet Assembly Line In Jeddah
https://fl360aero.com/detail/saudia-group-shows-inclination-towards-c919-offers-china-s-comac-to-set-up-jet-assembly-line-in-jeddah/1743
Fascinating.
I suspect that BRICS will have quite a few surprises for us this year…including a bombshell at the annual meeting in October.
If/when the Chinese get the CJ1000 engine up and running, Iran will order a whole bunch of C919s…
On a related note:
“THE REPUBLIC OF CONGO ORDERS THREE ARJ21-700S”
“The Ministry of Transport of the Republic of Congo has signed a firm purchase agreement for three ARJ21-700s, including two ARJ21-700 regional jets and one ARJ21-700 business aircraft. The Commercial Aircraft Corp of China (COMAC) announced the deal on the opening day of the 10th China International Aviation & Aerospace Exhibition (Zhuhai Airshow) but the order was initially announced at the Farnborough Airshow in July 2014.”
https://www.aviationnews-online.com/technology/the-republic-of-congo-orders-three-arj21-700s/
“KC-46 Deliveries Paused Due To Boom Issue, USAF Says”
“The U.S. Air Force has not taken delivery of KC-46 tankers from Boeing in more than two months as a new issue on the aircraft’s boom was discovered during inspections. Boeing to date has delivered 82 KC-46s to the Air Force, and four more to the Japan Air Self Defense Force.”
https://aviationweek.com/defense-space/aircraft-propulsion/kc-46-deliveries-paused-due-boom-issue-usaf-says
“..two good programs, possibly three.”
😉
“This proposed AD was prompted by a determination that the nitrogen enriched air distribution system (NEADS) cover plate assembly attached to a certain vent stringer in the center wing tank was installed without a designed electrical bond.”
ref: https://www.regulations.gov/document/FAA-2024-0761-0001
(does this touch on all 777 ever produced?)
Just a run of the mill upcoming AD?
probably .. but untimely nonetheless 🙂
More on that subject (in the US alone, there are 292 777s involved)
https://www.independent.co.uk/news/world/americas/boeing-planes-fuel-tank-explosion-b2550223.html
Abalone:
“In Boeing’s case, I suspect that large shareholders aren’t fully aware of the true extent/nature of the company’s predicament.”
I’m afraid powerful media, marketing & perception management and half truths often overwhelms traditional long term investors leaning on trust, blue chip historical perspectives & national pride. Disbelieve & optimism slow the process of gaining awareness.
I note there’s an eerie silence on twitterverse/X from the usual aviation pundits. Quite telling.
A 777-9 for Emirates goes for its fifth temporary protective coating at Everett.
Any “Pope” sightings in the media lately?
Nope. The curiously obscure new Boing Commercial Aircraft CEO appears to lead from the rear.
Take a bow, Ms. Pope!
https://www-foxbusiness-com.cdn.ampproject.org/v/s/www.foxbusiness.com/lifestyle/boeing-has-moral-compass-problem-veteran-pilot-argues.amp?amp_gsa=1&_js_v=a9&usqp=mq331AQGsAEggAID#amp_tf=From%20%251%24s&aoh=17165946757602&csi=0&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.foxbusiness.com%2Flifestyle%2Fboeing-has-moral-compass-problem-veteran-pilot-argues
I could be a speech writer for Calhoun. It’s easy:
“…blah, blah, blah….safety….blah, blah, blah…..regulators….blah, blah, blah…transparency….so buy the stock now cause soon we’ll generate $10b in free cash flow for dividends and buybacks.”
Thunderous applause!
So the new chairman of the board is Steven Mollenkopf, right?
I understand that “kopf” is German for head, which has me wondering if “Mollen” might also have some significance in German?
Uwe?
At any rate things should start looking up at Boeing….whatever “mollen” means, if anything, a Mollenkopf has got to be an improvement over a dummkopf!
Uwe is the expert here.
However, as far as I know, “eine Molle” (plural:Mollen) is a glass of beer in Berlin dialect. So, “beer jug head” is a possible translation.
