Leeham News and Analysis
There's more to real news than a news release.
There's more to real news than a news release.
Leeham News and Analysis
- Production increase delays hurt Airbus costs December 2, 2024
- Books to consider for Christmas November 29, 2024
- Slow, methodical process to restore Boeing’s trust, efficiencies November 28, 2024
- Engineering, Innovation is our DNA: Embraer November 25, 2024
- No changes to US labor Scope Clauses for indefinite future, says Embraer November 22, 2024
Farnborough, Day 4: Airbus comes from behind to win order contest
July 25, 2024, © Leeham News: Airbus came from behind today with a big order from flyNAS, a Saudi Arabian low cost carrier, for 75 A320neo family members and its first widebody order, for 15 A330-900s.
The announcement is a Memorandum of Understanding.
Airbus ends the show with 139 orders and commitments. Boeing ends the show with 118 orders and commitments.
ATR announced its only order for the show yesterday, for four ATR-72s from Air Tahiti.
De Havilland Canada ended the show with 22 orders and commitments for the Twin Otter and Certified Refurbished Dash 8-400s.
Embraer didn’t announce any commercial orders, but added nine C-390s to its order book.
Click on image to Enlarge. Sources: Company announcements, Leeham News.
Not worried about who wins the order race these days to be honest. I’m glad Boeing got new orders, especially for the B77X and B737MAX. It put’s some confidence that the worse for Boeing might be potentially behind. Yes, there might be more “unknown unknowns” however I have enough confidence that I’ve finally purchased Boeing stock after a long time.
We’ll see what Boeing does the next 2-3 years.
Boeing is walking on a very “Tight Rope” for the moment, with too many unknowns knocking on their door. Would not touch their Stock yet, with a 10’ pole, due to its unpredictable reorganization plans and new CEO/Board, still unannounced.
‘I have enough confidence that I’ve finally purchased Boeing stock after a long time.’
Brave soul. Especially to do so before a new CEO has been announced. What happens if the individual in the top slot is a rinse repeat of Calhoun, et al?
I bet you’re hoping that today’s DPA doesn’t get binned by Judge O’Connor in a few weeks time. If it does, the stock will take a nasty hit.
I think the chances of that are somewhere between slim and none- but we will see.
Cant be a DPA when its a guilty plea to charges – to be confirmed by the judge
“DPAs are agreements that resolve criminal enforcement actions *without the prosecution of charges*”- they also have probation periods which as previous story says Boeing didnt abide with.
NPAs are different again but not used in this circumstance
Plea deal is a more correct term.
It can be confirmed or rejected by the judge in Texas.
They are all ‘plea deals’ .
This time its a ‘plead guilty’ deal which never happened before
Jacobin777 bought Boeing stock. Maybe that’s a good sign in itself.
Everybody hopes will recover and be a valid competitor in the market again.
We’ve been dissapointed so many times people have become carefull hoping.
Sorry to hear you purchased Boeing stock. EADS stock is forecast to rise 12.7% above Boeing forecast for the next 12 months.
Put’s?
Out of curiosity,I still don’t understand why the previously announced Qatar airways 777-9 order is added to the list as firm, but the VietJet A330NEO is not on the list at all. Can someone please explain?
Jovi vs Bovi ?
because Qatar is ordering more 777-9 on top of the previous orders
Its now 94 of the passenger and cargo types
It’s not a new order though, check the Boeing press release:
https://boeing.mediaroom.com/2024-07-23-Qatar-Airways-Announces-Order-for-20-More-Boeing-777-9-Passenger-Jets
“The order, which expands the carrier’s 777X order book to nearly 100 airplanes, was finalized this year and listed as unidentified on Boeing’s Orders & Deliveries website.”
A real for money order
or just a form of
compensation for excessive delays?
( LH had to kick compensation for the taken down “Connexion by Boeing” in-flight online internet connectivity service down the road : first applied to 748 ( low satisfaction ) and then the 777X order ( announced as larger than the A350 order but LH stated early on that they had no use and contracted the order volume.)
“Out of curiosity,I still don’t understand why the previously announced Qatar airways 777-9 order is added to the list as firm”
Yeah, in fact, Boeing has already recorded the order months ago in its orders & deliveries report as an undisclosed customer.
More order for Airbus:
Another @Airbus MoU announced today is from Abra Group for 5 A350-900s. The airline owns @VoeGOLoficial and @LATAM
https://x.com/rschuur_aero/status/1816521964259078521
Abra Group (majority investor of Avianca and Gol) signs MoU for five A350-900s.
https://x.com/AirbusPRESS/status/1816510659133100462
Where does it say Abra controls LATAM.
Its Avianca ( Columbia) and GOL ( low cost Brazilian) and a few others
“Loose commonality”
Poster head explodes
+1
If only..
The X claim is completely false
https://en.wikipedia.org/wiki/LATAM_Airlines_Group#Ownership
perhaps South America isnt your area of expertise, Pedro…LOL
That one (carefully?) misses the point, yet again..
I wish it were possible to know what AB is going to net (all told) on their recent orders, v. BA.
Now there’s a question. Not only because of some many unknowns, but because of the old adage which says that an sale isn’t really a sale until the aircraft is out the door and the cheque has cleared.
Yeah, that phrasing was not an accident. 😉
95 of Airbus sales are in the lowest ranked option/commitment while only 22 of Boeings are that category
Do elaborate — we’re dying to hear.
While you’re on the subject of “ranking”, don’t forget to discuss how contractually meaningless an LOI is…like the Korean one that BA disclosed on day one.
And the JAL MoU, too. 🤭
AW:
“Japan Airlines (JAL) has firmed an MoU for up to 20 Boeing 787-9s that was announced earlier this year.”
I thought our frequent poster is well-read. Oops.
Ask Leeham , they are the experts of what the order rankings are
Im just repeating whats in the table for our far eastern friends who are more familiar with the party-state 5 year plans
Yeah. We know how well your predictions went:
inventory is “as good as cash”!
Profit doesn’t matter, FCF is king!
BA stock down 47% over last five years!
That means, Boeing orders are more in $ value.
BA is selling the 777-9 at an est. 55% discount
No predicting anything. Just relying on expert advice regarding rubber orders for Airbus- a well known problem of theirs
arent you worried about the 22 Max delivered to China this year… has no one kept you in the loop…many predicted they would be flying the crowed skies again
Well, if the past 20 quarters are a guide, then BA won’t generate a penny of profit from these orders…
I’m viewing their situation with interest. 🙂
“profit” isnt the metric for large companies
Free cash flow is
https://www.macrotrends.net/stocks/charts/BA/boeing/free-cash-flow#google_vignette
Every ones FCF went off the cliff during Covid , so excluding that year , its only 3 in last 10 that werent positive FCF
Profit = revenue minus booked costs.
Cashflow = cash in minus cash out.
Boeing’s cashflow in the past 20 quarters has been essentially attributable to deposits. These aren’t income — they’re loans.
So, Boeing has essentially dressed up “debt” to look like “income” — fools rookies all the time.
But you still don’t grasp that, I think…
FCF = “look over there!”
Zzz.
@ Vincent
Indeed.
Of interest, from just a few weeks ago:
“Boeing Says Cash Flow Is Worse Than It Thought”
https://www.wsj.com/business/airlines/boeing-says-cash-flow-is-worse-than-it-thought-0f2c954d
Remarkable that Mr. West only copped on to this in May…it’s been staring everyone in the face for years.
Boeing never generates profits.
They have a converter in HQ that turns it into share buy back and dividends, even if they have to borrow billions to do the dividends.
With program accounting you ensure there are no prof fits. Just 100s of millions to the execs.
Kind of like refining 100,000 lbs of rock to get a 1/2 oz gold.
No, just rarer than most thought: (as I previously posted)
“Between 2012 to 2014, BCA lost a total of $5.4 billion under unit-cost accounting”
Not a single program, it’s the whole BCA division was losing $$$ for three straight years because misteps of a single program.
Loans ?
Deposits on aircraft orders arent repayable if the airline cancels. By definition its not a loan ..LOL
Its a down payment on planes …. which Airbus also uses …well except for *rubber orders*- as the EU accounting standards arent as rigorous
Where did you learn your business knowledge . Did you run your own manufacturing business like I did
“.. as the EU accounting standards arent as rigorous ”
GAAP is the tool designed for excellent cosmetic effects.
Glossy overlay via programme accounting.
The US had quite a bit of hammstringing influence on IFRS
…. and then never made the move away from GAAP
guess why 🙂
Looks like Duke has forgotten all the useful accounting tuition that @Frank P gave him.
Duke, when an aircraft is delivered, the customer pays the agreed purchase price MINUS the deposits already paid. In other words, the deposits are returned to the customer in the form of a credit against the purchase price. Because the deposits are returned in this manner, that means that they were only on loan in the first place — which is why they’re recorded on the balance sheet as a liability. You can easily check this for yourself.
It must be tough for you to discover that BA’s “cashflow” is just dressed-up debt.
And, as @Frank P as repeatedly pointed out, all those deposits (i.e. loans) previously received have already been spent…gone up in smoke. That means BIG trouble for BA if customers start to invoke penalty-free cancellations due to late delivery — because, in such cases, BA has to repay the deposits that the cancelling customer already paid…but those deposits are long gone. And, if you check the delivery figures for the past 3 months, you’ll see that BA has suffered a cascade of cancellations…essentially negating its gross orders for that period.
Oops!
Hats off to Duke running his own mfg business.
Where the rubber meets the road is actually doing it, not just moving figures around on a spreadsheet.
I never wanted to run my own business, I was a good tech and engineer but I was no business owner. That takes more the skills to know how to do it (o0r have done and and do it) as well as people, financing, customer interface.
FCF is a useful measure of health. In general FCF should equal operating profits. A long-term disconnect implies something is rotten. You generally want to fund your company out of regular operations.
If Boeing is generating positive FCF then I think everyone who comments here understands that is a function of new debt and deposits (mostly new debt). Those investors propping up Boeing are doing so based on an assumption that the company is too big to fail. Honestly, I am having a hard time understanding how anyone thinks Boeing will ultimately get its debt spiral under control (public offering?)
Uncle Shug-shug..
“Privatize profits and Socialize losses: it’s the American Way.”