In Dutch/Flemish, “Mollenkop” (without the “f”) means “mole’s head”. Quite appropriate: a blind creature that doesn’t show itself during the day, and that undermines structures by burrowing 🙈
” … that undermines structures by burrowing 🙈”
the case here is ‘ .. that undermines structures by borrowing’ 🙂
OT:
in the regional dialect here (DE/DK) mole is “mullewap”.
beyond beer glass:
South German: nickname for an obstinate person related to the Swabian dialect word Molle ‘ox’ + Kopf ‘head’.
see https://www.google.com/search?client=firefox-b-d&q=Mollenkopf+etymology
Especially in the US it seems to be an amusing pastime to
link first or family names to character and deride words in foreign languages because they are homonym to some “censored” English expressions.
I have some hope for Mollenkopf since his background is engineering and he doesn’t appear to be one of Calhoun-McNerny-GE cash flow jihadists.
I am just having a bit of fun with names here.
Calhoun and McNerny sound very Anglo-British names. Perhaps Calhoun is Welch for dummkopf and McNerny means son of dummkopf?
Interesting you mentioned Swabian dialect, also known as alemanish.
I grew up with people speaking Schwiezertuech, or Swiss-German. Linguists classify it as highest Alemanish, ie, more Swabian than Swabian.
an obstinate person
South German: nickname for an obstinate person, related to the Swabian dialect word Molle ‘ox’ + Kopf ‘head’.
Reading tea leaves, is that Shanahan the most likely candidate for Boeing’s next CEO?
Airbus to hire 400 British engineers in race against crisis-hit Boeing
https://finance.yahoo.com/news/airbus-hire-400-british-engineers-131448327.html
Airbus is to hire 400 engineers at its wing manufacturing plant in Wales as the company races to extend its lead over crisis-hit Boeing in the market for single-aisle jets.
Additional staff will be required at the plant in Broughton, near Chester, as Airbus transforms a building that made wings for the A380 superjumbo into a production line for the best-selling A320neo model.
@Mike Bohnet
May 24, 2024
Frank P,
Why are you repeating unsubstantiated BS by some random person
————————————————
First off, I’m terribly sorry about missing the reply from you.
Secondly, the claim is not unsubstantiated. There is an individual in here, who has contacts in BA – who is the one who first told me about the small tail/big engine/software kludge issue.
The prune post was a way to detail what was being said on the shop floor, without naming or forcing the individual to come forward.
However, since you’re here and call the claims bogus, perhaps you’d like to explain:
Boeing 777X Facing Certification Issues
https://onemileatatime.com/news/boeing-777x-certification-issues/
‘when the plane apparently had a “pitch event” during a test flight, which sounds mighty similar to what happened to the 737 MAX.’
and here:
https://www.seattletimes.com/subscribe/signup-offers/?pw=redirect&subsource=paywall&return=https://www.seattletimes.com/business/boeing-aerospace/citing-a-serious-flight-test-incident-and-lack-of-design-maturity-faa-slows-boeing-777x-certification/
when the plane experienced an “uncommanded pitch event” — meaning the nose of the aircraft pitched abruptly up or down without input
and here:
https://aviation-safety.net/wikibase/264823
The second Boeing 777-9 prototype suffered a serious flight control incident during a test flight on December 8, 2020, when the plane experienced an uncommanded pitch event.
Frank P,
I’m not a all disputing or calling bogus the “uncommanded pitch event” that is talked about in links you provided. It indeed happened. I’m also not disputing that Boeing is going to have to change the FBW software to prevent that event from happening again. However, notice that none of the articles mention a cause, let alone that the cause is a small tail, or large engines, or a software kludge.
However, what is bogus is the implied claim that this is in any way similar to what happened to the MAX. The 777 is a FBW aircraft, the 737 is a mechanically controlled aircraft with software augmentation.
What is also bogus is the claim that a software kludge will be required to correct whatever the issue is. Again, the 777 is an FBW aircraft. The only way to make control changes on the 777 is to change the software because the whole control system is software driven. One cannot think of it like the 737.
Could there be an engine/pylon/wing interaction that has a pronounced pitching moment effect at high AoA relative to low AoA? Sort of like with the MAX? Sure, there likely is, but this is not a huge issue to handle, and FBW makes this much easier to account for. Boeing screwed this up royally on the MAX, but again, the 777 is a FBW aircraft, unlike the 737. This high AoA pitching moment effect occurs with varying degrees in all aircraft with engine pods mounted below/forward of the wing. While the engine size does matter in this regard, the primary driver is where the engine is located relative to the wing.