“Honestly, I am having a hard time understanding how anyone thinks Boeing will ultimately get its debt spiral under control”
Thats because you are clueless
“Boeing long term debt for the quarter ending March 31, 2024 was $46.877B, a 1.24% decline year-over-year. Boeing long term debt for 2023 was $47.103B, a 9.09% decline from 2022. Boeing long term debt for 2022 was $51.811B, a 8.79% decline from 2021
“long term dept numbers”
you are doing the shell game thing.
what about overall dept?
@Duke
Boeing rushed out to borrow $10 b in April, announced lower than expected cash flow one month later!!
Announced to “merge” with Spirit but can’t afford to pay in cash!
Duke’s figures conveniently overlook the fact that BA took on another $10B of debt just a few weeks ago (April 29).
So, the $46.9B debt figure from March 31 has since climbed to $56.9B…thereby neatly reinforcing Casey’s point.
So they successfully placed $10bn of bonds at pretty good premium? Wait, I remember doomsayser arguing that Boeing can’t borrow anymore because they will get rating downgrade straight into ‘junk’ range.
@ JS
They placed $10B in bonds at a penal interest rate of 7.2%.
And they only pulled that off by hoodwinking bond buyers with false cashflow info.
https://www.morningstar.com/news/marketwatch/20240523384/boeings-cash-flow-woes-hit-companys-bonds-raising-fears-of-a-debt-downgrade
And you call that successful?
Q:
is influx of borrowed money
booked on the cashflow “IN” side ?
Moody’s Ratings downgraded Boeing Co.’s credit score to one notch from junk
FT:
“A balance sheet that size would have a lot of challenges financing itself in the high-yield market”, making it “a really difficult transition to high-yield”, said one asset manager who holds Boeing bonds. […]
Boeing’s leverage — the ratio of its total debt to earnings before interest, taxes, depreciation and amortisation — makes it an “outlier” among companies with the same credit rating, said Fitch Ratings analyst Nicholas Varone.
JS:
Now you are interjecting logic into this.
Of course Boeing can borrow money. But those who have not run a business don’t understand business let alone business at Boeing scale.
I thought @Duke should have known better 🤣
“Boeing shares decline after CFO walks back 2024 cash-flow target
Boeing Co. scrapped a plan to generate cash again this year and said it will suffer another significant outflow in the current quarter as the embattled planemaker fights on multiple fronts to get production back in order and ramp up deliveries. The cash burn in the second quarter will be similar or even worse than in the first three months of the year, when Boeing ran through almost US$4 billion, Chief Financial Officer Brian West said …”
Servicing this debt gets increasinly problematic as the older maturities expire and get replace with 7+% loands. My quick math of $50B in loans is $3.5B a year just in interest if the Boeing doesnt get their situation under control. That’s why i think at some point Boeing is going to need an equity offering once they stabilize their operations. I just dont speed a quick path to otherwise this debt cloud (that may not be done growing).
The door plug problem.
However the overall production rate is much the same , while deliveries are paused . As the planes are built but not sold to designated customer yet cashflow is just transferred to 3 months or so down the road
The previous debt was serviced by paying it off from FCF.!!
Anyway only a fraction of the $10 bill is at 7% and thats because its very very looooong term… 40 years !
$1.0 billion aggregate principal amount of its 6.259% senior notes due 2027,
$1.5 billion aggregate principal amount of its 6.298% senior notes due 2029,
$1.0 billion aggregate principal amount of its 6.388% senior notes due 2031,
$2.5 billion aggregate principal amount of its 6.528% senior notes due 2034,
$2.5 billion aggregate principal amount of its 6.858% senior notes due 2054
and $1.5 billion aggregate principal amount of its 7.008% senior notes due 2064.
Guess who shares fell…so sad
https://www.cnbc.com/2024/06/25/airbus-shares-fall-9percent-as-company-cuts-2024-guidance-on-targets-deliveries.html
“However the overall production rate is much the same”
Not even Calhoun/West were able to repeat such, you know, “fiction”, to put it mildly.
Inventory is cash again, @duke?? How many MAXes are built but not delivered? What are the reasons such aircraft can’t be delivered?? 🤭
Take a look at the first flight numbers, or turn on your computer, Boeing slowed the MAX production. 😂
CNBC:
“Boeing’s CFO forecast the company would have negative free cash flow in 2024 as manufacturing troubles persist. The company has slowed production since a door plug blew out of a nearly new 737 Max 9 in January.”
Jul 21, 2024
“Boeing is mired in crisis after a cabin panel on a 737 MAX 9 jets blew off midair in January, prompting a *slowdown in production of its top-selling plane* as well as heightened regulatory and legal scrutiny.”
@Duke
Do you know Boeing may have a cash deficit as much as $8 billion in the first half? That’s why they have to raise $10 billion fresh debt in April to fill the gap.
Boeing stock fell 26% ytd.
The bigger picture is, the damage is done, at least for now:
1. The Big Three in China ordered 340 Airbus A320neo family, not a single Boeing.
2. https://aviationweek.com/air-transport/airlines-lessors/xiamen-air-turns-airbus-orders-40-a320neos
Wasn’t there some scuttlebutt that the myopic Mister West will be leaving that foundering ship, as well? I hear that BCA’s new CEO has a Bachelor’s in Accounting though, so all should be well. A two-fer.
It does not matter how much you order these days. Important is, who can deliver. Here we all know who is the so called number 2
making money on the aircraft you deliver is good, too
unless yor gonna make it up in valium
Peter, spot on.
You can always count on Airbus to sandbag orders till the end of the year or the airshow. Its great theater and my hat is off to them.
well often LOI or MOU and goodness knows what other acronyms they come up with.
90 rubber orders isnt a sandbag
Check the table , it clearly say they are the weakest of the types of order. Not much more than a vague intention. Its when they become firm that it matters.
Boeing under US accounting rules cant claim such candyfloss as ‘orders’
Yah, those “rigorous” US accounting rules..
Glad you’re around for humor, my good friend Duke
😉
https://leehamnews.com/2023/02/06/orders-at-risk-year-end-2022-snapshot/
“Unlike Boeing, Airbus isn’t subject to an accounting rule like the ASC 606 adjustments at a program level. Therefore, the European OEM does not break down the orders at risk of cancellation by the program.”
The experts have to analyse Airbus orders to adjust down from the candy floss made public and match the higher standards of US rules
This is the expert opinion, not the mindless drivel our party-state friends have to follow
“Unlike Boeing, Airbus isn’t subject to an accounting rule like the ASC 606 adjustments at a program level. ”
IFRS 15 is the instrument to adjust expected revenue by probability of fulfillment.
Boeing reporting ASC606 adjustments as questionable. individual sales hides the adjustment amount as per item pricing is not provided ( beyond list fantasms )
I.e. I judge this to be more of an objuscation than creation of clearness ( as one select poster insinuates. )
Fits in with programme accounting and the general character of GAAP beautification.
“.. as the EU accounting standards arent as rigorous ”
GAAP is the tool designed for excellent cosmetic effects.
Glossy overlay via programme accounting.
The US had quite a bit of hammstringing influence on IFRS
…. and then never made the move away from GAAP
guess why 🙂
get your broken record fixed!
“Over the years, Charlie and I have observed many accounting-based frauds of staggering size. Few of the perpetrators have been punished; many have not even been censured. […]”
What caused the subprime crisis? I heard banks were frozen out of the credit market, big insurance like AIA popped thanks to the “vigorous” accounting rules and “good” ethical business practices.
Wait for next month to see how many “orders” Boeing added.
“Wait for next month to see how many “orders” Boeing added.”
IMU
IFRS 15 is the instrument to adjust expected revenue by probability of fulfillment.
Boeing reporting ASC606 adjustments as questionable individual sales hides the adjustment amount as per item pricing is not provided ( beyond list fantasms )
I.e. I judge this to be more of an objuscation than creation of clearness ( as one select poster insinuates. )
Fits in with programme accounting and the general character of GAAP beautification.
The bottom line is Frank P is correct.
The way for Boeing to make money is to close all its factories and quit making aircraft.
Ford got to be king of the Auto Industry at the time by NOT making millions upon millions of Model T and how dare they sell them at such a low price. Its just not done.
Or maybe they did make millions of Model Ts and sold them at premium prices. This all gets so confusing.
The sad reality is that it would be easy to sit on the existing product lineup in order to “make a comeback” when in reality the Max series has maybe another 10 years left…and those final years will be handicapped once anyone launches a new aircraft or derivative.
Ford became the number two IIRC 😉
Significant commitments from Korean and JAL and a bunch of A330NEO’s, it seems that’s the recent good news for Airbus.
The A350 has become the long hauler of choice & Airbus is working to ramp up production to 12 a month in 2028.
A350-1000 discussions are ongoing on with United, ANA, Emirates and Singapore Airlines. And the dramatically shrunken list of major 777 operators that haven’t ordered A350s yet.. (AA, FEDEX, AC, DHL).
https://en.wikipedia.org/wiki/List_of_Boeing_777_orders_and_deliveries#Orders_and_deliveries
Boeings choice to not offer a real 777-300ER replacement (300-350 seats with a lot of cargo (Asia), 8000NM) seems to be handing over that segment to Airbus.
And it’s not like we didn’t see it coming.
https://www.airliners.net/forum/viewtopic.php?t=1339277
+1, and thanks for the link.
As I recall United has been talking to Airbus about A350 sales since 1930
UA kept the A350 slots, despite many promoting cancellation for a decade. Looking back, good for them.
From all appearances, UA is looking to retire the 777 Classics towards the end of the decade and replace them with B787 as their largest aircraft. United was the launch 777 operator and those oldest aircraft are coming up on 30 years.
If United pivots to wanting a larger aircraft, I completely agree it was a shrewd move to keep the A350. If I were Airbus and UA wanted more A321 slots, I might be inclined to ask UA to firm up their A350s in exhange for earlier slots.
@Casey
You think the 787 can be a direct replacement of the 777-300ER? I’m not sure it is a good substitute for United’s HD 777-200.
I guess it depends on what you want the B787 to be. So long as the two aircraft are capable of flying the same mission most operators will look to buy more of a smaller aircraft. I haven’t looked at the full United route map to know if there is any one route that a B777 (or A350) can do but not a B787.
Those HD 777 routes are not exactly flying at the upper limits of what a 777 can do as it relates to performance. They can be service with more frequent and lower volume aircraft. Then there is the knock-on benefit from staying away from aircraft types that have a thinner list of operators. Financing is simpler as well as fleet management and capacity with smaller aircraft.