Finally we get to the bogus small tail claim. People tried to claim this about the 737 in the wake of the MAX crashes and it was thoroughly debunked. The high AoA pitching moment issue with the MAX that Boeing attempted to alleviate with MCAS is not caused by tail size. The pitching moment issue is caused by the engine installation relative to the wing. Tail size will directly affect longitudinal (pitch) stability and control, and both the 777 and the 737 have tail sizes sufficient to meet all static and dynamic pitch stability requirements. They are both stable aircraft. To suggest otherwise is ridiculous.
So, what happened to cause this “uncommanded pitch event”? No one knows. At least no one who feels comfortable disclosing it or reporting it. It could’ve been a software glitch, sensor failure, power glitch, or any number of other causes. Heck, the co-pilot’s digital camera could’ve fallen off the dash and wedged itself between the control column and the seat. What I’m personally sure of though, is that the cause is not some nebulous “small tail/big engine/software kludge issue”.
FBW is not a catch and cope all for control issues.
Even the best designed FBW regime needs effective control surfaces and actors to work with.
Then my _impression_ is that Boeing FBW is more of a layered on thing than a grounds up conceptual design process.
IMU Airbus has spent much more time and brain on the foundational aspects of an FBW driven aircraft layout.
( again IMU und IMHO and on the 737:)
using the trim functionality for the speed related (automatic) alleviation was OK. Speed changes are slow.
(Mis)using that same functionality for fixing a _FAST_ pitchup issues was a strongly unsuitable design path from the get go.
Uwe,
Of course it is not. I never suggested it is. I was merely pointing out that correcting a flight control issue on an FBW aircraft will, by definition, require software changes. People trying to turn this into some kind of flaw is asinine.
What gives you this impression? Remember, we’re talking about the 777, not the 737.
No one who’s talking knows if there is a major flaw- possibly requiring hardware changes as well as software ones- connected to the 777X pitch-up events.
Lots of sophistry on display at present.
observation 🙂
I see a tendency to “accessorizing” in American engineering.
you rarely see “start from new” by application of established knowledge to a new project ( which is the way to go to get rid of accumulated chaff ).
It is regularly layering something new on existing hardware.
the 737 is an absolutely extreme case but you see it in Boeing’s other products too. good engineering is regularly based on abstracting knowledge gained out of previous solutions.
IMU it is to a part an educational thing and another motivator is hire and fire and a general trend to lobotomize
institutional cross connections. “cubicle minds”, vertical and less horizontal education.
Vincent,
Sophistry in LNA’s comments section? What? Are you kidding?
@Mike
‘However, what is bogus is the implied claim that this is in any way similar to what happened to the MAX.’
Please show me in my post where I talked about the Max.
————————————
‘However, notice that none of the articles mention a cause, let alone that the cause is a small tail, or large engines, or a software kludge.’
That is because, as I mentioned – the first I heard of it was from someone in the know and the issues were what was being talked about on the shop floor, by people who were working there.
As I said – if that person wants to add to it, they will.
———————————————
‘They are both stable aircraft. To suggest otherwise is ridiculous.’
If you say so.
—————————————–
‘What I’m personally sure of though, is that the cause is not some nebulous “small tail/big engine/software kludge issue”.’
Oh – well then, let’s just take your word for it and move along then. Because you’re ‘personally sure’.
———————————————-
How appropriate that you use the word nebulous, to describe what might be the issue hampering the 777X into service – yet it would be easy for BA to clarify exactly what the issue is and remove all doubt, wouldn’t it?
I think they call that projection. Boeing is the one with less than clear information regarding the issues surrounding the 777X, but everyone else is nebulous.
———————————
‘Heck, the co-pilot’s digital camera could’ve fallen off the dash and wedged itself between the control column and the seat.’
When in doubt, blame the pilots!
———————-
‘So, what happened to cause this “uncommanded pitch event”? No one knows.’
Incorrect. Boeing knows.
But they aren’t talking, are they?
Why do you suppose that is, Mike?
Frank P,
Here it is.
It doesn’t really matter that this is a quote from an article. You chose to quote it.
Yes, I say so, along with the NTSB, EASA, Transport Canada, ANAC, and the FAA. After careful consideration, I think I’ll believe myself and the agencies I listed over your imaginary shop floor friend.
I see you are a bit touchy. I meant my comment as humor, since incdents like this have already happened.
https://www.theregister.com/2017/03/03/raf_pilot_awaits_court_martial_sentence_4000ft_airbus_plummet/
https://www.businessinsider.com/pilot-seat-caused-787-drop-midair-similar-a330-nose-dive-2024-3?op=1
Well, Frank, it’s probably because they don’t need to. The 777X is still under development.
China’s C919 aircraft celebrates its first anniversary
“A year ago, China’s home-grown C919 jet made its maiden commercial flight. The flight between Shanghai and Beijing marked a milestone achievement in the country’s aviation industry”
https://www.scmp.com/photos/china/3264143/chinas-c919-aircraft-celebrates-its-first-anniversary
There’s also a nice article at Asia Times regarding COMAC’s positioning relative to the competition, particularly the US outfit. Sorry, no link.
Editor: here’s the link https://asiatimes.com/2024/05/chinas-comac-poised-to-rise-on-boeings-downfall/
If/when the Chinese get the CJ-1000 turbofan up and running, and/or start using the Russian PD-14 turbofan (which is already up and running), then they can plough ahead with the process of snatching market share.
Until that time, COMAC is vulnerable to (inevitable) US sanctions on export of LEAP-1C turbofans…which, of course, will ultimately backfire.
Thanks for providing the link, Editor. The Linux Fedora OS has some quirks- one of which is not being able to drag-and-drop URLs.
China Sells $48,900,000,000 in US Treasuries in One Quarter, Analyst Says ‘Clear Intention’ To Dump US Dollar Holdings on Display
“As China is selling both despite the fact that we are closer to a Fed rate-cut cycle, there should be a clear intention of diversifying away from US dollar holdings.”
https://dailyhodl.com/2024/05/19/china-sells-48900000000-in-us-treasuries-in-one-quarter-as-former-imf-official-warns-the-worlds-two-largest-economies-are-heading-for-a-massive-new-trade-war/
This process has been going on for more than a year at this stage — dumping US Treasuries and buying gold instead.
https://www.fxstreet.com/analysis/china-is-dumping-us-treasuries-and-buying-gold-202404212302
And it’s not just China: Saudi Arabia (among others) is also dumping treasuries.
https://www.ft.com/content/2925952d-1e20-4748-8fa4-05b3605fc46a
The BRICS countries have purchased huge quantities of gold in recent months — which is believed to be a prelude to the launch of a BRICS currency coming October.
It appears that BRICS is making very tangible moves to decouple from the West…which will significantly change the international trade landscape, including in aviation. Launching a new currency will make it easier for non-Western countries to purchase aviation products from Brazil, China and/or Russia, and/or supply materials/parts to the aviation industry in those countries.
“This process has been going on for more than a year..”
Longer.
china is divesting from the US Dollar:
by diversifying into other currencies.
by buying/investing into tangibles with large amounts globally.
CALC Records China’s First Overseas ARJ21 Lease In RMB
‘It appears that BRICS is making very tangible moves to decouple from the West…which will significantly change the international trade landscape, including in aviation. Launching a new currency will make it easier for non-Western countries to purchase aviation products from Brazil, China and/or Russia, and/or supply materials/parts to the aviation industry in those countries.’
Except that China, which is the biggest fish in the BRICS pond, will still need to sell it’s products to the West, in order to feed it’s people. India also has over a billion mouths to feed. As the US dollar slips in valuation, it’s exports will become cheaper to purchase. China keeps it’s currency artificially low for this purpose.
You want to buy aviation products from China or Russia? Like a Chinese or Russian aircraft? China is still 20 years out from producing anything that might compete with AB & BA. Look at the Russified jet that is 6 tons heavier than advertised and now flies around 2,000km, without Leap engines.
A currency is backed by the strength of the economy behind it. Setting it up on the gold standard is a risky play – what happens to the value if all other holders suddenly dump their holdings? A BRICS currency is largely seen as a way to get around sanctions against China/Russia.
The world is a global marketplace and there is no getting around it – China and the US are in a symbiotic relationship. They need each other, the West to buy it’s cheap products there and China to produce them.
If there is one thing the pandemic did, is show the West their weakness in relying on foreign semi-conductor production. Hence the Chips act and why China lobbied against it.
There are a lot of macro-economic strings to this bow.