I would argue there is a reason that UA still flies those old B777 today. They are already paid for and nobody else wants them.
Do you know what is a contract?? 🤔
Concerning the A321XLR:
“A321XLR programme head Gary O’Donnell tells FlightGlobal that the initial certification covers “all the required topics which make an XLR an XLR”, including its large rear centre fuel tank, reconfigured fuel-supply pipes, aerodynamic revisions, and the structural changes to support an eventual MTOW of 101t.”
https://www.flightglobal.com/air-transport/airbus-a321xlr-programme-chief-outlines-path-to-highest-weight-variant/159379.article
I think it is initially certified for 97t, 101t will be the next step with the forward additional fuel tank. And I was under the impression that a 102.x t version was planned, but cannot trace that back. .
FG:
“Airbus is looking to obtain higher-weight certifications for its A321XLR over the next three months, as it works on the individual enhancements required by early operators of the long-range twinjet.”
“Farnborough airliner sales lowest in a decade but Airbus come out on top”
“Sales of new airliners at the Farnborough International Airshow 2024 (FIA) were at their lowest in over a decade with a total of 286 aircraft receiving orders during this year’s event.
“By comparison the shows in 2022, 2018. 2016 and 2014 saw 441,1464, 742, and 1210 sales respectively.
“Airbus came out on top this year with a late surge on day 4 with orders from Flynas and Abra Group pushing them to a total of 164 aircraft when taking into account firm orders and Memorandum of Understanding (MoU) orders.
“Boeing totalled 118 aircraft with orders for the 787 Dreamliner leading the way but also sales for the 737 Max, 777-9 and 777 Freighters hitting the books.
“ATR also sold four ATR72 regional turboprops.
“The lower-than-normal sales aren’t entirely unexpected though. The current backlog for airliners is at its highest ever globally, around 15,812 and delays in deliveries have caused some airlines to hold off orders.
“The current global economic climate is also hitting the airline industry as are the effects of wars in Ukraine and Israel.”
“Both Boeing and Airbus have had strong sales outside of the events with Boeing reporting sales of 156 and Airbus 327 for 2024 ahead of FIA.”
https://ukaviation.news/farnborough-airliner-sales-lowest-in-a-decade-but-airbus-come-out-on-top/
—–
Confirms the view of various commenters here: it was a dull show 🙈
Next question: with the cooling economic climate for airlines, when are the deferrals going to start? And, in the case of Boeing, when will penalty-free cancellations start to bite? A huge portion of BA’s backlog is vulnerable to this, due to ongoing delivery delays. Cancellations/deferrals in H1 have essentially negated all its orders in that period.
I think this is a indicative that OEMs are not pushing to announce sales at airshows anylonger. This usually was done with large discounts to airlines. With the thin margin this industry has, they cannot afford losing a single percent just for airshow announcements.
is it airshows in general or this ( Farnborough and maybe Le Bourget too ) only?
I believe in general, and I wouldn’t be surprised if the trend continues next year.
Another stunning Boeing success during the airshow:
“NASA REPORTEDLY CONSIDERING RESCUING STRANDED ASTRONAUTS USING SPACEX SPACECRAFT”
“NASA has yet to announce a return date, showing that the problems are clearly ongoing. In fact, the agency is reportedly preparing a contingency plan that involves making room for Wilmore and Williams on an upcoming SpaceX Crew Dragon launch to the ISS”
“The option of having the two stranded astronauts return on board a Crew Dragon spacecraft must’ve been a relatively recent discussion. During a July 10 press conference, NASA’s Commercial Crew program manager Steve Stich said that “there’s really been no discussion with sending another Dragon to rescue the Starliner crew.””
https://futurism.com/the-byte/nasa-considering-rescuing-astronauts-spacex
Astronauts phone home!
Australia clipped MQ-28A’s wings?
“The Albanese government has shelved plans to develop the $800m-plus Ghost Bat drone as lethal weapon after the company designing the aircraft was struck out of a US government program”
Boeing’s PR offensive! You can literally see it coming.
“Green aviation solutions, either SAF or hydrogen, have yet to take off as climate restrictions loom
In a striking disconnect between A and B on hydrogen-powered jets, a top Boeing engineer disparages the prospect of “bigger, slower, more draggy airplanes”
https://x.com/dominicgates/status/1816878009690833337
“A high-profile crash of a B-1B Lancer at Ellsworth Air Force Base, SD, earlier this year destroyed a $450 million bomber and was caused by a cascading series of aircrew missteps, overlooked information, and an overall lax culture in units at the base, USAF says.
https://x.com/ByChrisGordon/status/1816529195830247760
on another note
Exclusive-Boeing asks suppliers for decade-long titanium paper trail as check for forgeries widens
“Boeing is asking suppliers to disclose records on Chinese titanium since 2014, according to a letter seen by Reuters, as the U.S. planemaker widens checks for false paperwork used to authenticate the metal used in commercial jets.”
https://finance.yahoo.com/news/exclusive-boeing-asks-suppliers-decade-181249924.html
Reminds me of the Fastener company I dealt with. The decided to source their fasteners in China. Lo and behold, they began to find they failed (now understand, sourced vs owning a fastener maker in China are two different things)
Now, rather than bring the fastener mfg back into the US, they bui8lt a huge lab that did nothing but test those fasteners they did not trust the quality on.