Frank
“China is still 20 years out from producing anything that might compete with AB & BA”
Need to define “compete” …will Comac sell to US…no will Comac sell to EU…no But the rest of world will be interested especially Southeast Asia where 40% of all commercial aircraft deliveries in the next 20 years
Then there are other influencers
Upstart Chinese planemaker Comac is in talks with Saudi Arabia as it seeks to disrupt the Boeing-Airbus duopoly
https://www.yahoo.com/news/upstart-chinese-planemaker-comac-talks-121006819.html
China looks at developing its commercial aircraft expansion in decades, not quarterly financial results
Comac C919 development http://www.comac.cc/video/xingxiangpian_3.mp4
enjoy the video
Frank
“If there is one thing the pandemic did, is show the West their weakness in relying on foreign semi-conductor production”
China has a strategic plan for their semi conductor production
China invests $47 billion in largest ever chip fund
https://techxplore.com/news/2024-05-china-invests-billion-largest-chip.html
Thanks for this comment- and the supporting links.
Need to define “compete”
Have a product that is competitive with other available products on the market.
At best, the C919 is an NG, without a track record of safety or performance. Or parts available in the supply chain when needed.
It’s not just about getting a plane out of the plant and into the hands of an airline.
It’ll take 20 years to catch up and build what is needed. It’ll be the next plane that will give Ab & BA trouble.
Sorry, @Frank, but we disagree on this one.
The US represents only 5% of the world population, and the BRICS block now represents a larger share of the global economy than the G7…so BRICS can do very well just selling to Asia and the Global South. Also, Asia is up and coming…whereas the West is in a twilight phase.
A weak dollar would theoretically help US exports…except that the US doesn’t really export much (75 percent of its economy is domestic consumption). On the other hand, a weak dollar will help the Global South to more easily pay off its old dollar-demoninated debt.
The Euro isn’t gold-backed, and it’s doing just fine. Similarly, a BRICS currency doesn’t need to be (fully) gold backed — from what I read, it’s going to be blockchain-based, with partial gold backing to start things off. In effect, it will just be a weighted basket of existing BRICS currencies — which is how the EMU (Euro precursor) started out.
The newest Leeham article (out today) has a nice graph showing how COMAC will ramp up C919 production, starting from next year. As @David Pritchard points out, these C919s don’t need to be sold to the US and EU — there’ll soon be plenty of takers for them elsewhere.
As regards US production of chips: TSMC is having to import Taiwanese employees to get its fab in Arizona on the rails. What does that tell you about the prospects for domestic production of chips in the US?
There was an article on Bloomberg last month titled “Trump Aides Discuss Penalties for Nations that De-Dollarize”. There you go: one further motivation for BRICS to dump the greenback. Mind you, those aides are a little late to the party, because most of the trade within BRICS is now already in local currencies, bonds are being issued in local currencies, and BRICS central banks have already diversified their reserves…so the step to a mutual trade currency is now just a finishing touch.
Advanced chip production in the US will prove to be
mostly theater, I’m sorry to say.
‘The US represents only 5% of the world population’
Having more mouths to feed, is not a plus
—————————————–
‘and the BRICS block now represents a larger share of the global economy than the G7’
Flat out wrong.
‘While the G7 countries’ combined GDP is around $15 trillion greater than the BRICS nations, with continued higher growth rates and the potential to add more members, BRICS looks likely to overtake the G7 in economic size within two decades.’
https://www.visualcapitalist.com/economic-growth-forecasts-for-g7-and-brics-countries-in-2024/#:~:text=Faster%20Growth%20for%20BRICS%20than%20G7%20Nations&text=While%20the%20G7%20countries'%20combined,economic%20size%20within%20two%20decades.
——————————————
‘A weak dollar would theoretically help US exports…except that the US doesn’t really export much ‘
Boeing, IIRC – was the US’s largest exporter.
——————————————
‘The Euro isn’t gold-backed, and it’s doing just fine.’
Neither is the US dollar. That was my point. They’re both backed up by their economies. Which means you have to have faith in the economies of a currency to invest in it.
Tell me, where do you think thee is more safety:
In the economy of the US & Euro nations, or Brazil, Russia, China & India?
————————————-
‘What does that tell you about the prospects for domestic production of chips in the US?’
It’ll take some time?
————————————–
‘Trump Aides Discuss Penalties for Nations that De-Dollarize’
The only thing Trump aides are discussing now is how the long prison sentence will be and if the shares of his blog tank before he can pull his money out to pay his debt.
———————————————
‘a mutual trade currency is now just a finishing touch.’
Have your mutual trade currency (which will actually be a China led thing, as they are the tail wagging the dog). But you’ll still pay for Boeing planes in US dollars and Airbus aircraft in Euro’s.
Frank
“‘The US represents only 5% of the world population’
Having more mouths to feed, is not a plus”
But middle class have purchasing power within their region As a note, total population in US by 2030 is going to be about 360 million of which 71% is middle and upper class (250m) https://www.weforum.org/agenda/2022/04/how-the-american-middle-class-has-changed-in-the-past-five-decades/
Forecast of the global middle class population from 2015 to 2030, by region
“By 2030, the middle-class population in Asia-Pacific is expected to increase from 1.38 billion people in 2015 to 3.49 billion people. In comparison, the middle-class population of sub-Saharan Africa is expected to increase from 114 million in 2015 to 212 million in 2030.”
https://www.statista.com/statistics/255591/forecast-on-the-worldwide-middle-class-population-by-region/
The World’s Growing Middle Class (2020–2030)
” More than half of the world’s population is projected to be in the middle class by 2030″
https://elements.visualcapitalist.com/the-worlds-growing-middle-class-2020-2030/
Middle class growth will drive global air miles
Plus:
SE Asia and the Global South will be spending hugely on infrastructure development in the coming decades — including on airport/aircraft infrastructure — making them very interesting customers for export powerhouses. But, unlike in the past, they can now shop from new sources…ones that may align more favorably with their full spectrum of interests.
Just look at how quickly China became the world’s largest car producer.
I think it’s going to surprise us where aircraft are concerned — particularly now that one member of the old duopoly is withering away.
@Abalone & David
‘Between 2003 and 2017, China’s food imports grew from just $14 billion to $104.6 billion. While food exports nearly tripled from $20.2 billion to $59.6 billion over the same period, China increasingly finds itself running a food trade deficit.
As the world’s largest importer of food and feed, China has for more than a decade been a leading factor in any discussion of global food trade.
India imported $29 billion worth of food in 2021, compared to $204 billion by China. | Reuters’
China can’t feed itself.
https://www.producer.com/markets/india-is-tops-in-population-but-not-a-big-food-importer/
@ Frank P
The US can’t feed itself either — and the problem is bigger than you indicate above for China/India:
“The U.S. imported around $148 billion worth of agricultural products in 2020, and according to the USDA, this has since risen to $194 billion in 2022.
“Around 50% of all U.S. agricultural imports are horticultural products like fruits, vegetables, tree nuts, and more. Other large import categories include sugar and tropical products, meat, grains, and oilseeds.”
https://www.visualcapitalist.com/cp/us-food-imports-by-country/
@Abalone
Yes, it imports $148 billion of food.
‘The value of U.S. agricultural exports, not adjusting for inflation, peaked in fiscal year 2022 before declining in 2023. Total exports were valued at $178.7 billion in 2023, a $17 billion decrease from 2022.’
That would make the US a net exporter of food.
https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/agricultural-trade/#:~:text=U.S.%20agricultural%20import%20values%20outpaced,trade%20balance%20in%20some%20years.
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Perhaps if Donnie hasn’t started his ‘easy to win’ trade war, the farmers would still be selling stuff to China. And BA might still be selling jets to them, as well.
Well done, Donnie
Six passengers and six crew members reported injuries in a 787-9 from Doha to Dublin.
Here, I come to save the day….
https://invezz.com/news/2024/05/27/boeing-new-contract-with-air-force/
Boeing announces new contract with Air Force
The aerospace and defence giant has signed a $7.48 billion agreement related to JDAM (Joint Direct Attack Munition) with the Air Force Life Cycle Management Center, Hill Air Force Base, UT.
Heh! Uncle Sugar to the rescue..
On the other hand:
“U.S.-made satellite-guided munitions in Ukraine have failed to withstand Russian jamming technology, leading Kyiv to cease using certain Western-provided armaments after effectiveness rates dropped sharply, according to The Washington Post.”
https://defence-blog.com/us-made-weapons-in-ukraine-struggle-against-russian-jamming/
The West’s weapons are costing more but achieving less — particularly against sophisticated adversaries.
Ok, we get it. You’re pro-Russia. Let’s keep the conversation on AB & BA et al. so Scott doesn’t get pissed off and shut it down.
Thanks
Looks like somebody just has to get the last word in, then silence the others..
Pootin’s under the bed, just heard him! 😉
I’m not pro-Russia at all…don’t know how you draw that conclusion.