It makes sense in a twisted way, I guess.
You can get cheap and you can get forgeries but you can’t get good.
“Stuff” quality tends to reflect the compensation the manufacturer got. Not the money you lay down to purchase.
Depends on how much you pay your suppliers. You get what you pay for, ask Boeing!!
Apple has no issue to find quality parts in China that it found it difficult to source from the U.S.
A custom screw easily sourced in China held up the Mac Pro build process in Texas
https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html
was it a two piece fastener…maybe a pull type?
From Reuters
“Reports of forged documentation initially raised concerns about the structural integrity of some aircraft, but planemakers and suppliers say the correct titanium alloy was used and their products are safe.”
“The planemaker has since asked its supply chain to confirm their paperwork is legitimate after the company reviewed certificates of conformance from China not recognized as authentic by the original Chinese manufacturer.
This then is not a “China problem” but apparently an issue with a reseller further up in the supply chain?
“Reports of forged documentation initially raised concerns about the structural integrity of some aircraft, but planemakers and suppliers say the correct titanium alloy was used and their products are safe.”
https://finance.yahoo.com/news/exclusive-boeing-asks-suppliers-decade-181249165.html
There was a guy years ago on PPrune warning of this very thing, basically pleading for someone to pay attention. No one really did of course. As far as companies and regulators were concerned, the paperwork was fine, so everything else was fine…
I can remember thinking then that it was too big a problem for any single person, apart from (for example) the head of the FAA with Presidential backing to tackle owing to the inevitable geopolitical and commercial consequences.
WaPo: The life of two Boeing Starliner astronauts stuck indefinitely in space
https://t.co/Ic4FYr1cqB
They’ll be riding DRAGONs 😉
“Airbus A320 Output Throttled by Leap Engine Blade Issues”
“(Bloomberg) — Airbus SE is grappling with a lack of critical engine parts powering its bestselling A320neo family of aircraft, a setback that played a role in the planemaker’s recent cutback in production targets.
“The issue is centered around an unusually high number of non-conforming high-pressure turbine blades, creating a shortage of the component for new engines, according to people familiar with the situation. CFM International Inc., one of the two engine suppliers on the Airbus’s A320-type aircraft, recently made the discovery on the Leap engine parts and alerted Airbus, said the people, asking not to be identified as the details of the findings are confidential.”
“GE now expects output of its Leap jet engine to increase by 5% at most this year, marking the second time the company has cut its 2024 outlook for the engine. At its investor day presentation in March, GE forecast as much as 25% growth.
“The issue doesn’t affect in-service engines, said the people. GE declined to comment beyond the statements about the engine made during an earnings release this week. Airbus had no further comment.”
https://www.bloomberg.com/news/articles/2024-07-26/airbus-a320-output-throttled-by-leap-engine-blade-issues/
Airbus Starts Cost-Saving Plan as Aviation Industry Turns Gloomy
https://www.bnnbloomberg.ca/business/2024/07/12/airbus-starts-cost-saving-plan-as-aviation-industry-turns-gloomy/
Has nothing to do with China or COMAC
DoU says “The previous debt was serviced by paying it off from FCF.!!”
So a Ponzi scheme, then. Thanks for that clarification, Duke.
RE: “Expert opinion”- anyone else remember expert opinion on Enron in the US before its collapse? What was obvious to any disinterested observer was utterly missed by “the experts”.
The exact same goes for the US Sub-prime bubble and subsequent collapse, just a few years after the Enron debacle. Utterly myopic “experts”, despite plenty of warning from those *not* in positions of power..
Sign of the times:
“Turkish Airlines secures first Chinese Yuan aircraft financing outside China”
“Turkish Airlines becomes the first airline to secure Chinese Yuan denominated aircraft financing outside of China, marking a significant milestone in its innovative financing strategies”
“The financing for three Airbus A350 aircraft, which joined the airline’s fleet between May and July 2024, was secured in Chinese Yuan through partnerships with AVIC International Leasing and CCB Financial Leasing.”
https://www.traveldailynews.asia/aviation/turkish-airlines-secures-first-chinese-yuan-aircraft-financing-outside-china/
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Part of the worldwide de-dollarization push.
De yuan is now the world’s number 2 currency for trade financing…and Turkiÿe wants to join BRICS.
Very significant re the CN financing, and maybe a watershed moment. Interesting about the movement toward BRICS, too.
Bryce would be amused..
Use of the yuan in trade financing has tripled in the past 3 years; if that pace continues, the yuan will overtake the dollar for trade finance within 6 years.
Settlement in yuan is also increasing, and holders of yuan can increasingly park the currency in so-called Panda bonds (mainland China) and DimSum bonds (Hong Kong). Egypt recently started to issue bonds in yuan — directly tapping Chinese credit in its move away from the USD. Initiatives such as mBridge are aimed at facilitating cross-border borrowing and settlement in (digital) yuan.
Interest rates in China are lower than in the US — making the yuan an attractive option for trade finance and bond issuance.
Now that Turkish Airlines has broken the ice, I suspect we’ll be seeing multiple followers.
We’re living in interesting times.
Malaysia applies to join BRICS.
BRICS will have to grow with care.
i.e. avoid taking in a nation that will transport US interests
like Poland did/does in the EU.
What is BRICS? It’s nothing. Just meetings of otherwise less important players without any coherent strategy. There are no rules for BRICS. They can invite whoever they want and throw out whoever they want.
Merkel did North Stream II while Poland was wait a minute, that land east of our border just annexed Crimea.
“What is BRICS?”
It’s the new kid on the block — and it’s going to eat the West’s lunch.
It’s 40% of the world’s population, and 1/3 of the world’s nominal GDP (PPP) — bigger than the G7.
Its members control a huge portion of the world’s natural resources, including some of its largest oil/gas exporters.
Three BRICS countries manufacture commercial aircraft. Three of them are nuclear powers. One of them has the world’s largest army and navy.
They’re trading in their own currencies, via their own clearing systems…and they’re decoupling from the dollar at a stunning pace.
Countries are queuing up to join…including most of the ASEAN bloc.
All in all: quite a headache for the West.
p.s. No, I don’t come from a BRICS country…but I don’t have my head in the sand, either.
“What is BRICS? It’s nothing.”
That IMHO is a bit of an naive accessment.
“Merkel did North Stream II while Poland was wait a minute,”
NS1 and 2 were reaction to Ukraine and Poland trying to blackmail Europe by way of hindering oil passage.
Both countries had very good earnings from transit but could not get enough _and_ did the US’s bidding to hamper the EU. Ukraine additionally stole large amounts of gas beyond the alloted amount for servicing the pipelines ( how did the gas princess get rich? 🙂
Getting Turkey into the EU would have been a better choice than rabid catholic Poland.
Wow
“Covering Boeing is a truly wild ride
https://pbs.twimg.com/media/GTm5_GAbwAAvlJe?format=jpg&name=900×900
https://x.com/jonostrower/status/1817688442056429935
“Former Rockwell Collins CEO joins list of Boeing CEO candidates”
Lots of juicy faux-intrigue for the proles, while the real action occurs at a different level.
How old is Mr Ortberg? He’s not young.
What if Boeing transitioned from Calhoun to one like Ortberg back in 2021/2022? 😂
https://aviationweek.com/air-transport/aircraft-propulsion/daily-memo-what-happened-kelly-ortberg
Ortberg is around 62-63; same age as Shanahan.
Thanks Scott.
According to this press release, he was 53 in August 2013.
https://www.businesswire.com/news/home/20130801005143/en/Kelly-Ortberg-Appointed-CEO-of-Rockwell-Collins
It seems for airlines like UA, AA, SQ, AC and ANA securing good slots for A350-1000s is not a given option anymore. I wouldn’t categorize this as a buyers market with A sold out, B stumbling.
Their fleet management teams maybe be forced to review the data, preferences, faith, relations and assumption that got them is the annoying position they are in now, replacing 777-200ER’s/777-300ER’s on long, heavy flights to/from Asia.
“Boeing not a sure thing for next flydubai aircraft order”
“The airline still has 127 aircraft on order at Boeing, all of them B737-8s. The current fleet includes fifty-six B737-8s, twenty-nine B737-800s, and three B737-9s, for a total of 88 aircraft. Al Ghaith said flydubai had only received four aircraft from Boeing this year, which had all been due for delivery in previous years. He added that Boeing had told him there would be no more deliveries in 2024, branding the delays as “a moment of pure frustration.” Previously, flydubai has said the delivery delays are hindering its expansion plans.”
https://www.ch-aviation.com/news/143028-boeing-not-a-sure-thing-for-next-flydubai-aircraft-order
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Hardly a surprise: the current line rate for the 737 MAX is only about 18 per month…with no realistic expectation of a meaningful increase any time soon.
BA’s Q2 results this week (Wednesday) are going to be blood red 🙈
They might consider getting used 737NG’s. Maintenance, cabin reconfiguration and higher operating costs to be financially supported by Boeing.
Hundreds of 737NG stored , mostly 737-700s it seems, but getting a dozen similar -800s, & pull them through a upgrade line at an MRO, lease a bunch of CFM56-7s, should be possible if they really want to grow.
But they would probably be not the only ones considering..
BA is currently burning through $1B per month, with no end in sight. It burned through $4B in each of Q1 and Q2.
It doesn’t have the money to financially support anyone or anything.
That $10B that it borrowed in April will soon be burned off — at that stage, the sh#t will really hit the fan.
In a harsh environment like Dubai there is a lot of value with going with a fully learned out installation like the NG. Harsh conditions plus relatively new powerplant designs are generally not a winning combination.
The expected glut continues to spread:
“U.S. airlines cut growth plans in a bid to stem profit-eating fare discounts”
“U.S. airlines are reducing their capacity through the end of the year in a bid to cool an oversupplied domestic market that has led to lower fares and reduced profits despite strong summer travel demand. For passengers, that could mean higher fares are on the way.”
https://www.cnbc.com/2024/07/29/us-airlines-cut-growth-plans-for-second-half.html
on another note
“Turkey’s President Recep Tayyip Erdogan threatens to invade Israel in support of the Palestinians.”
If this keeps up. Wonder how it will effect Turkish Airlines long term growth plans
As of May 2024, Turkish Airlines operates a fleet of 370 Airbus and Boeing aircraft. And The airline serves more destinations non-stop from a single airport than any other airline in the world and flies to 126 countries, more than any other airline.