Absolutely no harm in pointing out that the West (which is also where I live) continues to habitually spend huge amounts on relatively defunct weapons types…such as big, lumbering, sitting-duck tankers, for example. This discussion has been aired before on Leeham.
p.s. In terms of PPP GDP, BRICS overtook the G7 in 2020. Didn’t know that, did you? It’s a real problem that the West just continues to automatically dismiss the changes in the world around it.
https://www.statista.com/statistics/1412425/gdp-ppp-share-world-gdp-g7-brics/#:~:text=By%202023%2C%20the%20difference%20had,held%20by%20the%20G7%20countries.
p.p.s. I didn’t start this thread — @ David Pritchard did.
G7 Countries 2024 GDP (USD Trillion) Share of Global GDP
1. US $26,855 25%
2. Germany $4,309 Trillion 4%
3. UK $3,159 Trillion 3%
4. Canada $2,090 Trillion 2%
5. France $2,923 Trillion 3%
6. Italy $2,170 Trillion 2%
7. Japan $4,410 Trillion 4%
G7 Total $45,916 Trillion 43%
BRICS Country 2024 GDP (Billion & Trillion) Share of Global GDP
1. Brazil $2,081 Trillion 2%
2. Russia $2,063 Trillion 2%
3. India $3,737 Trillion 4%
4. China $19,374 Trillion 18%
5. South Africa $399 Billion 0.4%
6. UAE $499 Billion 0.5%
7. Egypt $387 Billion 0.4%
8. Iran $368 Billion 0.4%
9. Ethiopia $156 Billion 0.2%
BRICS Total $29,064 Trillion 27.94%
@ Frank P
Want to compile a similar table now for PPP GDP (as regularly used by the World Bank, IMF and OECD)? It’s the standard metric used to compare GDPs between different countries.
From my link above:
G7: 30% of world PPP GDP (shrinking)
BRICS: 32% of world PPP GDP (growing)
Here’s the thing about PPP.
‘The IMF considers that GDP in purchase-power-parity (PPP) terms is not the most appropriate measure for comparing the relative size of countries to the global economy, because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally. The IMF believes that GDP at market rates is a more relevant comparison.’
— International Monetary Fund spokeperson, Webber, Jude (2011). China’s rise, America’s demise. Financial Times.
So even the IMF isn’t so keen on it.
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In the context of aviation, especially AB & BA, it doesn’t matter what the PPP is. An OEM is going to get paid in either dollars, Euro’s or Brasilians Reals (unless they negotiate in another currency) and the amount of the product doesn’t change, for whatever the price is.
AB or BA is not going to drop the price relative to the PPP of a particular country. You want to buy an A321Neo or 737 Max (no jokes, please), here is the price (yes, after negotiation).
After all, PPP is an estimation, which can also be manipulated.
‘PPP exchange rates are especially useful when official exchange rates are artificially manipulated by governments. Countries with strong government control of the economy sometimes enforce official exchange rates that make their own currency artificially strong. ‘
@ Frank P
One should exercise care when talking about currency manipulation because quantitative easing can also be regarded as a form of currency manipulation…in which case the dollar becomes one of the most manipulated currencies in existence today. I’ll stick with PPP, thank you, because it does a much better job of filtering out effects of central bank interventions, disparate inflation levels, sanctions, etc.
The pricing of BA and AB products isn’t really relevant here. What makes a BRICS currency attractive is that it allows countries to conduct non-barter trade with one another without having to go anywhere near SWIFT…and, thus, without having to subject themselves to the sanctioning whims of the administration du jour in D.C. That opens up BRICS trade to a whole load of countries/entities that aren’t favored by Washington. So, for example, if the Chinese can get domestic or Russian engines on their planes, then they can sell those to Iran, North Korea, Myanmar, Venezuela, Libya, Sudan…the list goes on.
I recall that, when the idea of a BRICS currency made headlines last year, the kneejerk reaction in US media was to demean the idea as being a pipedream. In the meantime, however, you’ll now find more realistic analyses of the situation on some (renowned) US outlets — including admissions that the process is unstoppable, and will have an inflationary effect in the US.
I guess we’ll just have to see what happens in (the run-up to) the BRICS summit in October. Will Boeing even be around then?
Frank: “AB or BA is not going to drop the price relative to the PPP of a particular country. ”
Not in that domain is my guess.