This has been brewing for a long time: surprised it hasn’t reached this point before now.
Notable that the rumored Turkish order from Boeing still hasn’t materialized: I’d be very surprised if it ever does. Saudi interest in Boeing also appears to have diminished.
“Southwest Airlines Signals Major Shift: Drastic Reduction in Boeing Orders Coming In September?”
“Southwest Airlines has a lot of aircraft on order from Boeing. But they said some very strange things on their earnings call. They’re bringing on planes, but aren’t going to grow their flying at a rate faster than GDP.
“In fact, they say growth in their flying is expected to come from taking their current planes and keeping them in the air more – redeyes, and faster turn times on the ground – not from Boeing deliveries. That has to mean they’ll be cancelling or deferring deliveries. They just haven’t announced it yet.”
https://viewfromthewing.com/?p=210397
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Can’t blame them, if this is indeed what’s in the pipeline.
They’re never going to receive the -7s that they ordered, and they’re contractually entitled to penalty-free cancellation.
Very interesting! Thanks for the link.
I have to believe that even Boeing might be willing to let SWA penalty free cancellation on their entire backlog of -7. Boing benefits from never having to deliver a low volume variant and they can pivot their engineering resources over to the Max10.
Take the writeoff on the -7 now so that the new CEO takes office without one boat anchor.
“-7MAX cancellation.”
is SWA really dependent on Boeing’s “good will” to cancel?
( i.e. my guess is that B is so late with the -7 that any customer can drop orders with no penalty. similar situation for some other orders. You just can’t transport PAX on a plane folded from contract printouts )
Many 737-7 orders were swapped for 737-8 delivery (at a favorable price wink wink) and new orders were placed. Old and tired 737-700 still have to go.
Analysts are expecting BA’s Q2 results (out this coming Wednesday) to reveal a loss per share of $1.69 (more than double last year’s loss of -$0.82 per share) on revenue of $17.49B (down 11.4% yoy).
https://www.tipranks.com/news/boeing-nyseba-pre-earnings-heres-what-to-expect
—
This TipRanks estimate appears to be (very) optimistic — with 613M outstanding shares, this corresponds to a loss of “only” $1.04B. Some analysts are expecting a $3-4B loss at BA.
On July 6, I posted the following:
“BA analyst EPS estimates per MarketWatch:
Q2 / Q3 / FY 2024 / FY 2025
Current -1.24 / 0.42 / -1.25 / 5.04
1 m ago -0.96 / 0.45 / -0.86 / 5.37
3 m ago -0.37 / 0.76 / 0.79 / 6.69”
Update today:
BA analyst EPS estimates per MarketWatch:
Q2 / Q3 / FY 2024 / FY 2025
Current -1.87 / 0.01 / -2 26 / 4.88
1 m ago -1.16 / 0.31 / -1.39 / 5.08
3 m ago -0.66 / 0.53 / -0.26 / 6.10
The reality will be (much) worse than these estimates — it always is.
Maybe that outfit will announce a Dynamic New Choice for CEO to soften the blow of Wednesday’s financials- which will not be pretty.
Remember that Mister Calhoun (“ex” Blackstone Group) is still very much on the BoD there- alas.
AW: Oil consumption issue grounds TUI’s fleet of Pratt-powered E2s
Here we go — deferrals are now official.
Lots more to come, due to worsening aviation glut.
Freed-up slots soon on the menu. UA might jump in…if they weren’t also suffering ftom the glut.
“JetBlue also said it renegotiated its delivery schedule with Airbus SE in order to defer 44 A321neo aircraft originally scheduled for delivery from 2025 through 2029.”
https://www.bloomberg.com/news/articles/2024-07-30/jetblue-deepens-cost-cuts-defers-some-airbus-aircraft-purchases/
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On a related note:
Rex — Australia’s 3rd-largest airline — is entering receivership:
https://www.theguardian.com/business/article/2024/jul/30/rex-airlines-asx-shares-trading-halt
This is the second such Australian airline failure, after Bonza a few weeks ago.
“It’s deferring delivery of 44 Airbus A321neo aircraft until 2030 or later”
👇
“hey, man. you got any slots opening up recently. we heard some rumors…”
Going to United or Flydubai or someone else??
What if ULCCs are not ULCCs anymore?? What are they called? Crossovers? In-betweens?
The seventh C919 joined the China Eastern Airlines fleet on July 29 in Shanghai.
Congrats to Comac
“The latest Category 1 deficiency, discovered this spring, involves a faulty fuel pump.”
https://x.com/defense_news/status/1818357152743936350
More losses in Q2 or Q3?
“The Air Force and Boeing are in varying stages of resolving seven Category 1 deficiencies. Col. David Hall, senior materiel leader for the program, said during the same briefing that three of those are close to a resolution.”
“RVS 2.0 was supposed to be delivered this year, but that timeline has since shifted to 2026. Stamey said a recent schedule risk assessment indicates that spring of that year is the target for that delivery.
“Boeing is also redesigning the tanker’s boom actuator, which is required to ensure it can safely fuel the A-10. Stamey said the company has completed prototype hardware for the fix and began lab testing it in May.”
https://www.defensenews.com/air/2024/07/30/boeings-kc-46-has-a-new-top-tier-deficiency/