Other domains see regionally adapted pricing though:
A (noncommercial use) car in Denmark has lower price than the same model in Germany. ( Denmark has a massive tax on “luxury” items. 85% above ~9000€, refund on export, reason why there is a market for DK cars in Germany.)
The US tries to misuse this strategy to allege dumping for ( chinese ) products.
@Abalone
‘ I’ll stick with PPP, thank you’
Ok. Just don’t call it the ‘standard metric’, when those you quote to use it are walking away from it.
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‘The pricing of BA and AB products isn’t really relevant here.’
We should at least try to link it to how it will effect the OEM’s no?
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‘So, for example, if the Chinese can get domestic or Russian engines on their planes,’
Sure – and pay the 6 ton weight penalty. Did you miss the video on the Russified jet that is down to some 2,000km in range now?
Here it is again:
Overweight & Late: Russia’s MC-21 Expected To Be 6 Tons Heavier
https://www.youtube.com/watch?v=mDo9LuxhgBk
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‘Will Boeing even be around then?’
Without a doubt. Too Big To Fail. Will the shareholders….is another question.
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@Uwe
‘Not in that domain is my guess.
Other domains see regionally adapted pricing though’
Here’s the thing:
Let’s say that Abalone’s magical PPP has the middle class in some country able to exist on 50% of what would be in the west.
Ab or BA is selling aircraft to that country. Based on order size & negotiated discounts, a plane is costing $50 million US or the equivalent in Euro’s.
It doesn’t matter that the host nation’s people have 50% less, or can pay only 50% less for a trip – the plane will still cost the airline $50 million. They’ll have to purchase an assets in the denomination and capex will still be…$50 million.
You want to buy cheaper & heavier Russian or Chinese aircraft? You pays your money and you takes your chances….you get what you pay for. Ask InterJet how that worked out for them with their Sukhoi SuperJets.
“MC21: Sure – and pay the 6 ton weight penalty.”
787-8 initially was well beyond 10t overweight afair?
going by spec the PW1400 is 500kg lighter than the PD-14
Just more special pleading from the trillion dollar-plus US MIC: “we need moar money- fast!”
Instead, give every soldier a Cadillac, a hooker, and some blow. US will win every “war”, and at .05 the cost.
Show me the part that’s *not* theater, these days..
The uneven distribution of profits, which concentrate at the top like Apple/Nvidia/Qualcomm and SV/WS, impairs efforts to attract top talent to chip manufacturing in U.S. Don’t we see the same happens between Spirit AeroSystems and Boeing; Boeing’s manufacturing vs BA/BCA??
I hear you, Pedro. The West is like late-stage Rome now, with the worst / richest offenders requiring ever more “tribute”. Not fixable without full collapse first, I think.
@Pedro and Vincent
You’re not wrong with the characterization of BA, but things can change. Look at GE (mind you, in fairness they sold off a lot of things).
I think we all agree that it’s the fat cats of the c-suite that are the problem. Get those guys out and with some competent leadership, things can change.
Ch 11 would do that. Wipe out the shareholders, clean house, get the debt under control and fix the shop.
Full collapse? No.
1) I consider GE Aviation as the top dog sitting on the supply chain. It’s the tier two/three/four suppliers including those mom and pop shops which suffer the most! Who the hell is going to invest new capital to renew the manufacturing base only to see the profits gobbled up at the top??
2) I heard commercial aircraft engine suppliers still sell new engines at a loss. We live in an upside down world that they would be more profitable if they stop selling new engines and concentrate on servicing!
3) The commercial aircraft engine suppliers are oligopoly
*oligopolies
In other aviation news:
Longest-serving flight attendant dies at 88
https://www.bbc.com/news/articles/c0vvgqvw533o
Bette Nash, the world’s longest-serving flight attendant, has died aged 88 after nearly 70 years of airborne service.
Oof
https://x.com/dominicgates/status/1795470099354382501
“You have ordered 25 Boeing 777 X.
Etihad CEO: “No, I haven’t.”
But the order book of Boeing says so.
Etihad CEO: “The contracts we have were all restructured.”
“Etihad CEO Antonoaldo Neves in our interview: “For now the 777X doesn’t play any role in our five year plan”
https://t.co/rxjo0maAgY
How many times posters here point to the backlog of 777X as a proof of “success”?
China Eastern took delivery of their 6th C919 on the 1st anniversary of C919 commercial operations, May 27, 2024.